Next Steps: Unleashing the power of the enterprise. As a coordinated network of globally strong businesses and powerful brands, Textron has the potential to create significant shareholder value by accelerating our supply chain management program and creating internal shared service organizations to increase our efficiency and reduce costs. In 2001, we made significant progress toward realizing these benefits and unleashing the power of the enterprise. Supply Chain Management Our newly launched supply chain management program aims to realize the benefits of enterprise-wide integration in the areas of procurement, logistics, manufacturing, demand forecasting and service/support. By effectively managing our entire supply chain, we generate significant savings, achieve greater operational efficiency and improve overall customer satisfaction. Initially, we are focusing where the opportunity is most apparent - strategic sourcing. With annual production and non-production purchases totaling nearly $6 billion, we are leveraging our buying power, developing low-cost, global supply sources and using competitive bidding events like reverse e-auctions to realize savings. For example, in 2001 we conducted several reverse auction events in which suppliers were invited to bid on contracts for machine components. During one event, 55 suppliers provided competitive bids to eight Textron business units, resulting in more than $5 million in annual savings on a combined $25 million spend. Our next step is to expand our efforts beyond strategic sourcing to include the entire supply chain - from forecasting and manufacturing to distribution and field service/support. Shared Services Unleashing the power of the enterprise demands that we consolidate our resources to become more operationally and financially efficient. Case in point: Textron Information Services (TIS), an internal shared service organization responsible for providing information technology resources to all our businesses. This shared service takes away the distraction involved in specifying, implementing and servicing information technology (IT) hardware and software, giving our businesses greater freedom to focus on what they do best - tending to customer relationships. TIS is charged with creating a more robust technical infrastructure, enabling faster, more efficient communications across our enterprise. Through this shared service, we expect annual savings of 10 to 15 percent between now and 2004 through computer standardization, consolidation of everything from data centers to IT help desks, and reduction in the number of hardware, software and service contracts we have with external partners. TIS joins other Textron shared services such as Textron Global Services (TGS), a group of international Human Resource experts focused on helping Textron businesses plan and implement global assignments to further develop our people. TGS uses its combined experience of over 50 years in foreign tax planning, relocation management, international human resource policy, and vendor management to provide cost and risk avoidance solutions to the entire global Textron organization. From the start, our carefully planned combination of organizing and enhancing key strategic capabilities, while consolidating and outsourcing services to carefully selected vendors, resulted in significant cost savings and operational improvement. In 2001, TGS supported operations in 33 different countries.