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TEXTRON 2016 PROXY STATEMENT
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COMPENSATION DISCUSSION AND ANALYSIS
EXECUTIVE SUMMARY
BUSINESS OVERVIEW
Textron’s 2015 revenues were $13.4 billion, down about 3.2% from 2014, primarily reflecting lower revenues at our Bell
segment largely due to fewer V-22 tiltrotor aircraft deliveries to the U.S. government as specified by the program terms.
Despite the decline in revenues in 2015, we achieved improved operational performance, increasing segment profit by 3.4% to
$1.3 billion and diluted earnings per share from continuing operations by 16.3% to $2.50, reflecting good execution across all
of our business segments.
We generated slightly over one billion dollars in cash from operating activities of our manufacturing businesses, which allowed
us to return $241 million to our shareholders through the repurchase of shares and dividends paid, deploy $420 million
in capital expenditures to support future growth, invest $81 million in complementary acquisitions that strengthened our
businesses and pay down an additional $100 million of debt. Other notable accomplishments during the year which we
expect will contribute to future growth in shareholder value included the following:
•
Generated a 5.6% increase in Textron Aviation revenues, driven by a full year’s contribution from our acquisition of Beech
Holdings, LLC, which included Beechcraft Corporation and other subsidiaries (“Beechcraft”), and higher aircraft sales. We
also received certification of the new Pro Line Fusion-equipped Beechcraft King Air 350i and 250 turboprop aircraft. Textron
Aviation also accumulated a full year of operational benefits from the acquisition and integration of Beechcraft, allowing us
to increase Textron Aviation segment profit to $400 million from $234 million in 2014.
•
At Bell Helicopter, we took appropriate cost actions in reaction to continued reduced sales activity in global commercial
helicopter markets and continued to focus on our strategy of new product development. The introduction of our new,
upgraded 407 GXP helicopter resulted in a 10-year agreement with a customer to deliver up to 200 units. The successful
first flight of the new Bell 525 helicopter—the first ever commercial fly-by-wire rotorcraft—was a major milestone for
Bell in 2015. On the military side, we secured several notable contracts, both domestically and internationally, for both
the H-1 and V-22 programs.
•
Our Textron Systems segment won a number of U.S. and international military contracts, including additional
Ship-to-Shore Connector crafts for the U.S. Navy and a contract to deliver 55 COMMANDO Select vehicles for the
Afghan National Army.
•
Our Industrial segment generated solid revenue growth of 6.2% and expanded segment profit margins, reflecting the
success of our new product strategy and recent acquisitions.
•
Overall, we invested $778 million in research and development activities, up by 12% from the prior year, demonstrating
our ongoing commitment to improve and expand our product lines to drive future growth. Major new products currently in
development include the Citation Longitude, Citation Hemisphere, Bell V-280 tiltrotor, Bell 505 Jet Ranger X+, Bell 525
Relentless and our Scorpion military jet.
Revenues ($ millions)
Segment Profit ($ millions)
Diluted Earnings per Share
$14,000
$0
$1,300
$0
$2.50
$0
2014
2015
2014
2015
2014
2015
$13,878
$13,423
$1,214
$1,255
$2.15
$2.50
Down
3.2%
Up
3.4%
Up
16.3%
15000