Textron reduces net debt by $2.4 billion in 2010, looks to repay loans

By Jennifer Lanning Drey

Savannah, Ga., Jan. 26 - Textron Inc. ended 2010 with consolidated net debt of $5.0 billion, down from consolidated net debt of $7.4 billion at the end of the prior year, Frank Connor, the company's chief financial officer, reported Wednesday during Textron's fourth-quarter earnings conference call.

"We're comfortable with the strength of our balance sheet and believe we will continue to improve on our position," Connor said.

Textron has reduced its net debt by $6.9 billion in the last two years, he said.

Looking forward, the CFO said Textron expects to use cash flow to pay down the balance of the Textron Financial Corp. credit line in advance of its maturity in April 2012.

The company also expects to have a new Textron back-up credit line in place during the first half of 2011, he said.

Textron expects cash flow from continuing operations of the manufacturing group before pension contributions to be between $800 million and $850 million in 2011. Planned contributions are expected to be about $250 million.

Manufacturing free cash flow from continuing operations was $692 million in 2010.

During the fourth quarter, Textron made a $350 million voluntary contribution to its pension plan, as well as the first $300 million payment on Textron Financial's $1.75 billion credit line, Scott Donnelly, the company's chief executive officer, said during the call.

Cash flow was strong during the fourth quarter, due primarily to higher volumes at the company's Cessna, Bell and Industrial segments, he said.

Improved demand

Donnelly also said during the call the most encouraging news of the quarter was a noticeable improvement in the demand environment for business jets and commercial helicopters.

At Cessna, Textron booked the highest number of quarterly gross jet orders since the third quarter of 2008, he said.

The company also continued to liquidate its non-captive finance portfolio during the fourth quarter, Donnelly said.

Textron reported fourth-quarter revenues of $3.1 billion, up 11.2% from the same period in 2009.

"I believe 2010 was a good year, especially given the volatility we've experienced in the global economic environment," Donnelly said.

Textron is an aircraft, industrial and finance company based in Providence, R.I.

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