8-K 1 eightk.htm FINANCIALS/NOTES SECURITIES AND EXCHANGE COMMISSION

 

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

_______________

 

FORM 8-K



CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934

 

       December 20, 2001       

(Date of earliest event reported)



TEXTRON INC.

 

(Exact name of registrant as specified in its charter)

         Delaware         
(State or other jurisdiction of
incorporation or organization)

          1-5480          
(Commission File Number)

      05-0315468       
(I.R.S. Employer
Identification No.)

 

40 Westminster Street, Providence, Rhode Island 02903
(Address of principal executive offices including zip code)

         (401) 421-2800       
(Registrant's telephone number including area code)

 

                          N/A                           
(Former name or former address, if changed since last report)

 

Item 2. Acquisition or Disposition of Assets

On December 20, 2001, Textron completed the sale of its Automotive Trim business to Collins & Aikman Products Co. ("C&A Products"), a subsidiary of Collins & Aikman Corporation ("C&A Corporation"), pursuant to a Purchase Agreement (the "Purchase Agreement") by and among Textron, C&A Corporation and C&A Products. Pursuant to the Purchase Agreement, Textron will receive $800 million in a combination of $625 million in cash, a transfer of $88 million indebtedness and $87 million in lease financing. In addition, Textron will receive preferred shares of C&A Products with a face value of $326 million and 18 million shares of C&A Corporation common stock. Textron will also retain a 50% interest in an Italian joint venture, which Textron will have the right to sell to C&A Products for $23.1 million at a future date.

The Purchase Agreement also includes a provision that entitles Textron Inc. to an additional cash payment of up to $125 million to be calculated based on C&A Corporation's operating results for the five year period ending fiscal 2006.

The lease financing involves approximately $87 million of equipment used by the Automotive Trim business that will be retained by Textron and leased back to the business through Textron Financial Corporation.

A copy of the Purchase Agreement is filed as an exhibit hereto.

Item 7. Financial Statements and Exhibits

(b)

Pro Forma Financial Information
 

The following unaudited Pro Forma Condensed Consolidated Statement of Operations for the nine months ended September 29, 2001 and the fiscal year ended December 30, 2000 and the unaudited Pro Forma Condensed Consolidated Balance Sheet as of September 29, 2001 were prepared to illustrate the estimated effects of the sale. The unaudited Pro Forma Condensed Consolidated Statement of Operations for the year ended December 30, 2000 and for the nine months ended September 29, 2001 have been prepared to give effect to the sale of the Automotive trim business as if it had occurred on January 2, 2000 and December 31, 2000, respectively. The unaudited Pro Forma Condensed Consolidated Balance Sheet as of September 29, 2001 has been prepared to give effect to the sale as if it had occurred on such date.
 

The unaudited pro forma condensed consolidated financial statements have been presented for informational purposes only and do not purport to indicate what the Company's results of operations or financial position would have been if the transaction had in fact occurred on the dates indicated or to project the Company's results of operations for any future period or any future date. The unaudited pro forma adjustments are based upon available information and upon certain assumptions stated in the notes thereto that the Company believes are reasonable. The unaudited pro forma condensed financial statements should be read in conjunction with the consolidated financial statements of the Company and related notes included in the Company's fiscal 2000 Annual Report.

TEXTRON INC.
Pro Forma Condensed Consolidated Balance Sheet (unaudited)
September 29, 2001
(Dollars in millions)

 


Textron Inc.

  

Automotive Trim Business (A)

Pro Forma
Adjustments

  

Adjusted
Pro Forma

  

Assets

              

Textron Manufacturing

              

Cash and cash equivalents

$

261

  

$

(36)

$

343 (B)

  

$

568    

  

Commercial and U.S. government receivables, net

1,500

  

(237)

 

 

1,263

  

Inventories

2,018

  

(43)

 

 

1,975

  

Other current assets

443

  

(43)

 

 

400

  

          Total current assets

4,222

  

(359)

343

 

4,206

  

Property, plant, and equipment, net

2,560

  

(483)

 

 

2,077

  

Intangibles, net

2,183

  

(184)

 

 

1,999

  

Other assets

1,548

  

(113)

  278 (C)

 

1,713

  

          Total Textron Manufacturing assets

10,513

  

(1,139)

621

 

9,995

  

Textron Finance

 

  

 

 

 

 

  

Cash

38

  

 

 

 

38

  

Finance receivables, net

5,780

  

 

87 (D)

 

5,867

  

Other assets

807

  

 

 

 

807

  

          Total Textron Finance assets

6,625

  

 

87

 

6,712

  

          Total assets

$

17,138

  

$

(1,139)

$

708

  

$

16,707     

  

Liabilities and shareholders' equity

              

Liabilities

              

Textron Manufacturing

              

Current portion of long-term debt and short-term debt

$

1,353

  

$

(44)

$

(404) (E)

  

$

905     

  

Accounts payable and accrued liabilities

2,583

  

(374)

196 (F)

 

2,405

  

          Total current liabilities

3,936

  

(418)

(208)  

 

3,310

  

Other liabilities

1,876

  

(144)

33 (G) 

 

1,765

  

Long-term debt

1,475

  

(5)

 

 

1,470

  

          Total Textron Manufacturing liabilities

7,287

  

(567)

(175)

 

6,545

  

Textron Finance

 

  

 

 

 

 

  

Other liabilities

722

  

 

 

 

722

  

Debt

4,886

  

 

77 (D)

 

4,963

  

          Total Textron Finance liabilities

5,608

  

 

77

 

5,685

  

          Total liabilities

12,895

  

(567)

(98)

 

12,230

  

Textron Finance - mandatorily redeemable preferred
     securities of Finance subsidiary holding debentures


28

  


 


28

  

Textron - obligated mandatorily redeemable
     preferred securities of subsidiary trust holding
     solely Textron junior subordinated debt securities



485

  

 



 



485

  

Shareholders' equity

 

  

 

 

 

 

  

Capital stock:

 

  

 

 

 

 

  

     Preferred stock

11

  

 

 

 

11

  

     Common stock

25

  

 

 

 

25

  

Capital surplus

1,059

  

 

 

 

1,059

  

Retained earnings

5,618

  

 

242 (H)

 

5,860

  

Accumulated other comprehensive loss

(214)

  

 

(8) (H)

 

(222)

  
 

6,499

  

 

234

 

6,733

  

     Less cost of treasury shares

2,769

  

 

 

 

2,769

  

     Total shareholders' equity

3,730

234

3,964

     Total liabilities and shareholders' equity

$

17,138

  

$

(567)

$

136

  

$

16,707

  

Common shares outstanding

141,227,000

        

141,227,000

  

See notes to pro forma condensed consolidated financial statements.

TEXTRON INC.
Pro Forma Condensed Consolidated Statement of Operations (unaudited)
or the Year Ended December 30, 2000
(Dollars in millions, except per share amounts)

 



Textron Inc.
Automotive Trim
Business (A)


Pro Forma
Adjustments


Adjusted Pro Forma

  

Revenues

                  

Manufacturing revenues

$

12,399

$

(1,842)

$

 

$

10,557

  

Finance revenues

  

691

  

 

  

8 (I)

  

699

  

     Total revenues

  

13,090

  

(1,842)

  

8

  

11,256

  

Costs and expenses

  

 

  

 

  

 

  

 

  

Cost of sales

  

10,065

  

(1,602)

    

8,463

  

Selling and administrative

  

1,445

  

(84)

  

 (12) (J) 

  

1,349

  

Interest, net

  

486

  

 

  

(24) (K)

  

462

  

Special charges, net

  

483

  

(27)

  

 

  

456

  

     Total costs and expenses

  

12,479

  

(1,713)

  

(36)   

  

10,730

  

Income from  continuing operations before income
     taxes and distributions on preferred securities of
     subsidiary trusts

  



611

  



(129)

  



44     

  



526

  

Provision for income taxes

  

(308)

  

60

  

(16) (L)

  

(264)

  

Distribution on preferred securities of
     subsidiary trusts, net of income taxes

  


(26)

  


 


 


(26)

  

Income from continuing continuing operations

$

277

$

(69)

$

28   

$

236

  

Income from continuing operations per common
     share:

  

 

  

 

  

 

  

 

  

          Basic

$

1.92

  

 

  

 

$

1.67

  

          Diluted

$

1.90

      

 

$

1.64

  

Average shares outstanding:

  

 

              

     Basic

  

143,923,000

      

(2,336,000) (M)

  

141,587,000

  

     Diluted

  

146,150,000

      

(2,336,000) (M)

  

143,814,000

  

See notes to the pro forma condensed consolidated financial statements.

 

 

TEXTRON INC.
Pro Forma Condensed Consolidated Statement of Operations (unaudited)
For the Nine Months Ended September 29, 2001
(Dollars in millions, except per share amounts)

 



Textron Inc.


Automotive Trim Business (A)


Pro Forma Adjustments



Adjusted Pro Forma

  

Revenues

                  

Manufacturing revenues

$

8,625

$

(1,200)

$

$

7,425

  

Finance revenues

  

513

  

 

  

6 (I)       

  

519

  

     Total revenues

  

9,138

  

(1,200)

  

6            

  

7,944

  

Costs and expenses

  

 

  

 

      

 

  

Cost of sales

  

7,262

  

(1,077)

  

10 (J)       

  

6,195

  

Selling and administrative

  

1,124

  

(57)

  

(9) (J)      

  

1,058

  

Interest, net

  

340

  

 

  

(18)  (K)   

  

322

  

Special charges, net

  

415

  

(9)

      

406

  

     Total costs and expenses

  

9,141

  

(1,143)

  

(17)           

  

7,981

  

Loss from continuing operations before income
     taxes and distributions on preferred securities of
     subsidiary trusts

  



(3)

  



(57)

  



23           

  



(37)

  

Provision for income taxes

  

(69)

  

21

  

(8) (L)   

  

(56)

  

Distribution on preferred securities of
     subsidiary trusts, net of income taxes

  


(19)

  

 

      


(19)

  

Net loss

$

(91)

$

(36)

$

15    

  

(112)

  

Net loss per common share:

  

 

  

 

      

 

  

     Basic and diluted

$

(.65)

$

 

$

  

$

(.81)

  

Average shares outstanding:

  

 

  

 

      

 

  

     Basic and diluted

  

140,985,000

  

 

  

(2,281,000) (M)

  

138,704,000

  

See notes to the pro forma condensed consolidated financial statements.

 

TEXTRON INC.
Notes to the Pro Forma Condensed Consolidated Financial Statements
(unaudited)

 

Note 1      Pro Forma Adjustments

A.     To eliminate the carrying value of the assets and liabilities and the operating results of the Automotive Trim business.

B.     To record cash proceeds from the sale including financing by TFC (see D below), net of cash used to repurchase debt.

C.     To record (1) an investment of $237 million for the receipt of preferred shares of C&A Products valued at fair value ($147 million) and 18 million shares of C&A Corporation common stock valued at a cost of $5 per share ($90 million); (2) an investment of $15 million for the 50% retained interest in Textron Automotive Holdings Italy S.r.l.; and (3) a $26 million deferred tax asset.

D.     To record $77 million in debt financing by Textron Finance which was utilized to acquire equipment from the Automotive Trim business. This equipment was then leased back to the Automotive Trim business resulting in an $87 million finance receivable.

E.     To record the use of proceeds to pay down outstanding debt.

F.     To record accrual for $56 million in transaction costs and $140 million in taxes.

G.     To record obligations retained by Textron Inc.

H.     To record the after-tax gain on the sale and eliminate the $8 million cumulative translation adjustment for Textron's investment in the net assets sold.

I.     To record financing income for the equipment lease.

J.     To record other income and expenses related to retained operations and assets.

K.     To record a reduction in interest expense of $22 million for the nine months ended September 29, 2001 and $29 million for the year ended December 30, 2000 due to a $453 million reduction in outstanding debt at an average interest rate of 6.5%. This reduction is offset by additional interest expense of $4 million for the nine months ended September 29, 2001 and $5 million for the year ended December 30, 2000 on the $77 million in debt at Textron Finance.

L.     To record the income tax impact for the adjustments in footnote (I) through (K).

M.     To record the use of proceeds to buy back approximately four million shares of the Company's common stock pro rata over the first nine months of the respective periods using the average monthly historical stock price.

 

 

(c)

Exhibit No.

Exhibit
 

2.1

Purchase Agreement dated as of August 7, 2001, as amended and restated as of November 30, 2001, by and among Textron Inc., Collins & Aikman Corporation and Collins & Aikman Products Co., including Exhibit 1 (Certificate of Designation of the Series A Redeemable Preferred Stock, the Series B Redeemable Preferred Stock and the Series C Redeemable Preferred Stock) and Exhibit 7 (Asset Purchase Agreement dated as of August 7, 2001, as amended and restated November 30, 2001, by and between Textron Automotive Exteriors Inc. and JPS Automotive, Inc.).

NOTE: The Table of Contents of the Purchase Agreement listed as Exhibit 2.1 contains a list briefly identifying the contents of all omitted schedules and exhibits. Textron will supplementally furnish a copy of any omitted schedule or exhibit to the Commission upon request.

 

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

TEXTRON INC.
(Registrant)

  
     

Date: January 4, 2002

/s/ R. L. Yates

  
 

Name:   R. L. Yates
Title:     Vice President and Controller
             (principal accounting officer)

  
     

 

 

 

INDEX TO EXHIBITS

Exhibit No.

Exhibit

2.1

Purchase Agreement dated as of August 7, 2001, as amended and restated as of November 30, 2001, by and among Textron Inc., Collins & Aikman Corporation and Collins & Aikman Products Co., including Exhibit 1 (Certificate of Designation of the Series A Redeemable Preferred Stock, the Series B Redeemable Preferred Stock and the Series C Redeemable Preferred Stock) and Exhibit 7 (Asset Purchase Agreement dated as of August 7, 2001, as amended and restated November 30, 2001, by and between Textron Automotive Exteriors Inc. and JPS Automotive, Inc.).

NOTE: The Table of Contents of the Purchase Agreements listed in Exhibit 2.1 contains a list briefly identifying the contents of all omitted schedules and exhibits. Textron will supplementally furnish a copy of any omitted schedule or exhibit to the Commission upon request