-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, AtJCy4q4DJF5gL39yD/Oliv7onKRF8/K8hbkB091tNK3iOaX+lu4JVKDlpIUE79H DAT9n0BJOeIPLRel3rm8Fw== 0000217346-99-000011.txt : 19990630 0000217346-99-000011.hdr.sgml : 19990630 ACCESSION NUMBER: 0000217346-99-000011 CONFORMED SUBMISSION TYPE: 11-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19981231 FILED AS OF DATE: 19990629 FILER: COMPANY DATA: COMPANY CONFORMED NAME: TEXTRON INC CENTRAL INDEX KEY: 0000217346 STANDARD INDUSTRIAL CLASSIFICATION: AIRCRAFT & PARTS [3720] IRS NUMBER: 050315468 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 11-K SEC ACT: SEC FILE NUMBER: 001-05480 FILM NUMBER: 99654569 BUSINESS ADDRESS: STREET 1: 40 WESTMINSTER ST CITY: PROVIDENCE STATE: RI ZIP: 02903 BUSINESS PHONE: 4014212800 MAIL ADDRESS: STREET 1: 40 WESTMINSTER ST CITY: PROVIDENCE STATE: RI ZIP: 02903 FORMER COMPANY: FORMER CONFORMED NAME: AMERICAN TEXTRON INC DATE OF NAME CHANGE: 19710510 11-K 1 SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 FORM 11-K (Mark one) [X] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 1998 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _________ to ____________ Commission file number 001-5480 A. Full title of the plan and the address of the plan, if different for that the issuer named below: ELCO TEXTRON INC. PROFIT SHARING AND SAVINGS PLAN 1111 Samuelson Road P.O. Box 7009 Rockford, Illinois 61125 B. Name of issuer of securities held pursuant to the plan and address of Its principal executive office: TEXTRON INC. 40 Westminster Street Providence, Rhode Island 02903 SIGNATURES The Plan. Pursuant to the requirements of the Securities Exchange Act of 1934, the trustees (or other persons who administer the employee benefit plan) have duly caused this annual report to be signed on its behalf by the undersigned hereunto duly authorized. ELCO TEXTRON INC. PROFIT SHARING AND SAVINGS PLAN ELCO TEXTRON INC., Plan Administrator DATE: June 28, 1999 By: /s/Mark S. Arnold Mark S. Arnold Director of Finance Financial Statements and Supplemental Schedules Elco Textron Inc. Profit Sharing and Savings Plan Years ended December 31, 1998 and 1997 Elco Textron Inc. Profit Sharing and Savings Plan Financial Statements and Supplemental Schedules Years ended December 31, 1998 and 1997 Contents Report of Independent Auditors 1 Financial Statements Statements of Net Assets Available for Benefits 2 Statements of Changes in Net Assets Available for Benefits 4 Notes to Financial Statements 6 Supplemental Schedules Line 27a - Schedule of Assets Held for Investment Purposes 11 Line 27d - Schedule of Reportable Transactions 12 Report of Independent Auditors Administrative Committee Elco Textron Inc. Profit Sharing and Savings Plan We have audited the accompanying statements of net assets available for benefits of the Elco Textron Inc. Profit Sharing and Savings Plan as of December 31, 1998 and 1997, and the related statements of changes in net assets available for benefits for the years then ended. These financial statements are the responsibility of the Plan's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the net assets available for benefits of the Plan at December 31, 1998 and 1997, and the changes in its net assets available for benefits for the years then ended, in conformity with generally accepted accounting principles. Our audits were performed for the purpose of forming an opinion on the financial statements taken as a whole. The accompanying supplemental schedules of assets held for investment purposes as of December 31, 1998, and reportable transactions for the year then ended, are presented for purpose of additional analysis and are not a required part of the financial statements but are supplementary information required by the Department of Labor's Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974. The Fund Information in the statements of net assets available for benefits and statements of changes in net assets available for benefits is presented for purposes of additional analysis rather than to present the net assets available for benefits and changes in net assets available for benefits of each fund. The supplemental schedules and Fund Information have been subjected to the auditing procedures applied in our audits of the financial statements and, in our opinion, are fairly stated in all material respects in relation to the financial statements taken as a whole. /s/ Ernst & Young LLP ERNST & YOUNG LLP May 5, 1999 1 Elco Textron Inc. Profit Sharing and Savings Plan Statement of Net Assets Available for Benefits December 31, 1998
Fund Information Money George Textron Equity Market Putnam Bond Stock Index Voyager Loan Total Fund Fund Fund Fund Fund Fund Fund Funds Assets Investments, at fair value: Shares of registered investment companies: Fixed income $5,494,727 $ - $13,825,588 $ - $ - $ - $ - $19,320,315 Balanced - 43,304,457 - - 3,229,664 2,887,088 - 49,421,209 Textron Inc. common - - - 21,091,557 - - - 21,091,557 stock Participant notes - - - - - - 2,247,552 2,247,552 receivable Total investments 5,494,727 43,304,457 13,825,588 21,091,557 3,229,664 2,887,088 2,247,552 92,080,633 Receivables: Interest and dividends - - - 81,449 - - - 81,449 Due from broker - - - 179,461 - - - 179,461 Total receivables - - - 260,910 - - - 260,910 Net assets available $5,494,727 $43,304,457 $13,825,588 $21,352,467 $3,229,664 $2,887,088 $2,247,552 $92,341,543 for benefits
See accompanying notes. 2 Elco Textron Inc. Profit Sharing and Savings Plan Statement of Net Assets Available for Benefits December 31, 1997
Fund Information Money George Textron Market Putnam Bond Stock Loan Total Fund Fund Fund Fund Fund Funds Assets Investments, at fair value: Shares of registered investment companies: Fixed income $5,576,828 $ - $14,259,829 $ - $ - $19,836,657 Balanced - 48,397,498 - - - 48,397,498 Common stocks - 261,014 - 17,292,250 - 17,553,264 Preferred stocks - 270,272 - - - 270,272 Short-term investments 26 103,081 98 1,027 - 104,232 Participant notes receivable - - - - 1,013,556 1,013,556 Total investments 5,576,854 49,031,865 14,259,927 17,293,277 1,013,556 87,175,479 Receivables: Interest and dividends 16,776 55,250 10,842 69,882 - 152,750 Due to (from) other fund 6,677 (6,541) 2,235 (2,371) - - Other (7,505) 13,165 7,803 (1,170) - 12,293 Cash 2 5 485 (10) - 482 Net assets available for benefits $5,592,804 $49,093,744 $14,281,292 $17,359,608 $1,013,556 $87,341,004
See accompanying notes. 3 Elco Textron Inc. Profit Sharing and Savings Plan Statement of Changes in Net Assets Available for Benefits With Fund Information Year ended December 31, 1998
Fund Information Money George Textron Equity Market Putnam Bond Stock Index Voyager Loan Total Fund Fund Fund Fund Fund Fund Fund Funds Additions to net assets attributed to: Investment income: Net appreciation in fair value of investments $ - $576,308 $191,369 $3,997,765 $110,815 $28,328 $ - $4,904,585 Interest and dividend income 273,187 4,181,279 960,859 393,497 208,718 199,716 112,264 6,329,520 Total additions 273,187 4,757,587 1,152,228 4,391,262 319,533 228,044 112,264 11,234,105 Deductions from net assets attributed to: Benefits paid to participants 423,182 2,872,752 1,842,803 869,870 536 527 192,004 6,201,674 Administrative expenses 142 31,523 137 - 6 84 - 31,892 Total deductions 423,324 2,904,275 1,842,940 869,870 542 611 192,004 6,233,566 Net increase (decrease) before transfers (150,137) 1,853,312 (690,712) 3,521,392 318,991 227,433 (79,740) 5,000,539 Interfund transfers, net 52,060 (7,642,599) 235,008 471,467 2,910,673 2,659,655 1,313,736 - Net increase (decrease) (98,077) (5,789,287) (455,704) 3,992,859 3,229,664 2,887,088 1,233,996 5,000,539 Net assets available for benefits, beginning of year 5,592,804 49,093,744 14,281,292 17,359,608 - - 1,013,556 87,341,004 Net assets available for benefits, end of year $5,494,727 $43,304,457 $13,825,588 $21,352,467 $3,229,664 $2,887,088 $2,247,552 $92,341,543
See accompanying notes. 4 Elco Textron Inc. Profit Sharing and Savings Plan Statement of Changes in Net Assets Available for Benefits With Fund Information Year ended December 31, 1997 Fund Information Money George Textron Market Putnam Bond Stock Loan Total Fund Fund Fund Fund Fund Funds Additions to net assets attributed to: Investment income: Net appreciation (depreciation) in fair value of investments $(27,769) $8,012,971 $71,246 $2,179,114 $ - $10,235,562 Interest and dividend income 351,792 1,465,685 991,359 220,512 19,693 3,049,041 324,023 9,478,656 1,062,605 2,399,626 19,693 13,284,603 Contributions: Participants 99,536 649,262 141,875 199,588 - 1,090,261 Employer 317,994 1,039,166 270,826 307,041 - 1,935,027 417,530 1,688,428 412,701 506,629 - 3,025,288 Total additions 741,553 11,167,084 1,475,306 2,906,255 19,693 16,309,891 Deductions from net assets attributed to: Benefits paid to participants 2,641,487 2,651,115 1,307,802 443,897 - 7,044,301 Administrative expenses 257 304,475 66,540 - - 371,272 Total deductions 2,641,744 2,955,590 1,374,342 443,897 - 7,415,573 Net increase (decrease) before transfers (1,900,191) 8,211,494 100,964 2,462,358 19,693 8,894,318 Interfund transfers, net 456,166 (6,619,270) (2,944,364) 8,163,787 943,681 - Net increase (decrease) (1,444,025) 1,592,224 (2,843,400) 10,626,145 963,374 8,894,318 Net assets available for benefits, beginning of year 7,036,829 47,501,520 17,124,692 6,733,463 50,182 78,446,686 Net assets available for benefits, end of year $5,592,804 $49,093,744 $14,281,292 $17,359,608 $1,013,55 $87,341,004 6
See accompanying notes. 5 Elco Textron Inc. Profit Sharing and Savings Plan Notes to Financial Statements Years ended December 31, 1998 and 1997 1. Description of the Plan The following description of the Elco Textron Inc. Profit Sharing and Savings Plan (Plan) provides only general information. Participants should refer to the Summary Plan Description for a more complete description of the Plan. General The Plan is a defined contribution plan formed to provide profit-sharing benefits to employees of Elco Textron Inc. (the Company) and Textron Inc. All full-time employees of the Company's Corporate Division, Precision Formed Products Division, Precision Commercial Division of Camcar, Heat Treat and Finishes Division, Tool Manufacturing Division, Construction Products Division and Textron Logistics Corp. are eligible to participate in the Plan, commencing with the first annual anniversary of their employment. During 1997, the Plan was amended such that no employee shall become a participant in the Plan after April 1, 1997. The Plan is subject to the provisions of the Employee Retirement Income Security Act of 1974 (ERISA). The Plan is administered by an administrative committee consisting of not fewer than three members selected by the Board of Directors of the Company. Contributions and Vesting During 1997, the Plan was also amended such that all participant and employer profit-sharing and additional employer contributions were discontinued as of June 30, 1997. All participants became fully vested in the profit-sharing and additional employer contributions at June 30, 1997. Prior to June 30, 1997, the Company annually contributed to the Plan the lesser of 10 percent of the Company's net profits for the plan year plus an additional amount, which was authorized at the discretion of its Board of Directors, or 15 percent of the aggregate compensation paid to all Plan participants for the Plan year. In addition, the Company could make an additional contribution in such amount as determined at the Board's discretion. The Company made a discretionary contribution of $562,000 during 1997. Active participants could elect to make contributions not to exceed 14 percent of their earnings prior to June 30, 1997. All contributions were discontinued June 30, 1997, when the Plan was frozen. 6 Investment Options Upon enrollment in the Plan, a participant may direct employer and employee contributions in 10% increments in any of the six investment options: Money Market Fund, George Putnam Fund (formerly known as the Balanced Fund), Bond Fund (formerly known as the Mortgage and Bond Fund), Textron Stock Fund, Equity Index Fund and the Voyager Fund. Participants may change their investment options quarterly. Participant Accounts The allocation of Plan income or loss to active participants is made in the same ratio that a participant's account bears to the sum of the balances of all participants' accounts, taking into consideration the dates on which additional contributions and withdrawals are made. Participant account balances are valued daily by the Plan's recordkeeper based on the value of the number of shares owned in each mutual fund. The allocation of Company contributions and forfeitures is based on participant earnings, plus years of service, as defined by the Plan document. Payment of Benefits The benefit to which a participant is entitled is the benefit that can be provided from the participant's account balance. On termination of service, a participant may elect to receive either a lump-sum amount equal to the vested portion of his account, or periodic payments over a period of time as defined by the Plan. Participant Notes Receivable Participants may borrow an amount that does not exceed the lesser of $50,000 or one-half of their contributions. Loans must be repaid within five years and bear interest at the current prime rate plus 1%. 7 2. Significant Accounting Policies Investment Valuation The Plan's investments are stated at fair value. The shares of the registered investment companies are valued at quoted market prices which represent the net asset values of the shares held by the Plan at year end. Common stocks and preferred stocks are carried at fair value based on quoted market values. Short- term investments are reported at cost, which approximates fair value. Participant notes receivable are valued at their outstanding balances, which approximate fair value. Use of Estimates The preparation of financial statements in accordance with generally accepted accounting principles requires management to make estimates that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. Administrative Expense Certain administrative services are provided to the Plan by the Company without charge. 3. Investments In accordance with the terms of the trust agreement, as amended January 1, 1976, a trust fund administered by First of America Trust Company (FOA) had custody of all Plan assets, except cash and participant loans. Effective January 2, 1998, the trust agreement with FOA was terminated and NBD Bank was appointed trustee and Putnam Fiduciary Trust Company was appointed as custodian of the Plan assets. The fair value of individual investments that exceed five percent of the Plan's net assets is as follows: 1998 1997 Textron Inc. Common Stock $ 21,091,557 $ 17,292,250 Pegasus Bond Fund 13,825,588 14,259,829 George Putnam Fund of Boston 43,304,457 48,409,881 Pegasus Money Market Fund 5,494,727 5,576,828 8 Plan investments (including investments bought, sold, as well as held during the year) appreciated (depreciated) in fair value by $4,904,585 and $10,235,562, as follows: 1998 1997 Investments at fair value as determined by quoted market prices: Common stocks $ 3,997,765 $ 9,360,729 Mutual funds 906,820 568,420 Preferred stocks - (106,730) U.S. Government and Agency - 238,325 obligations Corporate obligations - 151,471 Foreign bonds - 23,347 $ 4,904,585 $10,235,562 The Plan invested in mortgage notes receivable from certain employees of the Company in northern Illinois who may or may not be Plan participants. The Plan's policy restricted these investments to first mortgages on personal residences, including subsequent home improvements, and required approval by the administrative committee. The mortgage amount could not exceed 80 percent of the appraised value of the property for non-Plan participants. For Plan participants, the mortgage amount could not exceed 80 percent of the appraised value of the property plus 50 percent of the participant's vested benefit in their profit-sharing account. The maximum amount loaned was limited to the appraised value, but could not exceed $50,000. Interest rates ranged from 7.5% to 8.5%. The notes were granted with maturities of up to ten years and payment schedules based on periods of up to twenty-five years. At the maturity date, unpaid loan balances were reviewed by the administrative committee and, upon approval, were refinanced at prevailing interest rates. In 1997, the outstanding mortgage notes were sold at approximate cost and the Plan no longer invests in mortgage notes. 4. Income Tax Status The Internal Revenue Service ruled on April 6, 1995, that the Plan qualifies under Section 401(a) of the Internal Revenue Code (IRC) and, therefore, the related trust is exempt from taxation. Once qualified, the Plan is required to operate in conformity with the IRC to maintain its qualification. The Plan Administrator believes the Plan is being operated in compliance with the applicable requirements of the IRC and, therefore, believes that the Plan is qualified and the related trust is tax exempt. 9 5. Related-Party Transactions During the year, the Plan had purchase and sale transactions with mutual funds administered by an affiliate of the Plan's trustee and the common stock of Textron Inc., parent company of Elco Textron Inc. 6. Plan Termination As discussed in Note 1, the Plan was frozen effective June 30, 1997, and all participants are 100% vested in their accounts. Although it has not made a decision to do so, the Company has the right to terminate the Plan, subject to the provisions of ERISA. 7. Year 2000 (Unaudited) The Company has determined that it will be necessary to take certain steps in order to ensure that the Plan's information systems are prepared to handle Year 2000 dates. The Company is taking a two-phase approach. The first phase addresses internal systems that must be modified or replaced to function properly. Both internal and external resources are being utilized to replace or modify existing software applications, and test the software and equipment for the Year 2000 modifications. The Company anticipates substantially completing this phase of the project by mid-1999. Costs associated with modifying software and equipment are not estimated to be significant and will be paid by the Company. For the second phase of the project, Plan management established formal communications with its third-party service providers to determine that they have developed plans to address their own Year 2000 problems as they relate to the Plan's operations. All third-party service providers have indicated that they will be Year 2000 compliant by mid-1999. If modification of data processing systems of either the Plan, the Company, or its service providers is not completed on time, the Year 2000 problem could have a material impact on the operations of the Plan. Plan management has not developed a contingency plan, because they are confident that all systems will be Year 2000 ready. 10 Supplemental Schedule Elco Textron Inc. Profit Sharing and Savings Plan Employer Identification Number 36-1033080 Plan Number 010 Line 27a - Schedule of Assets Held for Investment Purposes December 31, 1998
Par Value Current Identity /Description or Shares Cost Value Common stocks - Textron Inc.* 277,749 $15,274,171 $21,091,557 Short-term investments - Pegasus Money Market Fund 5,494,727 5,494,727 5,494,727 Mutual funds: Pegasus Equity Index Fund 127,202 3,117,238 3,229,664 George Putnam Fund of Boston* 2,400,469 43,199,588 43,304,457 Putnam Voyager Fund* 131,710 2,822,408 2,887,088 Pegasus Bond Fund 1,282,522 13,660,245 13,825,588 62,799,479 63,246,797 Participant notes receivable 7.9% to 9.5% - 2,247,552 $83,568,377 $92,080,633
* Indicates party-in-interest to the Plan. 11 Elco Textron Inc. Profit Sharing and Savings Plan Employer Identification Number 36-1033080 Plan Number 010 Line 27d - Schedule of Reportable Transactions Year ended December 31, 1998
Current Value Identity of Assets on Net of Party Purchase Selling Cost of Transaction Gain Involved Description Price Price Asset Date (Loss) Category (iii)-Series of security transactions in excess of 5% of plan assets Putnam Pegasus Bond Fund $3,177,600 $ - $3,177,600 $3,177,600 $ - - 3,875,803 3,849,777 3,875,803 26,026 Putnam Pegasus Money 2,005,520 - 2,005,520 2,005,520 - Market Fund - 2,103,597 2,103,597 2,103,597 - Putnam George Putnam Fund 7,335,003 - 7,335,003 7,335,003 - of Boston* - 12,337,019 11,865,581 12,337,019 471,438 Textron Inc. Common Stock* 4,137,453 - 4,137,453 4,137,453 - - 4,405,205 3,434,481 4,405,205 970,724 There were no category (i), (ii) or (iv) transactions in 1998. * Indicates party-in-interest to the Plan. 12
EX-23 2 Exhibit 23 Consent of Independent Auditors We consent to the incorporation by reference in the Registration Statement (Form S-8 No. 333-07121) pertaining to the Elco Textron Inc. Profit Sharing and Savings Plan of our report dated May 5, 1999, with respect to the financial statements and schedules of the Elco Textron Inc. Profit Sharing and Savings Plan included in this Annual Report (Form 11-K) for the year ended December 31, 1998. /s/ Ernst & Young LLP ERNST & YOUNG LLP Providence, Rhode Island June 28, 1999 -----END PRIVACY-ENHANCED MESSAGE-----