FILED PURSUANT TO RULE 424(b)(5)
SEC FILE NO 333-113313
PROSPECTUS SUPPLEMENT TO PROSPECTUS DATED AUGUST 4, 2004.
TEXTRON INC.
--------------------------------------------------------------------------------
E300,000,000
3.875% NOTES DUE 2013
--------------------------------------------------------------------------------
We will pay interest on the notes on March 11 of each year, beginning on March
11, 2006. The notes will mature on March 11, 2013.
We may, at our option, redeem the notes in whole or in part at any time at the
prices specified under "Description of the Notes--Optional Redemption." In
addition, we may, at our option, redeem the notes upon the occurrence of certain
events relating to U.S. taxation as described under "Description of the
Notes--Redemption upon Tax Event."
Application has been made to list the notes and to have the notes admitted to
trading on the Irish Stock Exchange. The listing application is subject to
approval by the Irish Stock Exchange.
NEITHER THE U.S. SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THE NOTES OR DETERMINED THAT THIS
PROSPECTUS SUPPLEMENT OR THE ACCOMPANYING PROSPECTUS IS ACCURATE OR COMPLETE.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
WE URGE YOU TO CAREFULLY READ THIS PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING
PROSPECTUS, INCLUDING THE FACTORS DESCRIBED UNDER "RISK FACTORS" BEGINNING ON
PAGE S-9 OF THIS PROSPECTUS SUPPLEMENT, BEFORE YOU MAKE YOUR INVESTMENT
DECISION.
PER NOTE TOTAL
Public offering price 99.521% E 298,563,000
Underwriting discounts and commissions 0.400% E 1,200,000
Proceeds, before expenses, to us 99.121% E 297,363,000
The public offering price set forth above does not include accrued interest, if
any, from March 11, 2005.
The underwriters expect to deliver the notes in book-entry form through the
facilities of Clearstream, Luxembourg and Euroclear on March 11, 2005.
JOINT BOOK-RUNNING MANAGERS
DEUTSCHE BANK JPMORGAN
SENIOR CO-MANAGERS
BANC OF AMERICA SG CORPORATE &
SECURITIES LIMITED INVESTMENT BANKING
CO-MANAGERS
HSBC MITSUBISHI SECURITIES
INTERNATIONAL PLC
March 2, 2005.
The notes are offered for sale in those jurisdictions in the United States,
Europe, Asia and elsewhere where it is lawful to make such offers. The
distribution of this prospectus supplement and the accompanying prospectus and
the offering or sale of the notes in some jurisdictions may be restricted by
law. Persons into whose possession this prospectus supplement and the
accompanying prospectus come are required by us and the underwriters to inform
themselves about and to observe any applicable restrictions. This prospectus
supplement and the accompanying prospectus may not be used for or in connection
with an offer or solicitation by any person in any jurisdiction in which that
offer or solicitation is not authorized or to any person to whom it is unlawful
to make that offer or solicitation. See "Offering Restrictions" in this
prospectus supplement.
No person is authorized to give any information or to make any
representations other than those contained or incorporated by reference in this
prospectus supplement or the accompanying prospectus and, if given or made, such
information or representations must not be relied upon as having been
authorized. This prospectus supplement and the accompanying prospectus do not
constitute an offer to sell or the solicitation of an offer to buy any
securities other than the securities described in this prospectus supplement or
an offer to sell or the solicitation of an offer to buy such securities in any
circumstances in which such offer or solicitation is unlawful. Neither the
delivery of this prospectus supplement or the accompanying prospectus, nor any
sale made hereunder and thereunder, shall under any circumstances create any
implication that there has been no change in our affairs since the date of this
prospectus supplement or the accompanying prospectus, or that the information
contained or incorporated by reference herein or therein is correct as of any
time subsequent to the date of such information.
----------------------------
TABLE OF CONTENTS
PROSPECTUS SUPPLEMENT
About this Prospectus Supplement............................ S-4
Textron..................................................... S-5
Risk Factors................................................ S-9
Use of Proceeds............................................. S-13
Selected Financial Data..................................... S-14
Capitalization and Indebtedness............................. S-16
Ratio of Income to Fixed Charges............................ S-17
Exchange Rate Information................................... S-18
Board of Directors of Textron............................... S-19
Description of the Notes.................................... S-20
Book-Entry Issuance......................................... S-26
Certain U.S. Federal Tax Consequences....................... S-30
Underwriting................................................ S-35
Offering Restrictions....................................... S-37
Legal Matters............................................... S-39
Listing and General Information............................. S-39
Where You Can Find More Information......................... S-41
S-2
PROSPECTUS
About this Prospectus....................................... 1
Textron..................................................... 1
Risk Factors................................................ 2
Use of Proceeds............................................. 5
Description of Capital Stock................................ 5
Description of Debt Securities.............................. 10
Plan of Distribution........................................ 16
Legal Opinions.............................................. 17
Experts..................................................... 17
Where You Can Find More Information......................... 17
----------------------------
S-3
ABOUT THIS PROSPECTUS SUPPLEMENT
This prospectus supplement supplements the accompanying prospectus. The
accompanying prospectus is part of a registration statement that we filed with
the U.S. Securities and Exchange Commission using a shelf registration process.
Under this shelf registration process, we may sell any combination of the
securities described in the accompanying prospectus in one or more offerings up
to an aggregate total initial public offering price of U.S.$2,000,000,000, or
its equivalent, based on the applicable exchange rate at the time of sale, if we
issue debt securities with principal amounts denominated in one or more foreign
currencies or currency units. The accompanying prospectus provides you with a
general description of these securities, and this prospectus supplement contains
specific information about the terms of this offering of notes.
This prospectus supplement, or the information incorporated by reference in
this prospectus supplement, may add, update or change information in the
accompanying prospectus. If information in this prospectus supplement, or the
information incorporated by reference in this prospectus supplement or the
accompanying prospectus, is inconsistent with the accompanying prospectus, this
prospectus supplement, or the information incorporated by reference in this
prospectus supplement or the accompanying prospectus, will apply and will
supersede that information in the accompanying prospectus.
It is important for you to read and consider all information contained in
this prospectus supplement and the accompanying prospectus in making your
investment decision. You should also read and consider the information in the
documents we have referred you to under "Where You Can Find Additional
Information" and "Listing and General Information" in this prospectus
supplement.
References in this prospectus and the prospectus supplement to "Textron,"
"we," "us," "our" and "our company" are to Textron Inc. and, as applicable, its
subsidiaries. When we refer to the "notes" in this prospectus supplement, we
mean the notes being offered by this prospectus supplement, unless we state
otherwise.
We accept responsibility for the information contained in this prospectus
supplement and the accompanying prospectus. To the best of our knowledge and
belief, the information contained in this prospectus supplement and the
accompanying prospectus is in accordance with the facts and does not omit
anything likely to affect the import of such information.
S-4
TEXTRON
GENERAL
We are a global, multi-industry company with operations in five business
segments--Bell, Cessna, Fastening Systems, Industrial and Finance. Our products
include: light and mid-size business jets, turboprop and piston-powered
aircraft, commercial and military helicopters, engineered fastening systems,
wire and cable installation and maintenance tools, golf cars and utility
vehicles, turf-care equipment, aerospace and defense systems, plastic fuel
tanks, industrial pumps and gears and other industrial products. We also are a
leading commercial finance company for select markets. Our business segments
include operations that are unincorporated divisions of Textron Inc. or its
subsidiaries and others that are separately incorporated subsidiaries.
Our financings are conducted through two borrowing groups: Textron
Manufacturing and Textron Finance. This framework is designed to enhance
Textron's borrowing power by separating the Finance segment. Textron
Manufacturing consists of Textron Inc., the parent company, consolidated with
the entities that operate in the Bell, Cessna, Fastening Systems and Industrial
business segments. Textron Finance consists of Textron's wholly-owned commercial
finance subsidiary Textron Financial Corporation, consolidated with its
subsidiaries, which are the entities through which Textron operates its Finance
segment. Textron Finance finances its operations by borrowing from its own group
of external creditors.
BELL SEGMENT
The Bell segment is comprised of Bell Helicopter and Textron Systems.
BELL HELICOPTER
Bell Helicopter is one of the largest suppliers of helicopters, tiltrotors,
and helicopter-related spare parts and services in the world. Bell Helicopter
manufactures for both military and commercial applications. A commercial
tiltrotor model is also in development. Bell Helicopter's revenues accounted for
approximately 16%, 18% and 16% of our total revenues in 2004, 2003 and 2002,
respectively.
Bell Helicopter supplies advanced military helicopters and support
(including spare parts, support equipment, technical data, trainers, pilot and
maintenance training, component repairs, aircraft modifications, contractor
maintenance and field and product support engineering services) to the U.S.
Government and to military customers outside the U.S. Bell Helicopter is one of
the leading suppliers of helicopters to the U.S. Government and, in association
with The Boeing Company, the only supplier of military tiltrotors. Bell
Helicopter is teamed with The Boeing Company to develop, produce and support the
V-22 Osprey tiltrotor aircraft for the U.S. Department of Defense. Tiltrotor
aircraft are designed to provide the benefits of both helicopters and fixed-wing
aircraft.
Bell Helicopter is a member of Bell/Agusta Aerospace Company, L.L.C., a
joint venture with Agusta, a leading helicopter manufacturer based in Italy, for
the design, manufacture, sale and customer support of a new medium twin-engine
helicopter, the AB139, and a commercial tiltrotor, the BA609.
Bell Helicopter and AgustaWestland North America, Inc. formed the
AgustaWestlandBell Limited Liability Company, or AWB LLC, in January 2004 for
the joint design, development, manufacture, sale, customer training and product
support of the US101 helicopter and certain variations and derivatives thereof,
to be offered and sold to departments or agencies of the U.S. government. On
January 28, 2005, Lockheed Martin, with AWB LLC as its principal
S-5
subcontractor, was selected to design, develop, manufacture and support the
Presidential helicopter for the U.S. Marine Corps Marine 1 Helicopter Squadron
(VXX) Program.
TEXTRON SYSTEMS
Textron Systems is a primary supplier to the defense and aerospace markets.
Textron Systems manufactures "smart" weapons, airborne and ground-based
surveillance systems, aircraft landing systems, hovercraft, search and rescue
vessels, armored vehicles and turrets, reciprocating piston aircraft engines,
and aircraft and missile control actuators, valves and related components.
Textron Systems is involved in supplying the U.S. Air Force with some of its
premier smart weapons as prime contractor for the Sensor Fuzed Weapon (SFW) and
is a subcontractor to The Boeing Company for tail actuation systems on the Joint
Direct Attack Munition (JDAM). Textron Systems also holds a primary systems
integrator role on the U.S. Army's Future Combat System for unattended ground
systems and sensors. While Textron Systems sells most of its products directly
to U.S. customers, it also sells an increasing number of products in over 35
other countries through a growing, global network of sales representatives and
distributors.
CESSNA SEGMENT
Based on unit sales, Cessna Aircraft Company is the world's largest
manufacturer of general aviation aircraft. Cessna currently has four major
product lines: Citation business jets, single engine turboprop Caravans, Cessna
single engine piston aircraft and after-market services. Cessna's revenues
accounted for approximately 24%, 23% and 31% of our total revenues in 2004, 2003
and 2002, respectively.
Cessna markets its products worldwide primarily through its own sales
force, as well as through a network of authorized independent sales
representatives, depending upon the product line. Cessna has several competitors
in the business jet market. Cessna's aircraft compete with other aircraft that
vary in size, speed, range, capacity, handling characteristics and price.
FASTENING SYSTEMS SEGMENT
Our Fastening Systems segment, Textron Fastening Systems, or TFS, offers a
full range of fastening technologies--which include fasteners, engineered
assemblies and automation equipment--to global customers in the aerospace,
automotive, computer, construction, electronics, electrical equipment,
industrial equipment, non-automotive transportation, telecommunications and
white good markets. Its customers are global and regional original equipment
manufacturers, contract producers, component manufacturers and distributors. TFS
provides products, services and solutions that simplify manufacturing processes
and maximize efficiencies resulting in lower total system costs to its
customers. Revenues of TFS accounted for approximately 19%, 18% and 16% of our
total revenues in 2004, 2003 and 2002, respectively.
TFS produces engineered threaded fasteners, fastening automation and
installation tools, cold formed components, engineered and laser welded
assemblies, blind fastening systems and metal stampings. TFS's Full Service
Provider approach integrates its product offering with such supply chain
management services as vendor managed inventory programs, plant provider
programs and global sourcing. TFS provides a wide range of design and
engineering services to its customers, and also derives a portion of its revenue
from licensing selected intellectual property assets to third parties.
INDUSTRIAL SEGMENT
The Industrial Segment is comprised of our E-Z-GO, Jacobsen, Kautex,
Greenlee and Fluid & Power businesses.
S-6
E-Z-GO
E-Z-GO designs, manufactures and sells golf cars and off-road utility
vehicles powered by electric and internal combustion engines under the E-Z-Go
name, as well as multipurpose utility vehicles under the E-Z-Go and Cushman
brand names.
E-Z-GO's commercial customers consist primarily of golf courses, resort
communities and municipalities, as well as commercial and industrial users such
as airports and factories. E-Z-GO's off-road utility vehicles and golf cars are
also sold into the consumer market. Sales are made through a network of
distributors and directly to end-users. Many of E-Z-GO's sales are financed
through Textron Financial Corporation.
JACOBSEN
Jacobsen designs, manufactures and sells professional turf maintenance
equipment, lawn care machinery and specialized industrial vehicles. Major brand
names include Ransomes, Jacobsen, Cushman, Ryan, Steiner, Brouwer, Bunton and
Bob-Cat.
Jacobsen's commercial customers consist primarily of golf courses, resort
communities and municipalities, as well as commercial and industrial users such
as airports, factories and professional lawn care services. Sales are made
through a network of distributors and directly to end-users. Many sales are
financed through Textron Financial Corporation.
KAUTEX
Kautex, headquartered in Bonn, Germany, is a leading global manufacturer of
blow-molded fuel systems and other blow-molded parts for automobile original
equipment manufacturers and other industrial customers. Kautex also produces
metal fuel systems and engine camshafts for the automotive market and automatic
assembly machines and systems, perishable tools and abrasives, and hydraulic
components for industrial markets. In Germany, Kautex produces plastic
containers and sheeting for household and industrial uses.
Revenues of Kautex accounted for approximately 15%, 15% and 12% of our
total revenue in 2004, 2003 and 2002, respectively.
GREENLEE
Greenlee consists of Greenlee, Klauke and Tempo. These components
manufacture powered equipment, electrical test and measurement instruments, hand
and hydraulic powered tools, and electrical and fiber optic connectors under the
Greenlee, Fairmont, Klauke and Tempo brand names. The products are principally
used in the electrical construction and maintenance, telecommunications and
plumbing industries, and are distributed through a global network of sales
representatives and distributors, and also directly to home improvement
retailers and original equipment manufacturers.
FLUID & POWER
Fluid & Power consists of four business units: Engineered Products,
Hydrocarbon Processing Products, Polymer Systems and Standard Products.
Engineered Products manufactures and designs industrial gears, mechanical and
hydraulic transmission systems, gear motors, and gear sets under the David Brown
brand name. Hydrocarbon Processing Products designs and manufactures industrial
pumps for the oil, gas, petrochemical and desalinization industries under the
David Brown Union Pump and David Brown Guinard Pump brands. Polymer Systems
designs and manufactures industrial pumps, extrusion equipment and screen
changers for the polymer industry under the Maag brand name. Standard Products
designs and manufactures industrial gears and gear sets, double enveloping worm
gear speed reducers, screwjacks and hydraulic products under the Benzlers, Cone
Drive, Radicon and David Brown Hydraulics brands.
S-7
These products are sold to a variety of customers, including original equipment
manufacturers, governments, distributors and end-users.
FINANCE SEGMENT
Our Finance segment consists of Textron Financial Corporation and its
subsidiaries. Textron Financial Corporation is a diversified commercial finance
company with core operations in six segments:
- Aircraft Finance provides financing for new and used Cessna business jets
and piston-engine airplanes, Bell helicopters, and other general aviation
aircraft;
- Asset-Based Lending provides asset-based loans to smaller middle-market
companies that manufacture or distribute finished goods and provides
factoring arrangements for freight companies and utility service
providers;
- Distribution Finance offers inventory finance programs for dealers of our
manufactured products and for dealers of a variety of other household,
housing, leisure, agricultural and technology products;
- Golf Finance makes mortgage loans for the acquisition and refinancing of
golf courses and provides term financing for E-Z-Go golf cars and
Jacobsen turf care equipment;
- Resort Finance extends loans to developers of vacation interval resorts,
secured primarily by notes receivable and interval inventory; and
- Structured Capital engages in tax-oriented, long-term leases of
large-ticket equipment and real estate, primarily with investment grade
lessees.
----------------------------
We are incorporated under the laws of Delaware. Our principal executive
offices are located at 40 Westminster Street, Providence, Rhode Island 02903,
and our telephone number is (401) 421-2800.
S-8
RISK FACTORS
In considering whether or not to purchase the notes, you should carefully
consider the risks described below and the other information we have included or
incorporated by reference in this prospectus supplement. These risk factors
update and supersede the risk factors in the accompanying prospectus.
BENEFITS FROM RESTRUCTURING AND OTHER COST IMPROVEMENT PROGRAMS COULD TAKE
LONGER THAN EXPECTED AND MAY NOT BE AS SUCCESSFUL AS PLANNED.
To improve returns at core businesses and to complete the integration of
certain acquisitions, we began a restructuring program in 2000. Although the
program was substantially complete at the end of 2004, operating efficiencies
achieved from the restructuring may not be sustained, and the operating
efficiencies expected in the future may be lower or may take longer to
materialize than anticipated. Any of these results could have an adverse effect
on our profitability.
WE MAY BE UNABLE TO EFFECTIVELY MITIGATE CUSTOMER PRICING PRESSURES.
In some markets, particularly where we deliver component products and
services to original equipment manufacturers, we face increasing customer
demands for price reductions, which are sometimes contractually obligated. In
most cases, we are able to offset these reductions through technological
advances or by lowering our cost base through improved operating and supply
chain efficiencies. However, if we are unable to effectively mitigate future
customer pricing pressures, our financial results of operations could be
adversely affected.
DELAYS IN AIRCRAFT DELIVERY SCHEDULES OR CANCELLATION OF ORDERS MAY ADVERSELY
AFFECT OUR FINANCIAL RESULTS.
The demand for business jets is highly correlated with corporate profits on
a lagged basis. Customers of business jets, including sellers of fractional
share interests, may respond to weak economic conditions by delaying delivery of
orders or canceling orders. Over the longer term, weakness in the market for new
jets may result in fewer hours flown and consequently lower demand for spare
parts and maintenance. Weak economic conditions may also cause reduced demand
for used business jets. We may accept used aircraft on trade-in and are subject
to fluctuations in the fair market value of the aircraft while in inventory.
Reduced demand for new business jets, spare parts and maintenance, or for used
business jets, can have an adverse effect on our financial results of
operations.
DEVELOPING NEW PRODUCTS AND TECHNOLOGIES ENTAILS SIGNIFICANT RISKS AND
UNCERTAINTIES.
We are exposed to risks that are unique to the products and services we
provide for the U.S. government. A significant portion of Bell's future business
is contingent on the design, development and acceptance of the V-22 Osprey
aircraft. This technology, in development for over a decade, is not yet in
full-rate production. The U.S. government is the sole customer for this product
currently, and a change in the appropriation for this project could have a
negative effect on our earnings and financial condition.
In our commercial business, delays in the development and certification of
new aircraft products could affect our financial results of operations. These
delays could be caused by production changes to meet customer demands,
coordination with joint venture partners or failure on the part of our suppliers
to deliver products as agreed. We also could be adversely affected if the
efficacy of our research and development investments to develop non-aircraft
products is less than expected.
S-9
WE HAVE CUSTOMER CONCENTRATION TO THE U.S. GOVERNMENT.
We derive approximately 12% of our revenue from sales to a variety of
services and departments within the U.S. government. We expect that these sales
will grow as a percentage of revenue over the foreseeable future. Our ability to
compete successfully for and retain business is highly dependent on technical
excellence, management proficiency, strategic alliances, cost-effective
performance and the ability to recruit and retain key personnel. U.S. government
programs are subject to uncertain future funding levels, which can result in the
extension or termination of programs. Our business is also highly sensitive to
changes in national and international priorities and U.S. government budgets.
OUR U.S. GOVERNMENT CONTRACTS MAY BE TERMINATED AT ANY TIME AND MAY CONTAIN
OTHER UNFAVORABLE PROVISIONS.
The U.S. government typically can terminate or modify any of its contracts
with us either for its convenience or if we default by failing to perform under
the terms of the applicable contract. A termination arising out of our default
could expose us to liability and have an adverse effect on our ability to
re-compete for future contracts and orders.
If any of our contracts are terminated by the U.S. government, our backlog
would be reduced by the expected value of the remaining terms of such contracts
and our financial condition and results of operations could be adversely
affected. In addition, on those contracts for which we are teamed with others
and are not the prime contractor, the U.S. government could terminate a prime
contract under which we are a subcontractor, irrespective of the quality of our
services as a subcontractor.
In addition to unfavorable termination provisions, our U.S. government
contracts contain provisions that allow the U.S. government to unilaterally
suspend us from receiving new contracts pending resolution of alleged violations
of procurement laws or regulations, reduce the value of existing contracts,
issue modifications to a contract and control and potentially prohibit the
export of our products, services and associated materials.
COST OVER-RUNS ON OUR CONTRACTS COULD SUBJECT US TO LOSSES OR ADVERSELY AFFECT
OUR FUTURE BUSINESS.
Under fixed-price contracts, we receive a fixed price irrespective of the
actual costs we incur, and consequently, any costs in excess of the fixed price
are absorbed by us. Under time and materials contracts, we are paid for labor at
negotiated hourly billing rates and for certain expenses. Under cost
reimbursement contracts, which are subject to a contract-ceiling amount, we are
reimbursed for allowable costs and paid a fee, which may be fixed or performance
based. However, if our costs exceed the contract ceiling or are not allowable
under the provisions of the contract or applicable regulations, we may not be
able to obtain reimbursement for all such costs. Under each type of contract, if
we are unable to control costs we incur in performing under the contract, our
financial condition and results of operations could be adversely affected. Cost
over-runs also may adversely affect our ability to sustain existing programs and
obtain future contract awards.
Contract and program accounting require judgment relative to assessing
risks, estimating contract revenues and costs and making assumptions for
schedule and technical issues. Due to the size and nature of many of our
contracts, the estimation of total revenues and cost at completion is
complicated and subject to many variables. Assumptions have to be made regarding
the length of time to complete the contract because costs also include expected
increases in wages and prices for materials. Incentives or penalties related to
performance on contracts are considered in estimating sales and profit rates and
are recorded when there is sufficient information for us to assess anticipated
performance. Estimates of award fees are also used in estimating sales and
profit rates based on actual and anticipated awards.
S-10
Because of the significance of the estimates described above, it is likely
that different amounts could be recorded if we used different assumptions or if
the underlying circumstances were to change. Changes in underlying assumptions,
circumstances or estimates may adversely affect our future financial results of
operations.
WE MAY MAKE ACQUISITIONS THAT INCREASE THE RISKS OF OUR BUSINESS.
We may enter into acquisitions in the future in an effort to enhance
shareowner value. Acquisitions involve a certain amount of risks and
uncertainties such as:
- the difficulty in integrating newly acquired businesses and operations in
an efficient and cost-effective manner and the risk that we encounter
significant unanticipated costs or other problems associated with
integration;
- the challenges in achieving strategic objectives, cost savings and other
benefits expected from acquisitions;
- the risk that the acquired businesses' markets do not evolve as
anticipated and that the technologies acquired do not prove to be those
needed to be successful in those markets;
- the risk that we pay a purchase price that exceeds what the future
results of operations would have merited;
- the potential loss of key employees of the acquired businesses; and
- the risk of diverting the attention of senior management from our
existing operations.
OUR BUSINESS COULD BE ADVERSELY AFFECTED BY STRIKES OR WORK STOPPAGES BY OUR
UNIONIZED EMPLOYEES.
Approximately 19,000 of our employees are unionized, which represented
approximately 43% of our employees at December 31, 2004. As a result, we may
experience work stoppages, which could negatively impact our ability to
manufacture our products on a timely basis, resulting in strain on our
relationships with our customers and a loss of revenues. In addition, the
presence of unions may limit our flexibility in responding to competitive
pressures in the marketplace, which could have an adverse effect on our
financial results of operations.
In addition to our workforce, the workforces of many of our customers and
suppliers are represented by labor unions. Work stoppages or strikes at the
plants of our key customers could result in delayed or cancelled orders for our
products. Work stoppages and strikes at the plants of our key suppliers could
disrupt our manufacturing processes. Any of these results could adversely affect
our financial results of operations.
OUR TEXTRON FINANCE BORROWING GROUP'S BUSINESS IS DEPENDENT ON ITS CONTINUING
ACCESS TO THE CAPITAL MARKETS.
Our financings are conducted through two borrowing groups, Textron Finance
and Textron Manufacturing. Textron Finance consists of Textron Financial
Corporation and its subsidiaries, which are the entities through which we
operate in the Finance segment. Textron Finance relies on its access to the
capital markets to fund asset growth and to meet debt obligations and other
commitments. Textron Finance raises funds through commercial paper borrowings,
issuances of medium-term notes and other term debt securities and syndication
and securitization of receivables. Additional liquidity is provided to Textron
Finance through committed bank lines of credit. Much of the capital markets
funding is made possible by the maintenance of credit ratings that are
acceptable to investors. If the credit ratings of Textron Finance were to be
lowered, it might face higher borrowing costs, a disruption of its access to the
capital markets or both. Textron Finance could also lose access to financing for
other
S-11
reasons, such as a general disruption of the capital markets. Any disruption of
Textron Finance's access to the capital markets could adversely affect its
business and our profitability.
IF TEXTRON FINANCE IS UNABLE TO MAINTAIN PORTFOLIO CREDIT QUALITY, OUR FINANCIAL
PERFORMANCE COULD BE ADVERSELY AFFECTED.
Textron Finance has taken steps to eliminate non-core portfolios and focus
on key markets. A key determinant of financial performance at Textron Finance
will be its ability to maintain the quality of loans, leases and other credit
products in the portfolios that remain and to continue to generate profitable
new business. The level of credit losses we may experience at Textron Finance is
heavily dependent upon economic factors, including debt service burden and
interest rates. Weak economic conditions may result in higher than anticipated
provisions for credit loss, which could adversely affect our financial
performance.
THE LEVEL OF OUR RESERVES AND THE VALUE OF OUR INVESTMENTS IN SECURITIES ARE
SUBJECT TO MANY UNCERTAINTIES AND MAY NOT BE ADEQUATE TO COVER WRITEDOWNS OR
LOSSES.
In addition to reserves at Textron Finance, we establish reserves in
various of our business segments to cover uncollectible accounts receivable,
excess or obsolete inventory, fair market value writedowns on used aircraft and
golf cars, recall campaigns, warranty costs and litigation. These reserves are
subject to adjustment from time to time depending on actual experience and are
subject to many uncertainties. Similarly, the values of our investments in
securities are subject to adjustment from time to time.
In the case of litigation matters for which reserves have not been
established because the loss is not deemed probable, it is reasonably possible
such matters could be decided against us and could require us to pay damages or
make other expenditures in amounts that are not presently estimable.
CURRENCY, RAW MATERIAL PRICE AND INTEREST RATE FLUCTUATIONS MAY ADVERSELY AFFECT
OUR RESULTS.
We are exposed to a variety of market risks, including the effects of
changes in foreign currency exchange rates, raw material prices and interest
rates. We monitor and manage these exposures as an integral part of our overall
risk management program. In some cases, we purchase derivatives or enter into
contracts to insulate our financial results of operations from these
fluctuations. Nevertheless, changes in currency exchange rates, raw material
prices and interest rates can have substantial adverse effects on our financial
results of operations.
THE INCREASING COSTS OF CERTAIN EMPLOYEE AND RETIREE BENEFITS COULD ADVERSELY
AFFECT OUR RESULTS.
Our earnings and cash flow may be impacted by the amount of income or
expense we record and expend for our employee benefit plans. This is
particularly true with income or expense from our pension plans, which are
dependent on returns in worldwide debt and equity markets and assumptions used
to determine the present value of our benefit obligations.
In addition, medical inflation in the U.S. is rising at a rate faster than
growth in the gross domestic product, or the GDP. Continued medical inflation in
excess of the growth in GDP increases the risk that we will not be able to
mitigate the rising costs of medical benefits. Increases to the costs of pension
and medical benefits could have an adverse effect on our financial results of
operations.
S-12
USE OF PROCEEDS
We estimate that the net proceeds from the sale of the notes will be
approximately E 297 million (or U.S.$392 million at an exchange rate of E 1.00 =
U.S.$1.3189, which was the noon buying rate for euros on March 1, 2005, as
announced by the U.S. Federal Reserve Bank of New York). We plan to use all of
these net proceeds for general corporate purposes, including the repayment at
maturity of E 300,000,000 principal amount of our 5.625% notes due March 14,
2005.
S-13
SELECTED FINANCIAL DATA
The following table presents selected financial data of Textron Inc. and
its subsidiaries for the periods specified. The information has been derived
from our audited consolidated financial statements. All dollar amounts in this
table are presented in U.S. dollars.
FISCAL YEAR ENDED
------------------------------------------------------------------------
DECEMBER 30, DECEMBER 29, DECEMBER 28, JANUARY 3, JANUARY 1,
2000 2001 2002 2004 2005
------------ ------------ ------------ ------------ ------------
(IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
REVENUES
Manufacturing:
Bell................... $ 2,194 $ 2,243 $ 2,235 $2,348 $ 2,254
Cessna................. 2,814 3,043 3,175 2,299 2,473
Fastening Systems...... 1,996 1,679 1,650 1,737 1,924
Industrial (a)......... 4,753 4,221 2,627 2,836 3,046
------- ------- ------- ------ -------
Finance (a).............. 691 681 584 572 545
------- ------- ------- ------ -------
Total revenues...... $12,448 $11,867 $10,271 $9,792 $10,242
======= ======= ======= ====== =======
SEGMENT OPERATING PROFIT
Manufacturing:
Bell................... $ 264 $ 93 $ 169 $ 234 $ 250
Cessna................. 300 344 376 199 267
Fastening Systems...... 192 70 72 66 53
Industrial (a)......... 513 289 169 150 194
------- ------- ------- ------ -------
Finance (a).............. 202 203 118 122 139
------- ------- ------- ------ -------
Segment profit......... $ 1,471 $ 999 $ 904 $ 771 $ 903
Special charges (b)...... (483) (141) (131) (152) (131)
------- ------- ------- ------ -------
Segment operating
income................. $ 988 $ 858 $ 773 $ 619 $ 772
Gain on sale of
businesses............. -- 342 25 15 --
Goodwill
amortization(c)........ (83) (86) -- -- --
Corporate expenses and
other, net............. (164) (152) (114) (119) (149)
Interest expense, net.... (152) (162) (108) (98) (95)
------- ------- ------- ------ -------
Income from continuing
operations before
income taxes and
distributions on
preferred securities of
subsidiary trusts...... $ 589 $ 800 $ 576 $ 417 $ 528
Income taxes............. (295) (287) (176) (112) (155)
Distribution on preferred
securities of
manufacturing
subsidiary trust, net
of income taxes........ (26) (26) (26) (13) --
------- ------- ------- ------ -------
(Table continued on next page)
S-14
FISCAL YEAR ENDED
------------------------------------------------------------------------
DECEMBER 30, DECEMBER 29, DECEMBER 28, JANUARY 3, JANUARY 1,
2000 2001 2002 2004 2005
------------ ------------ ------------ ------------ ------------
(IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
Income from continuing
operations............. $ 268 $ 487 $ 374 $ 292 $ 373
Income (loss) from
discontinued
operations, net of
income taxes (a)....... 9 (321) (10) (33) (8)
Cumulative effect of a
change in accounting
principle, net of
income taxes........... (59) -- (488) -- --
------- ------- ------- ------ -------
Net income (loss)........ $ 218 $ 166 $ (124) $ 259 $ 365
======= ======= ======= ====== =======
Earnings per share--
diluted:
Income from continuing
operations............. $ 1.84 $ 3.40 $ 2.66 $ 2.13 $ 2.66
Income (loss) from
discontinued
operations, net of
income taxes (a)....... 0.06 (2.24) (0.06) (0.24) (0.05)
Cumulative effect of
change in accounting
principle, net of
income taxes........... (0.41) -- (3.48) -- --
------- ------- ------- ------ -------
Net income............... $ 1.49 $ 1.16 $ (0.88) $ 1.89 $ 2.61
======= ======= ======= ====== =======
Average shares
outstanding (in
thousands)--diluted.... 146,150 142,937 140,252 137,217 140,169
======= ======= ======= ====== =======
---------------
(a) During the fourth quarter of 2004, Textron reached a final decision to sell
the remainder of its InteSys operations. In 2003, Textron sold its Small
Business Direct portfolio in the fourth quarter and consummated the sale of
its remaining OmniQuip businesses in the third quarter. As a result of
these actions, financial results of these businesses, net of taxes, are now
reported as discontinued operations. Discontinued operations also reflects
a second quarter 2004 gain, net of taxes, from the sale of InteSys's two
Brazilian-based joint ventures. The InteSys and OmniQuip businesses were
previously reported within the Industrial segment and the Small Business
Direct portfolio was previously reported within the Finance segment.
(b) Textron adopted Statement of Financial Accounting Standards, or SFAS, No.
146, "Accounting for Costs Associated with Exit or Disposal Activities,"
effective December 29, 2002. Upon adoption, costs related to restructuring
that were previously recorded in segment profit are now included with
severance costs, contract termination costs and asset impairment
write-downs in special charges. Costs related to restructuring that were
recorded in segment profit in prior periods have been reclassified to
special charges to conform to this presentation.
(c) Pursuant to SFAS No. 142,"Goodwill and Other Intangible Assets," beginning
on December 30, 2001, goodwill is no longer amortized. To reflect the
adoption of this statement and the fact that management does not include
amortization of goodwill in its internal evaluation of segment performance,
Textron has recast its segment data for comparability by reclassifying
goodwill amortization out of segment profit in prior periods.
S-15
CAPITALIZATION AND INDEBTEDNESS
The following table presents consolidated capitalization, including
short-term debt, of Textron Inc. and its subsidiaries:
- on an actual basis at January 1, 2005; and
- as adjusted to give effect to the offering of the notes and the
application of the net proceeds of the offering of the notes and
cash-on-hand to repay at maturity E 300,000,000 principal amount of our
5.625% notes due March 14, 2005 as described under "Use of Proceeds."
JANUARY 1, 2005
-------------------------
AS
ADJUSTED
ACTUAL (UNAUDITED)
----------- -----------
(IN MILLIONS)
Liabilities and shareholders' equity
Current portion of long-term debt and short-term debt..... U.S.$ 433 U.S.$ 27
Other current liabilities................................. 2,542 2,542
Other liabilities......................................... 2,187 2,187
3.875% Notes due March 11, 2013 offered hereby............ -- 404
Other long-term debt...................................... 1,358 1,358
Textron Finance liabilities............................... 5,703 5,703
----------- -----------
Total liabilities.................................... 12,223 12,221
Total shareholders' equity.................................. 3,652 3,652
----------- -----------
Total liabilities and shareholders' equity................ U.S.$15,875 U.S.$15,873
=========== ===========
The amount of the notes offered hereby included in the "As Adjusted" column
of the table above was translated from euros to U.S. dollars at an exchange rate
of E1.00 = U.S.$1.35365, which exchange rate was used to translate euros to U.S.
dollars for purposes of our balance sheet at January 1, 2005.
In this prospectus supplement, references to:
- "E" or "euro" mean the single currency of the participating Member States
in the Third Stage of European Economic and Monetary Union of the Treaty
Establishing the European Community, as amended from time to time; and
- "U.S.$" or "dollars" mean the lawful currency of the United States.
Since January 1, 2005, there has been no material change in the total
amount of our liabilities or shareholders' equity.
S-16
RATIO OF INCOME TO FIXED CHARGES
The following table sets forth our unaudited ratios of income to fixed
charges for the periods indicated.
FISCAL YEAR ENDED
------------------------------------------------------------------------
DECEMBER 30, DECEMBER 29, DECEMBER 28, JANUARY 3, JANUARY 1,
2000 2001 2002 2004 2005
------------ ------------ ------------ ------------ ------------
Textron Inc.,
including all
majority-owned
subsidiaries (a)... 2.03x 2.54x 2.46x 2.24x 2.82x
Textron Manufacturing
(b)................ 3.12x 3.63x 3.61x 3.63x 4.43x
------------
(a) For the purpose of calculating the ratio of income to fixed charges for
Textron Inc., including all majority-owned subsidiaries, "fixed charges"
includes interest expense, distributions on preferred securities of
subsidiary trusts, net of income taxes, and one-third of rental expenses
(which is deemed representative of the interest factor in rental expense),
including interest and rental expense of Textron Finance. "Income" consists
of income from continuing operations before income taxes and fixed charges,
adjusted to exclude distributions on preferred securities of subsidiary
trusts, net of income taxes.
(b) Textron Manufacturing consists of Textron Inc., the parent company,
together with the entities through which we operate the Bell, Cessna,
Fastening Systems and Industrial business segments. For the purpose of
calculating the ratio of income to fixed charges for Textron Manufacturing,
"fixed charges" includes interest expense, distributions on preferred
securities of subsidiary trusts, net of income taxes, and one-third of
rental expenses (which is deemed representative of the interest factor in
rental expense), excluding interest and rental expense of Textron Finance.
"Income" of Textron Manufacturing consists of income from continuing
operations before income taxes, excluding the equity in undistributed
pre-tax income of Textron Finance, and fixed charges, adjusted to exclude
distributions on preferred securities of subsidiary trusts, net of income
taxes.
S-17
EXCHANGE RATE INFORMATION
The table below sets forth, for the periods and dates indicated,
information concerning the noon buying rate in New York City for cable transfers
as announced by the U.S. Federal Reserve Bank of New York for euros (expressed
as U.S. dollars per euro). The rates in this table are provided for your
reference only.
PERIOD
PERIOD HIGH LOW AVERAGE (A) PERIOD END
------ ----------- ----------- ----------- -----------
2000.................................... $1.0335 $0.8270 $0.9303 $0.9388
2001.................................... 0.9535 0.8370 0.8903 0.8822
2002.................................... 1.0485 0.8594 0.9495 1.0485
2003.................................... 1.2597 1.0361 1.1411 1.2597
2004.................................... 1.3625 1.1801 1.2438 1.3538
2005 (through March 1).................. 1.3476 1.2773 1.3072 1.3189
January 2005............................ $1.3476 $1.2954 $1.3123 $1.3049
February 2005........................... 1.3274 1.2773 1.3013 1.3274
------------
(a) In the case of the period average for each period that is a full year, the
period average is the average of the noon buying rates on the last day of
each month during such year; in the case of the period average for each
period that is a month or a period of less than a year, the period average
is the average of the noon buying rates on each business day of such
period.
The noon buying rate for euros on March 1, 2005 as announced by the U.S.
Federal Reserve Bank of New York was E1.00 = U.S.$1.3189.
S-18
BOARD OF DIRECTORS OF TEXTRON
DIRECTORS PRINCIPAL OCCUPATION BUSINESS ADDRESS
-------------------- --------------------------------- ---------------------------------
H. Jesse Arnelle Of Counsel to Womble, Carlyle, 400 Urbano Drive
Sandridge & Rice San Francisco, California 94127
Kathleen M. Bader President and Chief Executive NatureWorks LLC
Officer of NatureWorks LLC 15305 Minnetonka Boulevard
Minnetonka, Minnesota 55345
Lewis B. Campbell Chairman, President and Chief Textron Inc.
Executive Officer of Textron 40 Westminster Street
Providence, Rhode Island 02903
R. Kerry Clark Vice Chairman of the Board and The Procter & Gamble Company
President -- Global Health, Baby One Procter & Gamble Plaza
and Family Care of The Procter & Cincinnati, Ohio 45202
Gamble Company
Ivor J. Evans Retired; formerly Vice Chairman Union Pacific Corporation
of Union Pacific Corporation 1400 Douglas Street, 19th Floor
Omaha, Nebraska 68179
Lawrence K. Fish Chairman, President and Chief Citizens Financial Group, Inc.
Executive Officer of Citizens One Citizens Plaza
Financial Group, Inc. Providence, Rhode Island 02903
Joe T. Ford Chairman of the Board of ALLTEL ALLTEL Corporation
Corporation One Allied Drive
Little Rock, Arkansas 72202
Paul E. Gagne Director of CAE Inc., Inmet 13 Senneville Road
Mining Corporation, Wajax Limited Senneville, Quebec H9X 1B4
and Asalco Inc. Canada
Dain M. Hancock Retired; formerly Executive Vice One Lockheed Martin Boulevard
President of Lockheed Martin Mail Zone 1208
Corporation and President of Fort Worth, Texas 76108
Lockheed Martin Aeronautics
Company; currently a consultant
to Lockheed Martin
Lord Powell of Nonexecutive Chairman of Sagitta 24 Queen Anne's Gate
Bayswater Asset Management and of LVMH (UK) London SW1H9AA
England
Brian H. Rowe Consultant of GE Aircraft 1 Neumann Way, N178
Engines, General Electric Company Cincinnati, Ohio 45215
Martin D. Walker Principal of Morwal Investments Two Seaside Lane
Apt. 802
Belleair, Florida 33756
Thomas B. Wheeler Retired; formerly Chairman and 736 Kingstown Drive
Chief Executive Officer of Naples, Florida 34102
Massachusetts Mutual Life
Insurance Company
S-19
DESCRIPTION OF THE NOTES
GENERAL
The notes are a series of "senior debt securities" described in the
accompanying prospectus. Reference should be made to the accompanying prospectus
for a detailed summary of additional provisions of the notes and of our
indenture dated as of September 10, 1999 with The Bank of New York Trust
Company, N.A., as trustee, under which the notes will be issued.
The notes will mature on March 11, 2013. Unless previously redeemed or
purchased and cancelled, we will repay the notes at 100% of their principal
amount together with accrued and unpaid interest thereon at maturity. We will
pay principal of, interest on and any other amounts payable under the notes in
euro. The notes will be issued in registered book-entry form without interest
coupons in denominations of E 50,000 and integral multiples thereof.
The notes will be initially issued in a total principal amount of
E 300,000,000. We may, without the consent of the holders of the notes, create
and issue additional notes ranking equally with the notes that we are offering
and otherwise similar in all respects to the notes (except for the payment of
interest accruing prior to the issue date of the additional notes or except for
the first payment of interest following the issue date of the additional notes)
so that those additional notes will be consolidated and form a single series
with the notes that we are offering. No additional notes may be issued if an
event of default under the indenture has occurred.
The notes will be redeemable at our option, as described below. The notes
will not be subject to a sinking fund. The notes will be subject to defeasance
as described in the accompanying prospectus. The notes will not be convertible
or exchangeable.
Application has been made to list the notes and to have the notes admitted
to trading on the Irish Stock Exchange. The listing application is subject to
approval by the Irish Stock Exchange. Arthur Cox Listing Services Limited will
be the listing agent for the notes in Ireland.
While the notes are represented by a global note deposited with The Bank of
New York, London Branch, as Common Depositary for Clearstream Banking, Societe
Anonyme, or "Clearstream, Luxembourg," and Euroclear Bank S.A./N.V., or
"Euroclear," notices to holders may be given by delivery to Clearstream,
Luxembourg and Euroclear, and such notices shall be deemed to be given on the
date of delivery to Clearstream, Luxembourg and Euroclear. The trustee will mail
notices by first-class mail, postage prepaid, to each registered holder's last
known address as it appears in the security register that the trustee maintains.
The trustee will only mail these notices to the registered holder of the notes,
which while the notes are in global form will be the nominee for the Common
Depositary. You will not receive notices regarding the notes directly from us
unless we reissue the notes to you in fully certificated form.
The trustee will also publish notices regarding the notes in a daily
newspaper of general circulation in the City of New York and in London, as well
as the Financial Times world edition. In addition, if the notes are listed on
the Irish Stock Exchange, and so long as the rules of the Irish Stock Exchange
require notice by publication, the trustee will publish notices regarding the
notes in a daily newspaper of general circulation in Dublin, Ireland. We expect
that publication will be made in the City of New York in The Wall Street
Journal, in London in the Financial Times and in Dublin, Ireland in the Irish
Times. If publication in Dublin, Ireland is not practical, the trustee will
publish these notices in an English language newspaper of general circulation
elsewhere in Europe. Published notices will be deemed to have been given on the
date they are published or, if published more than once, on the date of first
publication. If publication as described above becomes impossible, the trustee
may publish sufficient notice by alternate means that approximate the terms and
conditions described in this paragraph.
S-20
The Bank of New York Trust Company, N.A. is the trustee under the indenture
governing the notes. The Bank of New York Trust Company, N.A. is a national
banking association organized under and governed by the laws of the United
States. The Bank of New York Trust Company, N.A. provides trust services and
acts as indenture trustee for numerous corporate securities issuances, including
for other series of debt securities of which we are the issuer, and will be the
principal paying agent and the transfer agent for the notes. As long as the
notes are listed on the Irish Stock Exchange, AIB/BNY Fund Management (Ireland)
Limited will be the paying agent for the notes in Ireland.
The notes will be, and the indenture is, governed by the laws of the State
of New York.
The notes are direct, unsecured obligations of Textron Inc. exclusively.
Since a significant part of our operations is conducted through subsidiaries, a
significant portion of our cash flow and, consequently, our ability to service
debt, including the notes, is dependent upon the earnings of our subsidiaries
and the transfer of funds by those subsidiaries to us, in the form of dividends
or other transfers, supplemented with borrowings.
Financing for us and our subsidiaries is conducted through two borrowing
groups, Textron Manufacturing and Textron Finance. Textron Finance finances its
operations by borrowing from its own group of external creditors. Lending
agreements of Textron Finance restrict the amount of Textron Finance net assets
available for cash dividends and other payments to Textron Inc. In addition,
under a support agreement, Textron Inc. has agreed to make payments to Textron
Finance, if necessary to cause Textron Finance to maintain certain minimum
levels of financial performance. No payments from Textron Inc. to Textron
Finance have ever been necessary to meet these levels.
Creditors of our subsidiaries would be entitled to a claim on the assets of
our subsidiaries prior to any claims by us. Consequently, in the event of a
liquidation or reorganization of any subsidiary, creditors of the subsidiary are
likely to be paid in full before any distribution is made to us, except to the
extent that we ourselves are recognized as a creditor of such subsidiary. Any of
our claims as the creditor of our subsidiary would be subordinate to any
security interest in the assets of such subsidiary and any indebtedness of our
subsidiary senior to that held by us.
As of January 1, 2005, our subsidiaries had an aggregate of U.S.$5.0
billion of outstanding indebtedness and U.S.$4.1 billion of other obligations.
PAYMENT OF INTEREST
The interest on the notes will be 3.875% per year. We will pay interest in
arrears on March 11 of each year, beginning March 11, 2006. Interest on the
notes will accrue from March 11, 2005. We will pay interest to the persons in
whose names the notes are registered at the close of business on the preceding
February 15. We will pay interest computed on the basis of an Actual/Actual
(ISMA) day fraction basis. Actual/Actual (ISMA) means that interest on the notes
will be calculated on the basis of (a) the actual number of days in the period
from and including the last interest payment date (or the issue date with
respect to the first interest payment date) to but excluding the date on which
the interest payment falls due divided by (b) the product of (x) the actual
number of days in the period from and including the last interest payment date
(or the issue date with respect to the first interest payment date) to but
excluding the date on which the interest payment falls due and (y) the number of
interest payment dates per year.
If any interest payment date for the notes would otherwise be a day that is
not a business day, then the interest payment date will be postponed to the
following date that is a business day.
S-21
Interest will not accrue as a result of any delayed payment. The term
"business day" means any day, other than a Saturday or Sunday, that (1) is
neither a legal holiday nor a day on which banking institutions are generally
authorized or required by law or regulation to close in the City of New York or
London and (2) is a day on which the TARGET System operates. TARGET System means
the Trans-European Automated Real-time Gross Settlement Express Transfer system.
OPTIONAL REDEMPTION
We may redeem the notes at our option, in whole or in part at any time at a
redemption price equal to the greater of:
- 100% of the principal amount of the notes to be redeemed; and
- as determined by the Calculation Agent, the sum of the present values of
the remaining scheduled payments of principal of and interest on the
notes to be redeemed that would be due on or after the redemption date
but for the redemption (not including any portion of interest accrued on
the notes to be redeemed as of the redemption date) discounted to the
redemption date on an annual basis (assuming an Actual/Actual (ISMA) day
fraction basis) at the Official Fixing Rate;
plus, in either of the above cases, accrued and unpaid interest on the notes to
be redeemed up to, but not including, the redemption date. Certain terms used in
this description of our option to redeem the notes are defined below in this
section.
"Calculation Agent" means Deutsche Bank AG London, or any successor entity.
"Official Fixing Rate" means, with respect to any redemption date, the rate
per year equal to the annual yield to maturity of the Reference Government
Issue, assuming a price for the Reference Government Issue (expressed as a
percentage of its principal amount) equal to the price published for the
Reference Government Issue by the Frankfurt Stock Exchange on the third Payment
Business Day prior to the redemption date.
"Payment Business Day" means any day, other than a Saturday or Sunday, that
(1) is neither a legal holiday nor a day on which banking institutions are
generally authorized or required by law or regulation to close in the City of
New York or London, and (2) is a day on which the TARGET system operates.
"Reference Government Issue" means the security issued by the government of
the Federal Republic of Germany selected by the Calculation Agent as having a
maturity comparable to the remaining term of the notes to be redeemed that would
be used, at the time of selection and in accordance with customary financial
practice, in pricing new issues of corporate debt securities denominated in euro
of comparable maturity to the remaining term of the notes.
The trustee will mail a notice of redemption at least 30 days but not more
than 60 days before the redemption date to each holder of notes to be redeemed.
In the case of any partial redemption, selection of the notes for
redemption will be made by the trustee under the indenture in compliance with
the rules and requirements of the Irish Stock Exchange or the principal
exchange, if any, on which the notes are listed or, if the notes are not so
listed or that exchange prescribes no method of selection, on a pro rata basis,
by lot or by any other method as the trustee in its sole discretion deems to be
fair and appropriate, although no note of E 50,000 in original principal amount
or less shall be redeemed in part. If any note is to be redeemed in part only,
the notice of redemption relating to the note will state the portion of the
principal amount thereof to be redeemed. A new note in principal amount equal to
the unredeemed portion thereof will be issued and delivered to the trustee, or
its nominee, or, in the case of notes in certificated form, issued in the name
of the holder thereof, in each case upon cancellation of the original note.
S-22
Unless we default in payment of the redemption price and accrued and unpaid
interest on the notes, on and after the redemption date, interest will stop
accruing on the notes or portions of the notes called for redemption.
REDEMPTION UPON TAX EVENT
The notes may be redeemed at our option, in whole but not in part, on not
more than 60 days' and not less than 30 days' notice, at a redemption price
equal to 100% of their principal amount, together with accrued interest to the
date of redemption and any additional amounts then due, if we determine that, as
a result of any change in or amendment to the laws, treaties, regulations or
rulings of the United States or any political subdivision or taxing authority
thereof or therein, or any change in or amendment to the official application,
enforcement or interpretation of those laws, treaties, regulations or rulings,
including a holding by a court of competent jurisdiction in the United States,
or any other action by any taxing authority or a court of competent jurisdiction
in the United States, whether or not any such action was taken with respect to
us, which change or amendment is announced or becomes or is to become effective,
or which action is taken, on or after the date of this prospectus supplement, we
have or will become obligated to pay additional amounts as described under
"--Payment of Additional Amounts" on any of the notes and such obligation cannot
be avoided by taking reasonable measures available to us. Prior to the giving of
any notice of redemption described in this paragraph, we will deliver to the
trustee (1) an officers' certificate stating that we are entitled to effect the
redemption and setting forth a statement of facts showing that the conditions
precedent to our right to so redeem have occurred and (2) an opinion of counsel
to that effect based on that statement of facts. If we redeem the notes because
of a tax event and the notes are listed on the Irish Stock Exchange, we will
publish a notice of the redemption in Dublin, Ireland.
PAYMENT OF ADDITIONAL AMOUNTS
We will pay to the beneficial owner of any note who is a Non-U.S. Person
(as defined below) additional amounts as may be necessary so that every net
payment of principal and interest on that note, after deduction or withholding
for or on account of any present or future tax, assessment or other governmental
charge imposed upon any payment to that beneficial owner by the United States or
any political subdivision or taxing authority thereof or therein, will not be
less than the amount provided in that note to be then due and payable had no
deduction or withholding been required. We will not be required, however, to
make any payment of additional amounts for or on account of:
- any tax, assessment or other governmental charge that would not have been
imposed or withheld but for (1) the existence of any present or former
connection between that beneficial owner, or between a fiduciary,
settlor, beneficiary of, member or shareholder of, or possessor of a
power over, that beneficial owner, if that beneficial owner is an estate,
trust, partnership or corporation, and the United States (other than a
connection arising solely from the mere ownership of a note or the
receipt of payments thereon or the enforcement of a right in respect
thereof), including, without limitation, that beneficial owner, or that
fiduciary, settlor, beneficiary, member, shareholder or possessor, being
or having been a citizen or resident or treated as a resident of the
United States or being or having been engaged in trade or business or
present in the United States or (2) the presentation of a note for
payment (where presentation is required) on a date more than 30 days
after the later of the date on which that payment becomes due and payable
and the date on which payment is duly provided for;
- any estate, inheritance, gift, sales, transfer, excise, wealth or
personal property tax or similar tax, assessment or other governmental
charge;
S-23
- any tax, assessment or other governmental charge imposed by reason of
that beneficial owner's past or present status as a passive foreign
investment company, a controlled foreign corporation, a personal holding
company or a foreign or domestic personal holding company with respect to
the United States, or as a corporation that accumulates earnings to avoid
United States federal income tax or a private foundation or other tax-
exempt organization;
- any tax, assessment or other governmental charge that is payable
otherwise than by withholding from payment of principal or interest on
that note;
- any tax, assessment or other governmental charge required to be withheld
by any paying agent from any payment of principal or interest on any note
if that payment can be made without withholding by any other paying
agent;
- any tax, assessment or other governmental charge that would not have been
imposed but for the failure by any person to comply with any
certification, information, documentation or other reporting requirements
concerning the nationality, residence, identity or connections with the
United States of the beneficial owner or any holder of that note, if such
compliance is required by statute or by regulation of the U.S. Treasury
Department, without regard to any tax treaty, or by an applicable income
tax treaty to which the United States is a party, as a precondition to
relief or exemption from such tax, assessment or other governmental
charge;
- any tax, assessment or other governmental charge imposed on interest
received by (1) a 10% shareholder (as defined in Section 871(h)(3)(B) of
the U.S. Internal Revenue Code of 1986, as amended, or the Code, and the
regulations that may be promulgated thereunder) of our company, (2) a
controlled foreign corporation with respect to our company within the
meaning of the Code or (3) a bank whose receipt of the interest is
described in Section 881(c)(3)(A) of the Code;
- any withholding or deduction that is imposed on a payment to an
individual and is required to be made pursuant to the European Union
Directive relating to the taxation of savings adopted on June 3, 2003 by
the European Union's Economic and Financial Affairs Council, or any law
implementing or complying with, or introduced in order to conform to,
such Directive; or
- any combination of any of the foregoing items;
nor will we pay any additional amounts to any beneficial owner or holder of a
note who is a fiduciary or partnership to the extent that a beneficiary or
settlor with respect to that fiduciary, or a member of that partnership or a
beneficial owner thereof, would not have been entitled to the payment of those
additional amounts had that beneficiary, settlor, member or beneficial owner
been the beneficial owner of that note.
In the event that we are required to withhold or deduct any present or
future tax, assessment or other governmental charge from any payment to a
beneficial owner of a note who is a Non-U.S. Person, we will make reasonable
efforts to obtain an official receipt or other acknowledgment from the relevant
taxing authority evidencing the payment thereof, and will make such
documentation (or a copy thereof) available to any such beneficial owner upon
request therefor.
As used in the preceding paragraphs, "Non-U.S. Person" means any
corporation, individual, fiduciary or partnership that is, as to the United
States, a foreign corporation, a non-resident alien individual who has not made
a valid election to be treated as a United States resident, a non-resident
fiduciary of a foreign estate or trust, or a foreign partnership one or more of
the members of which is, as to the United States, a foreign corporation, a
non-resident alien individual or a non-resident fiduciary of a foreign estate or
trust.
S-24
PRESCRIPTION
Under New York's statute of limitations, any legal action to enforce our
payment obligations evidenced by the notes must be commenced within six years
after payment is due. Thereafter our payment obligations will generally become
unenforceable.
S-25
BOOK-ENTRY ISSUANCE
GENERAL
We will issue the notes as one or more global notes registered in the name
of a nominee of the Common Depositary for Clearstream, Luxembourg and Euroclear.
Investors may hold book-entry interests in the global notes through
organizations that participate, directly or indirectly, in Clearstream,
Luxembourg or Euroclear. Book-entry interests in the notes and all transfers
relating to the notes will be reflected in the book-entry records of
Clearstream, Luxembourg and Euroclear.
The distribution of the notes will be cleared through Clearstream,
Luxembourg and Euroclear. Any secondary market trading of book-entry interests
in the notes will take place through participants in Clearstream, Luxembourg and
Euroclear and will settle in same-day funds. Owners of book-entry interests in
the notes will receive payments relating to their notes in euros. Clearstream,
Luxembourg and Euroclear have established electronic securities and payment
transfer, processing, depositary and custodial links among themselves and
others, either directly or through custodians and depositaries. These links
allow securities to be issued, held and transferred among the clearing systems
without the physical transfer of certificates. Special procedures to facilitate
clearance and settlement have been established among these clearing systems to
trade securities across borders in the secondary market.
The policies of Clearstream, Luxembourg and Euroclear will govern payments,
transfers, exchange and other matters relating to an investor's interest in
securities held by them. We have no responsibility for any aspect of the records
kept by Clearstream, Luxembourg or Euroclear or any of their direct or indirect
participants. We do not supervise these systems in any way.
Clearstream, Luxembourg and Euroclear and their participants perform these
clearance and settlement functions under agreements they have made with one
another or with their customers. You should be aware that they are not obligated
to perform or continue to perform these procedures and may modify them or
discontinue them at any time.
Except as provided below, owners of beneficial interest in the notes will
not be entitled to have the notes registered in their names, will not receive or
be entitled to receive physical delivery of the notes in certificated form and
will not be considered the owners or holders of the notes under the indenture
governing the notes, including for purposes of receiving any reports delivered
by us or the trustee pursuant to the indenture. Accordingly, each person owning
a beneficial interest in a note must rely on the procedures of the depositary
and, if that person is not a participant, on the procedures of the participant
through which that person owns its interest, in order to exercise any rights of
a holder of notes.
This description of the clearing systems reflects our understanding of the
rules and procedures of Clearstream, Luxembourg and Euroclear as they are
currently in effect. These systems could change their rules and procedures at
any time. We have obtained the information in this section concerning
Clearstream, Luxembourg and Euroclear and their book-entry systems and
procedures from sources that we believe to be reliable, but we take no
responsibility for the accuracy of this information.
CLEARSTREAM, LUXEMBOURG AND EUROCLEAR
Clearstream, Luxembourg has advised us that: it is a duly licensed bank
organized as a societe anonyme incorporated under the laws of Luxembourg and is
subject to regulation by the Luxembourg Commission for the supervision of the
financial sector (Commission de surveillance du secteur financier); is a duly
licensed bank organized as a societe anonyme incorporated under the laws of
Luxembourg and is subject to regulation by the Luxembourg Commission for
S-26
the supervision of the financial sector (Commission de surveillance du secteur
financier); it holds securities for its customers and facilitates the clearance
and settlement of securities transactions among them, and does so through
electronic book-entry transfers between the accounts of its customers, thereby
eliminating the need for physical movement of certificates; it provides other
services to its customers, including safekeeping, administration, clearance and
settlement of internationally traded securities and lending and borrowing of
securities; it interfaces with the domestic markets in over 30 countries through
established depositary and custodial relationships; its customers include
worldwide securities brokers and dealers, banks, trust companies and clearing
corporations and may include certain other professional financial
intermediaries; its U.S. customers are limited to securities brokers and dealers
and banks; and indirect access to the Clearstream, Luxembourg system is also
available to others that clear through Clearstream, Luxembourg customers or that
have custodial relationships with its customers, such as banks, brokers, dealers
and trust companies.
Euroclear has advised us that: it is incorporated under the laws of Belgium
as a bank and is subject to regulation by the Belgian Banking and Finance
Commission (Commission Bancaire et Financiere) and the National Bank of Belgium
(Banque Nationale de Belgique); it holds securities for its participants and
facilitates the clearance and settlement of securities transactions among them;
it does so through simultaneous electronic book-entry delivery against payments,
thereby eliminating the need for physical movement of certificates; it provides
other services to its participants, including credit, custody, lending and
borrowing of securities and tri-party collateral management; it interfaces with
the domestic markets of several countries; its customers include banks,
including central banks, securities brokers and dealers, banks, trust companies
and clearing corporations and certain other professional financial
intermediaries; indirect access to the Euroclear system is also available to
others that clear through Euroclear customers or that have custodial
relationships with Euroclear customers; and all securities in Euroclear are held
on a fungible basis, which means that specific certificates are not matched to
specific securities clearance accounts.
GLOBAL CLEARANCE AND SETTLEMENT PROCEDURES
We understand that investors that hold their notes through Clearstream,
Luxembourg or Euroclear accounts will follow the settlement procedures that are
applicable to eurobonds in registered form. Notes will be credited to the
securities custody accounts of Clearstream, Luxembourg and Euroclear
participants on the business day following the settlement date for value on the
settlement date. They will be credited either free of payment or against payment
for value on the settlement date.
We understand that secondary market trading between Clearstream, Luxembourg
or Euroclear participants will occur in the ordinary way following the
applicable rules and operating procedures of Clearstream, Luxembourg and
Euroclear. Secondary market trading will be settled using procedures applicable
to eurobonds in registered form.
You should be aware that investors will only be able to make and receive
deliveries, payments and other communications involving the notes through
Clearstream, Luxembourg and Euroclear on business days. Those systems may not be
open for business on days when banks, brokers and other institutions are open
for business in the United States.
In addition, because of time-zone differences, there may be problems with
completing transactions involving Clearstream, Luxembourg and Euroclear on the
same business day as in the United States. U.S. investors who wish to transfer
their interests in the notes, or to make or receive a payment or delivery of the
notes, on a particular day may find that the transactions will not be performed
until the next business day in Luxembourg or Brussels, depending on whether
Clearstream, Luxembourg or Euroclear is used.
S-27
Clearstream, Luxembourg or Euroclear will credit payments to the cash
accounts of participants in Clearstream, Luxembourg or Euroclear in accordance
with the relevant systemic rules and procedures, to the extent received by its
depositary. Clearstream, Luxembourg or Euroclear, as the case may be, will take
any other action permitted to be taken by a holder under the indenture on behalf
of a Clearstream, Luxembourg or Euroclear participant only in accordance with
its relevant rules and procedures.
Clearstream, Luxembourg and Euroclear have agreed to the foregoing
procedures in order to facilitate transfers of the notes among participants of
Clearstream, Luxembourg and Euroclear. However, they are under no obligation to
perform or continue to perform those procedures, and they may discontinue those
procedures at any time.
SAME-DAY SETTLEMENT AND PAYMENT
The underwriters will settle the notes in immediately available funds. We
will make all payments of principal and interest on the notes in immediately
available funds. Secondary market trading between participants in Clearstream,
Luxembourg and Euroclear will occur in accordance with the applicable rules and
operating procedures of Clearstream, Luxembourg and Euroclear and will be
settled using the procedures applicable to eurobonds in immediately available
funds.
CERTIFICATED NOTES
We will issue notes to you in certificated registered form only if:
- the Common Depositary is no longer willing or able to discharge its
responsibilities properly, and neither the trustee nor we have appointed
a qualified successor within 90 days; or
- we decide to discontinue the book-entry system.
If either of these two events occurs, the trustee will reissue the notes in
fully certificated registered form and will recognize the registered holders of
the certificated notes as holders under the indenture.
In the event that we issue certificated securities under the limited
circumstances described above, and the notes are listed on the Irish Stock
Exchange at that time, then holders of certificated securities may transfer
their notes in whole or in part upon the surrender of the certificate to be
transferred, together with a completed and executed assignment form endorsed on
the certificated note, at the main offices of the transfer agent in the City of
New York. Copies of this assignment form may be obtained at the main offices of
the transfer agent in the City of New York. Each time that we transfer or
exchange a new note in certificated form for another note in certificated form,
and after the transfer agent receives a completed assignment form, we will make
available for delivery the new certificated note at the main offices of the
transfer agent in the City of New York. Alternatively, at the option of the
person requesting the transfer or exchange, we will mail, at that person's risk,
the new certificated note to the address of that person that is specified in the
assignment form. In addition, if we issue notes in certificated form and the
notes are listed on the Irish Stock Exchange at that time, then we will make
payments of principal of, interest on and any other amounts payable under the
notes to holders in whose names the notes in certificated form are registered at
the close of business on the record date for these payments. If the notes are
issued in certificated form, we will make payments of principal and any
redemption payments against the surrender of these certificated notes at, as the
case may be, at the offices of the paying agent in the City of New York or, as
long as the notes are listed on the Irish Stock Exchange, at the main office of
the Irish paying agent in Dublin. We will make payments to holders of notes by
check delivered to the
S-28
addresses of the holders as their addresses appear on our register or by
transfer to an account maintained by that holder with a bank located in the euro
zone.
Unless and until we issue the notes in fully certificated, registered form,
- you will not be entitled to receive a certificate representing your
interest in the notes;
- all references in this prospectus supplement or in the accompanying
prospectus to actions by holders will refer to actions taken by the
Common Depositary on behalf of Clearstream, Luxembourg or Euroclear upon
instructions from their direct participants; and
- all references in this prospectus supplement or in the accompanying
prospectus to payments and notices to holders will refer to payments and
notices to the Common Depositary, as the registered holder of the notes,
for distribution to you in accordance with its policies and procedures.
If we issue the notes in certificated registered form, so long as the notes
are listed on the Irish Stock Exchange, we will maintain a paying agent in
Ireland. We will also publish a notice in Ireland in the Irish Times if any
change is made in the paying agent in Ireland.
CERTAIN U.S. FEDERAL INCOME TAX DOCUMENTATION REQUIREMENTS
As discussed below under "Certain U.S. Federal Tax
Consequences--Consequences to Non-United States Holders--U.S. Federal
Withholding Tax," a beneficial owner of notes directly or indirectly holding
notes through Clearstream, Luxembourg or Euroclear will be subject to the 30%
U.S. withholding tax that generally applies to payments of interest on
registered debt issued by U.S. corporations (such as Textron), unless:
- the beneficial owner delivers one of the United States Internal Revenue
forms and certificates described under "Certain U.S. Federal Tax
Consequences--Consequences to Non-United States Holders--U.S. Federal
Withholding Tax" below; and
- each securities clearing organization, bank or other financial
institution that holds customers' notes in the ordinary course of its
trade or business in the chain of intermediaries between the beneficial
owner and the U.S. entity required to withhold such U.S. tax complies
with the applicable certification requirements referred to under "Certain
U.S. Federal Tax Consequences--Consequences to Non-United States
Holders--U.S. Federal Withholding Tax" below.
To obtain an exemption from (or a reduction in the rate of) the 30% U.S.
withholding tax, the beneficial owner of a note must deliver the appropriate
form and, if required, certificate to the person through whom it holds its
beneficial interest in the notes, and the intermediary must, in turn, provide a
copy of the form to us or our paying agent.
S-29
CERTAIN U.S. FEDERAL TAX CONSEQUENCES
The following is a discussion of material U.S. federal income and estate
tax consequences of the ownership of notes as of the date of this prospectus
supplement for beneficial owners of notes that purchase the notes at their
"issue price" on the issue date in connection with this offering. Except where
noted, this discussion deals only with notes held as capital assets and does not
deal with special situations. For example, this discussion does not address:
- tax consequences to beneficial owners of notes that may be subject to
special tax treatment, such as dealers in securities or currencies,
financial institutions, real estate investment trusts, regulated
investment companies, tax-exempt entities, investors in pass-through
entities, individual retirement accounts or other tax-deferred accounts,
traders in securities that elect to use a mark-to-market method of
accounting for their securities holdings, corporations that accumulate
earnings to avoid federal income tax, insurance companies, or, in some
cases, an expatriate of the United States or a nonresident alien
individual who has made a valid election to be treated as a United States
resident;
- tax consequences to persons holding notes as part of a hedging,
integrated, constructive sale or conversion transaction or a straddle;
- tax consequences to United States holders (as defined below) whose
"functional currency" is not the U.S. dollar;
- tax consequences to beneficial owners of notes that are "controlled
foreign corporations" or "passive foreign investment companies";
- alternative minimum tax consequences; or
- state, local or foreign tax consequences.
If a partnership, or other entity or arrangement treated as a partnership
for U.S. federal income tax purposes, owns notes, the tax treatment of a partner
or an equity interest owner of such other entity or arrangement will generally
depend upon the status of the person and the activities of the partnership or
other entity or arrangement. If you are a partner of a partnership or an equity
interest owner of another entity or arrangement treated as a partnership that
owns notes, you should consult your tax advisors.
The discussion below is based upon the provisions of the Code and
regulations, rulings and judicial decisions as of the date of this prospectus
supplement. Those authorities may be changed, perhaps retroactively, so as to
result in U.S. federal income tax consequences different from those discussed
below.
You should consult your own tax advisors concerning the U.S. federal income
tax consequences to you and any consequences arising under the laws of any other
taxing jurisdiction.
CONSEQUENCES TO UNITED STATES HOLDERS
The following is a discussion of material U.S. federal income tax
consequences that will apply to you if you are a United States holder.
"United States holder" means a beneficial owner of a note that is:
- an individual citizen or resident of the United States;
- a corporation, or other entity treated as a corporation for U.S. federal
income tax purposes, created or organized in or under the laws of the
United States, any state thereof or the District of Columbia;
S-30
- an estate the income of which is subject to U.S. federal income taxation
regardless of its source; or
- a trust that (a) is subject to the primary supervision of a court within
the United States and the control of one or more U.S. persons or (b) has
a valid election in effect under applicable U.S. Treasury regulations to
be treated as a U.S. person.
PAYMENTS OF INTEREST
Interest on a note will generally be taxable to you as ordinary income at
the time it is paid or accrued in accordance with your method of accounting for
U.S. federal income tax purposes. If you use the cash method of accounting, you
will be required to include in income the U.S. dollar value of the amount of
interest received, determined by translating the euros received at the "spot
rate" for such euros on the date such payment is received regardless of whether
the payment is in fact converted into U.S. dollars. You will not recognize
exchange gain or loss with respect to the receipt of such payment.
If you use the accrual method of accounting, you may determine the amount
of income recognized with respect to such interest in accordance with either of
two methods. Under the first method, you will be required to include in income
for each taxable year the U.S. dollar value of the euro amount of interest that
has accrued during such year, determined by translating such interest at the
average rate of exchange for the period or periods during which such interest
accrued. Under the second method, you may elect to translate interest income at
the "spot rate" on:
- the last day of the accrual period;
- the last day of the taxable year if the accrual period straddles your
taxable year; or
- the date the interest payment is received if such date is within five
days of the end of the accrual period.
Upon receipt of an interest payment on such note (including, upon the sale
of such note, the receipt of amounts attributable to accrued interest previously
included in income), you will recognize ordinary income or loss in an amount
equal to the difference between the U.S. dollar value of the euros received
(determined by translating the euros received at the "spot rate" for such euros
on the date such payment is received) and the U.S. dollar value of the euro
interest income you previously included in income with respect to such payment.
SALE, EXCHANGE AND RETIREMENT OF NOTES
Your tax basis in a note will, in general, be the U.S. dollar value of the
euro amount paid for such note determined at the time of your purchase. If you
purchase the note with previously owned euros, you will recognize exchange gain
or loss at the time of the purchase attributable to the difference at the time
of purchase, if any, between your tax basis in the euros and the fair market
value of the note in U.S. dollars on the date of purchase. Such gain or loss
will be ordinary income or loss. Gain or loss you realize on the sale, exchange
or retirement of the notes generally will be treated as U.S. source gain or
loss.
Upon the sale, exchange, retirement or other taxable disposition of a note,
you will recognize gain or loss equal to the difference between the U.S. dollar
value of the amount you realize upon the sale, exchange, retirement or other
disposition (less an amount equal to any accrued stated interest, which will be
treated as such) and your adjusted tax basis in the note. Except with respect to
gain or loss attributable to changes in exchange rates as discussed below, that
gain or loss will be capital gain or loss. Capital gains of individuals derived
in respect of capital assets held for more than one year are eligible for
reduced rates of taxation. The deductibility of capital losses is subject to
limitations.
S-31
You will recognize exchange gain or loss, instead of capital gain or loss,
with respect to gain or loss attributable to the movement in exchange rates
between the time of purchase and the time of sale, exchange, retirement or other
taxable disposition of a note. This gain or loss will equal the difference
between (a) the principal amount of the note translated into dollars at the
"spot rate" on the date of disposition and (b) your tax basis in the note. Such
gain or loss will be treated as ordinary income or loss. The realization of such
gain or loss will be limited to the amount of overall gain or loss realized on
the disposition of a note.
DISPOSITION OF EUROS
Your tax basis in euros received as interest on, or received on the sale,
exchange, retirement or other disposition of, a note will be the U.S. dollar
value thereof (determined by translating the euros received at the "spot rate"
for such euros on the date such payment is received). Any gain or loss
recognized by you on a sale, exchange or other disposition of euros will be
ordinary income or loss and will not be treated as interest income or expense,
except to the extent provided in Treasury regulations or administrative
pronouncements of the U.S. Internal Revenue Service, or the IRS.
REPORTABLE TRANSACTIONS
Treasury regulations requiring the reporting of certain tax shelter
transactions could be interpreted to cover transactions generally not regarded
as tax shelters, including certain foreign currency transactions. Under the
Treasury regulations, certain transactions are required to be reported to the
IRS, including, in certain circumstances, a sale, exchange, retirement or other
taxable disposition of a foreign currency note or foreign currency received in
respect of a foreign currency note to the extent that such sale, exchange,
retirement or other taxable disposition results in a tax loss in excess of a
threshold amount. If you are considering the purchase of notes, you should
consult with your own tax advisors to determine the tax return obligations, if
any, with respect to an investment in the notes, including any requirement to
file IRS Form 8886 (Reportable Transaction Disclosure Statement).
INFORMATION REPORTING AND BACKUP WITHHOLDING
In general, information reporting requirements will apply to certain
payments of principal, interest and other amounts paid on the notes and to the
proceeds of sale of the notes made to you unless you are an exempt recipient
(such as a corporation). A backup withholding tax may apply to such payments if
you fail to provide a correct taxpayer identification number or certification of
exempt status or fail to report in full dividend and interest income.
Any amounts withheld under the backup withholding rules will be allowed as
a refund or a credit against your U.S. federal income tax liability provided the
required information is timely furnished to the IRS.
CONSEQUENCES TO NON-UNITED STATES HOLDERS
The following is a discussion of material U.S. federal income and estate
tax consequences that generally will apply to you if you are a non-United States
holder. A non-United States holder is a beneficial owner of a note that is not a
United States holder (as defined above) or a partnership or other entity or
arrangement treated as a partnership for U.S. federal income tax purposes.
S-32
U.S. FEDERAL WITHHOLDING TAX
The 30% U.S. federal withholding tax will not apply to any payment of
principal of, interest on or other amounts payable on the notes, provided that:
- interest paid on the notes is not effectively connected with your conduct
of a trade or business in the United States;
- you do not actually or constructively own 10% or more of the total
combined voting power of all classes of our voting stock within the
meaning of Section 871(h)(3) of the Code and related U.S. Treasury
regulations;
- you are not a controlled foreign corporation that is related to us
through stock ownership;
- you are not a bank whose receipt of interest on the notes is described in
Section 881(c)(3)(A) of the Code; and
- you (a) provide your name and address on an IRS Form W-8BEN (or valid
substitute or successor form), and certify, under penalty of perjury,
that you are not a U.S. person or (b) hold your notes through certain
foreign intermediaries, and you and such intermediaries satisfy the
certification requirements of applicable U.S. Treasury regulations.
(Special certification rules apply to certain non-United States holders
that are pass-through entities rather than corporations or individuals.)
If you cannot satisfy the requirements described above, payments of
interest made to you will be subject to the 30% U.S. federal withholding tax
(which will be deducted from such interest payments by the paying agent), unless
you provide us with a properly executed (a) IRS Form W-8BEN (or valid substitute
or successor form) claiming an exemption from or reduction in the rate of
withholding under the benefit of an applicable tax treaty or (b) IRS Form W-8ECI
(or valid substitute or successor form) stating that interest paid on the notes
is not subject to withholding tax because it is effectively connected with your
conduct of a trade or business in the United States.
The 30% U.S. federal withholding tax generally will not apply to any gain
that you realize on the sale, exchange, retirement or other taxable disposition
of any of the notes, except to the extent, if any, that such gain is
attributable to accrued but unpaid interest due on the note.
U.S. FEDERAL INCOME TAX
If you are engaged in a trade or business in the United States and interest
on the notes is effectively connected with the conduct of that trade or business
(and, if so required by an applicable income tax treaty, the interest is
attributable to a permanent establishment that you maintain in the United
States), you will be subject to U.S. federal income tax on that interest on a
net income basis (although you will be exempt from the 30% withholding tax,
provided the certification requirements described above are satisfied) in the
same manner as if you were a United States holder. In addition, if you are a
foreign corporation, you may be subject to a branch profits tax equal to 30% (or
lower applicable treaty rate) of your earnings and profits for the taxable year,
subject to adjustments, that are effectively connected with the conduct by you
of a trade or business in the United States. For this purpose, interest on notes
will be included in your earnings and profits.
Any gain realized on the disposition of a note generally will not be
subject to U.S. federal income tax unless (a) that gain is effectively connected
with the conduct of a trade or business in the United States by you (and, if so
required by an applicable income tax treaty, the gain is attributable to a
permanent establishment that you maintain in the United States) or (b) you are
an individual who is present in the United States for 183 days or more in the
taxable year of that disposition and certain other conditions are met.
S-33
U.S. FEDERAL ESTATE TAX
Your estate will not be subject to U.S. federal estate tax on the notes
beneficially owned by you at the time of your death, provided that (a) you do
not own, within the meaning of the Code and the U.S. Treasury regulations, 10%
or more of the total combined voting power of those classes of our voting stock
referred to above and (b) interest on the notes would not have been, if received
at the time of your death, effectively connected with the conduct by you of a
trade or business in the United States.
INFORMATION REPORTING AND BACKUP WITHHOLDING
Information reporting will generally apply to payments of interest on the
notes to you and the amount of tax, if any, withheld with respect to such
payments. Copies of the information returns reporting such interest payments and
any withholding may also be made available to the tax authorities in the country
in which you reside under the provisions of an applicable income tax treaty.
In general, backup withholding will not apply to payments that we make or
any of our paying agents (in its capacity as such) makes to you if you have
provided the required certification that you are a non-United States holder as
described above and provided that neither we nor any of our paying agents has
actual knowledge or reason to know that you are a United States holder (as
described above).
In addition, you will not be subject to backup withholding or information
reporting with respect to the proceeds of the sale of a note within the United
States or conducted through certain U.S.-related financial intermediaries, if
the payor receives the statement described above and does not have actual
knowledge or reason to know that you are a United States holder, or you
otherwise establish an exemption.
Any amounts withheld under the backup withholding rules generally will be
allowed as a refund or a credit against your U.S. federal income tax liability
provided the required information is timely furnished to the IRS.
THE DISCUSSION ABOVE IS NOT INTENDED TO CONSTITUTE A COMPLETE ANALYSIS OF
ALL TAX CONSEQUENCES RELATING TO THE ACQUISITION, OWNERSHIP, OR DISPOSITION OF
THE NOTES. PROSPECTIVE PURCHASERS OF THE NOTES SHOULD CONSULT THEIR OWN TAX
ADVISORS CONCERNING THE TAX CONSEQUENCES OF THEIR PARTICULAR SITUATIONS.
S-34
UNDERWRITING
Subject to the terms and conditions of the underwriting agreement, the
underwriters named below have severally agreed to purchase from us the principal
amount of notes set forth opposite their names below:
PRINCIPAL AMOUNT
UNDERWRITERS OF NOTES
------------ ----------------
Deutsche Bank AG London..................................... E111,000,000
J.P. Morgan Securities Ltd. ................................ 111,000,000
Banc of America Securities Limited.......................... 24,000,000
Societe Generale............................................ 24,000,000
HSBC Bank plc............................................... 15,000,000
Mitsubishi Securities International plc..................... 15,000,000
------------
Total..................................................... E300,000,000
============
Deutsche Bank AG London and J.P. Morgan Securities Ltd. are the joint
bookrunners and lead managers for this offering of the notes.
The underwriting agreement provides that the obligations of the several
underwriters to purchase the notes included in this offering are subject to
approval of certain legal matters by counsel and to certain other conditions.
The underwriters are obligated to purchase all of the notes if they purchase any
of the notes.
We have been advised by the underwriters that they propose to offer the
notes initially at the public offering price set forth on the cover page of this
prospectus supplement. After the initial public offering of the notes is
completed, the underwriters may change the offering price and other selling
terms.
Although application has been made to list the notes on the Irish Stock
Exchange, the notes constitute a new issue of securities with no established
trading market. Upon listing on the Irish Stock Exchange, no assurance can be
given that the notes will remain so listed or, if the notes were to be delisted
from the Irish Stock Exchange, that alternative admission to listing, trading or
quotation for the notes would be obtained by another listing authority, exchange
or system. See "Listing and General Information." No assurance can be given as
to the liquidity of, or the trading markets for, the notes. Purchasers of the
notes may be required to pay stamp taxes and other charges in accordance with
the laws and practices of the country of purchase in addition to the issue price
set forth on the cover page hereof. We have been advised by the underwriters
that they intend to make a market in the notes, but they are not obligated to do
so and may discontinue such market-making at any time without notice.
In connection with the offering, SEC rules permit the underwriters to
engage in certain transactions that stabilize the price of the notes. These
transactions may consist of bids or purchases for the purpose of pegging, fixing
or maintaining the price of the notes. If the underwriters create a short
position in the notes in connection with the offering by selling a larger
principal amount of notes than as set forth on the cover page of this prospectus
supplement, the underwriters may reduce that short position by purchasing notes
in the open market.
In connection with the offering, Deutsche Bank AG London, or a person
acting for it, may over-allot or effect transactions with a view to supporting
the market price of the notes at a level higher than that which may otherwise
prevail for a limited period of time after the issuance of the notes. However,
Deutsche Bank AG London, or its agent, will not have any obligation to engage in
such transactions. Such stabilizing transactions, if begun, may be discontinued
at any time and may be brought to an end after a limited period of time.
S-35
We will pay transaction expenses, estimated to be approximately E190,000,
or U.S.$250,000, relating to the offering of the notes in addition to the
underwriting discounts appearing on the cover page of this prospectus
supplement.
We have agreed to indemnify the underwriters against certain liabilities,
including liabilities under the U.S. Securities Act of 1933, and to contribute
to payments the underwriters may be required to make in respect of any of these
liabilities.
The underwriters expect to deliver the notes against payment on or about
the date specified in the last paragraph of the cover page of this prospectus
supplement, which is the seventh business day following the date of this
prospectus supplement. Under Rule 15c6-1 of the SEC under the U.S. Securities
Exchange Act of 1934, trades in the secondary market generally are required to
settle in three business days, unless the parties to any such trade expressly
agree otherwise. Accordingly, if any purchaser wishes to trade the notes on the
date of this prospectus supplement or the three subsequent days, it will be
required, by virtue of the fact that the notes initially will settle on the
seventh business day following the date of this prospectus supplement, to
specify an alternate settlement cycle at the time of any such trade to prevent a
failed settlement.
The underwriters have informed us that they have directed the marketing of
the notes to institutional investors and other sophisticated investors who are
particularly knowledgeable in investment matters. According to the underwriters,
such institutional investors and sophisticated investors will purchase a minimum
of E500,000 of notes, with the vast majority purchasing notes in significantly
greater amounts.
Some of the underwriters and their affiliates may from time to time in the
ordinary course of business provide, and have provided in the past, investment
or commercial banking services to us and our affiliates. In particular,
affiliates of the underwriters are lenders under some of our credit facilities.
S-36
OFFERING RESTRICTIONS
The notes are offered for sale in those jurisdictions in the United States,
Europe, Asia and elsewhere where it is lawful to make such offers. The
distribution of this prospectus supplement and the accompanying prospectus and
the offering or sale of the notes in some jurisdictions may be restricted by
law. Persons into whose possession this prospectus supplement and the
accompanying prospectus come are required by us and the underwriters to inform
themselves about and to observe any applicable restrictions. This prospectus
supplement and the accompanying prospectus may not be used for or in connection
with an offer or solicitation by any person in any jurisdiction in which that
offer or solicitation is not authorized or to any person to whom it is unlawful
to make that offer or solicitation.
To the extent any underwriter is not registered in the United States as a
broker-dealer, it will not effect any sales of the notes in the United States
other than through a broker-dealer that is registered in the United States as a
broker-dealer.
Each underwriter has represented, warranted and agreed that (a) it has not
offered or sold and, prior to the expiry of the period of six months after the
date of issue of the notes, will not offer or sell any notes to persons in the
United Kingdom except to persons whose ordinary activities involve them in
acquiring, holding, managing or disposing of investments (as principal or agent)
for the purposes of their businesses or otherwise in circumstances that have not
resulted and will not result in an offer to the public in the United Kingdom
within the meaning of the Public Offers of Securities Regulations 1995, as
amended, (b) it has only communicated or caused to be communicated and will only
communicate or cause to be communicated any invitation or inducement to engage
in investment activity (within the meaning of section 21 of the Financial
Services and Markets Act 2000, or the FSMA, received by it in connection with
the issue or sale of any notes in circumstances in which section 21(1) of the
FSMA does not apply to us and (c) it has complied and will comply with all
applicable provisions of the FSMA with respect to anything done by it in
relation to the notes in, from or otherwise involving the United Kingdom.
We and each underwriter have represented, warranted and agreed that, in
connection with the initial distribution of notes, we and it have not offered or
sold, and will not offer or sell, directly or indirectly, notes to the public in
the Republic of France, and have not distributed or caused to be distributed and
will not distribute or cause to be distributed to the public in the Republic of
France, this prospectus supplement and the accompanying prospectus or any other
offering material relating to the notes, and that such offers, sales and
distributions have been and shall only be made in the Republic of France to
qualified investors (investisseurs qualifies), all as defined in and in
accordance with articles L411-1 and L411-2 of the Code Monetaire et Financier
and decret no. 98-880 dated October 1, 1998.
In connection with the initial placement of any notes in Germany, each
underwriter has represented, warranted and agreed that it will offer and sell
notes only in accordance with the provisions of the German Securities Selling
Prospectus Act and the German Securities Exchange Act (a) only for an aggregate
purchase price per purchaser of at least E 40,000 (or the foreign currency
equivalent) or such other amount as may be stipulated from time to time by
applicable German law or (b) as may otherwise be permitted in accordance with
applicable German law.
Each underwriter has acknowledged that the offering of the notes has not
been cleared by CONSOB (the Italian Securities Exchange Commission) pursuant to
Italian securities legislation and, accordingly, has represented, warranted and
agreed that no notes may be offered, sold or delivered, nor may copies of this
prospectus supplement and the accompanying prospectus or of any other document
relating to the notes be distributed in the Republic of Italy, except (a) to
professional investors (operatori qualificati), as defined in Article 31, second
paragraph, of CONSOB Regulation No. 11522 of July 1, 1998, as amended, or (b) in
circumstances that are exempted from the rules on solicitation of investments
pursuant to Article 100 of Legislative
S-37
Decree No. 58 of February 24, 1998 (the Financial Services Act) and Article 33,
first paragraph, of CONSOB Regulation No. 11971 of May 14, 1999, as amended. Any
offer, sale or delivery of the notes or distribution of copies of this
prospectus supplement or any other document relating to the notes in the
Republic of Italy under (a) or (b) above must be (1) made by an investment firm,
bank or financial intermediary permitted to conduct such activities in the
Republic of Italy in accordance with the Financial Services Act and Legislative
Decree No. 385 of September 1, 1993 (the Banking Act), (2) in compliance with
Article 129 of the Italian Banking Act and the implementing guidelines of the
Bank of Italy, as amended from time to time, pursuant to which the issue or the
offer of securities in the Republic of Italy may need to be preceded and
followed by an appropriate notice to be filed with the Bank of Italy depending,
inter alia, on the aggregate value of the securities issued or offered in the
Republic of Italy and their characteristics and (3) in compliance with any other
applicable laws and regulations.
Each underwriter has represented, warranted and agreed that issues of notes
may not, directly or indirectly, be offered or sold in The Netherlands with a
denomination of less than E 50,000 (or its equivalent in any other currency)
other than to persons who trade or invest in securities in the conduct of a
profession or business (which includes banks, stock brokers, insurance
companies, pension funds, other institutional investors and finance companies
and treasury departments of large enterprises), except for notes in respect of
which one of the exceptions in Article 3, or one of the exemptions under Article
4, of the Securities Transactions Supervision Act 1995 (Wet toezicht
effectenverkeer 1995) is applicable and the conditions attached to such
exemption or exception are complied with.
Each underwriter has represented, warranted and agreed that (a) except in
circumstances that do not constitute an offer to the public within the meaning
of the Irish Companies Act 1963 to 2003 (as amended from time to time), or the
Irish Acts, it has not offered or sold and will not offer or sell any notes in
Ireland or elsewhere, by means of any document prior to application for listing
of the notes being made and the Irish Stock Exchange having approved the
relevant listing particulars in accordance with the European Communities (Stock
Exchange) Regulations 1984, or the 1984 Regulations, and thereafter by means of
any document other than (1) the relevant listing particulars or (2) a form of
application issued in connection with the notes that indicates where the
relevant listing particulars can be obtained or inspected or that is issued with
the relevant listing particulars, (b) it has not made and will not make any
offer of the notes that would require a prospectus to be issued under the
European Communities (Transferable Securities and Stock Exchange) Regulations
1992 of Ireland and (c) it has complied with and will comply with all applicable
provisions of the Irish Acts, the 1984 Regulations and the Irish Investment
Intermediaries Act, 1995 (as amended) (including, without limitation, Sections
9, 23 (including any advertising restrictions made thereunder) and 50 and will
conduct itself in accordance with a code of conduct drawn up pursuant to Section
37) with respect to anything done by it in relation to the notes.
Each of the underwriters has represented, warranted and agreed that it has
not and will not offer, sell or deliver any of the notes directly or indirectly
or distribute this prospectus supplement and the accompanying prospectus or any
other offering material relating to the notes, in or from any jurisdiction
except under circumstances that will result in compliance with the applicable
laws and regulations thereof and that will not impose any obligations on us
except as set forth in the underwriting agreement.
S-38
LEGAL MATTERS
The validity of the notes offered hereby and certain legal matters relating
thereto will be passed upon on our behalf by Michael D. Cahn, our Senior
Associate General Counsel -- Securities and Assistant Secretary, and for the
underwriters by Simpson Thacher & Bartlett LLP, New York, New York. Mr. Cahn is
a full-time employee of ours and owns, and holds options to purchase shares of
our outstanding common stock. Certain legal matters will be passed upon on our
behalf by Pillsbury Winthrop LLP, New York, New York.
LISTING AND GENERAL INFORMATION
Application has been made to list the notes on the Irish Stock Exchange. In
connection with the listing application, we have deposited our restated
certificate of incorporation and a legal notice relating to the issuance of the
notes with the Irish Stock Exchange, where copies may be obtained upon request.
So long as any of the notes is outstanding, copies of these documents, together
with this prospectus supplement and the accompanying prospectus, the indenture
governing the notes, a copy of the global note representing the notes and our
current annual and quarterly reports, if any, and all future annual reports and
quarterly reports, will be made available for inspection at the main office in
Ireland of AIB/BNY Fund Management (Ireland) Limited, our paying agent for the
notes in Ireland. Copies of this prospectus supplement and the accompanying
prospectus will be available free of charge at the main office of our paying
agent in Ireland and at our principal executive offices located at 40
Westminster Street, Providence, Rhode Island 02903, United States. In addition,
copies of our annual reports and quarterly reports may be obtained free of
charge at that office.
The Directive 2004/109/EC of the European Parliament and of the Council
(2003/0045 (COD)), or the Transparency Directive, regarding the harmonization of
transparency requirements relating to financial information of issuers whose
securities are admitted to trading on a regulated market in the European Union,
such as the Irish Stock Exchange, is now required to be implemented by European
Union member states. If the Transparency Directive (or any other European or
national legislation) is implemented or takes effect in Ireland in a manner that
would require us to publish or produce financial statements according to
accounting principles or standards that are different from United States
generally accepted accounting principles, or that would otherwise impose
requirements on us that we, in our discretion, determine are not reasonable, we
may delist the notes. Under these circumstances, there can be no assurance that
we would obtain an alternative admission to listing, trading or quotation for
the notes by another listing authority, exchange or system within or outside the
European Union. A delisting of the notes from the Irish Stock Exchange may have
a material adverse effect on the ability of noteholders to resell the notes in
the secondary market.
We have obtained all necessary consents, approvals and authorizations in
connection with the issuance and performance of the notes. Resolutions
authorizing the issue and sale of the notes were adopted by our board of
directors.
So long as any of the notes remain outstanding and listed on the Irish
Stock Exchange, copies of the following items will be available at the main
office of the paying agent in Ireland and at our principal executive offices
located at the address set forth above:
- this prospectus supplement and the accompanying prospectus;
- all documents that are incorporated by reference in this prospectus
supplement;
- our restated certificate of incorporation and by-laws;
- our audited annual consolidated financial statements for our fiscal years
ended January 3, 2004 and January 1, 2005;
S-39
- our future annual, quarterly and current reports filed with the SEC;
- the indenture; and
- any documents relating to the foregoing items.
Except as disclosed in this prospectus supplement or the accompanying
prospectus, including the documents incorporated herein or therein by reference,
there has been no material adverse change in our financial position since
January 1, 2005.
Our annual reports on Form 10-K filed with the SEC and our annual reports
to our shareholders include our audited consolidated financial statements as of
the dates and for the periods identified in those reports, which financial
statements were prepared in accordance with United States generally accepted
accounting principles. Our quarterly reports on Form 10-Q filed with the SEC
include our unaudited consolidated financial statements as of the dates and for
the periods identified in those reports. Our independent registered public
accounting firm is Ernst & Young LLP, Boston, Massachusetts. See "Experts" in
the accompanying prospectus.
Except as disclosed in Item 3 and Note 15 to our consolidated financial
statements contained in our Annual Report on Form 10-K for the year ended
January 1, 2005, neither we nor any of our subsidiaries are subject to any legal
or arbitration proceedings (including any such proceedings that are pending or
threatened of which we are aware) that may have or have had during the recent
past (covering at least the twelve months prior to the date of this prospectus
supplement) a significant effect on us and our consolidated subsidiaries
financial position, taken as a whole.
The notes have been accepted for clearance through Clearstream, Luxembourg
and Euroclear and have been assigned the following identification numbers:
ISIN NUMBER COMMON CODE
----------- -----------
XS0214328493 021432849
S-40
WHERE YOU CAN FIND MORE INFORMATION
The SEC's rules allow us to "incorporate by reference" into this prospectus
supplement. This means that we can disclose important information to you by
referring you to another document. Any information referred to in this way is
considered part of this prospectus supplement from the date we file that
document. This prospectus supplement incorporates documents by reference, which
are not presented in or delivered with this prospectus supplement or the
accompanying prospectus.
All documents filed by us pursuant to Section 13(a), 13(c), 14 or 15(d) of
the U.S. Securities Exchange Act of 1934 after the date of this prospectus
supplement and before the termination of the offering are also incorporated into
this prospectus supplement by reference, although we are not incorporating any
information furnished in any of our Current Reports on Form 8-K filed under
either Item 2.02 or Item 7.01 (formerly Item 12 or Item 9 of that Form).
The following documents were filed by us with the SEC and are incorporated
into this prospectus supplement by reference:
- our Annual Report on Form 10-K for the fiscal year ended January 1, 2005
(filing date of February 24, 2005); and
- our Current Report on Form 8-K dated February 28, 2005 (filing date of
February 28, 2005), as amended by our Current Report on Form 8-K/A dated
February 28, 2005 (filing date of March 1, 2005).
Any statement contained in a document incorporated into this prospectus
supplement or the accompanying prospectus by reference will be deemed to be
modified or superseded for purposes of this prospectus supplement and the
accompanying prospectus to the extent that a statement contained in this
prospectus supplement or the accompanying prospectus or any other subsequently
filed document that is deemed to be incorporated by reference into this
prospectus supplement or the accompanying prospectus modifies or supersedes the
statement. Any statement so modified or superseded will not be deemed, except as
so modified or superseded, to constitute a part of this prospectus supplement or
the accompanying prospectus.
The documents incorporated into this prospectus supplement and the
accompanying prospectus by reference are available from us upon request. We will
provide a copy of any or all of the information that is incorporated into this
prospectus supplement or the accompanying prospectus by reference (not including
exhibits to the information unless those exhibits are specifically incorporated
by reference into this prospectus supplement or the accompanying prospectus) to
any person, including any beneficial owner, to whom a prospectus is delivered,
without charge, upon written or oral request.
Requests for documents should be directed to:
Textron Inc.
40 Westminster Street
Providence, Rhode Island 02903
Attention: Investor Relations Department
We file reports, proxy statements and other information with the SEC.
Copies of our reports, proxy statements and other information may be inspected
and copied at the public reference facilities maintained by the SEC at:
SEC Public Reference Room
450 Fifth Street, N.W.
Washington, D.C. 20549
S-41
For further information on the SEC's Public Reference Room, please call the
SEC at 1-800-SEC-0330. The SEC maintains an Internet site at http://www.sec.gov
that contains reports, proxy and information statements and other information
regarding companies that file electronically, including us. The accompanying
prospectus is part of a registration statement filed by us with the SEC. The
full registration statement can be obtained from the SEC, or directly from us,
as indicated above. In addition, these reports and other information are also
available through the New York Stock Exchange, 20 Broad Street, New York, New
York 10005, on which our common stock is listed. Information about us is also
available at our Internet site at http://www.textron.com. However, the
information on our Internet site is not a part of this prospectus supplement or
the accompanying prospectus.
S-42
PROSPECTUS
$2,000,000,000
TEXTRON INC.
COMMON STOCK, PREFERRED STOCK,
SENIOR DEBT SECURITIES AND SUBORDINATED DEBT SECURITIES
---------------------
Textron Inc. may periodically sell any or all of the following securities
to the public:
- common stock;
- preferred stock; and
- debt securities, including senior debt securities and subordinated debt
securities.
Specific terms of our preferred stock and our debt securities will be set
forth in a prospectus supplement with respect to the specific type or types of
securities then being offered.
The securities described in this prospectus may be offered in amounts, at
prices and on terms to be determined at the time of the offering. However, the
aggregate initial public offering price of all such securities will not exceed
$2,000,000,000 or its equivalent, based on the applicable exchange rate at the
time of sale, if our debt securities are issued with principal amounts
denominated in one or more foreign currencies or currency units as designated by
us.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS
PROSPECTUS OR THE ACCOMPANYING PROSPECTUS SUPPLEMENT IS TRUTHFUL OR COMPLETE.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
WE URGE YOU TO CAREFULLY READ THIS PROSPECTUS, INCLUDING THE FACTORS
DESCRIBED UNDER "RISK FACTORS" BEGINNING ON PAGE 2, AND THE ACCOMPANYING
PROSPECTUS SUPPLEMENT, WHICH WILL DESCRIBE THE SPECIFIC TERMS OF OUR COMMON OR
PREFERRED STOCK OR OUR DEBT SECURITIES BEING OFFERED, BEFORE YOU MAKE YOUR
INVESTMENT DECISION.
This prospectus may not be used to sell securities unless it is accompanied
by a prospectus supplement.
The date of this prospectus is August 4, 2004.
No person is authorized to give any information or to make any
representations other than those contained or incorporated by reference in this
prospectus or the accompanying prospectus supplement and, if given or made, such
information or representations must not be relied upon as having been
authorized. This prospectus and the accompanying prospectus supplement do not
constitute an offer to sell or the solicitation of an offer to buy any
securities other than the securities described in this prospectus and the
accompanying prospectus supplement or an offer to sell or the solicitation of an
offer to buy such securities in any circumstance in which such offer or
solicitation is unlawful. Neither the delivery of this prospectus or the
accompanying prospectus supplement, nor any sale made under this prospectus or
the accompanying prospectus supplement shall, under any circumstances, create
any implication that there has been no change in the affairs of Textron since
the date of this prospectus or the accompanying prospectus supplement or that
the information contained or incorporated by reference in this prospectus or the
accompanying prospectus supplement is correct as of any time subsequent to the
date of such information.
TABLE OF CONTENTS
PAGE
----
About this Prospectus....................................... 1
Textron..................................................... 1
Risk Factors................................................ 2
Use of Proceeds............................................. 5
Description of Capital Stock................................ 5
Description of Debt Securities.............................. 10
Plan of Distribution........................................ 16
Legal Opinions.............................................. 17
Experts..................................................... 17
Where You Can Find More Information......................... 17
i
ABOUT THIS PROSPECTUS
This prospectus is part of a registration statement that we filed with the
Securities and Exchange Commission, or the SEC, using a "shelf" registration
process. Under this shelf registration process, we may sell any combination of
the securities described in this prospectus in one of more offerings up to an
aggregate total initial public offering price of $2,000,000,000. This prospectus
provides you with a general description of the securities we may offer. Each
time we sell securities, we will provide a prospectus supplement accompanying
this prospectus that will contain specific information about the terms of that
offering, which we refer to as the "prospectus supplement" in this prospectus.
The prospectus supplement may also add, update or change information contained
in this prospectus. You should read both this prospectus and the prospectus
supplement, together with additional information described under the heading
"Where You Can Find More Information."
References in this prospectus and the prospectus supplement to "Textron,"
"we," "us" and "our" are to Textron Inc. and, as applicable, its subsidiaries.
When we refer to the "securities" in this prospectus, we mean any of our common
or preferred stock or our debt securities that we may offer with this
prospectus, unless we state otherwise.
TEXTRON
Textron Inc. is a global, multi-industry company with operations in five
business segments -- Bell, Cessna, Fastening Systems, Industrial and Finance.
Our products include helicopters and tiltrotor aircraft, light and mid-size
business jets, turbo-prop and piston-powered aircraft, aerospace and defense
systems, engineered fastening systems and solutions, plastic fuel tanks, golf
cars and utility vehicles, turf-care equipment, wire and cable installation and
maintenance tools and other industrial products. We also are a leading
commercial finance company for select markets.
We are incorporated under the laws of Delaware. Our principal executive
offices are located at 40 Westminster Street, Providence, Rhode Island 02903 and
our telephone number is (401) 421-2800.
1
RISK FACTORS
In considering whether or not to purchase our common or preferred stock or
our debt securities, you should carefully consider the risks described below and
the other information we have included or incorporated by reference in this
prospectus or the prospectus supplement.
BENEFITS FROM RESTRUCTURING AND OTHER COST IMPROVEMENT PROGRAMS COULD TAKE
LONGER THAN EXPECTED AND MAY NOT BE AS SUCCESSFUL AS PLANNED.
To improve returns at core businesses and to complete the integration of
certain acquisitions, we began a restructuring program in 2000. Although the
program will be substantially complete by the end of 2004, operating
efficiencies achieved from the restructuring may not be sustained, and the
operating efficiencies expected in the future may be lower or may take longer to
materialize than anticipated. Any of these results could have an adverse effect
on our profitability.
WE MAY BE UNABLE TO EFFECTIVELY MITIGATE CUSTOMER PRICING PRESSURES.
In some markets, particularly where we deliver component products and
services to original equipment manufacturers, we face increasing customer
demands for price reductions, which are sometimes contractually obligated. In
most cases, we are able to offset these reductions through technological
advances or by lowering our cost base through improved operating and supply
chain efficiencies. However, if we are unable to effectively mitigate future
customer pricing pressures, our financial results of operations could be
adversely affected.
DELAYS IN AIRCRAFT DELIVERY SCHEDULES OR CANCELLATION OF ORDERS MAY ADVERSELY
AFFECT OUR FINANCIAL RESULTS.
The demand for business jets is highly correlated with corporate profits on
a lagged basis. Customers of business jets, including sellers of fractional
share interests, may respond to weak economic conditions by delaying delivery of
orders or canceling orders. Over the longer term, weakness in the market for new
jets may result in fewer hours flown and consequently lower demand for spare
parts and maintenance. Weak economic conditions may also cause reduced demand
for used business jets. We may accept used aircraft on trade-in and are subject
to fluctuations in the fair market value of the aircraft while in inventory.
Reduced demand for new business jets, spare parts and maintenance, or for used
business jets, can have an adverse effect on our financial results of
operations.
DEVELOPING NEW PRODUCTS AND TECHNOLOGIES ENTAILS SIGNIFICANT RISKS AND
UNCERTAINTIES.
We are exposed to risks that are unique to the products and services we
provide for the U.S. government. A significant portion of Bell's future business
is contingent on the design, development and acceptance of the V-22 Osprey
aircraft. This technology, in development for over a decade, is not yet in
full-rate production. The U.S. government is the sole customer for this product
currently, and a change in the appropriation for this project could have a
negative effect on our earnings and financial condition.
In our commercial business, delays in the development and certification of
new aircraft products could affect our financial results of operations. These
delays could be caused by production changes to meet customer demands,
coordination with joint venture partners or failure on the part of our suppliers
to deliver product as agreed.
WE HAVE CUSTOMER CONCENTRATION TO THE U.S. GOVERNMENT.
We derive approximately 10% of our revenue from sales to a variety of
services and departments within the U.S. government. We expect that these sales
will grow as a percentage of revenue over the foreseeable future. Our ability to
compete successfully for and retain business is highly dependent on technical
excellence, management proficiency, strategic alliances, cost-effective
performance and the ability to recruit and retain key personnel. U.S. government
programs are subject to uncertain future funding
2
levels, which can result in the extension or termination of programs. Our
business is also highly sensitive to changes in national and international
priorities and U.S. government budgets.
OUR U.S. GOVERNMENT CONTRACTS MAY BE TERMINATED AT ANY TIME AND MAY CONTAIN
OTHER UNFAVORABLE PROVISIONS.
The U.S. government typically can terminate or modify any of its contracts
with us either for its convenience or if we default by failing to perform under
the terms of the applicable contract. A termination arising out of our default
could expose us to liability and have an adverse effect on our ability to
re-compete for future contracts and orders.
If any of our contracts are terminated by the U.S. government, our backlog
would be reduced by the expected value of the remaining terms of such contracts
and our financial condition and results of operations could be adversely
affected. In addition, on those contracts for which we are teamed with others
and are not the prime contractor, the U.S. government could terminate a prime
contract under which we are a subcontractor, irrespective of the quality of our
services as a subcontractor.
In addition to unfavorable termination provisions, our U.S. government
contracts contain provisions that allow the U.S. government to unilaterally
suspend us from receiving new contracts pending resolution of alleged violations
of procurement laws or regulations, reduce the value of existing contracts,
issue modifications to a contract and control and potentially prohibit the
export of our products, services and associated materials.
COST OVER-RUNS ON OUR CONTRACTS COULD SUBJECT US TO LOSSES OR ADVERSELY AFFECT
OUR FUTURE BUSINESS.
Under fixed-price contracts, we receive a fixed price irrespective of the
actual costs we incur, and consequently, any costs in excess of the fixed price
are absorbed by us. Under time and materials contracts, we are paid for labor at
negotiated hourly billing rates and for certain expenses. Under cost
reimbursement contracts, which are subject to a contract-ceiling amount, we are
reimbursed for allowable costs and paid a fee, which may be fixed or performance
based. However, if our costs exceed the contract ceiling or are not allowable
under the provisions of the contract or applicable regulations, we may not be
able to obtain reimbursement for all such costs. Under each type of contract, if
we are unable to control costs we incur in performing under the contract, our
financial condition and results of operations could be adversely affected. Cost
over-runs also may adversely affect our ability to sustain existing programs and
obtain future contract awards.
Contract and program accounting require judgment relative to assessing
risks, estimating contract revenues and costs and making assumptions for
schedule and technical issues. Due to the size and nature of many of our
contracts, the estimation of total revenues and cost at completion is
complicated and subject to many variables. Assumptions have to be made regarding
the length of time to complete the contract because costs also include expected
increases in wages and prices for materials. Incentives or penalties related to
performance on contracts are considered in estimating sales and profit rates and
are recorded when there is sufficient information for us to assess anticipated
performance. Estimates of award fees are also used in estimating sales and
profit rates based on actual and anticipated awards.
Because of the significance of the estimates described above, it is likely
that different amounts could be recorded if we used different assumptions or if
the underlying circumstances were to change. Changes in underlying assumptions,
circumstances or estimates may adversely affect our future financial results of
operations.
3
WE MAY MAKE ACQUISITIONS THAT INCREASE THE RISKS OF OUR BUSINESS.
We may enter into acquisitions in the future in an effort to enhance
shareowner value. Acquisitions involve a certain amount of risks and
uncertainties such as:
- the difficulty in integrating newly-acquired businesses and operations in
an efficient and cost-effective manner and the risk that we encounter
significant unanticipated costs or other problems associated with
integration;
- the challenges in achieving strategic objectives, cost savings and other
benefits expected from acquisitions;
- the risk that the acquired businesses' markets do not evolve as
anticipated and that the technologies acquired do not prove to be those
needed to be successful in those markets;
- the risk that we pay a purchase price that exceeds what the future
results of operations would have merited;
- the potential loss of key employees of the acquired businesses; and
- the risk of diverting the attention of senior management from our
existing operations.
OUR BUSINESS COULD BE ADVERSELY AFFECTED BY STRIKES OR WORK STOPPAGES BY OUR
UNIONIZED EMPLOYEES.
Approximately 16,000 of our employees are unionized, which represented
approximately 37% of our employees at December 31, 2003. As a result, we may
experience work stoppages, which could negatively impact our ability to
manufacture our products on a timely basis, resulting in strain on our
relationships with our customers and a loss of revenues. In addition, the
presence of unions may limit our flexibility in responding to competitive
pressures in the marketplace, which could have an adverse effect on our
financial results of operations.
In addition to our workforce, the workforces of many of our customers and
suppliers are represented by labor unions. Work stoppages or strikes at the
plants of our key customers could result in delayed or cancelled orders for our
products. Work stoppages and strikes at the plants of our key suppliers could
disrupt our manufacturing processes. Any of these results could adversely affect
our financial results of operations.
OUR TEXTRON FINANCE BORROWING GROUP'S BUSINESS IS DEPENDENT ON ITS CONTINUING
ACCESS TO THE CAPITAL MARKETS.
Our financings are conducted through two borrowing groups, Textron Finance
and Textron Manufacturing. Textron Finance consists of Textron Financial
Corporation and its subsidiaries, which are the entities through which we
operate in the Finance segment. Textron Finance relies on its access to the
capital markets to fund asset growth and to meet debt obligations and other
commitments. Textron Finance raises funds through commercial paper borrowings,
issuances of medium-term notes and other term debt securities, and syndication
and securitization of receivables. Additional liquidity is provided to Textron
Finance through committed bank lines of credit. Much of the capital markets
funding is made possible by the maintenance of credit ratings that are
acceptable to investors. If the credit ratings of Textron Finance were to be
lowered, it might face higher borrowing costs, a disruption of its access to the
capital markets or both. Textron Finance could also lose access to financing for
other reasons, such as a general disruption of the capital markets. Any
disruption of Textron Finance's access to the capital markets could adversely
affect its business and our profitability.
IF TEXTRON FINANCE IS UNABLE TO MAINTAIN PORTFOLIO CREDIT QUALITY, OUR FINANCIAL
PERFORMANCE COULD BE ADVERSELY AFFECTED.
Textron Finance has taken steps to eliminate non-core portfolios and focus
on key markets. A key determinant of financial performance at Textron Finance
will be its ability to maintain the quality of loans,
4
leases and other credit products in the portfolios that remain and to continue
to generate profitable new business. The level of credit losses we may
experience at Textron Finance is heavily dependent upon economic factors,
including debt service burden and interest rates. Weak economic conditions may
result in higher than anticipated provisions for credit loss, which could
adversely affect our financial performance.
THE LEVEL OF OUR RESERVES ARE SUBJECT TO MANY UNCERTAINTIES AND MAY NOT BE
ADEQUATE TO COVER WRITEDOWNS OR LOSSES.
In addition to reserves at Textron Finance, we establish reserves in
various of our businesses to cover uncollectible accounts receivable, excess or
obsolete inventory, fair market value writedowns on used aircraft and golf cars,
recall campaigns, warranty costs and litigation. These reserves are subject to
adjustment from time to time depending on actual experience and are subject to
many uncertainties.
In the case of litigation matters for which reserves have not been
established because the loss is not deemed probable, it is reasonably possible
such matters could be decided against us and could require us to pay damages or
make other expenditures in amounts that are not presently estimable.
CURRENCY, COMMODITY PRICE AND INTEREST RATE FLUCTUATIONS MAY ADVERSELY AFFECT
OUR RESULTS.
We are exposed to a variety of market risks, including the effects of
changes in foreign currency exchange rates, commodity prices and interest rates.
We monitor and manage these exposures as an integral part of our overall risk
management program. In some cases, we purchase hedges or enter into contracts to
insulate our financial results of operations from these fluctuations.
Nevertheless, changes in currency exchange rates, commodity prices and interest
rates can have adverse effects on our financial results of operations.
THE INCREASING COSTS OF CERTAIN EMPLOYEE AND RETIREE BENEFITS COULD ADVERSELY
AFFECT OUR RESULTS.
Our earnings and cash flow may be impacted by the amount of income or
expense we record and expend for our employee benefit plans. This is
particularly true with income or expense from our pension plans, which are
dependent on returns in worldwide debt and equity markets and assumptions used
to determine the present value of our benefit obligations.
In addition, medical inflation in the U.S. is rising at a rate faster than
growth in GDP. Continued medical inflation in excess of the growth in GDP
increases the risk that we will not be able to mitigate the rising costs of
medical benefits. Increases to the costs of pension and medical benefits could
have an adverse effect on our financial results of operations.
USE OF PROCEEDS
We expect to use all of the net proceeds from the sale of the securities
described in this prospectus for general corporate purposes, including, but not
limited to, any of the following: capital expenditures, investments in
subsidiaries, working capital, repurchases of shares of our outstanding common
stock, potential acquisitions and other business opportunities.
DESCRIPTION OF CAPITAL STOCK
We have authority to issue up to 515,000,000 shares of capital stock, of
which 15,000,000 shares may be designated as Textron preferred stock, no par
value, and 500,000,000 shares may be designated as Textron common stock, $.125
par value. As of January 3, 2004, 165,340 shares of Textron preferred stock were
outstanding and 137,153,849 shares of Textron common stock were outstanding.
When we refer to "Textron," "we," "our" and "us" in this section, we mean
Textron Inc. and not to its subsidiaries.
5
COMMON STOCK
Voting rights. Each holder of our common stock is entitled to one vote for
each share held on all matters to be voted upon by stockholders.
Dividends. The holders of our common stock, after any preferences of
holders of any of our preferred stock, are entitled to receive dividends as
determined by our board of directors.
Liquidation and dissolution. If we are liquidated or dissolved, the
holders of our common stock will be entitled to share in our assets available
for distribution to stockholders in proportion to the amount of our common stock
they own. The amount available for distribution to common stockholders is
calculated after payment of all liabilities and after holders of our preferred
stock receive their preferential share of our assets.
Other terms. Holders of our common stock have no right to:
- convert the stock into any other security;
- have the stock redeemed; or
- purchase additional stock or to maintain their proportionate ownership
interest.
Our common stock does not have cumulative voting rights.
Directors' liability. Our restated certificate of incorporation provides
that no member of our board of directors will be personally liable to Textron or
its stockholders for monetary damages for breaches of their fiduciary duties as
a director, except for liability:
- for any breach of the director's legal duty to act in the best interests
of Textron and its stockholders;
- for acts or omissions by the director in bad faith or that involve
intentional misconduct or an intentional violation of the law;
- for declaring dividends or authorizing the purchase or redemption of
shares in violation of Delaware law; or
- for transactions where the director derived an improper personal benefit.
Our by-laws also require us to indemnify directors and officers to the
fullest extent permitted by Delaware law.
Transfer agent and registrar. Wachovia Bank, N.A. is transfer agent and
registrar for our common stock.
Stockholder rights plan. Under Delaware law, a corporation may create and
issue rights entitling the holders of such rights to purchase from the
corporation shares of its capital stock of any class or classes. We have entered
into a rights agreement that provides for the creation and issuance of preferred
stock purchase rights. The terms of our rights agreement are complex and not
easily summarized. The summary that follows may not contain all of the
information that is important to you. You should carefully read our rights
agreement, which is filed as an exhibit to the registration statement of which
this prospectus is a part filed by us with the SEC.
Currently, each outstanding share of our common stock has attached to it
one-half of a preferred stock purchase right. One preferred stock purchase right
entitles the holder to buy one one-hundredth of a share of a series of our
preferred stock. The purchase price per one one-hundredth of a share of our
preferred stock is $250, but this purchase price may be adjusted in some
circumstances.
6
The preferred stock purchase rights are exercisable only in some
circumstances in which a person or group acquires or offers to acquire
beneficial ownership of 15% or more of our common stock. Generally:
- if a person or group acquires or has the right to acquire more than 15%
of our common stock, then each preferred stock purchase right will
entitle the holder to purchase a number of shares of our common stock
with a then current market value equal to twice the purchase price,
unless this amount is adjusted. The holder of a preferred stock purchase
right will not be entitled to exercise this right in connection with a
transaction that our board of directors determines to be at a fair price
and in the best interests of Textron; and
- each preferred stock purchase right will entitle the holder to purchase a
number of shares of the acquiror's common stock having a then current
market value equal to twice the purchase price, unless this amount is
adjusted, if:
-- we merge into another entity;
-- another entity merges into us; or
-- we sell more than 50% of our assets or earning power.
Any rights that are or were owned by an acquiror of more than 15% of our
outstanding common stock will be null and void.
The rights will expire on September 27, 2005, unless earlier redeemed by
us. At its option, our board of directors may redeem all the outstanding rights
at a price of $.05 per right prior to ten days following the time that an
acquiror obtains 15% or more of our outstanding common stock.
The rights may have anti-takeover effects and may cause substantial
dilution to a person or group that attempts to acquire Textron. The rights,
however, should not affect any potential acquiror willing to make an offer at a
price that is fair and in the best interest of Textron and its stockholders.
In addition, the following provisions in our restated certificate of
incorporation, by-laws and Delaware law may have anti-takeover effects.
Classified board of directors. Our restated certificate of incorporation
divides our board of directors into three classes. Each class is to consist as
nearly as possible of one-third of the directors. Each director serves for a
term of three years and until his or her successor is elected and qualified. The
number of directors of Textron will be fixed from time to time by our board of
directors.
Removal of directors by stockholders. Delaware law and our by-laws provide
that members of a classified board of directors may be removed only for cause by
a vote of the holders of a majority of the outstanding shares entitled to vote
on the election of directors.
Stockholder nomination of directors. Our by-laws provide that a
stockholder must notify us in writing of any stockholder nomination of a
director at least 90 but not more than 120 days prior to the date of the annual
meeting for the election of directors. However, if the date for the annual
meeting is not within 30 days of the anniversary of the immediately preceding
year's annual meeting, or if a stockholder wishes to make a nomination at a
special meeting held instead of an annual meeting, the notice must be received
by us no later than ten days after the date notice of the meeting is mailed or
the date the meeting date is publicly disclosed, whichever occurs first.
No action by written consent. Our restated certificate of incorporation
provides that our stockholders may act only at duly called meetings of
stockholders and by unanimous written consent.
10% stockholder provision. Under our restated certificate of incorporation,
the holders of at least two-thirds of the outstanding shares of our voting stock
must approve transactions between a 10% stockholder
7
and Textron or any of its subsidiaries. The vote of two-thirds of the
outstanding shares of our voting stock is required unless:
- a majority of disinterested directors who were directors before the 10%
stockholder became a 10% stockholder approve the transaction; or
- the form and value of the consideration to be received by our
stockholders is fair in relation to the price paid by the 10% stockholder
in connection with his or her prior acquisition of our stock.
Under Delaware law, a vote of the holders of at least two-thirds of the
outstanding shares of our voting stock is required to amend or repeal this
provision of our restated certificate of incorporation.
The terms of our restated certificate of incorporation and by-laws outlined
above are complex and not easily summarized. The above summary may not contain
all of the information that is important to you. Accordingly, you should
carefully read our restated certificate of incorporation and by-laws, which are
incorporated into this prospectus by reference in their entirety.
Delaware business combination statute. We are subject to Section 203 of
the Delaware General Corporation Law. Section 203 restricts some types of
transactions and business combinations between a corporation and a 15%
stockholder. A 15% stockholder is generally considered by Section 203 to be a
person owning 15% or more of the corporation's outstanding voting stock. A 15%
stockholder is referred to as an "interested stockholder." Section 203 restricts
these transactions for a period of three years from the date the stockholder
acquired 15% or more of our outstanding voting stock. With some exceptions,
unless the transaction is approved by our board of directors and the holders of
at least two-thirds of our outstanding voting stock, Section 203 prohibits
significant business transactions such as:
- a merger with, disposition of significant assets to or receipt of
disproportionate financial benefits by the 15% stockholder; or
- any other transaction that would increase the 15% stockholder's
proportionate ownership of any class or series of our capital stock.
The shares held by the 15% stockholder are not counted as outstanding when
calculating the two-thirds of the outstanding voting stock needed for approval.
The prohibition against these transactions does not apply if:
- prior to the time that any stockholder became a 15% stockholder, our
board of directors approved either the business combination or the
transaction in which such stockholder acquired 15% or more of our
outstanding voting stock; or
- the 15% stockholder owns at least 85% of the outstanding voting stock of
the corporation as a result of the transaction in which such stockholder
acquired 15% or more of our outstanding voting stock.
Shares held by persons who are both directors and officers or by some types
of employee stock plans are not counted as outstanding when making this
calculation.
PREFERRED STOCK
Our board of directors may issue shares of our preferred stock, without
shareholder approval, and may determine their terms, including the following:
- the designation of the series of our preferred stock and the number of
shares that will constitute such series;
- the public offering price;
- any discount paid to, or received by, any underwriters;
- the voting powers, if any;
8
- the dividend rate of such series and any preferences in relation to the
dividends payable on any other class or series of our capital stock and
any limitations or conditions on the payment of dividends;
- the redemption price and terms of redemption, if redeemable;
- the amount payable upon our liquidation, dissolution or winding up;
- the amount of a sinking fund, if any;
- conversion rights, if any, including the conversion price or rate of
exchange and the adjustment, if any, to be made to the conversion price
or rate of exchange;
- any other designation, preferences and relative, participating, optional
or other special rights; and
- any other qualifications, limitations or restrictions relating to our
preferred stock.
Our board of directors may delegate the power to determine the terms listed
above to a committee of our board of directors. The terms of our preferred
stock, as determined by our board of directors or that committee, will be
described in the prospectus supplement. In addition to the terms set by our
board of directors or that committee, Delaware law provides that the holders of
our preferred stock have the right to vote separately as a class on any proposal
involving a fundamental change in the rights of holders of such preferred stock.
9
DESCRIPTION OF DEBT SECURITIES
GENERAL
The following is a general description of the debt securities that may be
issued from time to time by us. The particular terms relating to each debt
security will be set forth in the prospectus supplement.
The debt securities will be our direct, unsecured obligations. Our senior
debt securities will rank equally with all of our other senior and
unsubordinated debt. Our subordinated debt securities will have a junior
position to all of our senior debt.
Since a significant part of our operations are conducted through
subsidiaries, a significant portion of our cash flow and, consequently, our
ability to service debt, including our debt securities, are dependent upon the
earnings of our subsidiaries and the transfer of funds by those subsidiaries to
us in the form of dividends or other transfers, supplemented with borrowings.
Some of our operating subsidiaries may finance their operations by borrowing
from external creditors. Lending agreements between some of the operating
subsidiaries and external creditors may restrict the amount of net assets
available for cash dividends and other payments to us.
In addition, holders of our debt securities will have a junior position to
claims of creditors of any of our subsidiaries, including trade creditors,
debtholders, secured creditors, taxing authorities, guarantee holders and any
preferred stockholders, except to the extent that we are recognized as a
creditor of any such subsidiary. Any claims of Textron as the creditor of its
subsidiary would be subordinate to any security interest in the assets of such
subsidiary and any indebtedness of such subsidiary senior to that held by us.
Each series of our debt securities will be issued under an indenture dated
as of September 10, 1999 between us and The Bank of New York, as trustee.
We have summarized below the material provisions of the indenture. The
indenture is filed as an exhibit to the registration statement of which this
prospectus is a part and is incorporated into this prospectus by reference. You
should read the indenture for provisions that may be important to you. In the
summary, we have included references to section numbers of the indenture so that
you can easily locate these provisions. When we refer to "Textron," "we," "our"
and "us" in this section, we mean Textron Inc. and not to its subsidiaries.
TERMS APPLICABLE TO SENIOR DEBT SECURITIES AND SUBORDINATED DEBT SECURITIES
No limit on debt amounts. The indenture does not limit the amount of debt
that can be issued under the indenture. That amount is set from time to time by
our board of directors. (sec. 3.1)
Prospectus supplements. The prospectus supplements will contain the
specific terms for our debt securities including some or all of the following:
- title of the securities;
- offering price;
- any limit on the amount that may be issued;
- whether or not our debt securities will be issued in global form and who
the depository will be;
- maturity date(s);
- interest rate or the method of computing the interest rate;
- dates on which interest will accrue, or how the dates will be determined,
the interest payment dates and any related record dates;
- place(s) where payments will be made;
10
- terms and conditions on which our debt securities may be redeemed at the
option of Textron;
- date(s), if any, on which, and the price(s) at which Textron is obligated
to redeem, or at the holder's option to purchase, our debt securities and
related terms and provisions;
- any provisions granting special rights to holders when a specified event
occurs;
- details of any required sinking fund payments;
- any changes to or additional events of default or covenants;
- any special tax implications of our debt securities;
- subordination terms of any of our subordinated debt securities;
- terms, if any, on which a series of our debt securities may be
convertible into or exchangeable for our common or preferred stock or our
other debt securities, including provisions as to whether conversion or
exchange is mandatory, at the option of the holder or at our option; and
- any other terms that are not inconsistent with the indenture.
Covenants. Under the indenture, we will:
- pay the principal, interest and any premium on our debt securities when
due (sec. 10.1); and
- maintain a place of payment (sec. 10.2).
Consolidation, merger and sale of assets. The indenture provides that we
will not consolidate with or merge into any other corporation or transfer our
assets substantially as an entirety unless:
- the successor is a corporation organized in the U.S. and expressly
assumes the due and punctual payment of the principal and interest on all
our debt securities issued under the indenture and the performance of
every other covenant of the indenture; and
- immediately after we consolidate or merge, no event of default and no
event that, after notice or lapse of time, or both, would become an event
of default shall have happened and be continuing. (sec. 8.1)
Upon any such consolidation, merger or transfer, the successor corporation
shall be substituted for us under the indenture and we shall be relieved of all
obligations and covenants under the indenture and our debt securities.
(sec. 8.2)
Events of default. The indenture provides that the following are events of
default with respect to any series of debt securities:
- we fail to pay the principal, any premium or any sinking fund payment on
such series when due;
- we fail to pay interest on such series within 30 days of the due date;
- we fail to observe or perform any other covenant in the indenture (other
than those included expressly for the benefit of debt securities of
series other than such series) and such failure continues for 90 days
after we receive notice from the trustee or holders of at least 25% in
aggregate principal amount of our outstanding debt securities of that
series; and
- certain events of bankruptcy or insolvency, whether voluntary or not.
(sec. 5.1).
An event of default with respect to one series of our debt securities does
not necessarily constitute an event of default with respect to any other series
of our debt securities.
The trustee may withhold notice to the holders of any series of our debt
securities of any default with respect to such series (except in the payment of
principal, premium or interest) if it considers such withholding to be in the
interests of such holders. (sec. 6.2)
11
If an event of default with respect to any series of our debt securities
shall have occurred and be continuing, the trustee or the holders of 25% in
aggregate principal amount of our debt securities of such series may declare the
principal of all our debt securities of such series, or in the case of
discounted debt securities, such portion of the discounted debt securities as
may be described in the prospectus supplement, to be immediately due and
payable. (sec. 5.2)
The indenture contains a provision entitling the trustee to be indemnified
by the holders before proceeding to exercise any right or power at the request
of any of the holders. (sec. 6.3) The indenture provides that the holders of a
majority in principal amount of our outstanding debt securities of any series
may direct the time, method and place of conducting any proceeding for any
remedy available to the trustee or with respect to our debt securities.
(sec. 5.12) The right of a holder to institute a proceeding with respect to the
indenture is subject to certain conditions, including giving notice and
indemnity to the trustee. However, the holder has an absolute right to receipt
of principal, premium, if any, and interest at the stated maturities (or, in the
case of redemption, on the redemption date) or to institute suit for the
enforcement of such payment. (sec.sec. 5.7 and 5.8)
The holders of a majority in principal amount of our outstanding debt
securities of any series may waive any past defaults except:
- a default in payment of the principal or interest; and
- a default in respect of a covenant or provision of the indenture that
cannot be amended or modified without the consent of the holder of each
debt security affected. (sec. 5.13)
We will periodically file statements with the trustees regarding our
compliance with covenants in the indenture. (sec. 10.6)
Modifications and amendments. Subject to the qualifications set forth
below, modifications and amendments to the indenture may be made by us and the
trustee without the consent of the holders of a majority in principal amount of
our outstanding debt securities. (sec. 9.1) The following changes can only be
made with the consent of each affected holder:
- a change in the terms of payment of principal, premium, or interest; and
- a reduction in the percentage of holders necessary to amend the indenture
or waive any default. (sec. 9.2)
Satisfaction and discharge. Unless otherwise specified in the prospectus
supplement, we can satisfy our obligations under our outstanding debt securities
and need not comply with most of the covenants in the indenture if we deposit
with the trustee funds sufficient to pay all amounts owed in the future and
obtain an opinion of counsel that the deposit itself will not cause the holders
of our debt securities to recognize gain or loss for income tax purposes.
(sec. 4.2)
Upon our request, the indenture will no longer be effective for almost all
purposes if either:
- all outstanding securities have been delivered to the trustee for
cancellation; or
- the only securities that are still outstanding have, or within one year
will, become due and payable or are to be called for redemption, and we
have deposited with the trustee funds that are sufficient to make all
future payments. (sec. 4.1)
Concerning the debt trustee. The trustee from time to time extends credit
facilities to us and certain of our subsidiaries. We and certain of our
subsidiaries may also maintain bank accounts, borrow money and have other
customary banking or investment banking relationships with the trustee in the
ordinary course of business.
Form, exchange, transfer. Unless otherwise specified in the prospectus
supplement, our debt securities will be issued in registered form without
coupons. They may also be issued in global form with accompanying book-entry
procedures as described below.
12
A holder of our debt securities of any series can exchange the such debt
securities for other debt securities of the same series, in any authorized
denomination and with the same terms and aggregate principal amount. They are
transferrable at the corporate trust office of the trustee or at any transfer
agent designated by us for that purpose. No charge will be made for any such
exchange or transfer except for any tax or governmental charge related to such
exchange or transfer. (sec. 3.5)
Global securities. The indenture provides that the registered debt
securities may be issued in the form of one or more fully registered global
securities that will be deposited with and registered in the name of a
depositary or with a nominee for a depositary identified in the prospectus
supplement. (sec. 3.1)
The specific terms of the depositary arrangement with respect to any of our
debt securities to be represented by a registered global security will be
described in the prospectus supplement.
Ownership of beneficial interests in a registered global security will be
limited to persons that have accounts with the depositary for such registered
global security ("participants") or persons that may hold interests through
participants. Upon the issuance of a registered global security, the depositary
will credit, on its book-entry registration and transfer system, the
participants' accounts with the respective principal amounts of our debt
securities represented by the registered global security beneficially owned by
such participants. Ownership of beneficial interests in such registered global
security will be shown on, and the transfer of such ownership interests will be
effected only through, records maintained by the depositary for such registered
global security or on the records of participants for interests of persons
holding through participants.
So long as the depositary for a registered global security, or its nominee,
is the registered owner of a registered global security, the depositary or the
nominee will be considered the sole owner or holder of our debt securities
represented by the registered global security for all purposes. Except as set
forth below, owners of beneficial interests in a registered global security will
not:
- be entitled to have our debt securities represented by such registered
global security registered in their names;
- receive or be entitled to receive physical delivery of such debt
securities in definitive forms; and
- be considered the owners or holders of our debt securities.
Accordingly, each person owning a beneficial interest in a registered
global security must rely on the procedures of the depositary for such
registered global security and, if such person is not a participant, on the
procedures of the participant through which such person owns its interest, to
exercise any rights of a holder under the indenture. We understand that under
existing industry practices, if we request any action of holders, or if an owner
of a beneficial interest in a registered global security desires to take any
action that a holder is entitled to take under the indenture, the depositary
would authorize the participants holding the relevant beneficial interests to
take such action, and such participants would authorize beneficial owners owning
through such participants to take such action.
Principal, premium, if any, and interest payments on our debt securities
represented by a registered global security registered in the name of a
depositary or its nominee will be made to such depositary or its nominee, as the
case may be, as the registered owner of such registered global security. Neither
Textron nor the trustee will have any responsibility or liability for any aspect
of the records relating to or payments made on account of beneficial ownership
interests in such registered global security.
We expect that the depositary for any of our debt securities represented by
a registered global security, upon receipt of any payment of principal, premium
or interest will immediately credit participants' accounts with payments in
amounts proportionate to their respective beneficial interests in such
registered global security as shown on the records of such depositary. We also
expect that payments by participants to owners of beneficial interests in such a
registered global security held by the participants will be governed by standing
customer instructions and customary practices, as is now the case with
securities held for the accounts of customers in bearer form or registered in
"street name."
13
We may at any time determine not to have any of our debt securities of a
series represented by one or more registered global securities and, in such
event, will issue our debt securities of such series in definitive form in
exchange for all of the registered global security or securities representing
such debt securities. Any of our debt securities issued in definitive form in
exchange for a registered global security will be registered in such name or
names as the depositary shall instruct the trustee. We expect that such
instructions will be based upon directions received by the depositary from
participants with respect to ownership of beneficial interests in such
registered global security.
Our debt securities may also be issued in the form of one or more bearer
global securities that will be deposited with a common depositary for Euroclear
and Clearstream Banking, or with a nominee for such depositary identified in the
prospectus supplement. The specific terms and procedures, including the specific
terms of the depositary arrangement, with respect to any portion of a series of
our debt securities to be represented by a bearer global security will be
described in the prospectus supplement.
PARTICULAR TERMS OF SENIOR DEBT SECURITIES
Ranking of senior debt securities. Our senior debt securities will
constitute part of our senior debt and rank equally with all our other unsecured
debt, except that it will be senior to our subordinated debt.
Limitation upon mortgages. The indenture's provisions applicable to senior
debt securities prohibit Textron and its Restricted Subsidiaries, as defined
below, from issuing, assuming or guaranteeing any debt for money borrowed
secured by a mortgage, security interest, lien or other encumbrance
("mortgages") upon any Principal Property, as defined below, of Textron or any
Restricted Subsidiary, as defined below, or upon any shares of stock or
indebtedness of any Restricted Subsidiary without equally and ratably securing
our senior debt securities issued under the indenture. This restriction,
however, will not apply to:
- mortgages on property, shares of stock or indebtedness of any corporation
existing at the time such corporation becomes a Restricted Subsidiary;
- mortgages on property existing at the time of acquisition of such
property by Textron or a Restricted Subsidiary, or mortgages to secure
the payment of all or any part of the purchase price of such property
upon the acquisition of such property or to secure indebtedness incurred
prior to, at the time of, or within 180 days after, the acquisition of
such property for the purpose of financing all or any part of the
purchase price thereof, or mortgages to secure the cost of improvements
to such acquired property;
- mortgages to secure indebtedness of a Restricted Subsidiary owing to
Textron or another Restricted Subsidiary;
- mortgages existing at the date of the indenture;
- mortgages on property of a corporation existing at the time such
corporation is merged into or consolidated with Textron or a Restricted
Subsidiary or at the time of a sale, lease or other disposition of the
properties of a corporation as an entirety or substantially as an
entirety to Textron or a Restricted Subsidiary;
- certain mortgages in favor of governmental entities; or
- extensions, renewals or replacements of any mortgage referred to in the
preceding six bullets. (sec. 10.4)
Notwithstanding the restrictions outlined in the preceding paragraph,
Textron or any Restricted Subsidiary will be permitted to issue, assume or
guarantee any mortgage without equally and ratably securing our senior debt
securities, provided that, after giving effect to such mortgage, the aggregate
amount of all debt so secured by mortgages (not including permitted mortgages as
described above) does not exceed 10% of the stockholders' equity of Textron and
its consolidated subsidiaries. (sec. 10.4)
Limitation upon sale and leaseback transactions. The Indenture's
provisions applicable to senior debt securities prohibit Textron and its
Restricted Subsidiaries from entering into any sale and leaseback
14
transaction with respect to any Principal Property other than any such
transaction involving a lease for a term of not more than three years or any
such transaction between Textron and a Restricted Subsidiary or between
Restricted Subsidiaries, unless either:
- Textron or such Restricted Subsidiary would be entitled to incur
indebtedness secured by a mortgage on Principal Property at least equal
in amount to the Attributable Debt, as defined below, with respect to
such sale and leaseback transaction, without equally and ratably securing
our senior debt securities; or
- Textron shall apply an amount equal to the greater of the net proceeds of
such sale and the Attributable Debt with respect to such sale and
leaseback transaction to:
-- the retirement of senior indebtedness that matures more than twelve
months after the creation of such senior indebtedness; or
-- the acquisition, construction, development or improvement of
properties, facilities or equipment that are, or upon such acquisition,
construction, development or improvement will be, or will be a part of,
a Principal Property. (sec. 10.5)
Waiver of certain covenants. We will not be required to comply with the
covenants listed above and certain other restrictive covenants with respect to
our senior debt securities if the holders of a majority of the outstanding
principal amount waive such compliance. (sec. 10.9)
Certain definitions. Set forth below is a summary of the definitions of
certain capitalized terms used in the indenture and referred to above. Reference
is made to the indenture for the full definition of all the terms used in the
indenture.
The term "Attributable Debt" when used in connection with a sale and
leaseback transaction referred to above shall mean the total net amount of rent
(discounted at the rate per annum borne by our senior debt securities) required
to be paid during the remaining term of the applicable lease. (sec. 1.1)
The term "Principal Property" means any manufacturing plant or
manufacturing facility that is (i) owned by Textron or any Restricted
Subsidiary, (ii) located within the continental U.S. and (iii) in the opinion of
our board of directors materially important to the total business conducted by
Textron and the Restricted Subsidiaries taken as a whole. (sec. 1.1 )
The term "Restricted Subsidiary" means any Subsidiary (i) substantially all
the property of which is located within the continental U.S. and (ii) that owns
any Principal Property; provided that the term "Restricted Subsidiary" shall not
include any Subsidiary that is principally engaged in leasing or in financing
receivables, or that is principally engaged in financing Textron's operations
outside the continental U.S. (sec. 1.1)
The term "Subsidiary" means a corporation more than 50% of the outstanding
voting stock of which is owned, directly or indirectly, by Textron or by one or
more other Subsidiaries. (sec. 1.1)
PARTICULAR TERMS OF SUBORDINATED DEBT SECURITIES
Ranking of subordinated debt securities. Our subordinated debt securities
will be subordinated and junior in right of payment to our senior debt
securities and certain of our other indebtedness to the extent set forth in the
prospectus supplement. (sec. 3.1)
15
PLAN OF DISTRIBUTION
We may periodically sell our common or preferred stock or any series of our
debt securities in one or more of the following ways:
- to underwriters or dealers for resale to the public or to institutional
investors;
- directly to the public or institutional investors; or
- through agents to the public or to institutional investors.
The prospectus supplement will state the terms of the offering of the
securities, including:
- the name or names of any underwriters, dealers or agents;
- the purchase price of such securities and the proceeds to be received by
us;
- any underwriting discounts, commissions or agency fees and other items
constituting underwriters' or agents' compensation;
- any initial public offering price;
- any discounts or concessions allowed or reallowed or paid to dealers; and
- any securities exchanges on which the securities may be listed.
If we use underwriters in the sale, the underwriters will acquire the
securities for their own account and may resell them in one or more
transactions, including:
- negotiated transactions;
- at a fixed public offering price or prices; or
- at varying prices determined at the time of sale.
Unless otherwise stated in a prospectus supplement, the obligations of the
underwriters to purchase any securities will be conditioned on customary closing
conditions and the underwriters will be obligated to purchase all of such series
of securities, if any are purchased.
If we use dealers in the sale, the dealers will acquire the securities as
principals and may resell them to the public at varying prices to be determined
by the dealers at the time of resale.
Unless otherwise stated in a prospectus supplement, any agent selling
securities on our behalf will be acting on a best efforts basis for the period
of its appointment.
This prospectus may be delivered by underwriters and dealers in connection
with short sales undertaken to hedge exposures under commitments to acquire the
securities described in this prospectus that may be issued on a delayed or
contingent basis.
Underwriters, agents and dealers may be entitled under agreements entered
into with us to indemnification by us against certain civil liabilities,
including liabilities under the Securities Act of 1933, or to contribution with
respect to payments that the underwriters, agents or dealers may be required to
make. Underwriters, agents and dealers may be customers of, engage in
transactions with, or perform services for us and our affiliates in the ordinary
course of business.
Any securities offered by this prospectus, other than our common stock,
will be a new issue of securities and will have no established trading market.
Our common stock is listed on the New York Stock Exchange, and any shares of our
common stock sold will also be listed on the New York Stock Exchange, upon
official notice of issuance. Any underwriters to whom securities are sold by us
for public offering and sale may make a market in the securities, but such
underwriters will not be obligated to do so and may discontinue any market
making at any time without notice. Any of these securities, other than our
common stock, may or may not be listed on a national securities exchange or the
Nasdaq National
16
Market. We give no assurance as to the liquidity of or the existence of any
trading market for any of these securities, other than our common stock.
LEGAL OPINIONS
The validity of any securities offered by this prospectus and certain legal
matters relating to those securities will be passed upon for us by Michael D.
Cahn, our Senior Associate General Counsel -- Securities and Assistant
Secretary, and for any underwriters or agents by counsel named in the prospectus
supplement. Mr. Cahn is a full-time employee of ours and owns, and holds options
to purchase, shares of our outstanding common stock.
EXPERTS
Ernst & Young LLP, independent auditors, have audited our consolidated
financial statements included in our most recently filed Annual Report on Form
10-K, as set forth in their report, which is incorporated into this prospectus
by reference. Our financial statements are incorporated into this prospectus by
reference in reliance on Ernst & Young LLP's report, given on their authority as
experts in accounting and auditing.
WHERE YOU CAN FIND MORE INFORMATION
The SEC's rules allow us to "incorporate by reference" into this
prospectus. This means that we can disclose important information to you by
referring you to another document. Any information referred to in this way is
considered part of this prospectus from the date we file that document. This
prospectus incorporates documents by reference, which are not presented in or
delivered with this prospectus.
All documents filed by us pursuant to Section 13(a), 13(c), 14 or 15(d) of
the Securities Exchange Act of 1934 after the date of this prospectus and before
the termination of the offering, as well as after the date of the initial
registration statement of which this prospectus is a part and prior to the
effectiveness of the registration statement, are also incorporated into this
prospectus by reference, although we are not incorporating any information
furnished in any of our Current Reports on Form 8-K filed under either Item 9 or
Item 12 of that Form.
The following documents were filed by us with the SEC and are incorporated
into this prospectus by reference:
- Our Annual Report on Form 10-K for the fiscal year ended January 3, 2004
(filing date of February 27, 2004), as amended by our Annual Report on
Form 10-K/A for that fiscal year (filing date of March 4, 2004); and
- the description of our common stock set forth in our registration
statement filed pursuant to Section 12 of the Securities Exchange Act of
1934, including any amendment or reports filed for the purpose of
updating such description.
Any statement contained in a document incorporated into this prospectus by
reference will be deemed to be modified or superseded for purposes of this
prospectus and the prospectus supplement to the extent that a statement
contained in this prospectus or the prospectus supplement or any other
subsequently filed document that is deemed to be incorporated by reference into
this prospectus modifies or supersedes the statement. Any statement so modified
or superseded will not be deemed, except as so modified or superseded, to
constitute a part of this prospectus or the prospectus supplement.
The documents incorporated into this prospectus by reference are available
from us upon request. We will provide a copy of any or all of the information
that is incorporated into this prospectus by reference (not including exhibits
to the information unless those exhibits are specifically incorporated by
reference into this prospectus) to any person, including any beneficial owner,
to whom a prospectus is delivered, without charge, upon written or oral request.
17
Requests for documents should be directed to:
Textron Inc.
40 Westminster Street
Providence, Rhode Island 02903
Attention: Investor Relations Department
We file reports, proxy statements and other information with the SEC.
Copies of our reports, proxy statements and other information may be inspected
and copied at the public reference facilities maintained by the SEC at:
SEC Public Reference Room
450 Fifth Street, N.W.
Washington, D.C. 20549
For further information on the SEC's Public Reference Room, please call the
SEC at 1-800-SEC-0330. The SEC maintains an Internet site at http://www.sec.gov
that contains reports, proxy and information statements and other information
regarding companies that file electronically, including Textron. This prospectus
is part of a registration statement filed by us with the SEC. The full
registration statement can be obtained from the SEC, or directly from us, as
indicated above. In addition, these reports and other information are also
available through the New York Stock Exchange, 20 Broad Street, New York, New
York 10005, on which our common stock is listed. Information about us is also
available at our Internet site at http://www.textron.com. However, the
information on our Internet site is not a part of this prospectus or the
prospectus supplement.
18
PRINCIPAL EXECUTIVE OFFICES OF TEXTRON INC.
Textron Inc.
40 Westminster Street
Providence, Rhode Island 02903
U.S.A.
TRUSTEE, REGISTRAR, TRANSFER AGENT AND U.S. PAYING AGENT
The Bank of New York Trust Company, N.A.
c/oThe Bank of New York
101 Barclay Street
New York, New York 10286
U.S.A.
IRISH PAYING AGENT
AIB/BNY Fund Management (Ireland) Limited
Guild House, Guild Street
Dublin 1
Ireland
IRISH LISTING AGENT
Arthur Cox Listing Services Limited
Earlsfort Centre, Earlsfort Terrace
Dublin 2
Ireland
LEGAL ADVISERS
TO TEXTRON INC. AS TO U.S. LAW TO THE UNDERWRITERS
AS TO U.S. LAW
Michael D. Cahn, Esq. Pillsbury Winthrop LLP Simpson Thacher & Bartlett LLP
Senior Associate General 1540 Broadway 425 Lexington Avenue
Counsel and New York, New York 10036 New York, New York 10017
Assistant Secretary U.S.A. U.S.A.
Textron Inc.
40 Westminster Street
Providence, Rhode Island 02903
U.S.A.
INDEPENDENT AUDITORS
Ernst & Young LLP
Independent Registered Public Accounting Firm
200 Clarendon Street
Boston, Massachusetts 02116
U.S.A.
(TEXTRON LOGO)