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Textron's CEO Discusses Q1 2012 Results - Earnings Call Transcript

On the call today, we have Scott Donnelly, Textron's Chairman and CEO; and Frank Connor, our Chief Financial Officer. Our earnings call presentation can be found in the Investor Relations section of our website.

Moving now to first quarter results, starting with Slide #3. Revenues in the quarter were $2.9 billion, up 15.2% from a year ago. On a GAAP basis, we recorded income from continuing operations of $0.41 per share, which compares to earnings per share of $0.10 in the first quarter of 2011.

Moving to cash flow, first quarter manufacturing cash flow before pension contributions was a $106 million use of cash. First quarter pension contributions were $144 million.

With that, I'll turn the call over to Scott.

Scott C. Donnelly

Thanks, Doug, and good morning, everybody. I believe our first quarter financial results represented a very solid start to the year, reflecting growth in our commercial aircraft and industrial end markets and continued operational execution improvements across all of our businesses. We also secured a number of key program wins and made some important strategic moves in the quarter that should help provide growth in the long term.

Starting with Systems, we won 2 important unmanned aerial systems fee-for-service contracts from the U.S. DoD. The business model for these fee-for-service programs is different, and we normally -- in that we will be investing CapEx in the platforms upfront and in turn, we'll be receiving cash over time as we operate the assets to deliver services to our customer. These 2 contracts were important for a number of reasons. First, the addition of what we expect will be meaningful revenue streams over the next several years at Textron Systems. And second, both these awards are based on our Aerosonde unmanned aircraft, which is a smaller air vehicle than our traditional Shadow models. So we'll now have a second product platform deployed with the U.S. military, which should lead to future opportunities. Finally, these contracts provide an opportunity to demonstrate the attractiveness of fee-for-service UAS arrangements for additional U.S. and foreign military applications.

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