SELECTED YEAR-OVER-YEAR FINANCIAL DATA

(Dollars in Millions, Except Per Share Amounts) 2020 2019
Total Revenues $ 11,651 $ 13,630
Total Segment Profit 751 1,270
Net Income—GAAP 309 815
Adjusted Net Income—Non-GAAP1 475 870

Per Share of Common Stock
Common Stock Price at Year-End $  48.33 $  44.74
Diluted Net Income—GAAP 1.35 3.50
Adjusted Diluted Net Income—Non-GAAP1 2.07 3.74

COMMON SHARES OUTSTANDING (In Thousands)
Diluted Average 228,979 232,709
Year-End 226,444 227,956

FINANCIAL POSITION
Total Assets $15,443 $15,018
Manufacturing Group Debt 3,707 3,124
Finance Group Debt 662 686
Shareholders’ Equity 5,845 5,518
Manufacturing Group Debt-to-Capital (Net of Cash) 21%   26%  
Manufacturing Group Debt-to-Capital 39%   36%  

KEY PERFORMANCE METRICS
Net Cash Provided by Operating Activities of Continuing Operations for Manufacturing Group—GAAP $    833 $    960
Manufacturing Cash Flow Before Pension Contributions—Non-GAAP1 596 642

1. Adjusted Net Income, Adjusted Diluted Earnings Per Share and Manufacturing Cash Flow Before Pension Contributions are Non-GAAP Measures. See page 7 for a Reconciliation to GAAP.

Footnote To Selected Year-Over-Year Financial Data

Adjusted net Income and Adjusted Diluted Earnings per Share

Adjusted net income and adjusted diluted earnings per share exclude special charges, net of tax, and an inventory charge, net of tax and a tax benefit both related to TRU Simulation + Training Canada Inc. (TRU Canada) in connection with the restructuring plan and disposition of this company. We consider items recorded in special charges, such as enterprise-wide restructuring, certain asset impairment charges, and acquisition-related restructuring, integration and transaction costs, to be of a non-recurring nature that is not indicative of ongoing operations. At TRU Canada, the inventory charge is excluded as it relates to the write-down of inventory in connection with an action taken under the restructuring plan. Due to the substantial decline in demand and order cancellations for flight simulators resulting from the impact of the pandemic on the commercial air transportation business, we ceased manufacturing at TRU Canada’s Montreal facility, resulting in the production suspension of its commercial air transport simulators. As a result of this action and market conditions, the related inventory was written down to its net realizable value. In the fourth quarter of 2020, we reached a definitive agreement to sell TRU Canada, which resulted in the recognition of an $8 million tax benefit. We believe this inventory charge and tax benefit are of a non-recurring nature and are not indicative of ongoing operations.

NET INCOME AND DILUTED EARNINGS PER SHARE GAAP TO NON-GAAP RECONCILIATION

(Dollars in Millions, Except Per Share Amounts) 2020 2019
Net income—GAAP $   309 $    815
Special charges, net of taxes 119 55
Inventory charge, net of tax 55 —
Tax benefit—TRU assets held for sale (8) —
Adjusted net income—Non-GAAP $   475 $    870
Diluted earnings per share:
Net income—GAAP $  1.35 $   3.50
Special charges, net of taxes 0.52 0.24
Inventory charge, net of tax 0.24 —
Tax benefit—TRU assets held for sale (0.04) —
Adjusted net income—Non-GAAP $  2.07 $   3.74

Manufacturing Cash Flow Before Pension Contributions

Manufacturing cash flow before pension contributions adjusts net cash from operating activities (GAAP) for the following:

  • Deducts capital expenditures and includes proceeds from an insurance recovery and the sale of property, plant and equipment to arrive at the net capital investment required to support ongoing manufacturing operations;
  • Excludes dividends received from Textron Financial Corporation (TFC) and capital contributions to TFC provided under the Support Agreement and debt agreements as these cash flows are not representative of manufacturing operations;
  • Adds back pension contributions as we consider our pension obligations to be debt-like liabilities. Additionally, these contributions can fluctuate significantly from period to period and we believe that they are not representative of cash used by our manufacturing operations during the period;
  • Excludes taxes paid related to the gain realized in 2018 on the Tools and Test business disposition. We have made this adjustment to the non-GAAP measure because we believe this use of cash is not representative of cash used by our manufacturing operations.

While we believe this measure provides a focus on cash generated from manufacturing operations, before pension contributions, and may be used as an additional relevant measure of liquidity, it does not necessarily provide the amount available for discretionary expenditures since we have certain non-discretionary obligations that are not deducted from the measure.

MANUFACTURING CASH FLOW BEFORE PENSION CONTRIBUTIONS GAAP TO NON-GAAP RECONCILIATION

(In Millions) 2020 2019
Net cash provided by operating activities of continuing operations—GAAP $ 833 $  960
Less: Capital expenditures (317) (339)
Dividends received from TFC — (50)
Plus: Total pension contributions 47 51
Proceeds from an insurance recovery and sale of property, plant and equipment 33 9
Taxes paid on gain on business disposition — 11
Manufacturing cash flow before pension contributions—Non-GAAP $ 596 $  642