Ladies and gentlemen, thank you for standing by and welcome to Textron's First Quarter Earnings Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. [Operator Instructions]. As a reminder, this conference is being recorded. I would now like to turn the conference over to your Vice President of Investor Relations, Mr. Doug Wilburne. Please go ahead, sir. Douglas R. Wilburne – Vice President, Investor Relations: Thanks, Alex, and good morning everyone. Joining me today are Lewis Campbell, Textron's Chief Executive Officer and Ted French, Ted is Chief Financial Officer. Before we begin I'd like to mention, our discussion today will include remarks about future estimates and expectations. These forward-looking statements are subject to various risk factors, which are detailed in our annual SEC filings and also in today's press release. Finally, you can also find a slide deck containing key data items from today's call in the IR section of our website. Beginning with this quarter, we are reporting Textron Systems as a separate new segment. We've named this segment Defense and Intelligence. Correspondingly, Bell Helicopter will also be reported separately as the Bell segment. Historical financial statements have been recast to reflect the new segment reporting structure, and these recast financials for the years ‘03 through ‘07 can be downloaded from the Investor Relations section of our company's website. Moving now to our results for the first quarter. Revenues were $3.5 billion, up 18.7% from last year's first quarter. Earnings per share from continuing operations were $0.93, up 19.2% from $0.78 a year ago. You'll see on the free cash flow calculation attached to our press release that we’ve modified our calculation to make our definition more consistent with that being used by most of our peers. Our new definition…

Thank you. And our first question comes from the line of Nicole Parent with Credit Suisse. Please go ahead. Nicole Parent – Credit Suisse: Good morning. Lewis B. Campbell – Chairman, President and Chief Executive Officer: Good morning, Nicole. Nicole Parent – Credit Suisse: Yes, first just on deliveries as we think about kind of the quarterly space out, it looks like Mustang is going to be back-half loaded. Could you just give us a sense, I guess, first on how you see the mix working out, and then also were there any particular timing issues in the first quarter versus what you're expecting? Ted R. French – Executive Vice President and Chief Financial Officer: The timing relative to deliveries? Nicole Parent – Credit Suisse: Yes. Ted R. French – Executive Vice President and Chief Financial Officer: We had a number of international deliveries that didn't get delivered in the first quarter that we had had previously in our forecast. And they are all a variety of kind of strange events, but not strange in some respects, because we've anticipated that as we get a larger and larger international mix, deliveries are a little bit more challenging from a timing standpoint. So, I won't give you too many anecdotes, but we had a wire transfer that went into the wrong account and didn't arrive until a day late that missed a delivery. We had a strike in Brazil with the regulatory authorities, we couldn't get a plane certified, missed a delivery. There are a number of things like that. All of the aircraft were built during the quarter, so we're in good shape from a production standpoint. Your other question relative to Mustang, Mustangs very much are back-end loaded. We delivered 15 Mustangs in Q1, and we'll ramp all the…

1,500. Nicole Parent – Credit Suisse: Got it. Douglas R. Wilburne – Vice President, Investor Relations: 1,550.

Yes.

Our next question comes from the line of Shannon O'Callaghan with Lehman Brothers. Please go ahead. Ted R. French – Executive Vice President and Chief Financial Officer: Hi Shan. Shannon O'Callaghan – Lehman Brothers: Good morning, guys. Hey Ted, can you just go through what your expectations are around TFC, as you look out the rest of the year, given what you're seeing going on inside the business? I mean how bad do you think it can get assuming what... the deteriorating situation we've seen broadly in the economy and what are you assuming? Ted R. French – Executive Vice President and Chief Financial Officer: Well, let me give you a couple of data points here. There are really two things that happened to us to knock us off plan in the first quarter. One was another hit or a bigger hit than we had forecasted around the indices mismatch issue, and I think that's going to turn around pretty nicely for us. That cost us, we had about $3.5 million in the forecast and it cost us closer to $8 million to $10 million depending on how you calculate it. But really kind of flukish [ph] in the quarter, because the Fed dropped the Fed fund rates so rapidly, with a 75% followed by another 50% basis point drop that LIBOR did not do a good job this time of anticipating, which it usually does better. So, when that happens, we got a lot of negative re-pricing to our customers that we didn’t offset and we gapped out a little bit. The positive thing going forward, it’s not to say that can’t positively happen again, but I don't think you're going to see that kind of reduction happen again. And then the very positive thing for us is, as…

Next question comes from the line of Jeff Sprague with Citigroup Investment Research. Please go ahead. Ted R. French – Executive Vice President and Chief Financial Officer: Good morning, Jeff. Jeffrey Sprague – Citigroup Investment Research: Hi, thanks, good morning everyone. Lewis B. Campbell – Chairman, President and Chief Executive Officer: Hi, Jeff. Jeffrey Sprague – Citigroup Investment Research: Maybe just a follow-up, a quick one on Bell and the miscellaneous charges and everything. I think you guys actually thought you overcompensated on this cabin issue in Q4 and maybe we're going to get some back from the supplier and yet you've taken a little bit more. Do you see any signs of that reversing back later in the year and is there an open item on this helmet yet that maybe is a question mark on H-1 costs over the course of the year? Ted R. French – Executive Vice President and Chief Financial Officer: On the cabin supply, we... at the end of last quarter we booked our best estimate based on our position with the supplier. Obviously, they were asking for a different number than we were, but we have now completed negotiations and reached a conclusion with the supplier around... as much of a schedule has cost and what the schedule changes due to the overall program cost profile and that's what we booked in the second quarter. So, I don't think there is any change coming to that. Lewis B. Campbell – Chairman, President and Chief Executive Officer: Jeff, this is Lewis. On the helmet, well, let me just say a couple of things. You may not recall, but the Phase II operation evaluation has been a planned event since we exited Phase I because the helmet the government picked once the war fighter flew…

And our next question comes from the line of Steve Tusa with JPMorgan. Please go ahead. Stephen Tusa – JPMorgan: Hi, good morning. Ted R. French – Executive Vice President and Chief Financial Officer: Hi Steve. Lewis B. Campbell – Chairman, President and Chief Executive Officer: Hi Steve. Stephen Tusa – JPMorgan: Hi, just a question on the delivery misses this quarter and on previous quarters you guys have actually delivered an extra jet here or there and it has had an unusual impact. What are the... what's the impact on the margin of not delivering those eight extra plans. Is there any impact on the Cessna margin? Ted R. French – Executive Vice President and Chief Financial Officer: Yes, it would be modestly positive. I mean on an as-delivered basis because of the typical to ASR sales commissions on international delivery, they are a little bit less. It doesn't mean they are less long term because we’ve got more fixed infrastructure supporting the domestic deliveries, but on... in a quarter on a contribution margin basis, they are a little less. So, margins would have been helped by having those deliveries be missed. Stephen Tusa – JPMorgan: Right. That's an extra $80 millionish of revenues that you are losing out on and those should fall through at an incrementally higher rate. Ted R. French – Executive Vice President and Chief Financial Officer: I'm sorry. Stephen Tusa – JPMorgan: $80 million of the incremental revenue that you are missing out on at a higher rate than what you reported? Ted R. French – Executive Vice President and Chief Financial Officer: Less than $80 million. But no, we missed them, they would have been at a little lower rate. Stephen Tusa – JPMorgan: Okay. Ted R. French – Executive Vice President and Chief Financial Officer: If we had delivered all the international... obviously, we would have higher revenues. But we probably would have had a slightly lower margin. But not around the year almost. Stephen Tusa – JPMorgan: Okay. Got you. And then on the Bell side with regards to commercial, I mean how much price you're getting there now? Ted R. French – Executive Vice President and Chief Financial Officer: It depends on the product. We have probably 5% or 6% on average on delivered product. Stephen Tusa – JPMorgan: Got you. Okay. Thanks.

And our next question comes from the line of Cai von Rumohr with Cowen and Company. Please go ahead. Cai von Rumohr – Cowen & Co.: Yes. Thank you, and terrific orders at Cessna. Lewis B. Campbell – Chairman, President and Chief Executive Officer: Hi, Cai. Ted R. French – Executive Vice President and Chief Financial Officer: Thanks, Cai. Cai von Rumohr – Cowen & Co.: If we back out Columbus, you did 199 orders, and your plan was 500 for the year. So, kind of that means 300 if the plan is the same. Is that the same or should we be raising that number and could you give us some color in terms of the progression going through the quarter? Did it slow as we went through the quarter? And kind of what's the color right now you are seeing international and domestic? Ted R. French – Executive Vice President and Chief Financial Officer: Well, first of all we are on track to get the orders that we need for the year, that's not a number we are going to continually update. But you can certainly assume we're... we're well on track to get what we need to get through the course of the year. And I think while we did end up higher in the last month than what we said, the progression of orders through the quarter was pretty steady. We tend to get a rush of orders the last month of a quarter, any way sales went out there pushing to wrap something up and get it in the book. But we had pretty solid January, February and probably a little stronger March. Cai von Rumohr – Cowen & Co.: Okay. And any color kind of going forward and what you're seeing domestic and international?…

There are no other questions, sir. Lewis B. Campbell – Chairman, President and Chief Executive Officer: Okay. If that's the case, we thank everybody for joining us today and we’ll talk to you in a quarter. Ted R. French – Executive Vice President and Chief Financial Officer: Thanks everyone. Lewis B. Campbell – Chairman, President and Chief Executive Officer: Take care.

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