10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended July 2, 2022

OR

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ______ to ______.

Commission File Number 1-5480

Textron Inc.

(Exact name of registrant as specified in its charter)

Delaware	05-0315468
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
40 Westminster Street, Providence, RI	02903
(Address of principal executive offices)	(Zip code)

(401) 421-2800

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol (s)	Name of each exchange on which registered
Common stock, $0.125 par value	TXT	New York Stock Exchange (NYSE)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No ¨

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes þ No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act (Check one):

Large accelerated filer	þ	Accelerated filer	☐	Non-accelerated filer	☐
Smaller reporting company	☐			Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No þ

As of July 15, 2022, there were 211,531,587 shares of common stock outstanding.

TEXTRON INC.

Index to Form 10-Q

For the Quarterly Period Ended July 2, 2022

		Page
PART I.	FINANCIAL INFORMATION
Item 1.	Financial Statements
	Consolidated Statements of Operations (Unaudited)	3
	Consolidated Statements of Comprehensive Income (Unaudited)	4
	Consolidated Balance Sheets (Unaudited)	5
	Consolidated Statements of Cash Flows (Unaudited)	6
	Notes to the Consolidated Financial Statements (Unaudited)	8
	Note 1.     Basis of Presentation	8
	Note 2.     Business Acquisition	9
	Note 3.     Accounts Receivable and Finance Receivables	9
	Note 4.     Inventories	10
	Note 5.     Warranty Liability	11
	Note 6.     Leases	11
	Note 7.     Derivative Instruments and Fair Value Measurements	11
	Note 8.    Shareholders’ Equity	13
	Note 9.    Segment Information	15
	Note 10.   Revenues	15
	Note 11.   Retirement Plans	17
	Note 12.   Special Charges	17
	Note 13.   Income Taxes	17
	Note 14.   Commitments and Contingencies	18
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	19
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	30
Item 4.	Controls and Procedures	30
PART II.	OTHER INFORMATION
Item 1.	Legal Proceedings	30
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	30
Item 6.	Exhibits	31
	Signatures	32

2

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

TEXTRON INC.

Consolidated Statements of Operations (Unaudited)

	Three Months Ended				Six Months Ended
(In millions, except per share amounts)	July 2, 2022		July 3, 2021		July 2, 2022		July 3, 2021
Revenues
Manufacturing product revenues	$	2,689	$	2,666	$	5,137	$	5,069
Manufacturing service revenues	451		513		988		974
Finance revenues	14		12		30		27
Total revenues	3,154		3,191		6,155		6,070
Costs, expenses and other
Cost of products sold	2,304		2,271		4,373		4,332
Cost of services sold	337		389		760		728
Selling and administrative expense	278		314		583		612
Interest expense	32		36		65		76
Non-service components of pension and postretirement income, net	(60)		(39)		(121)		(79)
Special charges	—		4		—		10
Gain on business disposition	—		(2)		—		(17)
Total costs, expenses and other	2,891		2,973		5,660		5,662
Income from continuing operations before income taxes	263		218		495		408
Income tax expense	45		34		84		53
Income from continuing operations	218		184		411		355
Loss from discontinued operations	(1)		(1)		(1)		(1)
Net income	$	217	$	183	$	410	$	354
Basic Earnings per share
Continuing operations	$	1.01	$	0.82	$	1.90	$	1.57
Discontinued operations	—		(0.01)		—		(0.01)
Basic Earnings per share	$	1.01	$	0.81	$	1.90	$	1.56
Diluted Earnings per share
Continuing operations	$	1.00	$	0.81	$	1.88	$	1.56
Discontinued operations	—		(0.01)		—		(0.01)
Diluted Earnings per share	$	1.00	$	0.80	$	1.88	$	1.55

See Notes to the Consolidated Financial Statements.

3

TEXTRON INC.

Consolidated Statements of Comprehensive Income (Unaudited)

	Three Months Ended				Six Months Ended
(In millions)	July 2, 2022		July 3, 2021		July 2, 2022		July 3, 2021
Net income	$	217	$	183	$	410	$	354
Other comprehensive income (loss), net of tax
Pension and postretirement benefits adjustments, net of reclassifications	17		30		34		60
Foreign currency translation adjustments, net of reclassifications	(90)		15		(104)		(3)
Deferred gains (losses) on hedge contracts, net of reclassifications	(3)		2		4		6
Other comprehensive income (loss)	(76)		47		(66)		63
Comprehensive income	$	141	$	230	$	344	$	417

See Notes to the Consolidated Financial Statements.

4

TEXTRON INC.

Consolidated Balance Sheets (Unaudited)

(Dollars in millions)	July 2, 2022		January 1, 2022
Assets
Manufacturing group
Cash and equivalents	$	1,764	$	1,922
Accounts receivable, net	876		838
Inventories	3,739		3,468
Other current assets	972		1,018
Total current assets	7,351		7,246
Property, plant and equipment, less accumulated depreciation    and amortization of $4,945 and $4,888, respectively	2,469		2,538
Goodwill	2,278		2,149
Other assets	3,113		3,027
Total Manufacturing group assets	15,211		14,960
Finance group
Cash and equivalents	77		195
Finance receivables, net	561		605
Other assets	30		67
Total Finance group assets	668		867
Total assets	$	15,879	$	15,827
Liabilities and shareholders’ equity
Liabilities
Manufacturing group
Current portion of long-term debt	$	7	$	6
Accounts payable	807		786
Other current liabilities	2,660		2,344
Total current liabilities	3,474		3,136
Other liabilities	1,956		2,005
Long-term debt	3,177		3,179
Total Manufacturing group liabilities	8,607		8,320
Finance group
Other liabilities	89		110
Debt	382		582
Total Finance group liabilities	471		692
Total liabilities	9,078		9,012
Shareholders’ equity
Common stock	28		28
Capital surplus	1,953		1,863
Treasury stock	(596)		(157)
Retained earnings	6,271		5,870
Accumulated other comprehensive loss	(855)		(789)
Total shareholders’ equity	6,801		6,815
Total liabilities and shareholders’ equity	$	15,879	$	15,827
Common shares outstanding (in thousands)	211,825		216,935

See Notes to the Consolidated Financial Statements.

5

TEXTRON INC.

Consolidated Statements of Cash Flows (Unaudited)

For the Six Months Ended July 2, 2022 and July 3, 2021, respectively

	Consolidated
(In millions)	2022		2021
Cash flows from operating activities
Income from continuing operations	$	411	$	355
Adjustments to reconcile income from continuing operations to    net cash provided by operating activities:
Non-cash items:
Depreciation and amortization	191		188
Deferred income taxes	(118)		16
Gain on business disposition	—		(17)
Other, net	55		64
Changes in assets and liabilities:
Accounts receivable, net	(48)		(38)
Inventories	(246)		(162)
Other assets	85		22
Accounts payable	24		188
Other liabilities	269		103
Income taxes, net	32		8
Pension, net	(83)		(42)
Captive finance receivables, net	35		89
Other operating activities, net	8		(1)
Net cash provided by operating activities of continuing operations	615		773
Net cash used in operating activities of discontinued operations	(2)		(1)
Net cash provided by operating activities	613		772
Cash flows from investing activities
Capital expenditures	(114)		(128)
Net cash used in business acquisitions	(198)		—
Net proceeds from corporate-owned life insurance policies	25		—
Proceeds from sale of property, plant and equipment	18		—
Net proceeds from business disposition	—		38
Finance receivables repaid	21		19
Other investing activities, net	44		6
Net cash used in investing activities	(204)		(65)
Cash flows from financing activities
Decrease in short-term debt	(15)		—
Principal payments on long-term debt and nonrecourse debt	(223)		(553)
Purchases of Textron common stock	(439)		(287)
Dividends paid	(9)		(9)
Proceeds from options exercised	32		77
Other financing activities, net	(4)		(2)
Net cash used in financing activities	(658)		(774)
Effect of exchange rate changes on cash and equivalents	(27)		1
Net decrease in cash and equivalents	(276)		(66)
Cash and equivalents at beginning of period	2,117		2,254
Cash and equivalents at end of period	$	1,841	$	2,188

See Notes to the Consolidated Financial Statements.

6

TEXTRON INC.

Consolidated Statements of Cash Flows (Unaudited) (Continued)

For the Six Months Ended July 2, 2022 and July 3, 2021, respectively

	Manufacturing Group				Finance Group
(In millions)	2022		2021		2022		2021
Cash flows from operating activities
Income (loss) from continuing operations	$	395	$	358	$	16	$	(3)
Adjustments to reconcile income (loss) from continuing operations to    net cash provided by (used in) operating activities:
Non-cash items:
Depreciation and amortization	191		183		—		5
Deferred income taxes	(106)		18		(12)		(2)
Gain on business disposition	—		(17)		—		—
Other, net	62		66		(7)		(2)
Changes in assets and liabilities:
Accounts receivable, net	(48)		(38)		—		—
Inventories	(246)		(162)		—		—
Other assets	85		23		—		(1)
Accounts payable	24		188		—		—
Other liabilities	279		103		(10)		—
Income taxes, net	28		—		4		8
Pension, net	(83)		(42)		—		—
Other operating activities, net	8		(1)		—		—
Net cash provided by (used in) operating activities of continuing operations	589		679		(9)		5
Net cash used in operating activities of discontinued operations	(2)		(1)		—		—
Net cash provided by (used in) operating activities	587		678		(9)		5
Cash flows from investing activities
Capital expenditures	(114)		(128)		—		—
Net cash used in business acquisitions	(198)		—		—		—
Net proceeds from corporate-owned life insurance policies	25		—		—		—
Proceeds from sale of property, plant and equipment	18		—		—		—
Net proceeds from business disposition	—		38		—		—
Finance receivables repaid	—		—		79		137
Finance receivables originated	—		—		(23)		(29)
Other investing activities, net	—		—		44		6
Net cash provided by (used in) investing activities	(269)		(90)		100		114
Cash flows from financing activities
Decrease in short-term debt	(15)		—		—		—
Principal payments on long-term debt and nonrecourse debt	(14)		(519)		(209)		(34)
Purchases of Textron common stock	(439)		(287)		—		—
Dividends paid	(9)		(9)		—		—
Proceeds from options exercised	32		77		—		—
Other financing activities, net	(4)		(2)		—		—
Net cash used in financing activities	(449)		(740)		(209)		(34)
Effect of exchange rate changes on cash and equivalents	(27)		1		—		—
Net increase (decrease) in cash and equivalents	(158)		(151)		(118)		85
Cash and equivalents at beginning of period	1,922		2,146		195		108
Cash and equivalents at end of period	$	1,764	$	1,995	$	77	$	193

See Notes to the Consolidated Financial Statements.

7

TEXTRON INC.

Notes to the Consolidated Financial Statements (Unaudited)

Note 1. Basis of Presentation

Our Consolidated Financial Statements include the accounts of Textron Inc. (Textron) and its majority-owned subsidiaries.  We have prepared these unaudited consolidated financial statements in accordance with accounting principles generally accepted in the U.S. for interim financial information.  Accordingly, these interim financial statements do not include all of the information and footnotes required by accounting principles generally accepted in the U.S. for complete financial statements.  The consolidated interim financial statements included in this quarterly report should be read in conjunction with the consolidated financial statements included in our Annual Report on Form 10-K for the year ended January 1, 2022.  In the opinion of management, the interim financial statements reflect all adjustments (consisting only of normal recurring adjustments) that are necessary for the fair presentation of our consolidated financial position, results of operations and cash flows for the interim periods presented. The results of operations for the interim periods are not necessarily indicative of the results to be expected for the full year.

Our financings are conducted through two separate borrowing groups.  The Manufacturing group consists of Textron consolidated with its majority-owned subsidiaries that operate in the Textron Aviation, Bell, Textron Systems and Industrial segments, and our new reporting segment, Textron eAviation, formed in the second quarter of 2022. Textron eAviation includes the operating results of Pipistrel, a manufacturer of electrically powered aircraft acquired on April 15, 2022, as discussed in Note 2, along with other research and development initiatives related to sustainable aviation solutions. The Finance group, which also is the Finance segment, consists of Textron Financial Corporation and its consolidated subsidiaries. We designed this framework to enhance our borrowing power by separating the Finance group. Our Manufacturing group operations include the development, production and delivery of tangible goods and services, while our Finance group provides financial services. Due to the fundamental differences between each borrowing group’s activities, investors, rating agencies and analysts use different measures to evaluate each group’s performance.  To support those evaluations, we present balance sheet and cash flow information for each borrowing group within the Consolidated Financial Statements.  All significant intercompany transactions are eliminated from the Consolidated Financial Statements, including retail financing activities for inventory sold by our Manufacturing group and financed by our Finance group.

Use of Estimates

We prepare our financial statements in conformity with generally accepted accounting principles, which require us to make estimates and assumptions that affect the amounts reported in the financial statements.  Actual results could differ from those estimates. Our estimates and assumptions are reviewed periodically, and the effects of changes, if any, are reflected in the Consolidated Statements of Operations in the period that they are determined.

Contract Estimates

For contracts where revenue is recognized over time, we recognize changes in estimated contract revenues, costs and profits using the cumulative catch-up method of accounting. This method recognizes the cumulative effect of changes on current and prior periods with the impact of the change from inception-to-date recorded in the current period.  Anticipated losses on contracts are recognized in full in the period in which the losses become probable and estimable.  

In the second quarter of 2022, our cumulative catch-up adjustments decreased segment profit by $4 million and net income by $3 million, $0.01 per diluted share. In the second quarter of 2021, our cumulative catch-up adjustments increased segment profit by $15 million and net income by $11 million, $0.05 per diluted share. Gross favorable profit adjustments totaled $25 million and $40 million in the second quarter of 2022 and 2021, respectively, and gross unfavorable profit adjustments totaled $29 million and $25 million, respectively. We reduced revenues by $21 million and recognized revenues of $20 million in the second quarter of 2022 and 2021, respectively, from performance obligations satisfied in prior periods that related to changes in profit booking rates.

In the first half of 2022, our cumulative catch-up adjustments decreased segment profit by $21 million and net income by $16 million, $0.07 per diluted share. In the first half of 2021, our cumulative catch-up adjustments increased segment profit by $29 million and net income by $22 million, $0.10 per diluted share. Gross favorable profit adjustments totaled $41 million and $76 million in the first half of 2022 and 2021, respectively, and gross unfavorable profit adjustments totaled $62 million and $47 million, respectively. We reduced revenues by $33 million and recognized revenues of $38 million in the first half of 2022 and 2021, respectively, from performance obligations satisfied in prior periods that related to changes in profit booking rates.

8

Note 2. Business Acquisition

On April 15, 2022, we acquired Pipistrel, a manufacturer of electrically powered aircraft, for a cash purchase price of $240 million, which included the assumption of $35 million of debt and other contractual obligations under the agreement and a final fixed payment of $21 million due in 2024. Beginning in the second quarter of 2022, this business is included in a new reporting segment, Textron eAviation, which combines the operating results of Pipistrel along with other research and development initiatives related to sustainable aviation solutions.

We allocated the purchase price for this business on a preliminary basis to the assets acquired and liabilities assumed based on their estimated fair values at the acquisition date. We expect to finalize the purchase accounting as soon as reasonably possible during the one-year measurement period. Based on the preliminary allocation, $142 million has been allocated to goodwill, related to expected synergies and the value of the assembled workforce, and $76 million to intangible assets, primarily including developed technologies. The intangible assets were primarily valued using the relief-from-royalty method. This method utilizes significant unobservable inputs, or Level 3 inputs, as defined by the fair value hierarchy and requires us to make estimates and assumptions about sales, growth rates, royalty rates and discount rates based on marketplace data.

Note 3. Accounts Receivable and Finance Receivables

Accounts Receivable

Accounts receivable is composed of the following:

(In millions)	July 2, 2022		January 1, 2022
Commercial	$	767	$	704
U.S. Government contracts	133		158
	900		862
Allowance for credit losses	(24)		(24)
Total accounts receivable, net	$	876	$	838

Finance Receivables

Finance receivables are presented in the following table:

(In millions)	July 2, 2022		January 1, 2022
Finance receivables	$	586	$	630
Allowance for credit losses	(25)		(25)
Total finance receivables, net	$	561	$	605

Finance Receivable Portfolio Quality

We internally assess the quality of our finance receivables based on a number of key credit quality indicators and statistics such as delinquency, loan balance to estimated collateral value and the financial strength of individual borrowers and guarantors.  Because many of these indicators are difficult to apply across an entire class of receivables, we evaluate individual loans on a quarterly basis and classify these loans into three categories based on the key credit quality indicators for the individual loan. These three categories are performing, watchlist and nonaccrual.

We classify finance receivables as nonaccrual if credit quality indicators suggest full collection of principal and interest is doubtful. In addition, we automatically classify accounts as nonaccrual once they are contractually delinquent by more than three months unless collection of principal and interest is not doubtful. Accounts are classified as watchlist when credit quality indicators have deteriorated as compared with typical underwriting criteria, and we believe collection of full principal and interest is probable but not certain. All other finance receivables that do not meet the watchlist or nonaccrual categories are classified as performing.

We measure delinquency based on the contractual payment terms of our finance receivables.  In determining the delinquency aging category of an account, any/all principal and interest received is applied to the most past-due principal and/or interest amounts due. If a significant portion of the contractually due payment is delinquent, the entire finance receivable balance is reported in accordance with the most past-due delinquency aging category.

9

Finance receivables categorized based on the credit quality indicators and by the delinquency aging category are summarized as follows:

(Dollars in millions)	July 2, 2022		January 1, 2022
Performing	$	518	$	536
Nonaccrual	68		94
Nonaccrual as a percentage of finance receivables	11.60%		14.92%
Current and less than 31 days past due	$	577	$	624
31-60 days past due	4		5
61-90 days past due	5		—
Over 90 days past due	—		1
60+ days contractual delinquency as a percentage of finance receivables	0.85%		0.16%

At July 2, 2022, 39% of our performing finance receivables were originated since the beginning of 2020 and 27% were originated from 2017 to 2019. For finance receivables categorized as nonaccrual, 7% were originated since the beginning of 2020 and 70% were originated from 2017 to 2019.

On a quarterly basis, we evaluate individual larger balance accounts for impairment. A finance receivable is considered impaired when it is probable that we will be unable to collect all amounts due according to the contractual terms of the loan agreement based on our review of the credit quality indicators described above. Impaired finance receivables include both nonaccrual accounts and accounts for which full collection of principal and interest remains probable, but the account’s original terms have been, or are expected to be, significantly modified. If the modification specifies an interest rate equal to or greater than a market rate for a finance receivable with comparable risk, the account is not considered impaired in years subsequent to the modification.

A summary of finance receivables and the allowance for credit losses, based on the results of our impairment evaluation, is provided below. The finance receivables included in this table specifically exclude leveraged leases in accordance with U.S. generally accepted accounting principles.

(In millions)	July 2, 2022		January 1, 2022
Finance receivables evaluated collectively	$	428	$	441
Finance receivables evaluated individually	68		94
Allowance for credit losses based on collective evaluation	21		21
Allowance for credit losses based on individual evaluation	4		4
Impaired finance receivables with specific allowance for credit losses	$	25	$	33
Impaired finance receivables with no specific allowance for credit losses	43		61
Unpaid principal balance of impaired finance receivables	82		109
Allowance for credit losses on impaired finance receivables	4		4
Average recorded investment of impaired finance receivables	80		117

Note 4. Inventories

Inventories are composed of the following:

(In millions)	July 2, 2022		January 1, 2022
Finished goods	$	1,110	$	1,071
Work in process	1,705		1,548
Raw materials and components	924		849
Total inventories	$	3,739	$	3,468

10

Note 5. Warranty Liability

Changes in our warranty liability are as follows:

	Six Months Ended
(In millions)	July 2, 2022		July 3, 2021
Beginning of period	$	127	$	119
Provision	34		31
Settlements	(34)		(35)
Adjustments*	10		1
End of period	$	137	$	116

* Adjustments include changes to prior year estimates, new issues on prior year sales, acquisitions and currency translation adjustments.

Note 6. Leases

We primarily lease certain manufacturing plants, offices, warehouses, training and service centers at various locations worldwide through operating leases. Our operating leases have remaining lease terms up to 27 years, which include options to extend the lease term for periods up to 25 years when it is reasonably certain the option will be exercised. Operating lease cost totaled $17 million and $16 million in the second quarter of 2022 and 2021, respectively, and $34 million and $32 million in the first half of 2022 and 2021, respectively. Variable and short-term lease costs were not significant. Cash paid for operating leases totaled $35 million and $33 million in the first half of 2022 and 2021, respectively, and is classified in cash flows from operating activities. Noncash transactions totaled $17 million and $63 million in the first half of 2022 and 2021, respectively, reflecting the recognition of operating lease assets and liabilities for new or extended leases.

Balance sheet and other information related to our operating leases is as follows:

(Dollars in millions)	July 2, 2022		January 1, 2022
Other assets	$	359	$	374
Other current liabilities	56		56
Other liabilities	310		325
Weighted-average remaining lease term (in years)	10.1		10.5
Weighted-average discount rate	3.22%		3.19%

At July 2, 2022, maturities of our operating lease liabilities on an undiscounted basis totaled $35 million for the remainder of 2022, $65 million for 2023, $55 million for 2024, $47 million for 2025, $35 million for 2026 and $217 million thereafter.

Note 7. Derivative Instruments and Fair Value Measurements

We measure fair value at the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.  We prioritize the assumptions that market participants would use in pricing the asset or liability into a three-tier fair value hierarchy. This fair value hierarchy gives the highest priority (Level 1) to quoted prices in active markets for identical assets or liabilities and the lowest priority (Level 3) to unobservable inputs in which little or no market data exist, requiring companies to develop their own assumptions. Observable inputs that do not meet the criteria of Level 1, which include quoted prices for similar assets or liabilities in active markets or quoted prices for identical assets and liabilities in markets that are not active, are categorized as Level 2. Level 3 inputs are those that reflect our estimates about the assumptions market participants would use in pricing the asset or liability based on the best information available in the circumstances. Valuation techniques for assets and liabilities measured using Level 3 inputs may include methodologies such as the market approach, the income approach or the cost approach and may use unobservable inputs such as projections, estimates and management’s interpretation of current market data. These unobservable inputs are utilized only to the extent that observable inputs are not available or cost effective to obtain.

Assets and Liabilities Recorded at Fair Value on a Recurring Basis

We manufacture and sell our products in a number of countries throughout the world, and, therefore, we are exposed to movements in foreign currency exchange rates. We primarily utilize foreign currency exchange contracts with maturities of no more than three years to manage this volatility. These contracts qualify as cash flow hedges and are intended to offset the effect of exchange rate fluctuations on forecasted sales, inventory purchases and overhead expenses. Net gains and losses recognized in earnings and Accumulated other comprehensive loss on cash flow hedges, including gains and losses related to hedge ineffectiveness, were not significant in the periods presented.

11

Our foreign currency exchange contracts are measured at fair value using the market method valuation technique. The inputs to this technique utilize current foreign currency exchange forward market rates published by third-party leading financial news and data providers. These are observable data that represent the rates that the financial institution uses for contracts entered into at that date; however, they are not based on actual transactions, so they are classified as Level 2.  At July 2, 2022 and January 1, 2022, we had foreign currency exchange contracts with notional amounts upon which the contracts were based of $264 million and $272 million, respectively. At July 2, 2022, the fair value amounts of our foreign currency exchange contracts were a $3 million asset and a $4 million liability. At January 1, 2022, the fair value amounts of our foreign currency exchange contracts were a $4 million asset and a $3 million liability.

Our Finance group enters into interest rate swap agreements to mitigate certain exposures to fluctuations in interest rates. By using these contracts, we are able to convert floating-rate cash flows to fixed-rate cash flows. These agreements are designated as cash flow hedges. At July 2, 2022, we had a swap agreement for a notional amount of $272 million with a maturity of August 2023, and a swap agreement for a notional amount of $25 million, maturing in June 2025, with a combined fair value of a $7 million asset. At January 1, 2022, we had a swap agreement for a notional amount of $289 million with a maturity of August 2023 and an insignificant fair value. The fair value of these swap agreements is determined using values published by third-party leading financial news and data providers. These values are observable data that represent the value that financial institutions use for contracts entered into at that date, but are not based on actual transactions, so they are classified as Level 2.

Assets and Liabilities Not Recorded at Fair Value

The carrying value and estimated fair value of our financial instruments that are not reflected in the financial statements at fair value are as follows:

	July 2, 2022				January 1, 2022
	Carrying		Estimated		Carrying		Estimated
(In millions)	Value		Fair Value		Value		Fair Value
Manufacturing group
Debt, excluding leases	$	(3,178)	$	(2,974)	$	(3,181)	$	(3,346)
Finance group
Finance receivables, excluding leases	381		351		413		444
Debt	(382)		(310)		(582)		(546)

Fair value for the Manufacturing group debt is determined using market observable data for similar transactions (Level 2).  The fair value for the Finance group debt was determined primarily based on discounted cash flow analyses using observable market inputs from debt with similar duration, subordination and credit default expectations (Level 2). Fair value estimates for finance receivables were determined based on internally developed discounted cash flow models primarily utilizing significant unobservable inputs (Level 3), which include estimates of the rate of return, financing cost, capital structure and/or discount rate expectations of current market participants combined with estimated loan cash flows based on credit losses, payment rates and expectations of borrowers’ ability to make payments on a timely basis.

12

Note 8. Shareholders’ Equity

A reconciliation of Shareholders’ equity is presented below:

(In millions)	Common Stock		Capital Surplus		Treasury Stock		Retained Earnings		Accumulated Other Comprehensive Loss		Total Shareholders' Equity
Three months ended July 2, 2022
Beginning of period	$	28	$	1,924	$	(314)	$	6,058	$	(779)	$	6,917
Net income	—		—		—		217		—		217
Other comprehensive loss	—		—		—		—		(76)		(76)
Share-based compensation activity	—		29		—		—		—		29
Dividends declared	—		—		—		(4)		—		(4)
Purchases of common stock	—		—		(282)		—		—		(282)
End of period	$	28	$	1,953	$	(596)	$	6,271	$	(855)	$	6,801
Three months ended July 3, 2021
Beginning of period	$	29	$	1,845	$	(294)	$	6,139	$	(1,723)	$	5,996
Net income	—		—		—		183		—		183
Other comprehensive income	—		—		—		—		47		47
Share-based compensation activity	—		75		—		—		—		75
Dividends declared	—		—		—		(4)		—		(4)
Purchases of common stock	—		—		(196)		—		—		(196)
End of period	$	29	$	1,920	$	(490)	$	6,318	$	(1,676)	$	6,101
Six months ended July 2, 2022
Beginning of period	$	28	$	1,863	$	(157)	$	5,870	$	(789)	$	6,815
Net income	—		—		—		410		—		410
Other comprehensive loss	—		—		—		—		(66)		(66)
Share-based compensation activity	—		90		—		—		—		90
Dividends declared	—		—		—		(9)		—		(9)
Purchases of common stock	—		—		(439)		—		—		(439)
End of period	$	28	$	1,953	$	(596)	$	6,271	$	(855)	$	6,801
Six months ended July 3, 2021
Beginning of period	$	29	$	1,785	$	(203)	$	5,973	$	(1,739)	$	5,845
Net income	—		—		—		354		—		354
Other comprehensive income	—		—		—		—		63		63
Share-based compensation activity	—		135		—		—		—		135
Dividends declared	—		—		—		(9)		—		(9)
Purchases of common stock	—		—		(287)		—		—		(287)
End of period	$	29	$	1,920	$	(490)	$	6,318	$	(1,676)	$	6,101

Dividends per share of common stock were $0.02 for both the second quarter of 2022 and 2021 and $0.04 for both the first half of 2022 and 2021.

Earnings Per Share

We calculate basic and diluted earnings per share (EPS) based on net income, which approximates income available to common shareholders for each period.  Basic EPS is calculated using the two-class method, which includes the weighted-average number of common shares outstanding during the period and restricted stock units to be paid in stock that are deemed participating securities as they provide nonforfeitable rights to dividends. Diluted EPS considers the dilutive effect of all potential future common stock, including stock options.  

The weighted-average shares outstanding for basic and diluted EPS are as follows:

	Three Months Ended		Six Months Ended
(In thousands)	July 2, 2022	July 3, 2021	July 2, 2022	July 3, 2021
Basic weighted-average shares outstanding	214,587	225,963	215,799	226,486
Dilutive effect of stock options	2,071	2,483	2,334	1,810
Diluted weighted-average shares outstanding	216,658	228,446	218,133	228,296

13

For both the second quarter and first half of 2022, stock options to purchase 1.0 million shares of common stock were excluded from the calculation of diluted weighted-average shares outstanding as their effect would have been anti-dilutive. For the first half of 2021, stock options to purchase 2.1 million shares of common stock were excluded from the calculation of diluted weighted-average shares outstanding as their effect would have been anti-dilutive.

Accumulated Other Comprehensive Loss and Other Comprehensive Income

The components of Accumulated other comprehensive loss are presented below:

(In millions)	Pension and Postretirement Benefits Adjustments		Foreign Currency Translation Adjustments		Deferred Gains (Losses) on Hedge Contracts		Accumulated Other Comprehensive Loss
Balance at January 1, 2022	$	(799)	$	9	$	1	$	(789)
Other comprehensive loss before reclassifications	—		(104)		4		(100)
Reclassified from Accumulated other comprehensive loss	34		—		—		34
Balance at July 2, 2022	$	(765)	$	(95)	$	5	$	(855)
Balance at January 2, 2021	$	(1,780)	$	42	$	(1)	$	(1,739)
Other comprehensive loss before reclassifications	—		(17)		6		(11)
Reclassified from Accumulated other comprehensive loss	60		14		—		74
Balance at July 3, 2021	$	(1,720)	$	39	$	5	$	(1,676)

The before and after-tax components of Other comprehensive income (loss) are presented below:

	July 2, 2022						July 3, 2021
(In millions)	Pre-Tax Amount		Tax (Expense) Benefit		After-tax Amount		Pre-Tax Amount		Tax (Expense) Benefit		After-tax Amount
Three Months Ended
Pension and postretirement benefits adjustments:
Amortization of net actuarial loss*	$	21	$	(6)	$	15	$	38	$	(9)	$	29
Amortization of prior service cost*	2		—		2		2		(1)		1
Pension and postretirement benefits adjustments, net	23		(6)		17		40		(10)		30
Foreign currency translation adjustments	(90)		—		(90)		15		—		15
Deferred gains (losses) on hedge contracts:
Current deferrals	(5)		2		(3)		2		—		2
Deferred gains (losses) on hedge contracts, net	(5)		2		(3)		2		—		2
Total	$	(72)	$	(4)	$	(76)	$	57	$	(10)	$	47
Six Months Ended
Pension and postretirement benefits adjustments:
Amortization of net actuarial loss*	$	42	$	(11)	$	31	$	76	$	(18)	$	58
Amortization of prior service cost*	4		(1)		3		4		(2)		2
Pension and postretirement benefits adjustments, net	46		(12)		34		80		(20)		60
Foreign currency translation adjustments:
Foreign currency translation adjustments	(104)		—		(104)		(17)		—		(17)
Business disposition	—		—		—		14		—		14
Foreign currency translation adjustments, net	(104)		—		(104)		(3)		—		(3)
Deferred gains on hedge contracts:
Current deferrals	5		(1)		4		7		(1)		6
Deferred gains on hedge contracts, net	5		(1)		4		7		(1)		6
Total	$	(53)	$	(13)	$	(66)	$	84	$	(21)	$	63

*These components of other comprehensive income (loss) are included in the computation of net periodic pension cost (income). See Note 15 of our 2021 Annual Report on Form 10-K for additional information.

14

Note 9. Segment Information

Through the first quarter of 2022, we operated in, and reported financial information for, the following five business segments: Textron Aviation, Bell, Textron Systems, Industrial and Finance. Beginning in the second quarter of 2022, we formed a new reporting segment within the Manufacturing group, Textron eAviation, which includes the operating results of Pipistrel, a manufacturer of electrically powered aircraft that we acquired on April 15, 2022, as discussed in Note 2, along with other research and development initiatives related to sustainable aviation solutions. Segment profit is an important measure used for evaluating performance and for decision-making purposes. Segment profit for the manufacturing segments excludes interest expense, certain corporate expenses, gains/losses on major business dispositions and special charges. The measurement for the Finance segment includes interest income and expense along with intercompany interest income and expense.

Our revenues by segment, along with a reconciliation of segment profit to income from continuing operations before income taxes, are included in the table below:

	Three Months Ended				Six Months Ended
(In millions)	July 2, 2022		July 3, 2021		July 2, 2022		July 3, 2021
Revenues
Textron Aviation	$	1,284	$	1,161	$	2,324	$	2,026
Bell	687		891		1,521		1,737
Textron Systems	293		333		566		661
Industrial	871		794		1,709		1,619
Textron eAviation	5		—		5		—
Finance	14		12		30		27
Total revenues	$	3,154	$	3,191	$	6,155	$	6,070
Segment Profit
Textron Aviation	$	155	$	96	$	276	$	143
Bell	63		110		161		215
Textron Systems	42		48		75		99
Industrial	41		32		84		79
Textron eAviation	(8)		—		(8)		—
Finance	10		3		19		9
Segment profit	303		289		607		545
Corporate expenses and other, net	(12)		(37)		(56)		(77)
Interest expense, net for Manufacturing group	(28)		(32)		(56)		(67)
Special charges	—		(4)		—		(10)
Gain on business disposition	—		2		—		17
Income from continuing operations before income taxes	$	263	$	218	$	495	$	408

Note 10. Revenues

Disaggregation of Revenues

Our revenues disaggregated by major product type are presented below:

	Three Months Ended				Six Months Ended
(In millions)	July 2, 2022		July 3, 2021		July 2, 2022		July 3, 2021
Aircraft	$	856	$	797	$	1,502	$	1,332
Aftermarket parts and services	428		364		822		694
Textron Aviation	1,284		1,161		2,324		2,026
Military aircraft and support programs	402		572		999		1,149
Commercial helicopters, parts and services	285		319		522		588
Bell	687		891		1,521		1,737
Textron Systems	293		333		566		661
Fuel systems and functional components	435		440		899		937
Specialized vehicles	436		354		810		682
Industrial	871		794		1,709		1,619
Textron eAviation	5		—		5		—
Finance	14		12		30		27
Total revenues	$	3,154	$	3,191	$	6,155	$	6,070

15

Our revenues for our segments by customer type and geographic location are presented below:

(In millions)	Textron Aviation		Bell		Textron Systems		Industrial		Textron eAviation		Finance		Total
Three months ended July 2, 2022
Customer type:
Commercial	$	1,253	$	279	$	19	$	862	$	5	$	14	$	2,432
U.S. Government	31		408		274		9		—		—		722
Total revenues	$	1,284	$	687	$	293	$	871	$	5	$	14	$	3,154
Geographic location:
United States	$	776	$	504	$	268	$	466	$	1	$	5	$	2,020
Europe	239		43		10		185		3		—		480
Other international	269		140		15		220		1		9		654
Total revenues	$	1,284	$	687	$	293	$	871	$	5	$	14	$	3,154
Three months ended July 3, 2021
Customer type:
Commercial	$	1,127	$	350	$	67	$	787	$	—	$	12	$	2,343
U.S. Government	34		541		266		7		—		—		848
Total revenues	$	1,161	$	891	$	333	$	794	$	—	$	12	$	3,191
Geographic location:
United States	$	885	$	677	$	297	$	406	$	—	$	6	$	2,271
Europe	122		47		9		192		—		1		371
Other international	154		167		27		196		—		5		549
Total revenues	$	1,161	$	891	$	333	$	794	$	—	$	12	$	3,191
Six months ended July 2, 2022
Customer type:
Commercial	$	2,274	$	513	$	38	$	1,697	$	5	$	30	$	4,557
U.S. Government	50		1,008		528		12		—		—		1,598
Total revenues	$	2,324	$	1,521	$	566	$	1,709	$	5	$	30	$	6,155
Geographic location:
United States	$	1,508	$	1,174	$	514	$	892	$	1	$	10	$	4,099
Europe	358		71		18		375		3		1		826
Other international	458		276		34		442		1		19		1,230
Total revenues	$	2,324	$	1,521	$	566	$	1,709	$	5	$	30	$	6,155
Six months ended July 3, 2021
Customer type:
Commercial	$	1,973	$	616	$	125	$	1,607	$	—	$	27	$	4,348
U.S. Government	53		1,121		536		12		—		—		1,722
Total revenues	$	2,026	$	1,737	$	661	$	1,619	$	—	$	27	$	6,070
Geographic location:
United States	$	1,494	$	1,293	$	586	$	784	$	—	$	14	$	4,171
Europe	206		83		19		428		—		1		737
Other international	326		361		56		407		—		12		1,162
Total revenues	$	2,026	$	1,737	$	661	$	1,619	$	—	$	27	$	6,070

Remaining Performance Obligations

Our remaining performance obligations, which is the equivalent of our backlog, represent the expected transaction price allocated to our contracts that we expect to recognize as revenues in future periods when we perform under the contracts.  These remaining obligations exclude unexercised contract options and potential orders under ordering-type contracts such as Indefinite Delivery, Indefinite Quantity contracts. At July 2, 2022, we had $13.2 billion in remaining performance obligations of which we expect to recognize revenues of approximately 75% through 2023, an additional 21% through 2025, and the balance thereafter.  

16

Contract Assets and Liabilities

Assets and liabilities related to our contracts with customers are reported on a contract-by-contract basis at the end of each reporting period. At July 2, 2022 and January 1, 2022, contract assets totaled $643 million and $717 million, respectively, and contract liabilities totaled $1.6 billion and $1.2 billion, respectively, reflecting timing differences between revenues recognized, billings and payments from customers. We recognized revenues of $293 million and $170 million in the second quarter of 2022 and 2021, respectively, and $499 million and $448 million in the first half of 2022 and 2021, respectively, that were included in the contract liability balance at the beginning of each year.

Note 11. Retirement Plans

We provide defined benefit pension plans and other postretirement benefits to eligible employees.  The components of net periodic benefit (income) cost for these plans are as follows:

	Three Months Ended				Six Months Ended
(In millions)	July 2, 2022		July 3, 2021		July 2, 2022		July 3, 2021
Pension Benefits
Service cost	$	27	$	29	$	54	$	58
Interest cost	68		63		136		126
Expected return on plan assets	(153)		(144)		(306)		(288)
Amortization of net actuarial loss	22		38		44		77
Amortization of prior service cost	3		3		6		6
Net periodic benefit income*	$	(33)	$	(11)	$	(66)	$	(21)
Postretirement Benefits Other Than Pensions
Service cost	$	—	$	—	$	1	$	1
Interest cost	2		2		3		3
Amortization of net actuarial gain	(1)		—		(2)		(1)
Amortization of prior service credit	(1)		(1)		(2)		(2)
Net periodic benefit cost	$	—	$	1	$	—	$	1

* Excludes the cost associated with the defined contribution component, included in certain of our U.S.-based defined benefit pension plans, that totaled $3 million and $3 million in the second quarter of 2022 and 2021, respectively, and $7 million and $6 million for the first half of 2022 and 2021, respectively.

Note 12. Special Charges

In the second quarter and first half of 2021, we recognized special charges of $4 million and $10 million, respectively, related to a restructuring plan initiated in 2020 in response to the economic challenges and uncertainty resulting from the COVID-19 pandemic. There were no special charges recorded in the second quarter and first half of 2022.

Our restructuring reserve activity is summarized below:

(In millions)	Severance Costs		Contract Terminations and Other		Total
Balance at January 1, 2022	$	19	$	9	$	28
Cash paid	(10)		(1)		(11)
Foreign currency translation	(1)		—		(1)
Balance at July 2, 2022	$	8	$	8	$	16

The majority of the remaining cash outlays of $16 million is expected to be paid in the next nine months.

Note 13. Income Taxes

Our effective tax rate for the second quarter and first half of 2022 was 17.1% and 17.0%, respectively. In the second quarter and first half of 2022, the effective tax rate was lower than the U.S. federal statutory rate of 21%, largely due to the favorable impact of research and development credits.

Our effective tax rate for the second quarter and first half of 2021 was 15.6% and 13.0%, respectively. In the second quarter and first half of 2021, the effective tax rate was lower than the U.S. federal statutory rate of 21%, largely due to the favorable impact of research and development credits. In the first half of 2021, the effective tax rate also included a $12 million benefit recognized for additional research and development credits related to prior years.

17

Note 14. Commitments and Contingencies

We are subject to legal proceedings and other claims arising out of the conduct of our business, including proceedings and claims relating to commercial and financial transactions; government contracts; alleged lack of compliance with applicable laws and regulations; production partners; product liability; patent and trademark infringement; employment disputes; and environmental, safety and health matters. Some of these legal proceedings and claims seek damages, fines or penalties in substantial amounts or remediation of environmental contamination. As a government contractor, we are subject to audits, reviews and investigations to determine whether our operations are being conducted in accordance with applicable regulatory requirements. Under federal government procurement regulations, certain claims brought by the U.S. Government could result in our suspension or debarment from U.S. Government contracting for a period of time. On the basis of information presently available, we do not believe that existing proceedings and claims will have a material effect on our financial position or results of operations.

18

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Consolidated Results of Operations

	Three Months Ended					Six Months Ended
(Dollars in millions)	July 2, 2022		July 3, 2021		% Change	July 2, 2022		July 3, 2021		% Change
Revenues	$	3,154	$	3,191	(1)%	$	6,155	$	6,070	1%
Cost of sales	2,641		2,660		(1)%	5,133		5,060		1%
Gross margin as a % of Manufacturing revenues	15.9%		16.3%			16.2%		16.3%
Selling and administrative expense	278		314		(11)%	583		612		(5)%

During the first half of 2022, all of our manufacturing segments were impacted by labor shortages and ongoing global supply chain shortages and delays resulting from the continuation of the COVID-19 pandemic and the war in Ukraine. While our businesses are managing through these challenges, in some cases they have caused, and we expect will continue to cause, some manufacturing inefficiencies and delays in delivery of certain of our products to customers.

An analysis of our consolidated operating results is set forth below. A more detailed analysis of our segments’ operating results is provided in the Segment Analysis section on pages 20 to 25.

Revenues

Revenues decreased $37 million in the second quarter of 2022, compared with the second quarter of 2021. The revenue decrease primarily included the following factors:

•Lower Bell revenues of $204 million, largely due to lower military revenues of $170 million, primarily in the H-1 program due to lower aircraft and spares production volume, reflecting lower demand, and lower commercial revenues of $34 million.

•Lower Textron Systems revenues of $40 million, largely due to lower volume of $44 million, which included a $39 million decrease from our Afghanistan fee-for-service and aircraft support contracts.

•Higher Textron Aviation revenues of $123 million, reflecting higher volume and mix of $79 million and higher pricing of $44 million.

•Higher Industrial revenues of $77 million, due to favorable impact from pricing of $64 million and higher volume and mix of $37 million, principally in the Specialized Vehicles product line, partially offset by $24 million from foreign exchange rate fluctuations.

Revenues increased $85 million in the first half of 2022, compared with the first half of 2021. The revenue increase primarily included the following factors:

•Higher Textron Aviation revenues of $298 million, reflecting higher volume and mix of $221 million and higher pricing of $77 million.

•Higher Industrial revenues of $90 million, largely due to favorable impact from pricing of $110 million, principally in the Specialized Vehicles product line, partially offset by $33 million from exchange rate fluctuations.

•Lower Bell revenues of $216 million, largely due to lower military revenues of $150 million, primarily in the H-1 program due to lower aircraft and spares production volume, reflecting lower demand, and lower commercial revenues of $66 million.

•Lower Textron Systems revenues of $95 million, largely due to lower volume of $103 million, which included a $78 million decrease from our Afghanistan fee-for-service and aircraft support contracts.

Cost of Sales and Selling and Administrative Expense

Cost of sales decreased $19 million in the second quarter of 2022, compared with the second quarter of 2021, largely due to lower net volume and mix described above, partially offset by inflation of $108 million, principally reflecting higher material cost in the Industrial and Textron Aviation segments. Gross margin as a percentage of Manufacturing revenues decreased 40 basis points in the second quarter of 2022 as higher margin at the Textron Aviation segment, reflecting higher volume and mix, was more than offset by lower margin at the other Manufacturing segments, primarily at the Bell Segment, reflecting lower volume and mix.

Cost of sales increased $73 million in the first half of 2022, compared with the first half of 2021, largely due to inflation of $181 million, principally reflecting higher material cost in the Industrial and Textron Aviation segments, partially offset by lower net volume and mix. Gross margin as a percentage of Manufacturing revenues decreased 10 basis points in the first half of 2022 as higher margin at the Textron Aviation segment, reflecting higher volume and mix, was offset by lower margin at the other Manufacturing segments.

19

Selling and administrative expense decreased $36 million, 11%, and $29 million, 5%, in the second quarter and first half of 2022, respectively, compared with the corresponding periods in 2021, primarily reflecting lower share-based compensation expense.

Non-service components of pension and postretirement income, net

In the second quarter of 2022, non-service components of pension and postretirement income, net increased by $21 million, 54%, to $60 million. In the first half of 2022, non-service components of pension and postretirement income, net increased by $42 million, 53%, to $121 million. The increase in both periods was primarily driven by an increase in the discount rate utilized for our domestic qualified pension plans and actual pension asset returns that exceeded our expected return on plan assets assumption.

Income Taxes

Our effective tax rate for the second quarter and first half of 2022 was 17.1% and 17.0%, respectively. In the second quarter and first half of 2022, the effective tax rate was lower than the U.S. federal statutory rate of 21%, largely due to the favorable impact of research and development credits.

Our effective tax rate for the second quarter and first half of 2021 was 15.6% and 13.0%, respectively. In the second quarter and first half of 2021, the effective tax rate was lower than the U.S. federal statutory rate of 21%, largely due to the favorable impact of research and development credits. In the first half of 2021, the effective tax rate also included a $12 million benefit recognized for additional research and development credits related to prior years.

Backlog

Our backlog is summarized below:

(In millions)	July 2, 2022		January 1, 2022
Textron Aviation	$	5,830	$	4,120
Bell	5,281		3,871
Textron Systems	2,061		2,144
Total backlog	$	13,172	$	10,135

Textron Aviation's backlog increased $1.7 billion, 42%, in the first half of 2022, reflecting orders in excess of deliveries. Backlog at Bell increased $1.4 billion, 36%, largely due to new orders in excess of deliveries and revenues recognized. Bell was awarded a $1.4 billion 5-year contract with the U.S. Government for spares and logistic support for the V-22 tiltrotor aircraft in the first quarter of 2022.

Segment Analysis

Through the first quarter of 2022, we operated in, and reported financial information for, the following five business segments: Textron Aviation, Bell, Textron Systems, Industrial and Finance. Beginning in the second quarter of 2022, we formed a new reporting segment within the Manufacturing group, Textron eAviation. This new segment includes the operating results of Pipistrel, a manufacturer of electrically powered aircraft that we acquired on April 15, 2022, as discussed in Note 2 to the Consolidated Financial Statements, along with other research and development initiatives related to sustainable aviation solutions.

Segment profit is an important measure used for evaluating performance and for decision-making purposes. Segment profit for the manufacturing segments excludes interest expense, certain corporate expenses, gains/losses on major business dispositions and special charges. The measurement for the Finance segment includes interest income and expense along with intercompany interest income and expense. Operating expenses for the Manufacturing segments include cost of sales, selling and administrative expense and other non-service components of net periodic benefit cost/(income), and exclude certain corporate expenses and special charges.

In our discussion of comparative results for the Manufacturing group, changes in revenues and segment profit for our commercial businesses typically are expressed in terms of volume and mix, pricing, foreign exchange, acquisitions and dispositions, inflation and performance. For revenues, volume and mix represents changes in revenues from increases or decreases in the number of units delivered or services provided and the composition of products and/or services sold. For segment profit, volume and mix represents a change due to the number of units delivered or services provided and the composition of products and/or services sold at different profit margins. Pricing represents changes in unit pricing. Foreign exchange is the change resulting from translating foreign-denominated amounts into U.S. dollars at exchange rates that are different from the prior period. Revenues generated by acquired businesses are reflected in Acquisitions for a twelve-month period, while reductions in revenues and segment profit from the sale of businesses are reflected as Dispositions.  Inflation represents higher material, wages, benefits, pension service cost or other costs. Performance reflects an increase or decrease in research and development, depreciation, selling and administrative costs, warranty, product liability, quality/scrap, labor efficiency, overhead, non-service pension cost/(income), product line profitability, start-up, ramp up and cost-reduction initiatives or other manufacturing inputs.

20

Approximately 26% of our 2021 revenues were derived from contracts with the U.S. Government, including those under the U.S. Government-sponsored foreign military sales program.  For our segments that contract with the U.S. Government, changes in revenues related to these contracts are expressed in terms of volume.  Changes in segment profit for these contracts are typically expressed in terms of volume and mix and performance; these include cumulative catch-up adjustments associated with a) revisions to the transaction price that may reflect contract modifications or changes in assumptions related to award fees and other variable consideration or b) changes in the total estimated costs at completion due to improved or deteriorated operating performance.

Textron Aviation

	Three Months Ended					Six Months Ended
(Dollars in millions)	July 2, 2022		July 3, 2021		% Change	July 2, 2022		July 3, 2021		% Change
Revenues:
Aircraft	$	856	$	797	7%	$	1,502	$	1,332	13%
Aftermarket parts and services	428		364		18%	822		694		18%
Total revenues	1,284		1,161		11%	2,324		2,026		15%
Operating expenses	1,129		1,065		6%	2,048		1,883		9%
Segment profit	$	155	$	96	61%	$	276	$	143	93%
Profit margin	12.1%		8.3%			11.9%		7.1%

Textron Aviation Revenues and Operating Expenses

The following factors contributed to the change in Textron Aviation’s revenues for the periods:

(In millions)	Q2 2022 versus Q2 2021		YTD 2022 versus YTD 2021
Volume and mix	$	79	$	221
Pricing	44		77
Total change	$	123	$	298

Textron Aviation’s revenues increased $123 million, 11%, in the second quarter of 2022, compared with the second quarter of 2021, reflecting higher volume and mix of $79 million and higher pricing of $44 million. The increase in volume and mix was largely due to higher Citation jet and aftermarket volume, partially offset by lower pre-owned volume. The higher aftermarket volume reflected increased aircraft utilization. We delivered 48 Citation jets and 35 commercial turboprops in the second quarter of 2022, compared with 44 Citation jets and 33 commercial turboprops in the second quarter of 2021.

Textron Aviation’s revenues increased $298 million, 15%, in the first half of 2022, compared with the first half of 2021, reflecting higher volume and mix of $221 million and higher pricing of $77 million. The increase in volume and mix was largely due to higher Citation jet, aftermarket and commercial turboprop volume, partially offset by lower pre-owned volume. The higher aftermarket volume reflected increased aircraft utilization. We delivered 87 Citation jets and 66 commercial turboprops in the first half of 2022, compared with 72 Citation jets and 47 commercial turboprops in the first half of 2021.

Textron Aviation’s operating expenses increased $64 million, 6%, and $165 million, 9%, in the second quarter and first half of 2022, respectively, compared with the corresponding periods of 2021, largely due to higher volume and mix described above and inflation of $29 million and $46 million, respectively.

Textron Aviation Segment Profit

The following factors contributed to the change in Textron Aviation’s segment profit for the periods:

(In millions)	Q2 2022 versus Q2 2021		YTD 2022 versus YTD 2021
Volume and mix	$	25	$	80
Pricing, net of inflation	15		31
Performance	19		22
Total change	$	59	$	133

Segment profit at Textron Aviation increased $59 million, 61%, in the second quarter of 2022, compared with the second quarter of 2021, largely due to the impact from higher volume and mix of $25 million described above, a favorable impact from performance of $19 million and favorable pricing, net of inflation of $15 million.

21

Segment profit at Textron Aviation increased $133 million, 93%, in the first half of 2022, compared with the first half of 2021, largely due to the impact from higher volume and mix described above, favorable pricing, net of inflation of $31 million and a favorable impact from performance of $22 million.

Bell

	Three Months Ended					Six Months Ended
(Dollars in millions)	July 2, 2022		July 3, 2021		% Change	July 2, 2022		July 3, 2021		% Change
Revenues:
Military aircraft and support programs	$	402	$	572	(30)%	$	999	$	1,149	(13)%
Commercial helicopters, parts and services	285		319		(11)%	522		588		(11)%
Total revenues	687		891		(23)%	1,521		1,737		(12)%
Operating expenses	624		781		(20)%	1,360		1,522		(11)%
Segment profit	$	63	$	110	(43)%	$	161	$	215	(25)%
Profit margin	9.2%		12.3%			10.6%		12.4%

Bell’s major U.S. Government programs at this time are the V-22 tiltrotor aircraft and the H-1 helicopter platforms, which are both in the production and support stage and represent a significant portion of Bell’s revenues from the U.S. Government. Over the next several years, the H-1 helicopter program with the U.S. Government will be transitioning from the production stage to the support stage.

Bell Revenues and Operating Expenses

The following factors contributed to the change in Bell’s revenues for the periods:

(In millions)	Q2 2022 versus Q2 2021		YTD 2022 versus YTD 2021
Volume and mix	$	(217)	$	(240)
Pricing	13		24
Total change	$	(204)	$	(216)

Bell’s revenues decreased $204 million, 23%, in the second quarter of 2022, compared with the second quarter of 2021, largely due to lower military revenues of $170 million, primarily in the H-1 program due to lower aircraft and spares production volume, reflecting lower demand. Commercial revenues decreased $34 million, primarily due to lower volume and mix. We delivered 34 commercial helicopters in the second quarter of 2022, compared with 47 commercial helicopters in the second quarter of 2021.  

Bell’s revenues decreased $216 million, 12%, in the first half of 2022, compared with the first half of 2021, largely due to lower military revenues of $150 million, primarily in the H-1 program due to lower aircraft and spares production volume, reflecting lower demand. Commercial revenues decreased $66 million, primarily due to lower volume and mix. We delivered 59 commercial helicopters in the first half of 2022, compared with 64 commercial helicopters in the first half of 2021.  

Bell’s operating expenses decreased $157 million, 20%, and $162 million, 11% in the second quarter and first half of 2022, respectively, compared with the corresponding periods of 2021, primarily due to lower volume and mix described above.

Bell Segment Profit

The following factors contributed to the change in Bell’s segment profit for the periods:

(In millions)	Q2 2022 versus Q2 2021		YTD 2022 versus YTD 2021
Volume and mix	$	(62)	$	(72)
Performance	16		22
Inflation, net of pricing	(1)		(4)
Total change	$	(47)	$	(54)

Bell’s segment profit decreased $47 million, 43%, in the second quarter of 2022, compared with the second quarter of 2021, primarily reflecting lower volume and mix as described above, partially offset by a favorable impact from performance of $16 million. Performance included lower research and development costs, pension costs and selling and administrative expense of $26 million, partially offset by an unfavorable change in net program adjustments.

22

Bell’s segment profit decreased $54 million, 25%, in the first half of 2022, compared with the first half of 2021, primarily reflecting lower volume and mix described above, partially offset by a favorable impact from performance of $22 million. Performance included lower research and development costs, pension costs and selling and administrative expense of $57 million, partially offset by an unfavorable change in net program adjustments.

Textron Systems

	Three Months Ended					Six Months Ended
(Dollars in millions)	July 2, 2022		July 3, 2021		% Change	July 2, 2022		July 3, 2021		% Change
Revenues	$	293	$	333	(12)%	$	566	$	661	(14)%
Operating expenses	251		285		(12)%	491		562		(13)%
Segment profit	$	42	$	48	(13)%	$	75	$	99	(24)%
Profit margin	14.3%		14.4%			13.3%		15.0%

Textron Systems Revenues and Operating Expenses

The following factors contributed to the change in Textron Systems’ revenues for the periods:

(In millions)	Q2 2022 versus Q2 2021		YTD 2022 versus YTD 2021
Volume	$	(44)	$	(103)
Other	4		8
Total change	$	(40)	$	(95)

Textron Systems' revenues decreased $40 million, 12%, and $95 million, 14%, in the second quarter and first half of 2022, respectively, compared with the corresponding periods of 2021. Lower volume of $44 million and $103 million, respectively, included a decrease of $39 million and $78 million, respectively, from our Afghanistan fee-for-service and aircraft support contracts, primarily reflecting the impact from the U.S. Army’s withdrawal from Afghanistan.

Textron Systems’ operating expenses decreased $34 million, 12%, and $71 million, 13% in the second quarter and first half of 2022, respectively, compared with the corresponding periods of 2021, primarily related to lower net volume described above.

Textron Systems Segment Profit

The following factors contributed to the change in Textron Systems’ segment profit for the periods:

(In millions)	Q2 2022 versus Q2 2021		YTD 2022 versus YTD 2021
Volume and mix	$	(4)	$	(15)
Performance and other	(2)		(9)
Total change	$	(6)	$	(24)

Textron Systems’ segment profit decreased $6 million, 13%, in the second quarter of 2022, compared with the second quarter of 2021, primarily due to lower volume and mix of $4 million described above.

Textron Systems’ segment profit decreased $24 million, 24%, in the first half of 2022, compared with the first half of 2021, due to lower volume and mix of $15 million described above and an unfavorable impact from performance and other of $9 million.

23

Industrial

	Three Months Ended					Six Months Ended
(Dollars in millions)	July 2, 2022		July 3, 2021		% Change	July 2, 2022		July 3, 2021		% Change
Revenues:
Fuel systems and functional components	$	435	$	440	(1)%	$	899	$	937	(4)%
Specialized vehicles	436		354		23%	810		682		19%
Total revenues	871		794		10%	1,709		1,619		6%
Operating expenses	830		762		9%	1,625		1,540		6%
Segment profit	$	41	$	32	28%	$	84	$	79	6%
Profit margin	4.7%		4.0%			4.9%		4.9%

Industrial Revenues and Operating Expenses

The following factors contributed to the change in Industrial’s revenues for the periods:

(In millions)	Q2 2022 versus Q2 2021		YTD 2022 versus YTD 2021
Pricing	$	64	$	110
Volume and mix	37		13
Foreign exchange	(24)		(33)
Total change	$	77	$	90

Industrial segment revenues increased $77 million, 10%, in the second quarter of 2022, compared with the second quarter of 2021, primarily due to a $64 million favorable impact from pricing and $37 million from higher volume and mix, principally in the Specialized Vehicles product line, partially offset by $24 million from foreign exchange rate fluctuations, primarily related to the Euro.

Industrial segment revenues increased $90 million, 6%, in the first half of 2022, compared with the first half of 2021, primarily due to a $110 million favorable impact from pricing, principally in the Specialized Vehicles product line, partially offset by $33 million from foreign exchange rate fluctuations, primarily related to the Euro. Higher volume and mix in the Specialized Vehicles product line was partially offset by lower volume and mix in the Fuel Systems and Functional Components product line, primarily due to the impact of global supply chain shortages on our original equipment manufacturer customers.

Industrial's operating expenses increased $68 million, 9%, in the second quarter of 2022, compared with the second quarter of 2021, primarily reflecting inflation of $70 million, largely in material costs, and the impact of higher volume and mix described above, partially offset by a favorable impact of $22 million from foreign exchange rate fluctuations.

Industrial's operating expenses increased $85 million, 6%, in the first half of 2022, compared with the first half of 2021, primarily reflecting inflation of $115 million, largely in material costs, partially offset by a favorable impact of $30 million from foreign exchange rate fluctuations.

Industrial Segment Profit

The following factors contributed to the change in Industrial’s segment profit for the periods:

(In millions)	Q2 2022 versus Q2 2021		YTD 2022 versus YTD 2021
Performance	$	6	$	8
Volume and mix	11		5
Inflation, net of pricing	(6)		(5)
Foreign exchange	(2)		(3)
Total change	$	9	$	5

Segment profit for the Industrial segment increased $9 million, 28%, in the second quarter of 2022, compared with the second quarter of 2021, primarily due to higher volume and mix of $11 million described above and favorable performance of $6 million, partially offset by inflation, net of pricing of $6 million.

24

Segment profit for the Industrial segment increased $5 million, 6%, in the first half of 2022, compared with the first half of 2021, primarily due to favorable performance of $8 million and higher volume and mix of $5 million described above, partially offset by inflation, net of pricing of $5 million.

Textron eAviation

In the second quarter of 2022, Textron eAviation segment revenues and segment loss totaled $5 million and $8 million, respectively, which reflected the operating results of Pipistrel since its acquisition along with research and development costs for initiatives related to the development of sustainable aviation solutions.

Finance

	Three Months Ended				Six Months Ended
(In millions)	July 2, 2022		July 3, 2021		July 2, 2022		July 3, 2021
Revenues	$	14	$	12	$	30	$	27
Segment profit	10		3		19		9

Finance segment revenues increased $2 million and $3 million in the second quarter and first half of 2022, respectively, compared with the corresponding periods of 2021, and segment profit increased $7 million and $10 million, respectively. The following table reflects information about the Finance segment’s credit performance related to finance receivables.

(Dollars in millions)	July 2, 2022		January 1, 2022
Finance receivables	$	586	$	630
Allowance for credit losses	25		25
Ratio of allowance for credit losses to finance receivables	4.27%		3.97%
Nonaccrual finance receivables	68		94
Ratio of nonaccrual finance receivables to finance receivables	11.60%		14.92%
60+ days contractual delinquency	5		1
60+ days contractual delinquency as a percentage of finance receivables	0.85%		0.16%

We believe our allowance for credit losses adequately covers our exposure on these loans as our estimated collateral values largely exceed the outstanding loan amounts. Key portfolio quality indicators are discussed in Note 3 to the Consolidated Financial Statements.

25

Liquidity and Capital Resources

Our financings are conducted through two separate borrowing groups.  The Manufacturing group consists of Textron consolidated with its majority-owned subsidiaries that operate in the Textron Aviation, Bell, Textron Systems and Industrial segments along with Textron eAviation, a new segment formed at the beginning of the second quarter of 2022. The Finance group, which also is the Finance segment, consists of Textron Financial Corporation and its consolidated subsidiaries. We designed this framework to enhance our borrowing power by separating the Finance group.  Our Manufacturing group operations include the development, production and delivery of tangible goods and services, while our Finance group provides financial services. Due to the fundamental differences between each borrowing group’s activities, investors, rating agencies and analysts use different measures to evaluate each group’s performance.  To support those evaluations, we present balance sheet and cash flow information for each borrowing group within the Consolidated Financial Statements.

Key information that is utilized in assessing our liquidity is summarized below:

(Dollars in millions)	July 2, 2022		January 1, 2022
Manufacturing group
Cash and equivalents	$	1,764	$	1,922
Debt	3,184		3,185
Shareholders’ equity	6,801		6,815
Capital (debt plus shareholders’ equity)	9,985		10,000
Net debt (net of cash and equivalents) to capital	17%		16%
Debt to capital	32%		32%
Finance group
Cash and equivalents	$	77	$	195
Debt	382		582

We believe that our calculations of debt to capital and net debt to capital are useful measures as they provide a summary indication of the level of debt financing (i.e., leverage) that is in place to support our capital structure, as well as to provide an indication of the capacity to add further leverage. We expect to have sufficient cash to meet our needs based on our existing cash balances, the cash we expect to generate from our manufacturing operations and the availability of our existing credit facility.

Credit Facilities and Other Sources of Capital

Textron has a senior unsecured revolving credit facility for an aggregate principal amount of $1.0 billion, of which up to $100 million is available for the issuance of letters of credit. We may elect to increase the aggregate amount of commitments under the facility to up to $1.3 billion by designating an additional lender or by an existing lender agreeing to increase its commitment. The facility expires in October 2024, subject to up to two one-year extensions at our option with the consent of lenders representing a majority of the commitments under the facility. There were no amounts borrowed against the facility and there were $9 million of outstanding letters of credit issued under the facility at both July 2, 2022 and January 1, 2022.

We also maintain an effective shelf registration statement filed with the Securities and Exchange Commission that allows us to issue an unlimited amount of public debt and other securities.

Manufacturing Group Cash Flows

Cash flows for the Manufacturing group as presented in our Consolidated Statements of Cash Flows are summarized below:

	Six Months Ended
(In millions)	July 2, 2022		July 3, 2021
Operating activities	$	589	$	679
Investing activities	(269)		(90)
Financing activities	(449)		(740)

In the first half of 2022, cash flows from operating activities decreased $90 million to $589 million, compared with $679 million in the first half of 2021, primarily due to an increase in income tax payments of $140 million, largely resulting from a change in tax legislation. Effective at the beginning of 2022, the Tax Cuts and Jobs Act of 2017 eliminated the option to deduct research and development expenditures immediately in the year incurred and requires taxpayers to amortize such expenditures over five years. Without the option to deduct these expenses in the year incurred, our tax payments are expected to increase by approximately $300 million for the full year of 2022, depending on the final amount of research and development expenses incurred during the year.

26

Cash flows used in investing activities in the first half of 2022 included $198 million of net cash paid for business acquisitions, largely related to the Pipistrel acquisition discussed in Note 2 to the Consolidated Financial Statements, and $114 million of capital expenditures. Investing activities in the first half of 2021 included $128 million of capital expenditures, partially offset by $38 million of net proceeds from the disposition of TRU Simulation + Training Canada Inc.

Cash flows used in financing activities in the first half of 2022 included $439 million of cash paid to repurchase an aggregate of 6.6 million shares of our common stock. In the first half of 2021, cash flows used in financing activities included $519 million of payments on long-term debt and $287 million of cash paid to repurchase an aggregate of 4.8 million shares of our common stock.

On January 25, 2022, we announced the authorization of the repurchase of up to 25 million shares of our common stock. This new plan allows us to continue our practice of repurchasing shares to offset the impact of dilution from stock-based compensation and benefit plans and for opportunistic capital management purposes. The 2022 plan has no expiration date and replaced the prior 2020 share repurchase authorization.

Finance Group Cash Flows

Cash flows for the Finance group as presented in our Consolidated Statements of Cash Flows are summarized below:

	Six Months Ended
(In millions)	July 2, 2022		July 3, 2021
Operating activities	$	(9)	$	5
Investing activities	100		114
Financing activities	(209)		(34)

The Finance group’s cash flows from investing activities included collections on finance receivables totaling $79 million and $137 million in the first half of 2022 and 2021, respectively, and finance receivable originations of $23 million and $29 million, respectively. Cash flows provided by investing activities in the first half of 2022 also included $44 million of other investing activities, largely related to proceeds from the sale of operating lease assets.  In the first half of 2022 and 2021, financing activities included payments on long-term and nonrecourse debt of $209 million and $34 million, respectively.  

Consolidated Cash Flows

The consolidated cash flows after elimination of activity between the borrowing groups, are summarized below:

	Six Months Ended
(In millions)	July 2, 2022		July 3, 2021
Operating activities	$	615	$	773
Investing activities	(204)		(65)
Financing activities	(658)		(774)

In the first half of 2022, cash flows from operating activities decreased $158 million to $615 million, compared with $773 million in the first half of 2021, primarily due to an increase in income tax payments of $151 million, largely resulting from a change in tax legislation discussed above.

Cash flows used in investing activities in the first half of 2022 included $198 million of net cash paid for business acquisitions, largely related to the Pipistrel acquisition, and $114 million of capital expenditures, partially offset by $44 million of other investing activities, which included proceeds from the sale of operating lease assets. Investing activities in the first half of 2021 included $128 million of capital expenditures, partially offset by $38 million of net proceeds from the disposition of TRU Simulation + Training Canada Inc.

Cash flows used in financing activities in the first half of 2022 included $439 million of cash paid to repurchase shares of our outstanding common stock and $223 million of payments on long-term debt. In the first half of 2021, cash flows used in financing activities included $553 million of payments on long-term debt and $287 million of cash paid to repurchase shares of our outstanding common stock.

Captive Financing and Other Intercompany Transactions

The Finance group provides financing primarily to purchasers of new and pre-owned Textron Aviation aircraft and Bell helicopters manufactured by our Manufacturing group, otherwise known as captive financing.  In the Consolidated Statements of Cash Flows, cash received from customers is reflected as operating activities when received from third parties.  However, in the cash flow information provided for the separate borrowing groups, cash flows related to captive financing activities are reflected based on the operations of each group.  For example, when product is sold by our Manufacturing group to a customer and is financed by the

27

Finance group, the origination of the finance receivable is recorded within investing activities as a cash outflow in the Finance group’s statement of cash flows.  Meanwhile, in the Manufacturing group’s statement of cash flows, the cash received from the Finance group on the customer’s behalf is recorded within operating cash flows as a cash inflow.  Although cash is transferred between the two borrowing groups, there is no cash transaction reported in the consolidated cash flows at the time of the original financing.  These captive financing activities, along with all significant intercompany transactions, are reclassified or eliminated from the Consolidated Statements of Cash Flows.

Reclassification adjustments included in the Consolidated Statements of Cash Flows are summarized below:

	Six Months Ended
(In millions)	July 2, 2022		July 3, 2021
Reclassification adjustments from investing activities to operating activities:
Cash received from customers	$	58	$	118
Finance receivable originations for Manufacturing group inventory sales	(23)		(29)
Total reclassification adjustments from investing activities to operating activities	$	35	$	89

Critical Accounting Estimates Update

Our Consolidated Financial Statements are prepared in conformity with U.S. generally accepted accounting principles, which require us to make estimates and assumptions that affect the amounts reported in the financial statements. The accounting estimates that we believe are most critical to the portrayal of our financial condition and results of operations are reported in Item 7 of our Annual Report on Form 10-K for the year ended January 1, 2022. The following section provides an update of the year-end disclosure.

Revenue Recognition

A substantial portion of our revenues is related to long-term contracts with the U.S. Government, including those under the U.S. Government-sponsored foreign military sales program, for the design, development, manufacture or modification of aerospace and defense products as well as related services. We generally use the cost-to-cost method to measure progress for these contracts because it best depicts the transfer of control to the customer that occurs as we incur costs on our contracts.  Under this measure, the extent of progress towards completion is measured based on the ratio of costs incurred to date to the estimated costs at completion of the performance obligation, and revenue is recorded proportionally as costs are incurred.

Changes in our estimate of the total expected cost or in the transaction price for a contract typically impact our profit booking rate. We utilize the cumulative catch-up method of accounting to recognize the impact of these changes on our profit booking rate for a contract. Under this method, the inception-to-date impact of a profit adjustment on a contract is recognized in the period the adjustment is identified. The impact of our cumulative catch-up adjustments on segment profit recognized in prior periods is presented below:

	Three Months Ended				Six Months Ended
(In millions)	July 2, 2022		July 3, 2021		July 2, 2022		July 3, 2021
Gross favorable	$	25	$	40	$	41	$	76
Gross unfavorable	(29)		(25)		(62)		(47)
Net adjustments	$	(4)	$	15	$	(21)	$	29

28

Forward-Looking Information

Certain statements in this Quarterly Report on Form 10-Q and other oral and written statements made by us from time to time are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements, which may describe strategies, goals, outlook or other non-historical matters, or project revenues, income, returns or other financial measures, often include words such as “believe,” “expect,” “anticipate,” “intend,” “plan,” “estimate,” “guidance,” “project,” “target,” “potential,” “will,” “should,” “could,” “likely” or “may” and similar expressions intended to identify forward-looking statements. These statements are only predictions and involve known and unknown risks, uncertainties, and other factors that may cause our actual results to differ materially from those expressed or implied by such forward-looking statements. Given these uncertainties, you should not place undue reliance on these forward-looking statements. Forward-looking statements speak only as of the date on which they are made, and we undertake no obligation to update or revise any forward-looking statements.  In addition to those factors described in our 2021 Annual Report on Form 10-K under “Risk Factors,” among the factors that could cause actual results to differ materially from past and projected future results are the following:

•Interruptions in the U.S. Government’s ability to fund its activities and/or pay its obligations;

•Changing priorities or reductions in the U.S. Government defense budget, including those related to military operations in foreign countries;

•Our ability to perform as anticipated and to control costs under contracts with the U.S. Government;

•The U.S. Government’s ability to unilaterally modify or terminate its contracts with us for the U.S. Government’s convenience or for our failure to perform, to change applicable procurement and accounting policies, or, under certain circumstances, to withhold payment or suspend or debar us as a contractor eligible to receive future contract awards;

•Changes in foreign military funding priorities or budget constraints and determinations, or changes in government regulations or policies on the export and import of military and commercial products;

•Volatility in the global economy or changes in worldwide political conditions that adversely impact demand for our products;

•Volatility in interest rates or foreign exchange rates and inflationary pressures;

•Risks related to our international business, including establishing and maintaining facilities in locations around the world and relying on joint venture partners, subcontractors, suppliers, representatives, consultants and other business partners in connection with international business, including in emerging market countries;

•Our Finance segment’s ability to maintain portfolio credit quality or to realize full value of receivables;

•Performance issues with key suppliers or subcontractors;

•Legislative or regulatory actions, both domestic and foreign, impacting our operations or demand for our products;

•Our ability to control costs and successfully implement various cost-reduction activities;

•The efficacy of research and development investments to develop new products or unanticipated expenses in connection with the launching of significant new products or programs;

•The timing of our new product launches or certifications of our new aircraft products;

•Our ability to keep pace with our competitors in the introduction of new products and upgrades with features and technologies desired by our customers;

•Pension plan assumptions and future contributions;

•Demand softness or volatility in the markets in which we do business;

•Cybersecurity threats, including the potential misappropriation of assets or sensitive information, corruption of data or operational disruption;

•Difficulty or unanticipated expenses in connection with integrating acquired businesses;

•The risk that acquisitions do not perform as planned, including, for example, the risk that acquired businesses will not achieve revenues and profit projections;

•The impact of changes in tax legislation;

•Risks and uncertainties related to the ongoing impact of the COVID-19 pandemic and the war between Russia and Ukraine on our business and operations; and

•The ability of our businesses to hire and retain the highly skilled personnel necessary for our businesses to succeed.

29

Item 3. Quantitative and Qualitative Disclosures About Market Risk

There has been no significant change in our exposure to market risk during the fiscal quarter ended July 2, 2022. For discussion of our exposure to market risk, refer to Item 7A. Quantitative and Qualitative Disclosures about Market Risk contained in Textron’s 2021 Annual Report on Form 10-K.

Item 4. Controls and Procedures

We performed an evaluation of the effectiveness of our disclosure controls and procedures as of July 2, 2022. The evaluation was performed with the participation of senior management of each business segment and key Corporate functions, under the supervision of our Chairman, President and Chief Executive Officer (CEO) and our Executive Vice President and Chief Financial Officer (CFO). Based on this evaluation, the CEO and CFO concluded that our disclosure controls and procedures were operating and effective as of July 2, 2022.

There were no changes in our internal control over financial reporting during the fiscal quarter ended July 2, 2022 that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

As previously reported in Textron’s Annual Report on Form 10-K for the fiscal year ended January 4, 2020, on August 22, 2019, a purported shareholder class action lawsuit was filed in the United States District Court in the Southern District of New York against Textron, its Chairman and Chief Executive Officer and its Chief Financial Officer. The suit, filed by Building Trades Pension Fund of Western Pennsylvania, alleges that the defendants violated the federal securities laws by making materially false and misleading statements and concealing material adverse facts related to the Arctic Cat acquisition and integration. The complaint seeks unspecified compensatory damages. On November 12, 2019, the Court appointed IWA Forest Industry Pension Fund (IWA) as the sole lead plaintiff in the case. On December 24, 2019, IWA filed an Amended Complaint in the now entitled In re Textron Inc. Securities Litigation. On February 14, 2020, IWA filed a Second Amended Complaint, and on March 6, 2020, Textron filed a motion to dismiss the Second Amended Complaint. On July 20, 2020, the Court granted Textron’s motion to dismiss and closed the case. On August 18, 2020, plaintiffs filed a notice of appeal contesting the dismissal, which Textron opposed. On September 17, 2021, the Second Circuit Court of Appeals narrowed the case, unanimously upholding dismissal of most of the Second Amended Complaint, but reversing dismissal of one aspect of the Second Amended Complaint and remanding that remaining portion back to the District Court for further proceedings.

On June 23, 2022, as a result of a mediation process overseen by an independent mediator, the Parties entered into a settlement agreement, subject to court approval, to settle plaintiff’s claims for an amount not material to Textron. Neither Textron nor any of the other defendants admitted any wrongdoing with respect to the allegations in the case.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

The following provides information about our second quarter of 2022 repurchases of equity securities that are registered pursuant to Section 12 of the Securities Exchange Act of 1934, as amended:

Period (shares in thousands)	Total Number of Shares Purchased *	Average Price Paid per Share (excluding commissions)		Total Number of Shares Purchased as part of Publicly Announced Plan *	Maximum Number of Shares that may yet be Purchased under the Plan
April 3, 2022 – May 7, 2022	1,030	$	71.09	1,030	21,725
May 8, 2022 – June 4, 2022	1,560	64.16		1,560	20,165
June 5, 2022 – July 2, 2022	1,775	61.31		1,775	18,390
Total	4,365	$	64.64	4,365

* On January 25, 2022, our Board of Directors authorized the repurchase of up to 25 million shares of our common stock. This new plan has no expiration date and replaced the existing plan adopted in 2020.

30

Item 6.    Exhibits

31.1	Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2	Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1	Certification of Chief Executive Officer Pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2	Certification of Chief Financial Officer Pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101	The following materials from Textron Inc.’s Quarterly Report on Form 10-Q for the quarterly period ended July 2, 2022, formatted in XBRL (eXtensible Business Reporting Language): (i) the Consolidated Statements of Operations, (ii) the Consolidated Statements of Comprehensive Income, (iii) the Consolidated Balance Sheets, (iv) the Consolidated Statements of Cash Flows and (v) the Notes to the Consolidated Financial Statements.
104	Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).

31

Signatures

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.     

		TEXTRON INC.
Date:	July 28, 2022	/s/ Mark S. Bamford
		Mark S. Bamford Vice President and Corporate Controller (principal accounting officer)

32

EX-31.1

Exhibit 31.1

Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, Scott C. Donnelly, Chairman, President and Chief Executive Officer of Textron Inc. certify that:

1.I have reviewed this quarterly report on Form 10-Q of Textron Inc.;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a)designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b)designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c)evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d)disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

a)all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b)any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date:	July 28, 2022	/s/ Scott C. Donnelly
		Scott C. Donnelly Chairman, President and Chief Executive Officer

EX-31.2

Exhibit 31.2

Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, Frank T. Connor, Executive Vice President and Chief Financial Officer of Textron Inc. certify that:

1.I have reviewed this quarterly report on Form 10-Q of Textron Inc.;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a)designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b)designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c)evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d)disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

a)all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b)any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date:	July 28, 2022	/s/ Frank T. Connor
		Frank T. Connor Executive Vice President and Chief Financial Officer

EX-32.1

Exhibit 32.1

TEXTRON INC.

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Textron Inc. (the "Company") on Form 10-Q for the period ended July 2, 2022 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Scott C. Donnelly, Chairman, President and Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:

(1)The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2)The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date:	July 28, 2022	/s/ Scott C. Donnelly
		Scott C. Donnelly Chairman, President and Chief Executive Officer

EX-32.2

Exhibit 32.2

TEXTRON INC.

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Textron Inc. (the "Company") on Form 10-Q for the period ended July 2, 2022 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Frank T. Connor, Executive Vice President and Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:

(1)The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2)The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date:	July 28, 2022	/s/ Frank T. Connor
		Frank T. Connor Executive Vice President and Chief Financial Officer

XML

Cover - shares	6 Months Ended
	Jul. 02, 2022	Jul. 15, 2022
Cover [Abstract]
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Jul. 02, 2022
Document Transition Report	false
Entity File Number	1-5480
Entity Registrant Name	Textron Inc.
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	05-0315468
Entity Address, Address Line One	40 Westminster Street
Entity Address, City or Town	Providence
Entity Address, State or Province	RI
Entity Address, Postal Zip Code	02903
City Area Code	401
Local Phone Number	421-2800
Title of 12(b) Security	Common stock, $0.125 par value
Trading Symbol	TXT
Security Exchange Name	NYSE
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Large Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		211,531,587
Entity Central Index Key	0000217346
Current Fiscal Year End Date	--12-31
Document Fiscal Year Focus	2022
Document Fiscal Period Focus	Q2
Amendment Flag	false

XML

Consolidated Statements of Operations (Unaudited) - USD ($)	3 Months Ended		6 Months Ended
	Jul. 02, 2022	Jul. 03, 2021	Jul. 02, 2022	Jul. 03, 2021
Revenues
Total revenues	$ 3,154,000,000	$ 3,191,000,000	$ 6,155,000,000	$ 6,070,000,000
Costs, expenses and other
Selling and administrative expense	278,000,000	314,000,000	583,000,000	612,000,000
Interest expense	32,000,000	36,000,000	65,000,000	76,000,000
Non-service components of pension and postretirement income, net	(60,000,000)	(39,000,000)	(121,000,000)	(79,000,000)
Special charges	0	4,000,000	0	10,000,000
Gain on business disposition	0	(2,000,000)	0	(17,000,000)
Total costs, expenses and other	2,891,000,000	2,973,000,000	5,660,000,000	5,662,000,000
Income from continuing operations before income taxes	263,000,000	218,000,000	495,000,000	408,000,000
Income tax expense	45,000,000	34,000,000	84,000,000	53,000,000
Income from continuing operations	218,000,000	184,000,000	411,000,000	355,000,000
Loss from discontinued operations	(1,000,000)	(1,000,000)	(1,000,000)	(1,000,000)
Net income	$ 217,000,000	$ 183,000,000	$ 410,000,000	$ 354,000,000
Basic Earnings per share
Continuing operations (in dollars per share)	$ 1.01	$ 0.82	$ 1.90	$ 1.57
Discontinued operations (in dollars per share)	0	(0.01)	0	(0.01)
Basic Earnings per share (in dollars per share)	1.01	0.81	1.90	1.56
Diluted Earnings per share
Continuing operations (in dollars per share)	1.00	0.81	1.88	1.56
Discontinued operations (in dollars per share)	0	(0.01)	0	(0.01)
Diluted Earnings per share (in dollars per share)	$ 1.00	$ 0.80	$ 1.88	$ 1.55
Manufacturing group
Costs, expenses and other
Gain on business disposition			$ 0	$ (17,000,000)
Income from continuing operations			395,000,000	358,000,000
Finance group
Revenues
Total revenues	$ 14,000,000	$ 12,000,000	30,000,000	27,000,000
Costs, expenses and other
Gain on business disposition			0	0
Income from continuing operations			16,000,000	(3,000,000)
Product
Costs, expenses and other
Cost of products/services sold	2,304,000,000	2,271,000,000	4,373,000,000	4,332,000,000
Product | Manufacturing group
Revenues
Total revenues	2,689,000,000	2,666,000,000	5,137,000,000	5,069,000,000
Service
Costs, expenses and other
Cost of products/services sold	337,000,000	389,000,000	760,000,000	728,000,000
Service | Manufacturing group
Revenues
Total revenues	$ 451,000,000	$ 513,000,000	$ 988,000,000	$ 974,000,000

XML

Consolidated Statements of Comprehensive Income (Unaudited) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jul. 02, 2022	Jul. 03, 2021	Jul. 02, 2022	Jul. 03, 2021
Statement of Comprehensive Income [Abstract]
Net income	$ 217	$ 183	$ 410	$ 354
Other comprehensive income (loss), net of tax
Pension and postretirement benefits adjustments, net of reclassifications	17	30	34	60
Foreign currency translation adjustments, net of reclassifications	(90)	15	(104)	(3)
Deferred gains (losses) on hedge contracts, net of reclassifications	(3)	2	4	6
Other comprehensive income (loss)	(76)	47	(66)	63
Comprehensive income	$ 141	$ 230	$ 344	$ 417

XML

Consolidated Balance Sheets (Unaudited) - USD ($) shares in Thousands, $ in Millions	Jul. 02, 2022	Jan. 01, 2022
Assets
Inventories	$ 3,739	$ 3,468
Finance receivables, net	561	605
Total assets	15,879	15,827
Liabilities
Total liabilities	9,078	9,012
Shareholders’ equity
Common stock	28	28
Capital surplus	1,953	1,863
Treasury stock	(596)	(157)
Retained earnings	6,271	5,870
Accumulated other comprehensive loss	(855)	(789)
Total shareholders’ equity	6,801	6,815
Total liabilities and shareholders’ equity	$ 15,879	$ 15,827
Common shares outstanding (in shares)	211,825	216,935
Manufacturing group
Assets
Cash and equivalents	$ 1,764	$ 1,922
Accounts receivable, net	876	838
Inventories	3,739	3,468
Other current assets	972	1,018
Total current assets	7,351	7,246
Property, plant and equipment, less accumulated depreciation and amortization of $4,945 and $4,888, respectively	2,469	2,538
Goodwill	2,278	2,149
Other assets	3,113	3,027
Total assets	15,211	14,960
Liabilities
Current portion of long-term debt	7	6
Accounts payable	807	786
Other current liabilities	2,660	2,344
Total current liabilities	3,474	3,136
Other liabilities	1,956	2,005
Long-term debt	3,177	3,179
Total liabilities	8,607	8,320
Finance group
Assets
Cash and equivalents	77	195
Finance receivables, net	561	605
Other assets	30	67
Total assets	668	867
Liabilities
Other liabilities	89	110
Debt	382	582
Total liabilities	$ 471	$ 692

XML

Consolidated Balance Sheets (Unaudited) (Parenthetical) - USD ($) $ in Millions	Jul. 02, 2022	Jan. 01, 2022
Statement of Financial Position [Abstract]
Accumulated depreciation and amortization	$ 4,945	$ 4,888

XML

Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Millions	6 Months Ended
	Jul. 02, 2022	Jul. 03, 2021
Cash flows from operating activities
Income from continuing operations	$ 411	$ 355
Non-cash items:
Depreciation and amortization	191	188
Deferred income taxes	(118)	16
Gain on business disposition	0	(17)
Other, net	55	64
Changes in assets and liabilities:
Accounts receivable, net	(48)	(38)
Inventories	(246)	(162)
Other assets	85	22
Accounts payable	24	188
Other liabilities	269	103
Income taxes, net	32	8
Pension, net	(83)	(42)
Captive finance receivables, net	35	89
Other operating activities, net	8	(1)
Net cash provided by (used in) operating activities of continuing operations	615	773
Net cash used in operating activities of discontinued operations	(2)	(1)
Net cash provided by (used in) operating activities	613	772
Cash flows from investing activities
Capital expenditures	(114)	(128)
Net cash used in business acquisitions	(198)	0
Net proceeds from corporate-owned life insurance policies	25	0
Proceeds from sale of property, plant and equipment	18	0
Net proceeds from business disposition	0	38
Finance receivables repaid	21	19
Other investing activities, net	44	6
Net cash provided by (used in) investing activities	(204)	(65)
Cash flows from financing activities
Decrease in short-term debt	(15)	0
Principal payments on long-term debt and nonrecourse debt	(223)	(553)
Purchases of Textron common stock	(439)	(287)
Dividends paid	(9)	(9)
Proceeds from options exercised	32	77
Other financing activities, net	(4)	(2)
Net cash used in financing activities	(658)	(774)
Effect of exchange rate changes on cash and equivalents	(27)	1
Net increase (decrease) in cash and equivalents	(276)	(66)
Cash and equivalents at beginning of period	2,117	2,254
Cash and equivalents at end of period	$ 1,841	$ 2,188

XML

Consolidated Statements of Cash Flows (Unaudited) - Manufacturing Group and Finance Group - USD ($) $ in Millions	6 Months Ended
	Jul. 02, 2022	Jul. 03, 2021
Cash flows from operating activities
Income from continuing operations	$ 411	$ 355
Non-cash items:
Depreciation and amortization	191	188
Deferred income taxes	(118)	16
Gain on business disposition	0	(17)
Other, net	55	64
Changes in assets and liabilities:
Accounts receivable, net	(48)	(38)
Inventories	(246)	(162)
Other assets	85	22
Accounts payable	24	188
Other liabilities	269	103
Income taxes, net	32	8
Pension, net	(83)	(42)
Other operating activities, net	8	(1)
Net cash provided by (used in) operating activities of continuing operations	615	773
Net cash used in operating activities of discontinued operations	(2)	(1)
Net cash provided by (used in) operating activities	613	772
Cash flows from investing activities
Capital expenditures	(114)	(128)
Net cash used in business acquisitions	(198)	0
Net proceeds from corporate-owned life insurance policies	25	0
Proceeds from sale of property, plant and equipment	18	0
Net proceeds from business disposition	0	38
Finance receivables repaid	21	19
Other investing activities, net	44	6
Net cash provided by (used in) investing activities	(204)	(65)
Cash flows from financing activities
Decrease in short-term debt	(15)	0
Principal payments on long-term debt and nonrecourse debt	(223)	(553)
Purchases of Textron common stock	(439)	(287)
Dividends paid	(9)	(9)
Proceeds from options exercised	32	77
Other financing activities, net	(4)	(2)
Net cash used in financing activities	(658)	(774)
Effect of exchange rate changes on cash and equivalents	(27)	1
Net increase (decrease) in cash and equivalents	(276)	(66)
Cash and equivalents at beginning of period	2,117	2,254
Cash and equivalents at end of period	1,841	2,188
Manufacturing group
Cash flows from operating activities
Income from continuing operations	395	358
Non-cash items:
Depreciation and amortization	191	183
Deferred income taxes	(106)	18
Gain on business disposition	0	(17)
Other, net	62	66
Changes in assets and liabilities:
Accounts receivable, net	(48)	(38)
Inventories	(246)	(162)
Other assets	85	23
Accounts payable	24	188
Other liabilities	279	103
Income taxes, net	28	0
Pension, net	(83)	(42)
Other operating activities, net	8	(1)
Net cash provided by (used in) operating activities of continuing operations	589	679
Net cash used in operating activities of discontinued operations	(2)	(1)
Net cash provided by (used in) operating activities	587	678
Cash flows from investing activities
Capital expenditures	(114)	(128)
Net cash used in business acquisitions	(198)	0
Net proceeds from corporate-owned life insurance policies	25	0
Proceeds from sale of property, plant and equipment	18	0
Net proceeds from business disposition	0	38
Finance receivables repaid	0	0
Finance receivables originated	0	0
Other investing activities, net	0	0
Net cash provided by (used in) investing activities	(269)	(90)
Cash flows from financing activities
Decrease in short-term debt	(15)	0
Principal payments on long-term debt and nonrecourse debt	(14)	(519)
Purchases of Textron common stock	(439)	(287)
Dividends paid	(9)	(9)
Proceeds from options exercised	32	77
Other financing activities, net	(4)	(2)
Net cash used in financing activities	(449)	(740)
Effect of exchange rate changes on cash and equivalents	(27)	1
Net increase (decrease) in cash and equivalents	(158)	(151)
Cash and equivalents at beginning of period	1,922	2,146
Cash and equivalents at end of period	1,764	1,995
Finance group
Cash flows from operating activities
Income from continuing operations	16	(3)
Non-cash items:
Depreciation and amortization	0	5
Deferred income taxes	(12)	(2)
Gain on business disposition	0	0
Other, net	(7)	(2)
Changes in assets and liabilities:
Accounts receivable, net	0	0
Inventories	0	0
Other assets	0	(1)
Accounts payable	0	0
Other liabilities	(10)	0
Income taxes, net	4	8
Pension, net	0	0
Other operating activities, net	0	0
Net cash provided by (used in) operating activities of continuing operations	(9)	5
Net cash used in operating activities of discontinued operations	0	0
Net cash provided by (used in) operating activities	(9)	5
Cash flows from investing activities
Capital expenditures	0	0
Net cash used in business acquisitions	0	0
Net proceeds from corporate-owned life insurance policies	0	0
Proceeds from sale of property, plant and equipment	0	0
Net proceeds from business disposition	0	0
Finance receivables repaid	79	137
Finance receivables originated	(23)	(29)
Other investing activities, net	44	6
Net cash provided by (used in) investing activities	100	114
Cash flows from financing activities
Decrease in short-term debt	0	0
Principal payments on long-term debt and nonrecourse debt	(209)	(34)
Purchases of Textron common stock	0	0
Dividends paid	0	0
Proceeds from options exercised	0	0
Other financing activities, net	0	0
Net cash used in financing activities	(209)	(34)
Effect of exchange rate changes on cash and equivalents	0	0
Net increase (decrease) in cash and equivalents	(118)	85
Cash and equivalents at beginning of period	195	108
Cash and equivalents at end of period	$ 77	$ 193

XML

Basis of Presentation

6 Months Ended

Jul. 02, 2022

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Basis of Presentation

Basis of Presentation

Our Consolidated Financial Statements include the accounts of Textron Inc. (Textron) and its majority-owned subsidiaries.  We have prepared these unaudited consolidated financial statements in accordance with accounting principles generally accepted in the U.S. for interim financial information.  Accordingly, these interim financial statements do not include all of the information and footnotes required by accounting principles generally accepted in the U.S. for complete financial statements.  The consolidated interim financial statements included in this quarterly report should be read in conjunction with the consolidated financial statements included in our Annual Report on Form 10-K for the year ended January 1, 2022.  In the opinion of management, the interim financial statements reflect all adjustments (consisting only of normal recurring adjustments) that are necessary for the fair presentation of our consolidated financial position, results of operations and cash flows for the interim periods presented. The results of operations for the interim periods are not necessarily indicative of the results to be expected for the full year.

Our financings are conducted through two separate borrowing groups.  The Manufacturing group consists of Textron consolidated with its majority-owned subsidiaries that operate in the Textron Aviation, Bell, Textron Systems and Industrial segments, and our new reporting segment, Textron eAviation, formed in the second quarter of 2022. Textron eAviation includes the operating results of Pipistrel, a manufacturer of electrically powered aircraft acquired on April 15, 2022, as discussed in Note 2, along with other research and development initiatives related to sustainable aviation solutions. The Finance group, which also is the Finance segment, consists of Textron Financial Corporation and its consolidated subsidiaries. We designed this framework to enhance our borrowing power by separating the Finance group. Our Manufacturing group operations include the development, production and delivery of tangible goods and services, while our Finance group provides financial services. Due to the fundamental differences between each borrowing group’s activities, investors, rating agencies and analysts use different measures to evaluate each group’s performance.  To support those evaluations, we present balance sheet and cash flow information for each borrowing group within the Consolidated Financial Statements.  All significant intercompany transactions are eliminated from the Consolidated Financial Statements, including retail financing activities for inventory sold by our Manufacturing group and financed by our Finance group.

Use of Estimates

We prepare our financial statements in conformity with generally accepted accounting principles, which require us to make estimates and assumptions that affect the amounts reported in the financial statements.  Actual results could differ from those estimates. Our estimates and assumptions are reviewed periodically, and the effects of changes, if any, are reflected in the Consolidated Statements of Operations in the period that they are determined.

Contract Estimates

For contracts where revenue is recognized over time, we recognize changes in estimated contract revenues, costs and profits using the cumulative catch-up method of accounting. This method recognizes the cumulative effect of changes on current and prior periods with the impact of the change from inception-to-date recorded in the current period.  Anticipated losses on contracts are recognized in full in the period in which the losses become probable and estimable.  

In the second quarter of 2022, our cumulative catch-up adjustments decreased segment profit by $4 million and net income by $3 million, $0.01 per diluted share. In the second quarter of 2021, our cumulative catch-up adjustments increased segment profit by $15 million and net income by $11 million, $0.05 per diluted share. Gross favorable profit adjustments totaled $25 million and $40 million in the second quarter of 2022 and 2021, respectively, and gross unfavorable profit adjustments totaled $29 million and $25 million, respectively. We reduced revenues by $21 million and recognized revenues of $20 million in the second quarter of 2022 and 2021, respectively, from performance obligations satisfied in prior periods that related to changes in profit booking rates.

In the first half of 2022, our cumulative catch-up adjustments decreased segment profit by $21 million and net income by $16 million, $0.07 per diluted share. In the first half of 2021, our cumulative catch-up adjustments increased segment profit by $29 million and net income by $22 million, $0.10 per diluted share. Gross favorable profit adjustments totaled $41 million and $76 million in the first half of 2022 and 2021, respectively, and gross unfavorable profit adjustments totaled $62 million and $47 million, respectively. We reduced revenues by $33 million and recognized revenues of $38 million in the first half of 2022 and 2021, respectively, from performance obligations satisfied in prior periods that related to changes in profit booking rates.

XML

Business Acquisition	6 Months Ended
	Jul. 02, 2022
Business Combination and Asset Acquisition [Abstract]
Business Acquisition	Business AcquisitionOn April 15, 2022, we acquired Pipistrel, a manufacturer of electrically powered aircraft, for a cash purchase price of $240 million, which included the assumption of $35 million of debt and other contractual obligations under the agreement and a final fixed payment of $21 million due in 2024. Beginning in the second quarter of 2022, this business is included in a new reporting segment, Textron eAviation, which combines the operating results of Pipistrel along with other research and development initiatives related to sustainable aviation solutions. We allocated the purchase price for this business on a preliminary basis to the assets acquired and liabilities assumed based on their estimated fair values at the acquisition date. We expect to finalize the purchase accounting as soon as reasonably possible during the one-year measurement period. Based on the preliminary allocation, $142 million has been allocated to goodwill, related to expected synergies and the value of the assembled workforce, and $76 million to intangible assets, primarily including developed technologies. The intangible assets were primarily valued using the relief-from-royalty method. This method utilizes significant unobservable inputs, or Level 3 inputs, as defined by the fair value hierarchy and requires us to make estimates and assumptions about sales, growth rates, royalty rates and discount rates based on marketplace data.

XML

Accounts Receivable and Finance Receivables

6 Months Ended

Jul. 02, 2022

Receivables [Abstract]

Accounts Receivable and Finance Receivables

Accounts Receivable and Finance Receivables

Accounts Receivable

Accounts receivable is composed of the following:

(In millions)	July 2, 2022		January 1, 2022
Commercial	$	767	$	704
U.S. Government contracts	133		158
	900		862
Allowance for credit losses	(24)		(24)
Total accounts receivable, net	$	876	$	838

Finance Receivables

Finance receivables are presented in the following table:

(In millions)	July 2, 2022		January 1, 2022
Finance receivables	$	586	$	630
Allowance for credit losses	(25)		(25)
Total finance receivables, net	$	561	$	605

Finance Receivable Portfolio Quality

We internally assess the quality of our finance receivables based on a number of key credit quality indicators and statistics such as delinquency, loan balance to estimated collateral value and the financial strength of individual borrowers and guarantors.  Because many of these indicators are difficult to apply across an entire class of receivables, we evaluate individual loans on a quarterly basis and classify these loans into three categories based on the key credit quality indicators for the individual loan. These three categories are performing, watchlist and nonaccrual.

We classify finance receivables as nonaccrual if credit quality indicators suggest full collection of principal and interest is doubtful. In addition, we automatically classify accounts as nonaccrual once they are contractually delinquent by more than three months unless collection of principal and interest is not doubtful. Accounts are classified as watchlist when credit quality indicators have deteriorated as compared with typical underwriting criteria, and we believe collection of full principal and interest is probable but not certain. All other finance receivables that do not meet the watchlist or nonaccrual categories are classified as performing.

We measure delinquency based on the contractual payment terms of our finance receivables.  In determining the delinquency aging category of an account, any/all principal and interest received is applied to the most past-due principal and/or interest amounts due. If a significant portion of the contractually due payment is delinquent, the entire finance receivable balance is reported in accordance with the most past-due delinquency aging category.

Finance receivables categorized based on the credit quality indicators and by the delinquency aging category are summarized as follows:

(Dollars in millions)	July 2, 2022		January 1, 2022
Performing	$	518	$	536
Nonaccrual	68		94
Nonaccrual as a percentage of finance receivables	11.60%		14.92%
Current and less than 31 days past due	$	577	$	624
31-60 days past due	4		5
61-90 days past due	5		—
Over 90 days past due	—		1
60+ days contractual delinquency as a percentage of finance receivables	0.85%		0.16%

At July 2, 2022, 39% of our performing finance receivables were originated since the beginning of 2020 and 27% were originated from 2017 to 2019. For finance receivables categorized as nonaccrual, 7% were originated since the beginning of 2020 and 70% were originated from 2017 to 2019.

On a quarterly basis, we evaluate individual larger balance accounts for impairment. A finance receivable is considered impaired when it is probable that we will be unable to collect all amounts due according to the contractual terms of the loan agreement based on our review of the credit quality indicators described above. Impaired finance receivables include both nonaccrual accounts and accounts for which full collection of principal and interest remains probable, but the account’s original terms have been, or are expected to be, significantly modified. If the modification specifies an interest rate equal to or greater than a market rate for a finance receivable with comparable risk, the account is not considered impaired in years subsequent to the modification.

A summary of finance receivables and the allowance for credit losses, based on the results of our impairment evaluation, is provided below. The finance receivables included in this table specifically exclude leveraged leases in accordance with U.S. generally accepted accounting principles.

(In millions)	July 2, 2022		January 1, 2022
Finance receivables evaluated collectively	$	428	$	441
Finance receivables evaluated individually	68		94
Allowance for credit losses based on collective evaluation	21		21
Allowance for credit losses based on individual evaluation	4		4
Impaired finance receivables with specific allowance for credit losses	$	25	$	33
Impaired finance receivables with no specific allowance for credit losses	43		61
Unpaid principal balance of impaired finance receivables	82		109
Allowance for credit losses on impaired finance receivables	4		4
Average recorded investment of impaired finance receivables	80		117

XML

Inventories

6 Months Ended

Jul. 02, 2022

Inventory Disclosure [Abstract]

Inventories

Inventories

Inventories are composed of the following:

(In millions)	July 2, 2022		January 1, 2022
Finished goods	$	1,110	$	1,071
Work in process	1,705		1,548
Raw materials and components	924		849
Total inventories	$	3,739	$	3,468

XML

Warranty Liability

6 Months Ended

Jul. 02, 2022

Payables and Accruals [Abstract]

Warranty Liability

Warranty Liability

Changes in our warranty liability are as follows:

	Six Months Ended
(In millions)	July 2, 2022		July 3, 2021
Beginning of period	$	127	$	119
Provision	34		31
Settlements	(34)		(35)
Adjustments*	10		1
End of period	$	137	$	116

* Adjustments include changes to prior year estimates, new issues on prior year sales, acquisitions and currency translation adjustments.

XML

Leases

6 Months Ended

Jul. 02, 2022

Leases [Abstract]

Leases

Leases

We primarily lease certain manufacturing plants, offices, warehouses, training and service centers at various locations worldwide through operating leases. Our operating leases have remaining lease terms up to 27 years, which include options to extend the lease term for periods up to 25 years when it is reasonably certain the option will be exercised. Operating lease cost totaled $17 million and $16 million in the second quarter of 2022 and 2021, respectively, and $34 million and $32 million in the first half of 2022 and 2021, respectively. Variable and short-term lease costs were not significant. Cash paid for operating leases totaled $35 million and $33 million in the first half of 2022 and 2021, respectively, and is classified in cash flows from operating activities. Noncash transactions totaled $17 million and $63 million in the first half of 2022 and 2021, respectively, reflecting the recognition of operating lease assets and liabilities for new or extended leases.

Balance sheet and other information related to our operating leases is as follows:

(Dollars in millions)	July 2, 2022		January 1, 2022
Other assets	$	359	$	374
Other current liabilities	56		56
Other liabilities	310		325
Weighted-average remaining lease term (in years)	10.1		10.5
Weighted-average discount rate	3.22%		3.19%

At July 2, 2022, maturities of our operating lease liabilities on an undiscounted basis totaled $35 million for the remainder of 2022, $65 million for 2023, $55 million for 2024, $47 million for 2025, $35 million for 2026 and $217 million thereafter.

XML

Derivative Instruments and Fair Value Measurements

6 Months Ended

Jul. 02, 2022

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivative Instruments and Fair Value Measurements

Derivative Instruments and Fair Value Measurements

We measure fair value at the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.  We prioritize the assumptions that market participants would use in pricing the asset or liability into a three-tier fair value hierarchy. This fair value hierarchy gives the highest priority (Level 1) to quoted prices in active markets for identical assets or liabilities and the lowest priority (Level 3) to unobservable inputs in which little or no market data exist, requiring companies to develop their own assumptions. Observable inputs that do not meet the criteria of Level 1, which include quoted prices for similar assets or liabilities in active markets or quoted prices for identical assets and liabilities in markets that are not active, are categorized as Level 2. Level 3 inputs are those that reflect our estimates about the assumptions market participants would use in pricing the asset or liability based on the best information available in the circumstances. Valuation techniques for assets and liabilities measured using Level 3 inputs may include methodologies such as the market approach, the income approach or the cost approach and may use unobservable inputs such as projections, estimates and management’s interpretation of current market data. These unobservable inputs are utilized only to the extent that observable inputs are not available or cost effective to obtain.

Assets and Liabilities Recorded at Fair Value on a Recurring Basis

We manufacture and sell our products in a number of countries throughout the world, and, therefore, we are exposed to movements in foreign currency exchange rates. We primarily utilize foreign currency exchange contracts with maturities of no more than three years to manage this volatility. These contracts qualify as cash flow hedges and are intended to offset the effect of exchange rate fluctuations on forecasted sales, inventory purchases and overhead expenses. Net gains and losses recognized in earnings and Accumulated other comprehensive loss on cash flow hedges, including gains and losses related to hedge ineffectiveness, were not significant in the periods presented.

Our foreign currency exchange contracts are measured at fair value using the market method valuation technique. The inputs to this technique utilize current foreign currency exchange forward market rates published by third-party leading financial news and data providers. These are observable data that represent the rates that the financial institution uses for contracts entered into at that date; however, they are not based on actual transactions, so they are classified as Level 2.  At July 2, 2022 and January 1, 2022, we had foreign currency exchange contracts with notional amounts upon which the contracts were based of $264 million and $272 million, respectively. At July 2, 2022, the fair value amounts of our foreign currency exchange contracts were a $3 million asset and a $4 million liability. At January 1, 2022, the fair value amounts of our foreign currency exchange contracts were a $4 million asset and a $3 million liability.

Our Finance group enters into interest rate swap agreements to mitigate certain exposures to fluctuations in interest rates. By using these contracts, we are able to convert floating-rate cash flows to fixed-rate cash flows. These agreements are designated as cash flow hedges. At July 2, 2022, we had a swap agreement for a notional amount of $272 million with a maturity of August 2023, and a swap agreement for a notional amount of $25 million, maturing in June 2025, with a combined fair value of a $7 million asset. At January 1, 2022, we had a swap agreement for a notional amount of $289 million with a maturity of August 2023 and an insignificant fair value. The fair value of these swap agreements is determined using values published by third-party leading financial news and data providers. These values are observable data that represent the value that financial institutions use for contracts entered into at that date, but are not based on actual transactions, so they are classified as Level 2.

Assets and Liabilities Not Recorded at Fair Value

The carrying value and estimated fair value of our financial instruments that are not reflected in the financial statements at fair value are as follows:

	July 2, 2022				January 1, 2022
	Carrying		Estimated		Carrying		Estimated
(In millions)	Value		Fair Value		Value		Fair Value
Manufacturing group
Debt, excluding leases	$	(3,178)	$	(2,974)	$	(3,181)	$	(3,346)
Finance group
Finance receivables, excluding leases	381		351		413		444
Debt	(382)		(310)		(582)		(546)

Fair value for the Manufacturing group debt is determined using market observable data for similar transactions (Level 2).  The fair value for the Finance group debt was determined primarily based on discounted cash flow analyses using observable market inputs from debt with similar duration, subordination and credit default expectations (Level 2). Fair value estimates for finance receivables were determined based on internally developed discounted cash flow models primarily utilizing significant unobservable inputs (Level 3), which include estimates of the rate of return, financing cost, capital structure and/or discount rate expectations of current market participants combined with estimated loan cash flows based on credit losses, payment rates and expectations of borrowers’ ability to make payments on a timely basis.

XML

Shareholders' Equity

6 Months Ended

Jul. 02, 2022

Equity [Abstract]

Shareholders' Equity

Shareholders’ Equity

A reconciliation of Shareholders’ equity is presented below:

(In millions)	Common Stock		Capital Surplus		Treasury Stock		Retained Earnings		Accumulated Other Comprehensive Loss		Total Shareholders' Equity
Three months ended July 2, 2022
Beginning of period	$	28	$	1,924	$	(314)	$	6,058	$	(779)	$	6,917
Net income	—		—		—		217		—		217
Other comprehensive loss	—		—		—		—		(76)		(76)
Share-based compensation activity	—		29		—		—		—		29
Dividends declared	—		—		—		(4)		—		(4)
Purchases of common stock	—		—		(282)		—		—		(282)
End of period	$	28	$	1,953	$	(596)	$	6,271	$	(855)	$	6,801
Three months ended July 3, 2021
Beginning of period	$	29	$	1,845	$	(294)	$	6,139	$	(1,723)	$	5,996
Net income	—		—		—		183		—		183
Other comprehensive income	—		—		—		—		47		47
Share-based compensation activity	—		75		—		—		—		75
Dividends declared	—		—		—		(4)		—		(4)
Purchases of common stock	—		—		(196)		—		—		(196)
End of period	$	29	$	1,920	$	(490)	$	6,318	$	(1,676)	$	6,101
Six months ended July 2, 2022
Beginning of period	$	28	$	1,863	$	(157)	$	5,870	$	(789)	$	6,815
Net income	—		—		—		410		—		410
Other comprehensive loss	—		—		—		—		(66)		(66)
Share-based compensation activity	—		90		—		—		—		90
Dividends declared	—		—		—		(9)		—		(9)
Purchases of common stock	—		—		(439)		—		—		(439)
End of period	$	28	$	1,953	$	(596)	$	6,271	$	(855)	$	6,801
Six months ended July 3, 2021
Beginning of period	$	29	$	1,785	$	(203)	$	5,973	$	(1,739)	$	5,845
Net income	—		—		—		354		—		354
Other comprehensive income	—		—		—		—		63		63
Share-based compensation activity	—		135		—		—		—		135
Dividends declared	—		—		—		(9)		—		(9)
Purchases of common stock	—		—		(287)		—		—		(287)
End of period	$	29	$	1,920	$	(490)	$	6,318	$	(1,676)	$	6,101

Dividends per share of common stock were $0.02 for both the second quarter of 2022 and 2021 and $0.04 for both the first half of 2022 and 2021.

Earnings Per Share

We calculate basic and diluted earnings per share (EPS) based on net income, which approximates income available to common shareholders for each period.  Basic EPS is calculated using the two-class method, which includes the weighted-average number of common shares outstanding during the period and restricted stock units to be paid in stock that are deemed participating securities as they provide nonforfeitable rights to dividends. Diluted EPS considers the dilutive effect of all potential future common stock, including stock options.  

The weighted-average shares outstanding for basic and diluted EPS are as follows:

	Three Months Ended		Six Months Ended
(In thousands)	July 2, 2022	July 3, 2021	July 2, 2022	July 3, 2021
Basic weighted-average shares outstanding	214,587	225,963	215,799	226,486
Dilutive effect of stock options	2,071	2,483	2,334	1,810
Diluted weighted-average shares outstanding	216,658	228,446	218,133	228,296

For both the second quarter and first half of 2022, stock options to purchase 1.0 million shares of common stock were excluded from the calculation of diluted weighted-average shares outstanding as their effect would have been anti-dilutive. For the first half of 2021, stock options to purchase 2.1 million shares of common stock were excluded from the calculation of diluted weighted-average shares outstanding as their effect would have been anti-dilutive.

Accumulated Other Comprehensive Loss and Other Comprehensive Income

The components of Accumulated other comprehensive loss are presented below:

(In millions)	Pension and Postretirement Benefits Adjustments		Foreign Currency Translation Adjustments		Deferred Gains (Losses) on Hedge Contracts		Accumulated Other Comprehensive Loss
Balance at January 1, 2022	$	(799)	$	9	$	1	$	(789)
Other comprehensive loss before reclassifications	—		(104)		4		(100)
Reclassified from Accumulated other comprehensive loss	34		—		—		34
Balance at July 2, 2022	$	(765)	$	(95)	$	5	$	(855)
Balance at January 2, 2021	$	(1,780)	$	42	$	(1)	$	(1,739)
Other comprehensive loss before reclassifications	—		(17)		6		(11)
Reclassified from Accumulated other comprehensive loss	60		14		—		74
Balance at July 3, 2021	$	(1,720)	$	39	$	5	$	(1,676)

The before and after-tax components of Other comprehensive income (loss) are presented below:

	July 2, 2022						July 3, 2021
(In millions)	Pre-Tax Amount		Tax (Expense) Benefit		After-tax Amount		Pre-Tax Amount		Tax (Expense) Benefit		After-tax Amount
Three Months Ended
Pension and postretirement benefits adjustments:
Amortization of net actuarial loss*	$	21	$	(6)	$	15	$	38	$	(9)	$	29
Amortization of prior service cost*	2		—		2		2		(1)		1
Pension and postretirement benefits adjustments, net	23		(6)		17		40		(10)		30
Foreign currency translation adjustments	(90)		—		(90)		15		—		15
Deferred gains (losses) on hedge contracts:
Current deferrals	(5)		2		(3)		2		—		2
Deferred gains (losses) on hedge contracts, net	(5)		2		(3)		2		—		2
Total	$	(72)	$	(4)	$	(76)	$	57	$	(10)	$	47
Six Months Ended
Pension and postretirement benefits adjustments:
Amortization of net actuarial loss*	$	42	$	(11)	$	31	$	76	$	(18)	$	58
Amortization of prior service cost*	4		(1)		3		4		(2)		2
Pension and postretirement benefits adjustments, net	46		(12)		34		80		(20)		60
Foreign currency translation adjustments:
Foreign currency translation adjustments	(104)		—		(104)		(17)		—		(17)
Business disposition	—		—		—		14		—		14
Foreign currency translation adjustments, net	(104)		—		(104)		(3)		—		(3)
Deferred gains on hedge contracts:
Current deferrals	5		(1)		4		7		(1)		6
Deferred gains on hedge contracts, net	5		(1)		4		7		(1)		6
Total	$	(53)	$	(13)	$	(66)	$	84	$	(21)	$	63

*These components of other comprehensive income (loss) are included in the computation of net periodic pension cost (income). See Note 15 of our 2021 Annual Report on Form 10-K for additional information

XML

Segment Information

6 Months Ended

Jul. 02, 2022

Segment Reporting [Abstract]

Segment Information

Segment Information

Through the first quarter of 2022, we operated in, and reported financial information for, the following five business segments: Textron Aviation, Bell, Textron Systems, Industrial and Finance. Beginning in the second quarter of 2022, we formed a new reporting segment within the Manufacturing group, Textron eAviation, which includes the operating results of Pipistrel, a manufacturer of electrically powered aircraft that we acquired on April 15, 2022, as discussed in Note 2, along with other research and development initiatives related to sustainable aviation solutions. Segment profit is an important measure used for evaluating performance and for decision-making purposes. Segment profit for the manufacturing segments excludes interest expense, certain corporate expenses, gains/losses on major business dispositions and special charges. The measurement for the Finance segment includes interest income and expense along with intercompany interest income and expense.

Our revenues by segment, along with a reconciliation of segment profit to income from continuing operations before income taxes, are included in the table below:

	Three Months Ended				Six Months Ended
(In millions)	July 2, 2022		July 3, 2021		July 2, 2022		July 3, 2021
Revenues
Textron Aviation	$	1,284	$	1,161	$	2,324	$	2,026
Bell	687		891		1,521		1,737
Textron Systems	293		333		566		661
Industrial	871		794		1,709		1,619
Textron eAviation	5		—		5		—
Finance	14		12		30		27
Total revenues	$	3,154	$	3,191	$	6,155	$	6,070
Segment Profit
Textron Aviation	$	155	$	96	$	276	$	143
Bell	63		110		161		215
Textron Systems	42		48		75		99
Industrial	41		32		84		79
Textron eAviation	(8)		—		(8)		—
Finance	10		3		19		9
Segment profit	303		289		607		545
Corporate expenses and other, net	(12)		(37)		(56)		(77)
Interest expense, net for Manufacturing group	(28)		(32)		(56)		(67)
Special charges	—		(4)		—		(10)
Gain on business disposition	—		2		—		17
Income from continuing operations before income taxes	$	263	$	218	$	495	$	408

XML

Revenues

6 Months Ended

Jul. 02, 2022

Revenue from Contract with Customer [Abstract]

Revenues

Revenues

Disaggregation of Revenues

Our revenues disaggregated by major product type are presented below:

	Three Months Ended				Six Months Ended
(In millions)	July 2, 2022		July 3, 2021		July 2, 2022		July 3, 2021
Aircraft	$	856	$	797	$	1,502	$	1,332
Aftermarket parts and services	428		364		822		694
Textron Aviation	1,284		1,161		2,324		2,026
Military aircraft and support programs	402		572		999		1,149
Commercial helicopters, parts and services	285		319		522		588
Bell	687		891		1,521		1,737
Textron Systems	293		333		566		661
Fuel systems and functional components	435		440		899		937
Specialized vehicles	436		354		810		682
Industrial	871		794		1,709		1,619
Textron eAviation	5		—		5		—
Finance	14		12		30		27
Total revenues	$	3,154	$	3,191	$	6,155	$	6,070

Our revenues for our segments by customer type and geographic location are presented below:

(In millions)	Textron Aviation		Bell		Textron Systems		Industrial		Textron eAviation		Finance		Total
Three months ended July 2, 2022
Customer type:
Commercial	$	1,253	$	279	$	19	$	862	$	5	$	14	$	2,432
U.S. Government	31		408		274		9		—		—		722
Total revenues	$	1,284	$	687	$	293	$	871	$	5	$	14	$	3,154
Geographic location:
United States	$	776	$	504	$	268	$	466	$	1	$	5	$	2,020
Europe	239		43		10		185		3		—		480
Other international	269		140		15		220		1		9		654
Total revenues	$	1,284	$	687	$	293	$	871	$	5	$	14	$	3,154
Three months ended July 3, 2021
Customer type:
Commercial	$	1,127	$	350	$	67	$	787	$	—	$	12	$	2,343
U.S. Government	34		541		266		7		—		—		848
Total revenues	$	1,161	$	891	$	333	$	794	$	—	$	12	$	3,191
Geographic location:
United States	$	885	$	677	$	297	$	406	$	—	$	6	$	2,271
Europe	122		47		9		192		—		1		371
Other international	154		167		27		196		—		5		549
Total revenues	$	1,161	$	891	$	333	$	794	$	—	$	12	$	3,191
Six months ended July 2, 2022
Customer type:
Commercial	$	2,274	$	513	$	38	$	1,697	$	5	$	30	$	4,557
U.S. Government	50		1,008		528		12		—		—		1,598
Total revenues	$	2,324	$	1,521	$	566	$	1,709	$	5	$	30	$	6,155
Geographic location:
United States	$	1,508	$	1,174	$	514	$	892	$	1	$	10	$	4,099
Europe	358		71		18		375		3		1		826
Other international	458		276		34		442		1		19		1,230
Total revenues	$	2,324	$	1,521	$	566	$	1,709	$	5	$	30	$	6,155
Six months ended July 3, 2021
Customer type:
Commercial	$	1,973	$	616	$	125	$	1,607	$	—	$	27	$	4,348
U.S. Government	53		1,121		536		12		—		—		1,722
Total revenues	$	2,026	$	1,737	$	661	$	1,619	$	—	$	27	$	6,070
Geographic location:
United States	$	1,494	$	1,293	$	586	$	784	$	—	$	14	$	4,171
Europe	206		83		19		428		—		1		737
Other international	326		361		56		407		—		12		1,162
Total revenues	$	2,026	$	1,737	$	661	$	1,619	$	—	$	27	$	6,070

Remaining Performance Obligations

Our remaining performance obligations, which is the equivalent of our backlog, represent the expected transaction price allocated to our contracts that we expect to recognize as revenues in future periods when we perform under the contracts.  These remaining obligations exclude unexercised contract options and potential orders under ordering-type contracts such as Indefinite Delivery, Indefinite Quantity contracts. At July 2, 2022, we had $13.2 billion in remaining performance obligations of which we expect to recognize revenues of approximately 75% through 2023, an additional 21% through 2025, and the balance thereafter.  

Contract Assets and Liabilities Assets and liabilities related to our contracts with customers are reported on a contract-by-contract basis at the end of each reporting period. At July 2, 2022 and January 1, 2022, contract assets totaled $643 million and $717 million, respectively, and contract liabilities totaled $1.6 billion and $1.2 billion, respectively, reflecting timing differences between revenues recognized, billings and payments from customers. We recognized revenues of $293 million and $170 million in the second quarter of 2022 and 2021, respectively, and $499 million and $448 million in the first half of 2022 and 2021, respectively, that were included in the contract liability balance at the beginning of each year.

XML

Retirement Plans

6 Months Ended

Jul. 02, 2022

Retirement Benefits [Abstract]

Retirement Plans

Retirement PlansWe provide defined benefit pension plans and other postretirement benefits to eligible employees.  The components of net periodic benefit (income) cost for these plans are as follows:

	Three Months Ended				Six Months Ended
(In millions)	July 2, 2022		July 3, 2021		July 2, 2022		July 3, 2021
Pension Benefits
Service cost	$	27	$	29	$	54	$	58
Interest cost	68		63		136		126
Expected return on plan assets	(153)		(144)		(306)		(288)
Amortization of net actuarial loss	22		38		44		77
Amortization of prior service cost	3		3		6		6
Net periodic benefit income*	$	(33)	$	(11)	$	(66)	$	(21)
Postretirement Benefits Other Than Pensions
Service cost	$	—	$	—	$	1	$	1
Interest cost	2		2		3		3
Amortization of net actuarial gain	(1)		—		(2)		(1)
Amortization of prior service credit	(1)		(1)		(2)		(2)
Net periodic benefit cost	$	—	$	1	$	—	$	1

* Excludes the cost associated with the defined contribution component, included in certain of our U.S.-based defined benefit pension plans, that totaled $3 million and $3 million in the second quarter of 2022 and 2021, respectively, and $7 million and $6 million for the first half of 2022 and 2021, respectively.

XML

Special Charges

6 Months Ended

Jul. 02, 2022

Special Charges [Abstract]

Special Charges

Special Charges

In the second quarter and first half of 2021, we recognized special charges of $4 million and $10 million, respectively, related to a restructuring plan initiated in 2020 in response to the economic challenges and uncertainty resulting from the COVID-19 pandemic. There were no special charges recorded in the second quarter and first half of 2022.

Our restructuring reserve activity is summarized below:

(In millions)	Severance Costs		Contract Terminations and Other		Total
Balance at January 1, 2022	$	19	$	9	$	28
Cash paid	(10)		(1)		(11)
Foreign currency translation	(1)		—		(1)
Balance at July 2, 2022	$	8	$	8	$	16

The majority of the remaining cash outlays of $16 million is expected to be paid in the next nine months.

XML

Income Taxes	6 Months Ended
	Jul. 02, 2022
Income Tax Disclosure [Abstract]
Income Taxes	Income TaxesOur effective tax rate for the second quarter and first half of 2022 was 17.1% and 17.0%, respectively. In the second quarter and first half of 2022, the effective tax rate was lower than the U.S. federal statutory rate of 21%, largely due to the favorable impact of research and development credits. Our effective tax rate for the second quarter and first half of 2021 was 15.6% and 13.0%, respectively. In the second quarter and first half of 2021, the effective tax rate was lower than the U.S. federal statutory rate of 21%, largely due to the favorable impact of research and development credits. In the first half of 2021, the effective tax rate also included a $12 million benefit recognized for additional research and development credits related to prior years.

XML

Commitments and Contingencies	6 Months Ended
	Jul. 02, 2022
Commitments and Contingencies Disclosure [Abstract]
Commitments and Contingencies	Commitments and ContingenciesWe are subject to legal proceedings and other claims arising out of the conduct of our business, including proceedings and claims relating to commercial and financial transactions; government contracts; alleged lack of compliance with applicable laws and regulations; production partners; product liability; patent and trademark infringement; employment disputes; and environmental, safety and health matters. Some of these legal proceedings and claims seek damages, fines or penalties in substantial amounts or remediation of environmental contamination. As a government contractor, we are subject to audits, reviews and investigations to determine whether our operations are being conducted in accordance with applicable regulatory requirements. Under federal government procurement regulations, certain claims brought by the U.S. Government could result in our suspension or debarment from U.S. Government contracting for a period of time. On the basis of information presently available, we do not believe that existing proceedings and claims will have a material effect on our financial position or results of operations.

XML

Basis of Presentation (Policies)

6 Months Ended

Jul. 02, 2022

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Use of Estimates

Use of Estimates

We prepare our financial statements in conformity with generally accepted accounting principles, which require us to make estimates and assumptions that affect the amounts reported in the financial statements.  Actual results could differ from those estimates. Our estimates and assumptions are reviewed periodically, and the effects of changes, if any, are reflected in the Consolidated Statements of Operations in the period that they are determined.

XML

Accounts Receivable and Finance Receivables (Tables)

6 Months Ended

Jul. 02, 2022

Receivables [Abstract]

Accounts Receivable

Accounts receivable is composed of the following:

(In millions)	July 2, 2022		January 1, 2022
Commercial	$	767	$	704
U.S. Government contracts	133		158
	900		862
Allowance for credit losses	(24)		(24)
Total accounts receivable, net	$	876	$	838

Finance Receivables

Finance receivables are presented in the following table:

(In millions)	July 2, 2022		January 1, 2022
Finance receivables	$	586	$	630
Allowance for credit losses	(25)		(25)
Total finance receivables, net	$	561	$	605

Finance Receivables Categorized Based On Credit Quality Indicators

Finance receivables categorized based on the credit quality indicators and by the delinquency aging category are summarized as follows:

(Dollars in millions)	July 2, 2022		January 1, 2022
Performing	$	518	$	536
Nonaccrual	68		94
Nonaccrual as a percentage of finance receivables	11.60%		14.92%
Current and less than 31 days past due	$	577	$	624
31-60 days past due	4		5
61-90 days past due	5		—
Over 90 days past due	—		1
60+ days contractual delinquency as a percentage of finance receivables	0.85%		0.16%

Finance Receivables By Delinquency Aging Category

Finance receivables categorized based on the credit quality indicators and by the delinquency aging category are summarized as follows:

(Dollars in millions)	July 2, 2022		January 1, 2022
Performing	$	518	$	536
Nonaccrual	68		94
Nonaccrual as a percentage of finance receivables	11.60%		14.92%
Current and less than 31 days past due	$	577	$	624
31-60 days past due	4		5
61-90 days past due	5		—
Over 90 days past due	—		1
60+ days contractual delinquency as a percentage of finance receivables	0.85%		0.16%

Finance Receivables and Allowance For Credit Losses Based on Impairment Evaluation

A summary of finance receivables and the allowance for credit losses, based on the results of our impairment evaluation, is provided below. The finance receivables included in this table specifically exclude leveraged leases in accordance with U.S. generally accepted accounting principles.

(In millions)	July 2, 2022		January 1, 2022
Finance receivables evaluated collectively	$	428	$	441
Finance receivables evaluated individually	68		94
Allowance for credit losses based on collective evaluation	21		21
Allowance for credit losses based on individual evaluation	4		4
Impaired finance receivables with specific allowance for credit losses	$	25	$	33
Impaired finance receivables with no specific allowance for credit losses	43		61
Unpaid principal balance of impaired finance receivables	82		109
Allowance for credit losses on impaired finance receivables	4		4
Average recorded investment of impaired finance receivables	80		117

XML

Inventories (Tables)

6 Months Ended

Jul. 02, 2022

Inventory Disclosure [Abstract]

Inventories

Inventories are composed of the following:

(In millions)	July 2, 2022		January 1, 2022
Finished goods	$	1,110	$	1,071
Work in process	1,705		1,548
Raw materials and components	924		849
Total inventories	$	3,739	$	3,468

XML

Warranty Liability (Tables)

6 Months Ended

Jul. 02, 2022

Payables and Accruals [Abstract]

Changes in Warranty Liability

Changes in our warranty liability are as follows:

	Six Months Ended
(In millions)	July 2, 2022		July 3, 2021
Beginning of period	$	127	$	119
Provision	34		31
Settlements	(34)		(35)
Adjustments*	10		1
End of period	$	137	$	116

* Adjustments include changes to prior year estimates, new issues on prior year sales, acquisitions and currency translation adjustments.

XML

Leases (Tables)

6 Months Ended

Jul. 02, 2022

Leases [Abstract]

Schedule of Balance Sheet and Other Information

Balance sheet and other information related to our operating leases is as follows:

(Dollars in millions)	July 2, 2022		January 1, 2022
Other assets	$	359	$	374
Other current liabilities	56		56
Other liabilities	310		325
Weighted-average remaining lease term (in years)	10.1		10.5
Weighted-average discount rate	3.22%		3.19%

XML

Derivative Instruments and Fair Value Measurements (Tables)

6 Months Ended

Jul. 02, 2022

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Carrying Value and Estimated and Fair Value of Financial Instruments

The carrying value and estimated fair value of our financial instruments that are not reflected in the financial statements at fair value are as follows:

	July 2, 2022				January 1, 2022
	Carrying		Estimated		Carrying		Estimated
(In millions)	Value		Fair Value		Value		Fair Value
Manufacturing group
Debt, excluding leases	$	(3,178)	$	(2,974)	$	(3,181)	$	(3,346)
Finance group
Finance receivables, excluding leases	381		351		413		444
Debt	(382)		(310)		(582)		(546)

XML

Shareholders' Equity (Tables)

6 Months Ended

Jul. 02, 2022

Equity [Abstract]

Schedule of Shareholder's Equity

A reconciliation of Shareholders’ equity is presented below:

(In millions)	Common Stock		Capital Surplus		Treasury Stock		Retained Earnings		Accumulated Other Comprehensive Loss		Total Shareholders' Equity
Three months ended July 2, 2022
Beginning of period	$	28	$	1,924	$	(314)	$	6,058	$	(779)	$	6,917
Net income	—		—		—		217		—		217
Other comprehensive loss	—		—		—		—		(76)		(76)
Share-based compensation activity	—		29		—		—		—		29
Dividends declared	—		—		—		(4)		—		(4)
Purchases of common stock	—		—		(282)		—		—		(282)
End of period	$	28	$	1,953	$	(596)	$	6,271	$	(855)	$	6,801
Three months ended July 3, 2021
Beginning of period	$	29	$	1,845	$	(294)	$	6,139	$	(1,723)	$	5,996
Net income	—		—		—		183		—		183
Other comprehensive income	—		—		—		—		47		47
Share-based compensation activity	—		75		—		—		—		75
Dividends declared	—		—		—		(4)		—		(4)
Purchases of common stock	—		—		(196)		—		—		(196)
End of period	$	29	$	1,920	$	(490)	$	6,318	$	(1,676)	$	6,101
Six months ended July 2, 2022
Beginning of period	$	28	$	1,863	$	(157)	$	5,870	$	(789)	$	6,815
Net income	—		—		—		410		—		410
Other comprehensive loss	—		—		—		—		(66)		(66)
Share-based compensation activity	—		90		—		—		—		90
Dividends declared	—		—		—		(9)		—		(9)
Purchases of common stock	—		—		(439)		—		—		(439)
End of period	$	28	$	1,953	$	(596)	$	6,271	$	(855)	$	6,801
Six months ended July 3, 2021
Beginning of period	$	29	$	1,785	$	(203)	$	5,973	$	(1,739)	$	5,845
Net income	—		—		—		354		—		354
Other comprehensive income	—		—		—		—		63		63
Share-based compensation activity	—		135		—		—		—		135
Dividends declared	—		—		—		(9)		—		(9)
Purchases of common stock	—		—		(287)		—		—		(287)
End of period	$	29	$	1,920	$	(490)	$	6,318	$	(1,676)	$	6,101

Schedule of Weighted-Average Shares Outstanding for Basic and Diluted EPS

The weighted-average shares outstanding for basic and diluted EPS are as follows:

	Three Months Ended		Six Months Ended
(In thousands)	July 2, 2022	July 3, 2021	July 2, 2022	July 3, 2021
Basic weighted-average shares outstanding	214,587	225,963	215,799	226,486
Dilutive effect of stock options	2,071	2,483	2,334	1,810
Diluted weighted-average shares outstanding	216,658	228,446	218,133	228,296

Schedule of Components of Accumulated Other Comprehensive Loss

The components of Accumulated other comprehensive loss are presented below:

(In millions)	Pension and Postretirement Benefits Adjustments		Foreign Currency Translation Adjustments		Deferred Gains (Losses) on Hedge Contracts		Accumulated Other Comprehensive Loss
Balance at January 1, 2022	$	(799)	$	9	$	1	$	(789)
Other comprehensive loss before reclassifications	—		(104)		4		(100)
Reclassified from Accumulated other comprehensive loss	34		—		—		34
Balance at July 2, 2022	$	(765)	$	(95)	$	5	$	(855)
Balance at January 2, 2021	$	(1,780)	$	42	$	(1)	$	(1,739)
Other comprehensive loss before reclassifications	—		(17)		6		(11)
Reclassified from Accumulated other comprehensive loss	60		14		—		74
Balance at July 3, 2021	$	(1,720)	$	39	$	5	$	(1,676)

Schedule of Before and After-Tax Components of Other Comprehensive Income (Loss)

The before and after-tax components of Other comprehensive income (loss) are presented below:

	July 2, 2022						July 3, 2021
(In millions)	Pre-Tax Amount		Tax (Expense) Benefit		After-tax Amount		Pre-Tax Amount		Tax (Expense) Benefit		After-tax Amount
Three Months Ended
Pension and postretirement benefits adjustments:
Amortization of net actuarial loss*	$	21	$	(6)	$	15	$	38	$	(9)	$	29
Amortization of prior service cost*	2		—		2		2		(1)		1
Pension and postretirement benefits adjustments, net	23		(6)		17		40		(10)		30
Foreign currency translation adjustments	(90)		—		(90)		15		—		15
Deferred gains (losses) on hedge contracts:
Current deferrals	(5)		2		(3)		2		—		2
Deferred gains (losses) on hedge contracts, net	(5)		2		(3)		2		—		2
Total	$	(72)	$	(4)	$	(76)	$	57	$	(10)	$	47
Six Months Ended
Pension and postretirement benefits adjustments:
Amortization of net actuarial loss*	$	42	$	(11)	$	31	$	76	$	(18)	$	58
Amortization of prior service cost*	4		(1)		3		4		(2)		2
Pension and postretirement benefits adjustments, net	46		(12)		34		80		(20)		60
Foreign currency translation adjustments:
Foreign currency translation adjustments	(104)		—		(104)		(17)		—		(17)
Business disposition	—		—		—		14		—		14
Foreign currency translation adjustments, net	(104)		—		(104)		(3)		—		(3)
Deferred gains on hedge contracts:
Current deferrals	5		(1)		4		7		(1)		6
Deferred gains on hedge contracts, net	5		(1)		4		7		(1)		6
Total	$	(53)	$	(13)	$	(66)	$	84	$	(21)	$	63

*These components of other comprehensive income (loss) are included in the computation of net periodic pension cost (income). See Note 15 of our 2021 Annual Report on Form 10-K for additional information

XML

Segment Information (Tables)

6 Months Ended

Jul. 02, 2022

Segment Reporting [Abstract]

Revenues by Segment and Reconciliation of Segment Profit Income (Loss) Before Income Taxes

Our revenues by segment, along with a reconciliation of segment profit to income from continuing operations before income taxes, are included in the table below:

	Three Months Ended				Six Months Ended
(In millions)	July 2, 2022		July 3, 2021		July 2, 2022		July 3, 2021
Revenues
Textron Aviation	$	1,284	$	1,161	$	2,324	$	2,026
Bell	687		891		1,521		1,737
Textron Systems	293		333		566		661
Industrial	871		794		1,709		1,619
Textron eAviation	5		—		5		—
Finance	14		12		30		27
Total revenues	$	3,154	$	3,191	$	6,155	$	6,070
Segment Profit
Textron Aviation	$	155	$	96	$	276	$	143
Bell	63		110		161		215
Textron Systems	42		48		75		99
Industrial	41		32		84		79
Textron eAviation	(8)		—		(8)		—
Finance	10		3		19		9
Segment profit	303		289		607		545
Corporate expenses and other, net	(12)		(37)		(56)		(77)
Interest expense, net for Manufacturing group	(28)		(32)		(56)		(67)
Special charges	—		(4)		—		(10)
Gain on business disposition	—		2		—		17
Income from continuing operations before income taxes	$	263	$	218	$	495	$	408

XML

Revenues (Tables)

6 Months Ended

Jul. 02, 2022

Revenue from Contract with Customer [Abstract]

Disaggregation of Revenue

Our revenues disaggregated by major product type are presented below:

	Three Months Ended				Six Months Ended
(In millions)	July 2, 2022		July 3, 2021		July 2, 2022		July 3, 2021
Aircraft	$	856	$	797	$	1,502	$	1,332
Aftermarket parts and services	428		364		822		694
Textron Aviation	1,284		1,161		2,324		2,026
Military aircraft and support programs	402		572		999		1,149
Commercial helicopters, parts and services	285		319		522		588
Bell	687		891		1,521		1,737
Textron Systems	293		333		566		661
Fuel systems and functional components	435		440		899		937
Specialized vehicles	436		354		810		682
Industrial	871		794		1,709		1,619
Textron eAviation	5		—		5		—
Finance	14		12		30		27
Total revenues	$	3,154	$	3,191	$	6,155	$	6,070

Our revenues for our segments by customer type and geographic location are presented below:

(In millions)	Textron Aviation		Bell		Textron Systems		Industrial		Textron eAviation		Finance		Total
Three months ended July 2, 2022
Customer type:
Commercial	$	1,253	$	279	$	19	$	862	$	5	$	14	$	2,432
U.S. Government	31		408		274		9		—		—		722
Total revenues	$	1,284	$	687	$	293	$	871	$	5	$	14	$	3,154
Geographic location:
United States	$	776	$	504	$	268	$	466	$	1	$	5	$	2,020
Europe	239		43		10		185		3		—		480
Other international	269		140		15		220		1		9		654
Total revenues	$	1,284	$	687	$	293	$	871	$	5	$	14	$	3,154
Three months ended July 3, 2021
Customer type:
Commercial	$	1,127	$	350	$	67	$	787	$	—	$	12	$	2,343
U.S. Government	34		541		266		7		—		—		848
Total revenues	$	1,161	$	891	$	333	$	794	$	—	$	12	$	3,191
Geographic location:
United States	$	885	$	677	$	297	$	406	$	—	$	6	$	2,271
Europe	122		47		9		192		—		1		371
Other international	154		167		27		196		—		5		549
Total revenues	$	1,161	$	891	$	333	$	794	$	—	$	12	$	3,191
Six months ended July 2, 2022
Customer type:
Commercial	$	2,274	$	513	$	38	$	1,697	$	5	$	30	$	4,557
U.S. Government	50		1,008		528		12		—		—		1,598
Total revenues	$	2,324	$	1,521	$	566	$	1,709	$	5	$	30	$	6,155
Geographic location:
United States	$	1,508	$	1,174	$	514	$	892	$	1	$	10	$	4,099
Europe	358		71		18		375		3		1		826
Other international	458		276		34		442		1		19		1,230
Total revenues	$	2,324	$	1,521	$	566	$	1,709	$	5	$	30	$	6,155
Six months ended July 3, 2021
Customer type:
Commercial	$	1,973	$	616	$	125	$	1,607	$	—	$	27	$	4,348
U.S. Government	53		1,121		536		12		—		—		1,722
Total revenues	$	2,026	$	1,737	$	661	$	1,619	$	—	$	27	$	6,070
Geographic location:
United States	$	1,494	$	1,293	$	586	$	784	$	—	$	14	$	4,171
Europe	206		83		19		428		—		1		737
Other international	326		361		56		407		—		12		1,162
Total revenues	$	2,026	$	1,737	$	661	$	1,619	$	—	$	27	$	6,070

XML

Retirement Plans (Tables)

6 Months Ended

Jul. 02, 2022

Retirement Benefits [Abstract]

Schedule of Components of Net Periodic Benefit (Income) Cost

The components of net periodic benefit (income) cost for these plans are as follows:

	Three Months Ended				Six Months Ended
(In millions)	July 2, 2022		July 3, 2021		July 2, 2022		July 3, 2021
Pension Benefits
Service cost	$	27	$	29	$	54	$	58
Interest cost	68		63		136		126
Expected return on plan assets	(153)		(144)		(306)		(288)
Amortization of net actuarial loss	22		38		44		77
Amortization of prior service cost	3		3		6		6
Net periodic benefit income*	$	(33)	$	(11)	$	(66)	$	(21)
Postretirement Benefits Other Than Pensions
Service cost	$	—	$	—	$	1	$	1
Interest cost	2		2		3		3
Amortization of net actuarial gain	(1)		—		(2)		(1)
Amortization of prior service credit	(1)		(1)		(2)		(2)
Net periodic benefit cost	$	—	$	1	$	—	$	1

* Excludes the cost associated with the defined contribution component, included in certain of our U.S.-based defined benefit pension plans, that totaled $3 million and $3 million in the second quarter of 2022 and 2021, respectively, and $7 million and $6 million for the first half of 2022 and 2021, respectively.

XML

Special Charges (Tables)

6 Months Ended

Jul. 02, 2022

Special Charges [Abstract]

Schedule of Restructuring Reserve Activity

Our restructuring reserve activity is summarized below:

(In millions)	Severance Costs		Contract Terminations and Other		Total
Balance at January 1, 2022	$	19	$	9	$	28
Cash paid	(10)		(1)		(11)
Foreign currency translation	(1)		—		(1)
Balance at July 2, 2022	$	8	$	8	$	16

XML

Basis of Presentation (Details) $ / shares in Units, $ in Millions	3 Months Ended		6 Months Ended
	Jul. 02, 2022 USD ($) $ / shares	Jul. 03, 2021 USD ($) $ / shares	Jul. 02, 2022 USD ($) borrowingGroup $ / shares	Jul. 03, 2021 USD ($) $ / shares
Basis of Presentation
Number of borrowing groups | borrowingGroup			2
Cumulative catch-up method
Basis of Presentation
Cumulative catch up adjustments, increase (decease) in segment profit	$ (4)	$ 15	$ (21)	$ 29
Change in accounting estimate financial effect, increase (decrease) in net income	$ (3)	$ 11	$ (16)	$ 22
Change in accounting estimate financial effect increase (decrease) in earnings per diluted share (in dollars per share) | $ / shares	$ (0.01)	$ 0.05	$ (0.07)	$ 0.10
Gross favorable adjustments	$ 25	$ 40	$ 41	$ 76
Gross unfavorable adjustments	29	25	62	47
Revenue (reduced) recognized from performance obligations satisfied in prior periods	$ (21)	$ 20	$ (33)	$ 38

XML

Business Acquisition (Details) - Pipistrel $ in Millions	Apr. 15, 2022 USD ($)
Business Acquisition [Line Items]
Purchase price	$ 240
Assumption of debt and other contractual obligations	35
Final fixed purchase price payment	21
Purchase price allocated to goodwill	142
Purchase price allocated to intangible assets	$ 76

XML

Accounts Receivable and Finance Receivables - Accounts Receivable (Details) - Manufacturing group - USD ($) $ in Millions	Jul. 02, 2022	Jan. 01, 2022
Accounts Receivable
Accounts receivable, gross	$ 900	$ 862
Allowance for credit losses	(24)	(24)
Total accounts receivable, net	876	838
Commercial
Accounts Receivable
Accounts receivable, gross	767	704
U.S. Government
Accounts Receivable
Accounts receivable, gross	$ 133	$ 158

XML

Accounts Receivable and Finance Receivables - Finance Receivables (Details) - USD ($) $ in Millions	Jul. 02, 2022	Jan. 01, 2022
Finance Receivables
Finance receivables	$ 586	$ 630
Allowance for credit losses	(25)	(25)
Total finance receivables, net	$ 561	$ 605

XML

Accounts Receivable and Finance Receivables - Finance Receivable Portfolio Quality (Details) - USD ($) $ in Millions	6 Months Ended
	Jul. 02, 2022	Jan. 01, 2022
Finance Receivable Portfolio Quality
Finance receivables	$ 586	$ 630
60+ days contractual delinquency as a percentage of finance receivables	0.85%	0.16%
Current and less than 31 days past due
Finance Receivable Portfolio Quality
Finance receivables	$ 577	$ 624
31-60 days past due
Finance Receivable Portfolio Quality
Finance receivables	4	5
61-90 days past due
Finance Receivable Portfolio Quality
Finance receivables	5	0
Over 90 days past due
Finance Receivable Portfolio Quality
Finance receivables	$ 0	$ 1
Performing
Finance Receivable Portfolio Quality
Financing receivable originating since the beginning of 2020	39.00%
Financing receivable originating from 2017 to 2019	27.00%
Nonperforming
Finance Receivable Portfolio Quality
Nonaccrual as a percentage of finance receivables	11.60%	14.92%
Nonperforming | Nonaccrual
Finance Receivable Portfolio Quality
Finance receivables	$ 68	$ 94
Financing receivable originating since the beginning of 2020	7.00%
Financing receivable originating from 2017 to 2019	70.00%
Nonperforming | Minimum
Finance Receivable Portfolio Quality
Number of months of contractual delinquency to classify accounts as nonaccrual unless such collection is not doubtful	3 months
Performing
Finance Receivable Portfolio Quality
Finance receivables	$ 518	$ 536

XML

Accounts Receivable and Finance Receivables - Finance Receivables and Allowance for Losses Based on the Results of Impairment Evaluation (Details) - USD ($) $ in Millions	6 Months Ended	12 Months Ended
	Jul. 02, 2022	Jan. 01, 2022
Finance receivables
Finance receivables evaluated collectively	$ 428	$ 441
Finance receivables evaluated individually	68	94
Allowance for credit losses based on collective evaluation	21	21
Allowance for credit losses based on individual evaluation	4	4
Impaired finance receivables with specific allowance for credit losses	25	33
Impaired finance receivables with no specific allowance for credit losses	43	61
Unpaid principal balance of impaired finance receivables	82	109
Allowance for credit losses on impaired finance receivables	4	4
Average recorded investment of impaired finance receivables	$ 80	$ 117

XML

Inventories (Details) - USD ($) $ in Millions	Jul. 02, 2022	Jan. 01, 2022
Inventories
Finished goods	$ 1,110	$ 1,071
Work in process	1,705	1,548
Raw materials and components	924	849
Total inventories	$ 3,739	$ 3,468

XML

Warranty Liability (Details) - USD ($) $ in Millions	6 Months Ended
	Jul. 02, 2022	Jul. 03, 2021
Changes in warranty liability
Beginning of period	$ 127	$ 119
Provision	34	31
Settlements	(34)	(35)
Adjustments	10	1
End of period	$ 137	$ 116

XML

Leases - Narrative (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jul. 02, 2022	Jul. 03, 2021	Jul. 02, 2022	Jul. 03, 2021
Leases [Abstract]
Remaining lease terms	27 years		27 years
Operating lease - option to extend			true
Operating lease - option to extend the lease, term	25 years		25 years
Operating lease cost	$ 17	$ 16	$ 34	$ 32
Cash paid for operating lease liabilities			35	33
Noncash lease transactions			$ 17	$ 63

XML

Leases - Balance Sheet and Other Information (Details) - USD ($) $ in Millions	Jul. 02, 2022	Jan. 01, 2022
Operating leases:
Operating Lease, Right-of-Use Asset, Statement of Financial Position [Extensible Enumeration]	Other assets	Other assets
Other assets	$ 359	$ 374
Operating Lease, Liability, Current, Statement of Financial Position [Extensible Enumeration]	Other current liabilities	Other current liabilities
Other current liabilities	$ 56	$ 56
Operating Lease, Liability, Noncurrent, Statement of Financial Position [Extensible Enumeration]	Other liabilities	Other liabilities
Other liabilities	$ 310	$ 325
Weighted-average remaining lease term (in years)
Weighted-average remaining lease term (in years)	10 years 1 month 6 days	10 years 6 months
Weighted-average discount rate
Weighted-average discount rate	3.22%	3.19%

XML

Leases - Maturity of Lease Liabilities (Details) $ in Millions	Jul. 02, 2022 USD ($)
Operating Leases
Remainder of 2022	$ 35
2023	65
2024	55
2025	47
2026	35
Thereafter	$ 217

XML

Derivative Instruments and Fair Value Measurements - Assets and Liabilities Recorded at Fair Value on a Recurring Basis (Details) - USD ($) $ in Millions	6 Months Ended
	Jul. 02, 2022	Jan. 01, 2022
Manufacturing group
Assets and Liabilities Recorded at Fair Value on a Recurring Basis
Forward exchange contracts maximum maturity period	3 years
Manufacturing group | Foreign currency exchange contracts | Cash Flow Hedging
Assets and Liabilities Recorded at Fair Value on a Recurring Basis
Notional amounts	$ 264	$ 272
Manufacturing group | Foreign currency exchange contracts | Cash Flow Hedging | Level 2
Assets and Liabilities Recorded at Fair Value on a Recurring Basis
Derivative asset, fair value	3	4
Derivative liability, fair value	4	3
Finance group | Interest rate swap | Cash Flow Hedging
Assets and Liabilities Recorded at Fair Value on a Recurring Basis
Derivative asset, fair value	7
Finance group | Interest rate swap, maturing in August 2023 | Cash Flow Hedging
Assets and Liabilities Recorded at Fair Value on a Recurring Basis
Notional amounts	272	$ 289
Finance group | Interest rate swap, maturing in June 2025 | Cash Flow Hedging
Assets and Liabilities Recorded at Fair Value on a Recurring Basis
Notional amounts	$ 25

XML

Derivative Instruments and Fair Value Measurements - Assets and Liabilities not Recorded at Fair Value (Details) - USD ($) $ in Millions	Jul. 02, 2022	Jan. 01, 2022
Manufacturing group | Carrying Value
Financial instruments not reflected at fair value
Debt	$ (3,178)	$ (3,181)
Manufacturing group | Estimated Fair value
Financial instruments not reflected at fair value
Debt	(2,974)	(3,346)
Finance group | Carrying Value
Financial instruments not reflected at fair value
Debt	(382)	(582)
Finance receivables, excluding leases	381	413
Finance group | Estimated Fair value
Financial instruments not reflected at fair value
Debt	(310)	(546)
Finance receivables, excluding leases	$ 351	$ 444

XML

Shareholders' Equity - Reconciliation of Shareholders' Equity (Details) - USD ($) $ / shares in Units, $ in Millions	3 Months Ended		6 Months Ended
	Jul. 02, 2022	Jul. 03, 2021	Jul. 02, 2022	Jul. 03, 2021
Increase (Decrease) in Stockholders' Equity
Balance at beginning of period	$ 6,917	$ 5,996	$ 6,815	$ 5,845
Net income	217	183	410	354
Other comprehensive income (loss)	(76)	47	(66)	63
Share-based compensation activity	29	75	90	135
Dividends declared	(4)	(4)	(9)	(9)
Purchases of common stock	(282)	(196)	(439)	(287)
Balance at end of period	$ 6,801	$ 6,101	$ 6,801	$ 6,101
Dividends per share of common stock (in dollars per share)	$ 0.02	$ 0.02	$ 0.04	$ 0.04
Common Stock
Increase (Decrease) in Stockholders' Equity
Balance at beginning of period	$ 28	$ 29	$ 28	$ 29
Balance at end of period	28	29	28	29
Capital Surplus
Increase (Decrease) in Stockholders' Equity
Balance at beginning of period	1,924	1,845	1,863	1,785
Share-based compensation activity	29	75	90	135
Balance at end of period	1,953	1,920	1,953	1,920
Treasury Stock
Increase (Decrease) in Stockholders' Equity
Balance at beginning of period	(314)	(294)	(157)	(203)
Purchases of common stock	(282)	(196)	(439)	(287)
Balance at end of period	(596)	(490)	(596)	(490)
Retained Earnings
Increase (Decrease) in Stockholders' Equity
Balance at beginning of period	6,058	6,139	5,870	5,973
Net income	217	183	410	354
Dividends declared	(4)	(4)	(9)	(9)
Balance at end of period	6,271	6,318	6,271	6,318
Accumulated Other Comprehensive Loss
Increase (Decrease) in Stockholders' Equity
Balance at beginning of period	(779)	(1,723)	(789)	(1,739)
Other comprehensive income (loss)	(76)	47	(66)	63
Balance at end of period	$ (855)	$ (1,676)	$ (855)	$ (1,676)

XML

Shareholders' Equity - Earnings Per Share (Details) - shares shares in Thousands	3 Months Ended		6 Months Ended
	Jul. 02, 2022	Jul. 03, 2021	Jul. 02, 2022	Jul. 03, 2021
Weighted-average shares outstanding for basic and diluted EPS
Basic weighted-average shares outstanding (in shares)	214,587	225,963	215,799	226,486
Dilutive effect of stock options (in shares)	2,071	2,483	2,334	1,810
Diluted weighted-average shares outstanding (in shares)	216,658	228,446	218,133	228,296
Stock options
Weighted-average shares outstanding for basic and diluted EPS
Anti-dilutive effect of weighted average shares (in shares)	1,000		1,000	2,100

XML

Shareholders' Equity - Accumulated Other Comprehensive Loss and Other Comprehensive Income (Details) - USD ($) $ in Millions	6 Months Ended
	Jul. 02, 2022	Jul. 03, 2021
AOCI Attributable to Parent, Net of Tax [Roll Forward]
Balance at beginning of period	$ 6,815	$ 5,845
Other comprehensive loss before reclassifications	(100)	(11)
Reclassified from Accumulated other comprehensive loss	34	74
Balance at end of period	6,801	6,101
Accumulated Other Comprehensive Loss
AOCI Attributable to Parent, Net of Tax [Roll Forward]
Balance at beginning of period	(789)	(1,739)
Balance at end of period	(855)	(1,676)
Pension and Postretirement Benefits Adjustments
AOCI Attributable to Parent, Net of Tax [Roll Forward]
Balance at beginning of period	(799)	(1,780)
Other comprehensive loss before reclassifications	0	0
Reclassified from Accumulated other comprehensive loss	34	60
Balance at end of period	(765)	(1,720)
Foreign Currency Translation Adjustments
AOCI Attributable to Parent, Net of Tax [Roll Forward]
Balance at beginning of period	9	42
Other comprehensive loss before reclassifications	(104)	(17)
Reclassified from Accumulated other comprehensive loss	0	14
Balance at end of period	(95)	39
Deferred Gains (Losses) on Hedge Contracts
AOCI Attributable to Parent, Net of Tax [Roll Forward]
Balance at beginning of period	1	(1)
Other comprehensive loss before reclassifications	4	6
Reclassified from Accumulated other comprehensive loss	0	0
Balance at end of period	$ 5	$ 5

XML

Shareholders' Equity - Before and After Tax Components of Other Comprehensive Income (Loss) (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jul. 02, 2022	Jul. 03, 2021	Jul. 02, 2022	Jul. 03, 2021
Pension and postretirement benefits adjustments, pre-tax:
Amortization of net actuarial loss, pre-tax	$ 21	$ 38	$ 42	$ 76
Amortization of prior service cost, pre-tax	2	2	4	4
Pension and postretirement benefits adjustments, net, pre-tax	23	40	46	80
Pension and postretirement benefits adjustments, tax:
Amortization of net actuarial loss, tax (expense) benefit	(6)	(9)	(11)	(18)
Amortization of prior service cost, tax (expense) benefit	0	(1)	(1)	(2)
Pension and postretirement benefits adjustments, net, tax (expense) benefit	(6)	(10)	(12)	(20)
Pension and postretirement benefits adjustments, after-tax:
Amortization of net actuarial loss, after-tax	15	29	31	58
Amortization of prior period service cost, after-tax	2	1	3	2
Pension and postretirement benefits adjustments, net, after-tax	17	30	34	60
Foreign currency translation adjustments, pre-tax:
Foreign currency translation adjustments, pre-tax			(104)	(17)
Business disposition, pre-tax			0	14
Foreign currency translation adjustments, net, pre-tax	(90)	15	(104)	(3)
Foreign currency translation adjustments, tax:
Foreign currency translation adjustments, tax (expense) benefit			0	0
Business disposition, tax (expense) benefit			0	0
Foreign currency translation adjustments, net, tax (expense) benefit	0	0	0	0
Foreign currency translation adjustments, after-tax:
Foreign currency translation adjustments, after-tax			(104)	(17)
Business disposition, after-tax			0	14
Foreign currency translation adjustments, net, after-tax	(90)	15	(104)	(3)
Deferred gains (losses) on hedge contracts, pre-tax:
Current deferrals, pre-tax	(5)	2	5	7
Deferred gains on hedge contracts, net, pre-tax	(5)	2	5	7
Deferred gains (losses) on hedge contracts, tax:
Current deferrals, tax (expense) benefit	2	0	(1)	(1)
Deferred gains on hedge contracts, net, tax (expense) benefit	2	0	(1)	(1)
Deferred gains (losses) on hedge contracts, after-tax:
Current deferrals, after-tax	(3)	2	4	6
Deferred gains on hedge contracts, net, after-tax	(3)	2	4	6
Other comprehensive income (loss), pre-tax	(72)	57	(53)	84
Other comprehensive income (loss), tax (expense) benefit	(4)	(10)	(13)	(21)
Other comprehensive income (loss)	$ (76)	$ 47	$ (66)	$ 63

XML

Segment Information - Operating and Reportable Segments (Details)	3 Months Ended
	Apr. 02, 2022 businessSegment
Operating and reportable business segments
Number of business operating segments	5
Number of reportable business segments	5

XML

Segment Information - Revenue by Segment and Reconciliation of Segment Profit to Income Before Income Taxes (Details) - USD ($)	3 Months Ended		6 Months Ended
	Jul. 02, 2022	Jul. 03, 2021	Jul. 02, 2022	Jul. 03, 2021
Revenues
Total revenues	$ 3,154,000,000	$ 3,191,000,000	$ 6,155,000,000	$ 6,070,000,000
Reconciliation of segment profit to income from continuing operations before income taxes
Special charges	0	(4,000,000)	0	(10,000,000)
Gain on business disposition	0	2,000,000	0	17,000,000
Income from continuing operations before income taxes	263,000,000	218,000,000	495,000,000	408,000,000
Operating Segment
Reconciliation of segment profit to income from continuing operations before income taxes
Segment profit	303,000,000	289,000,000	607,000,000	545,000,000
Reconciling Items
Reconciliation of segment profit to income from continuing operations before income taxes
Corporate expenses and other, net	(12,000,000)	(37,000,000)	(56,000,000)	(77,000,000)
Special charges	0	(4,000,000)	0	(10,000,000)
Gain on business disposition	0	2,000,000	0	17,000,000
Textron Aviation
Revenues
Total revenues	1,284,000,000	1,161,000,000	2,324,000,000	2,026,000,000
Bell
Revenues
Total revenues	687,000,000	891,000,000	1,521,000,000	1,737,000,000
Textron Systems
Revenues
Total revenues	293,000,000	333,000,000	566,000,000	661,000,000
Industrial
Revenues
Total revenues	871,000,000	794,000,000	1,709,000,000	1,619,000,000
Textron eAviation
Revenues
Total revenues	5,000,000	0	5,000,000	0
Finance
Revenues
Total revenues	14,000,000	12,000,000	30,000,000	27,000,000
Finance | Operating Segment
Reconciliation of segment profit to income from continuing operations before income taxes
Segment profit	10,000,000	3,000,000
Manufacturing group
Reconciliation of segment profit to income from continuing operations before income taxes
Gain on business disposition			0	17,000,000
Manufacturing group | Reconciling Items
Reconciliation of segment profit to income from continuing operations before income taxes
Interest expense, net for Manufacturing group	(28,000,000)	(32,000,000)	(56,000,000)	(67,000,000)
Manufacturing group | Textron Aviation | Operating Segment
Revenues
Total revenues	1,284,000,000	1,161,000,000	2,324,000,000	2,026,000,000
Reconciliation of segment profit to income from continuing operations before income taxes
Segment profit	155,000,000	96,000,000	276,000,000	143,000,000
Manufacturing group | Bell | Operating Segment
Revenues
Total revenues	687,000,000	891,000,000	1,521,000,000	1,737,000,000
Reconciliation of segment profit to income from continuing operations before income taxes
Segment profit	63,000,000	110,000,000	161,000,000	215,000,000
Manufacturing group | Textron Systems | Operating Segment
Revenues
Total revenues	293,000,000	333,000,000	566,000,000	661,000,000
Reconciliation of segment profit to income from continuing operations before income taxes
Segment profit	42,000,000	48,000,000	75,000,000	99,000,000
Manufacturing group | Industrial | Operating Segment
Revenues
Total revenues	871,000,000	794,000,000	1,709,000,000	1,619,000,000
Reconciliation of segment profit to income from continuing operations before income taxes
Segment profit	41,000,000	32,000,000	84,000,000	79,000,000
Manufacturing group | Textron eAviation | Operating Segment
Revenues
Total revenues	5,000,000	0	5,000,000	0
Reconciliation of segment profit to income from continuing operations before income taxes
Segment profit	(8,000,000)	0	(8,000,000)	0
Finance group
Revenues
Total revenues	14,000,000	12,000,000	30,000,000	27,000,000
Reconciliation of segment profit to income from continuing operations before income taxes
Gain on business disposition			0	0
Finance group | Finance | Operating Segment
Revenues
Total revenues	$ 14,000,000	$ 12,000,000	30,000,000	27,000,000
Reconciliation of segment profit to income from continuing operations before income taxes
Segment profit			$ 19,000,000	$ 9,000,000

XML

Revenues - Disaggregation of Revenue (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jul. 02, 2022	Jul. 03, 2021	Jul. 02, 2022	Jul. 03, 2021
Revenues
Revenues	$ 3,154	$ 3,191	$ 6,155	$ 6,070
United States
Revenues
Revenues	2,020	2,271	4,099	4,171
Europe
Revenues
Revenues	480	371	826	737
Other international
Revenues
Revenues	654	549	1,230	1,162
Commercial
Revenues
Revenues	2,432	2,343	4,557	4,348
U.S. Government
Revenues
Revenues	722	848	1,598	1,722
Textron Aviation
Revenues
Revenues	1,284	1,161	2,324	2,026
Textron Aviation | United States
Revenues
Revenues	776	885	1,508	1,494
Textron Aviation | Europe
Revenues
Revenues	239	122	358	206
Textron Aviation | Other international
Revenues
Revenues	269	154	458	326
Textron Aviation | Commercial
Revenues
Revenues	1,253	1,127	2,274	1,973
Textron Aviation | U.S. Government
Revenues
Revenues	31	34	50	53
Textron Aviation | Aircraft
Revenues
Revenues	856	797	1,502	1,332
Textron Aviation | Aftermarket parts and services
Revenues
Revenues	428	364	822	694
Bell
Revenues
Revenues	687	891	1,521	1,737
Bell | United States
Revenues
Revenues	504	677	1,174	1,293
Bell | Europe
Revenues
Revenues	43	47	71	83
Bell | Other international
Revenues
Revenues	140	167	276	361
Bell | Commercial
Revenues
Revenues	279	350	513	616
Bell | U.S. Government
Revenues
Revenues	408	541	1,008	1,121
Bell | Military aircraft and support programs
Revenues
Revenues	402	572	999	1,149
Bell | Commercial helicopters, parts and services
Revenues
Revenues	285	319	522	588
Textron Systems
Revenues
Revenues	293	333	566	661
Textron Systems | United States
Revenues
Revenues	268	297	514	586
Textron Systems | Europe
Revenues
Revenues	10	9	18	19
Textron Systems | Other international
Revenues
Revenues	15	27	34	56
Textron Systems | Commercial
Revenues
Revenues	19	67	38	125
Textron Systems | U.S. Government
Revenues
Revenues	274	266	528	536
Industrial
Revenues
Revenues	871	794	1,709	1,619
Industrial | United States
Revenues
Revenues	466	406	892	784
Industrial | Europe
Revenues
Revenues	185	192	375	428
Industrial | Other international
Revenues
Revenues	220	196	442	407
Industrial | Commercial
Revenues
Revenues	862	787	1,697	1,607
Industrial | U.S. Government
Revenues
Revenues	9	7	12	12
Industrial | Fuel systems and functional components
Revenues
Revenues	435	440	899	937
Industrial | Specialized vehicles
Revenues
Revenues	436	354	810	682
Textron eAviation
Revenues
Revenues	5	0	5	0
Textron eAviation | United States
Revenues
Revenues	1	0	1	0
Textron eAviation | Europe
Revenues
Revenues	3	0	3	0
Textron eAviation | Other international
Revenues
Revenues	1	0	1	0
Textron eAviation | Commercial
Revenues
Revenues	5	0	5	0
Textron eAviation | U.S. Government
Revenues
Revenues	0	0	0	0
Finance
Revenues
Revenues	14	12	30	27
Finance | United States
Revenues
Revenues	5	6	10	14
Finance | Europe
Revenues
Revenues	0	1	1	1
Finance | Other international
Revenues
Revenues	9	5	19	12
Finance | Commercial
Revenues
Revenues	14	12	30	27
Finance | U.S. Government
Revenues
Revenues	$ 0	$ 0	$ 0	$ 0

XML

Revenues - Remaining Performance Obligations (Details) $ in Billions	Jul. 02, 2022 USD ($)
Remaining Performance Obligation, Expected Timing of Satisfaction
Remaining performance obligation	$ 13.2
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2022-07-03
Remaining Performance Obligation, Expected Timing of Satisfaction
Remaining performance obligation, percent	75.00%
Remaining performance obligation, expected timing of satisfaction	18 months
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2023-12-31
Remaining Performance Obligation, Expected Timing of Satisfaction
Remaining performance obligation, percent	21.00%
Remaining performance obligation, expected timing of satisfaction	24 months

XML

Revenues - Contract Assets and Liabilities (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jul. 02, 2022	Jul. 03, 2021	Jul. 02, 2022	Jul. 03, 2021	Jan. 01, 2022
Contract Assets and Liabilities
Contract assets	$ 643		$ 643		$ 717
Contract liabilities	1,600		1,600		$ 1,200
Revenue recognized included in contract liabilities	$ 293	$ 170	$ 499	$ 448

XML

Retirement Plans (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jul. 02, 2022	Jul. 03, 2021	Jul. 02, 2022	Jul. 03, 2021
Pension Benefits
Net periodic benefit cost (credit)
Service cost	$ 27	$ 29	$ 54	$ 58
Interest cost	68	63	136	126
Expected return on plan assets	(153)	(144)	(306)	(288)
Amortization of net actuarial loss	22	38	44	77
Amortization of prior service cost	3	3	6	6
Net periodic benefit (income) cost	(33)	(11)	(66)	(21)
Pension Benefits | United States
Net periodic benefit cost (credit)
Defined contribution component	3	3	7	6
Postretirement Benefits Other Than Pensions
Net periodic benefit cost (credit)
Service cost	0	0	1	1
Interest cost	2	2	3	3
Amortization of net actuarial loss	(1)	0	(2)	(1)
Amortization of prior service cost	(1)	(1)	(2)	(2)
Net periodic benefit (income) cost	$ 0	$ 1	$ 0	$ 1

XML

Special Charges - Narrative (Details) - USD ($)	3 Months Ended		6 Months Ended
	Jul. 02, 2022	Jul. 03, 2021	Jul. 02, 2022	Jul. 03, 2021	Jan. 01, 2022
Restructuring and Related Activities [Abstract]
Special charges	$ 0	$ 4,000,000	$ 0	$ 10,000,000
Remaining cash outlays	$ 16,000,000		$ 16,000,000		$ 28,000,000

XML

Special Charges - Restructuring Reserve Activity (Details) $ in Millions	6 Months Ended
	Jul. 02, 2022 USD ($)
Restructuring Reserve [Roll Forward]
Beginning balance	$ 28
Cash paid	(11)
Foreign currency translation	(1)
Ending balance	16
Severance Costs
Restructuring Reserve [Roll Forward]
Beginning balance	19
Cash paid	(10)
Foreign currency translation	(1)
Ending balance	8
Contract Terminations and Other
Restructuring Reserve [Roll Forward]
Beginning balance	9
Cash paid	(1)
Foreign currency translation	0
Ending balance	$ 8

XML

Income Taxes (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jul. 02, 2022	Jul. 03, 2021	Jul. 02, 2022	Jul. 03, 2021
Income Tax Disclosure [Abstract]
Effective income tax rate	17.10%	15.60%	17.00%	13.00%
U.S. federal statutory income tax rate	21.00%	21.00%	21.00%	21.00%
Tax benefit recognized for additional research and development credits				$ 12