Revenues

6 Months Ended

Jun. 30, 2018

Revenues

Revenues

Note 15. Revenues

Disaggregation of Revenues

Our revenues disaggregated by major product type for the three and six months ended June 30, 2018 are presented below:

(In millions)		Three Months Ended		Six Months Ended
Aircraft	$	877	$	1,511
Aftermarket parts and services		399		775
Textron Aviation		1,276		2,286
Military aircraft and support programs		533		1,020
Commercial helicopters, parts and services		298		563
Bell		831		1,583
Unmanned systems		161		331
Marine and land systems		69		161
Simulation, training and other		150		275
Textron Systems		380		767
Fuel systems and functional components		627		1,282
Specialized vehicles		475		823
Tools and test equipment		120		248
Industrial		1,222		2,353
Finance		17		33
Total revenues	$	3,726	$	7,022

Our revenues by customer type and geographic location for the three and six months ended June 30, 2018 are presented below:

(In millions)		Textron Aviation		Bell		Textron Systems		Industrial		Finance		Total
Three months ended
Customer type:
Commercial	$	1,191	$	291	$	107	$	1,215	$	17	$	2,821
U.S. Government		85		540		273		7		—		905
Total revenues	$	1,276	$	831	$	380	$	1,222	$	17	$	3,726
Geographic location:
United States	$	914	$	543	$	297	$	590	$	7	$	2,351
International		362		288		83		632		10		1,375
Total revenues	$	1,276	$	831	$	380	$	1,222	$	17	$	3,726
Six months ended
Customer type:
Commercial	$	2,164	$	543	$	234	$	2,339	$	33	$	5,313
U.S. Government		122		1,040		533		14		—		1,709
Total revenues	$	2,286	$	1,583	$	767	$	2,353	$	33	$	7,022
Geographic location:
United States	$	1,579	$	1,052	$	584	$	1,086	$	14	$	4,315
International		707		531		183		1,267		19		2,707
Total revenues	$	2,286	$	1,583	$	767	$	2,353	$	33	$	7,022

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 revenue in future periods when we perform under the contracts.  These remaining obligations include amounts that have been formally appropriated under contracts with the U.S. Government, and exclude unexercised contract options and potential orders under ordering-type contracts such as Indefinite Delivery, Indefinite Quantity contracts.  At June 30, 2018, we had $8.2 billion in remaining performance obligations of which we expect to recognize revenues of approximately 67% through 2019, an additional 19% through 2021, 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 June 30, 2018, contract assets and liabilities totaled $405 million and $1.1 billion, respectively.  Upon adoption of ASC 606 on December 31, 2017, contract assets and liabilities related to our contracts with customers were $429 million and $1.0 billion, respectively.  During the second quarter and first half of 2018, we recognized $377 million and $699 million, respectively, in revenues that were included in the contract liability balance at the adoption date.

Reconciliation of ASC 606 to Prior Accounting Standards

The amount by which each financial statement line item is affected in 2018 as a result of applying the new accounting standard as discussed in Note 2 is presented below:

							June 30, 2018
(In millions)								As Reported		Effect of the adoption of ASC 606		Under Prior Accounting
Consolidated Balance Sheets
Accounts receivable, net							$	1,121	$	163	$	1,284
Inventories								3,925		209		4,134
Other current assets								763		(413)		350
Property, plant and equipment, net								2,608		6		2,614
Other assets								1,869		40		1,909
Total Manufacturing group assets								13,454		5		13,459
Total assets								14,558		5		14,563
Other current liabilities								2,175		127		2,302
Total Manufacturing group liabilities								8,276		127		8,403
Total liabilities								9,196		127		9,323
Retained earnings								5,861		(122)		5,739
Total shareholders’ equity								5,362		(122)		5,240
	Three Months Ended June 30, 2018						Six Months Ended June 30, 2018
(In millions, except per share amounts)		As Reported		Effect of the adoption of ASC 606		Under Prior Accounting		As Reported		Effect of the adoption of ASC 606		Under Prior Accounting
Consolidated Statements of Operations
Manufacturing revenues	$	3,709	$	(25)	$	3,684	$	6,989	$	(246)	$	6,743
Total revenues		3,726		(25)		3,701		7,022		(246)		6,776
Cost of sales		3,073		(5)		3,068		5,802		(203)		5,599
Income from continuing operations before income taxes		260		(20)		240		478		(43)		435
Income tax expense		36		(5)		31		65		(11)		54
Income from continuing operations		224		(15)		209		413		(32)		381
Net income		224		(15)		209		413		(32)		381
Basic earnings per share - continuing operations	$	0.88	$	(0.06)	$	0.82	$	1.61	$	(0.13)	$	1.48
Diluted earnings per share - continuing operations		0.87		(0.06)		0.81		1.59		(0.13)		1.46
Consolidated Statements of Comprehensive Income
Other comprehensive income (loss)	$	(42)	$	(15)	$	(57)	$	32	$	(32)	$	—
Comprehensive income		182		(15)		167		445		(32)		413
							Six Months Ended June 30, 2018
(In millions)								As Reported		Effect of the adoption of ASC 606		Under Prior Accounting
Consolidated Statements of Cash flows
Net income							$	413	$	(32)	$	381
Income from continuing operations								413		(32)		381
Deferred income taxes								12		(11)		1
Accounts receivable, net								(42)		40		(2)
Inventories								(78)		(10)		(88)
Other assets								(38)		(28)		(66)
Other liabilities								(165)		41		(124)
Net cash provided by operating activities of continuing operations								398		—		398