Textron (TXT) 10-K risk factor changes: FY2020 vs FY2019

[removed: We] [added: We] have customer concentration with the U.S. Government; reduction in U.S. Government defense spending can adversely affect our results of operations and financial [removed: condition.][added: condition.]

During [removed: 2019,] [added: 2020,] we derived approximately [removed: 24%] [added: 30%] of our revenues from sales to a variety of U.S. Government entities.

Although multiple-year contracts may be planned in connection with major procurements, Congress generally appropriates funds on a fiscal year basis [removed: even though a program may continue for several years.]

[removed: U.S.] [added: U.S.] Government contracts can be terminated at any time and may contain other unfavorable [removed: provisions.][added: provisions.]

[removed: As] [added: As] a U.S. Government contractor, we are subject to procurement rules and [removed: regulations ;] [added: regulations;] our failure to comply with these rules and regulations could adversely affect our [removed: business.][added: business.]

[removed: As] [added: As] a U.S. Government contractor, our businesses and systems are subject to audit and review by the Defense Contract Audit Agency (DCAA) and the Defense Contract Management Agency [removed: (DCMA).][added: (DCMA).]

If an audit uncovers improper or illegal activities, we may be subject to civil and criminal penalties and administrative sanctions that may include the termination of our contracts, forfeiture or reduction of profits, suspension or [removed: reduction of payments, fines, and, under certain circumstances, suspension or debarment from future contracts for a period of time.]

[removed: The] [added: The] use of multi-award contracts by the U.S. Government increases competition, pricing pressure and [removed: cost.][added: cost.]

[removed: Our] [added: Our] profitability and cash flow varies depending on the mix of our government contracts and our ability to control [removed: costs.][added: costs.]

[removed: Demand] [added: Demand] for our aircraft products is cyclical and lower demand adversely affects our financial [removed: results.][added: results.]

[removed: We] [added: We] have made and may continue to make acquisitions that increase the risks of our [removed: business.][added: business.]

[removed: Failure] [added: Failure] to perform by our subcontractors or suppliers could adversely affect our [removed: performance.][added: performance.]

[removed: In particular, in the aircraft] industry, most vendor parts are certified by the regulatory agencies as part of the overall Type Certificate for the aircraft being produced by the manufacturer.

[removed: Our] [added: Our] business could be negatively impacted by information technology disruptions and security [removed: threats.][added: threats.]

[removed: Developing] [added: Developing] new products and technologies entails significant risks and [removed: uncertainties.][added: uncertainties.]

[removed: We] [added: We] are subject to the risks of doing business in foreign countries that could adversely impact our [removed: business.][added: business.]

During [removed: 2019,] [added: 2020,] we derived approximately [removed: 34%] [added: 32%] of our revenues from international business, including U.S. exports.

Risks related to international operations include import, export, economic sanctions and other trade restrictions; changing U.S. and foreign procurement policies and practices; changes in international trade policies, including higher tariffs on imported goods and materials and renegotiation of free trade agreements; potential retaliatory tariffs imposed by foreign countries against U.S. goods; impacts related to the voluntary exit of the United Kingdom from the European Union [removed: (“Brexit”);] [added: (Brexit);] restrictions on technology transfer; difficulties in protecting intellectual property; increasing complexity of employment and environmental, health and safety regulations; foreign investment laws; exchange controls; repatriation of earnings or cash settlement [removed: challenges,] [added: challenges; compliance with increasingly rigorous data privacy and protection laws;] competition from foreign and multinational firms with home country advantages; economic and government instability, acts of terrorism and related safety concerns.

[removed: We] [added: We] are subject to increasing compliance risks that could adversely affect our operating [removed: results.][added: results.]

If our Finance segment [removed: is unable to maintain portfolio credit quality,] [added: has difficulty collecting on its finance receivables,] our financial performance could be adversely affected.

[removed: A key determinant of the] [added: The] financial performance of our Finance segment [removed: is] [added: depends on] the quality of loans, leases and other assets in its portfolio.

Portfolio quality can be adversely affected by several factors, including finance receivable underwriting procedures, collateral value, geographic or industry concentrations, and the effect of general economic [removed: conditions.][added: conditions such as the recent deterioration of the economy due to the impact from the COVID-19 pandemic.]

In addition, a substantial number of the [removed: new] originations in our finance receivable portfolio are cross-border transactions for aircraft sold outside of the U.S. Cross-border transactions present additional challenges and risks in [removed: realizing upon collateral in] the event of borrower default, which can result in difficulty or delay in collecting on the related finance receivables.

[removed: If our] Finance segment [removed: has] [added: may have] difficulty successfully collecting [added: on] its finance receivable portfolio, [added: and as a result] our cash flow, results of operations and financial condition could be adversely affected.

Natural disasters, including hurricanes, fires, tornados, floods and other forms of severe weather, the intensity and frequency of which are being exacerbated by climate change, other impacts of climate change, such as rising sea waters, as well as other events outside of our control including public health crises or pandemics, power [removed: outages,] [added: outages and] industrial [removed: explosions or other] accidents, have in the past and could in the future disrupt our operations and adversely affect our business.

[removed: Global] [added: Increased regulation related to global] climate change could negatively affect our business.

[removed: We] [added: We] are subject to legal proceedings and other [removed: claims.][added: claims.]

[removed: Intellectual] [added: Intellectual] property infringement claims of others and the inability to protect our intellectual property rights could harm our business and our [removed: customers.][added: customers.]

[removed: Certain] [added: Certain] of our products are subject to laws regulating consumer products and could be subject to repurchase or recall as a result of safety [removed: issues.][added: issues.]

[removed: The] [added: The] increasing costs of certain employee and retiree benefits could adversely affect our [removed: results.][added: results.]

[removed: Our] [added: Our] business could be adversely affected by strikes or work stoppages and other labor [removed: issues.][added: issues.]

Approximately [removed: 7,400,] [added: 6,800,] or [removed: 29%,] [added: 28%,] of our U.S. employees are unionized, and many of our non-U.S. employees are represented by organized councils.

As a result, from time to time we experience work stoppages, which can negatively impact our ability to manufacture our products on a timely basis, resulting in strain on our relationships with our customers, loss or delay of [removed: revenue] [added: revenues] and/or increased cost.

[removed: Unanticipated] [added: Unanticipated] changes in our tax rates or exposure to additional income tax liabilities could affect our [removed: profitability.][added: profitability.]

Risks Related to the COVID-19 Pandemic

Our business is being adversely impacted, and is expected to continue to be adversely impacted, by the coronavirus (COVID-19) pandemic.

Our businesses have experienced and continue to experience various degrees of disruption and reduced demand for certain of our products due to the unprecedented conditions surrounding the COVID-19 pandemic.

The effects of COVID-19 have included and could continue to include disruption of the operation or temporary closure of certain of our facilities or the facilities of our

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customers, suppliers or business partners as well as other disruptions in our supply chains.

Challenges resulting from the pandemic have impacted, and may continue to impact, the ability of many of our employees to work effectively, due to illness, quarantines, facility closures, changes in manufacturing processes to accommodate social distancing guidelines, remote working arrangements, or other government-imposed operating restrictions.

We have experienced and may continue to experience increased costs as a result of these business and production disruptions.

Likewise, we have incurred and may continue to incur additional expenses related to implementing processes and procedures to comply with required operating restrictions and to enhance the safety of our facilities to protect the health of our employees.

Our commercial businesses have been and may continue to be adversely impacted due to a general slowdown in demand for our general aviation products and services, recreational and other specialized vehicles and automotive products.

We have experienced a decline in orders for our aviation products and services, as well as lower deliveries of commercial helicopters and fixed-wing aircraft because of reduced demand and travel restrictions imposed in response to the pandemic.

Economic and other impacts from the pandemic may also result in future weak demand for our aviation and commercial helicopter products and services, the delay or cancellation of existing orders by our customers and lower flight hours, and consequently, lower demand for parts and maintenance.

In addition, new regulations by U.S. or foreign governments and government agencies addressed to the aviation or travel industry could impose additional regulatory, aircraft security, travel restrictions or other requirements or restrictions related to the pandemic that could adversely impact demand for aircraft and rotorcraft or significantly reduce hours flown.

As a result, our costs may further increase as a result of the COVID-19 outbreak.

These cost increases may not be fully recoverable, negatively impacting our profitability, and may continue even after the business environment has improved.

It is possible that the continued spread of COVID-19 and actions taken by various governmental authorities and other third parties in response to the outbreak could also further cause disruption in our supply chain or in the operations of our business partners, impacting their ability to perform their obligations, which could impact our ability to perform our contractual obligations; cause delay by, or limit the ability of, the U.S. Government and other customers to perform, including in making timely payments to us; and cause other unpredictable events.

Limitations on government operations could impact regulatory approvals such as export licenses that are needed for international sales and deliveries.

In addition, there may be changes in our U.S. and foreign government customers’ priorities as they confront competing budget priorities and more limited resources.

These changes may impact current and future programs, government payments and other practices, procurements and funding decisions.

The outbreak of COVID-19 has resulted in a widespread health crisis that is adversely affecting the economies and financial markets of many countries.

The resulting economic downturn, the severity and length of which cannot be predicted, may cause continued reduced demand for our products, delays or cancellations of customer orders, the inability of customers to obtain financing to purchase our products, bankruptcies of our suppliers, customers or other business partners, adverse impact to investment performance of our pension plans and continued volatility in the global capital markets adversely impacting our access to capital.

The extent to which the pandemic could impact our business, results of operations, financial condition and liquidity is highly uncertain and also will depend on future developments, most of which are outside our control.

Such developments may include the geographic spread and duration of the virus, the severity of the disease, the development of treatments or vaccines, and the effects of actions that have been or may be taken by various governmental authorities and other third parties in response to the outbreak.

See also risks related to our Finance Segment under Financial Risks section below.

Aerospace and Defense Industry Risks

Unexpected events, such as the COVID-19 pandemic, have adversely impacted demand for our aircraft products and may continue to do so.

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even though a program may continue for several years.

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reduction of payments, fines, and, under certain circumstances, suspension or debarment from future contracts for a period of time.

Strategic Risks

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Business and Operational Risks

In particular, in the aircraft

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Financial Risks

The pandemic has resulted in disruptions in the ability of many of our customers to conduct business effectively because of illness, quarantines, government shut-down orders, facility closures, reduced customer demand or other restrictions.

As a result, our Finance segment has modified a significant number of the loans in its portfolio in order to provide temporary payment relief to its customers.

In addition, the Finance segment has provided extended payment relief to certain customers.

These modifications will delay our ultimate recovery on these assets.

​

Currency, raw material price and interest rate fluctuations can adversely affect our results.

We are exposed to a variety of market risks, including the effects of changes in foreign currency exchange rates, raw material prices and interest rates.

Fluctuations in foreign currency rates contribute to variations in revenues and costs in impacted jurisdictions which can adversely affect our profitability.

We monitor and manage these exposures as an integral part of our overall risk management program.

Nevertheless, changes in currency exchange rates, raw material prices and interest rates can have substantial adverse effects on our results of operations.

We may be unable to effectively mitigate pricing pressures.

In some markets, particularly where we deliver component products and services to OEMs, we face ongoing customer demands for price reductions, which sometimes are contractually obligated.

However, if we are unable to effectively mitigate future pricing pressures through technological advances or by lowering our cost base through improved operating and supply chain efficiencies, our results of operations could be adversely affected.

[removed: | | ● | Our manufacturing businesses generated $960] [added: - Generated $833] million of net cash from operating activities [removed: of continuing operations. |][added: from our manufacturing businesses.]

[removed: | | ● |] [added: -] Invested [removed: $647] [added: $317] million in [removed: research and development activities] [added: capital expenditures] and [removed: $339] [added: $549] million in [removed: capital expenditures. |][added: research and development projects.]

| [removed: *​*] | [removed: ​] | [removed: ​] | [removed: ​] | [removed: ​] | [removed: ​] | [removed: ​] | [removed: ​] | [removed: ​] | [removed: ​] | [added: | |] % Change | | | | [added: | |]

| [removed: _(Dollars] [added: *(Dollars] in [removed: millions)_] [added: millions)*] | [added: | | 2020 | | |] 2019 | | | 2018 | | | [removed: 2017] [added: 2020] | | | 2019 | | [removed: 2018] | [removed: |]

| Revenues | [added: | |] $ | [removed: 13,630] [added: 11,651] | [removed: ​] | $ | [removed: 13,972] [added: 13,630] | [removed: ​] | $ | [removed: 14,198] [added: 13,972] | [removed: ​] | [removed: (2)] [added: (15)%] | [removed: %] | [removed: (2)] | [removed: %] [added: (2)%] | [added: | |]

| Cost of sales | [removed: ​] | [added: | 10,094 | | |] 11,406 | [removed: ​] | [removed: ​] | 11,594 | [removed: ​] | [removed: ​] | [removed: 11,827] [added: (12)%] | [removed: ​] | [removed: (2)] | [removed: %] [added: (2)%] | [removed: (2)] | [removed: %] |

| Gross margin as a percentage of Manufacturing revenues | | [removed: 15.9] | [removed: %] [added: 13.0%] | | [removed: 16.6] | [removed: %] [added: 15.9%] | | [removed: 16.3] | [removed: %] [added: 16.6%] | | | | [removed: ​] | [added: | | | |]

| Selling and administrative expense | [removed: ​] | [added: | 1,045 | | |] 1,152 | [removed: ​] | [removed: ​] | 1,275 | [removed: ​] | [removed: ​] | [removed: 1,334] [added: (9)%] | [removed: ​] | [removed: (10)] | [removed: %] [added: (10)%] | [removed: (4)] | [removed: %] |

| Interest expense | [removed: ​] | [added: | 166 | | |] 171 | [removed: ​] | [removed: ​] | 166 | [removed: ​] | [removed: ​] | [removed: 174] [added: (3)%] | [removed: ​] | [removed: 3] | [removed: %] [added: 3%] | [removed: (5)] | [removed: %] |

[removed: | | ● | Higher] [added: -] Bell revenues [removed: of $74] [added: were higher by $55] million, [removed: resulting from an increase in commercial] [added: due to higher military] revenues of [removed: $116] [added: $225] million, largely reflecting [removed: higher deliveries,] [added: spares and logistics support,] partially offset by lower [removed: military volume. |][added: commercial revenues.]

Gross margin as a percentage of Manufacturing revenues decreased [removed: 70] [added: 290] basis points in [removed: 2019,] [added: 2020,] compared with [removed: 2018,] [added: 2019,] primarily due to lower margin at the Textron Aviation [removed: segment,] [added: segment] reflecting [added: unfavorable impacts from] the [removed: mix of aircraft sold in] [added: pandemic, including] the [removed: year.][added: idle facility costs and inventory valuation charges.]

[removed: Special Charges][added: Special Charges]

Special charges of [removed: $72 million, $73] [added: $147] million and [removed: $130] [added: $72] million in [removed: 2019, 2018] [added: 2020] and [removed: 2017,] [added: 2019,] respectively, primarily include restructuring activities [added: and intangible asset impairment charges] as described in Note 17 to the Consolidated Financial [removed: Statements.][added: Statements in Item 8.]

[removed: Income Taxes][added: Income Taxes]

| [removed: *​*] | [added: | | 2020 | | |] 2019 | | [removed: 2018] | [added: 2018] | [removed: 2017] | |

For a full reconciliation of our effective tax rate to the U.S. federal statutory tax rate, see Note 18 to the Consolidated Financial [removed: Statements.][added: Statements in Item 8.]

Segment profit for the manufacturing segments excludes interest expense, certain corporate expenses, gains/losses on major business [removed: dispositions and] [added: dispositions,] special [removed: charges.][added: charges and an inventory charge related to the 2020 COVID-19 restructuring plan, as discussed in Note 17 to the Consolidated Financial Statements in Item 8.]

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 [removed: sold at different profit margins.]

Approximately [removed: 24%] [added: 30%] of our [removed: 2019] [added: 2020] revenues were derived from contracts with the U.S. Government, including those under the U.S. Government-sponsored foreign military sales program.

| Revenues: | [removed: ​] | | | [removed: ​] | | | [removed: ​] | | | | | | [removed: ​] | [added: | | | |]

| Aircraft | [added: | |] $ | [removed: 3,592] [added: 2,714] | [removed: ​] | $ | [removed: 3,435] [added: 3,592] | [removed: ​] | $ | [removed: 3,112] [added: 3,435] | [removed: ​] | [removed: 5] [added: (24)%] | [removed: %] | [removed: 10] | [removed: %] [added: 5%] | [added: | |]

| Aftermarket parts and services | | [added: | 1,260 | | |] 1,595 | [removed: ​] | | 1,536 | [removed: ​] | | [removed: 1,574] [added: (21)%] | [removed: ​] | [removed: 4] | [removed: %] [added: 4%] | [removed: (2)] | [removed: %] |

| Total revenues | | [added: | 3,974 | | |] 5,187 | [removed: ​] | | 4,971 | [removed: ​] | | [removed: 4,686] [added: (23)%] | [removed: ​] | [removed: 4] | [removed: %] [added: 4%] | [removed: 6] | [removed: %] |

| Operating expenses | | [added: | 3,958 | | |] 4,738 | [removed: ​] | | 4,526 | [removed: ​] | | [removed: 4,383] [added: (16)%] | [removed: ​] | [removed: 5] | [removed: %] [added: 5%] | [removed: 3] | [removed: %] |

| Segment profit | | [added: | 16 | | |] 449 | [removed: ​] | | 445 | [removed: ​] | | [removed: 303] [added: (96)%] | [removed: ​] | [removed: 1] | [removed: %] [added: 1%] | [removed: 47] | [removed: %] |

| Backlog | [added: | |] $ | [removed: 1,714] [added: 1,603] | [removed: ​] | $ | [removed: 1,791] [added: 1,714] | [removed: ​] | $ | [removed: 1,180] [added: 1,791] | [removed: ​] | [removed: (4)] [added: (6)%] | [removed: %] | [removed: 52] | [removed: %] [added: (4)%] | [added: | |]

[removed: Textron] [added: Textron] Aviation Revenues and Operating [removed: Expenses][added: Expenses]

Factors contributing to the [removed: 2019] [added: 2020] year-over-year revenue change are provided below:

| [removed: *​*] [added: *(In millions)*] | [removed: 2019 versus] | | [added: 2020 versus 2019 | | |]

| [removed: _(In millions)_] [added: *(In millions)*] | [added: | | 2020 | | | 2019 | | |] 2018 | | [added: |]

| Volume and mix | [added: | |] $ | [removed: 199] [added: 41] | [added: |]

| Pricing | | [removed: 17] | [added: 5 | | |]

| Total change | [added: | |] $ | [removed: 216] [added: 55] | [added: |]

Textron Aviation’s [removed: revenues increased $216] [added: operating expenses decreased $780] million, [removed: 4%,] [added: 16%,] in [removed: 2019,] [added: 2020,] compared with [removed: 2018,] [added: 2019,] largely due to [removed: higher] [added: lower] volume and mix [removed: of $199 million.][added: described above.]

We delivered [removed: 206] [added: 132] Citation jets and [removed: 176] [added: 113] commercial turboprops in [removed: 2019,] [added: 2020,] compared with [removed: 188] [added: 206] Citation jets and [removed: 186] [added: 176] commercial turboprops in [removed: 2018.][added: 2019.]

[removed: Textron Aviation’s] [added: Bell’s] operating expenses increased [removed: $212] [added: $28] million, [removed: 5%,] [added: 1%,] in [removed: 2019,] [added: 2020,] compared with [removed: 2018, largely] [added: 2019, primarily] due to higher net volume and mix as described [removed: above and an unfavorable impact from inflation, partially offset by improved manufacturing performance.][added: above.]

Factors contributing to the [removed: 2018] [added: 2020] year-over-year revenue change are provided below:

| Volume and mix | [added: | |] $ | [removed: 185] [added: 16] | [added: |]

| Total change | [added: | |] $ | [removed: 285] [added: 27] | [added: |]

Textron [removed: Aviation’s] [added: Systems’] operating expenses [removed: increased $143] [added: decreased $23] million, [removed: 3%,] [added: 2%,] in [removed: 2018,] [added: 2020,] compared with [removed: 2017, largely] [added: 2019, primarily] due to [removed: higher] [added: lower] net volume [removed: as] described above.

Overview

During 2020, the global pandemic caused by the novel coronavirus, known as “COVID-19”, led to worldwide facility closures, workforce disruptions, supply chain destabilizations, reduced demand for many products and services, volatility in the capital markets and uncertainty in the economic outlook.

Our operations experienced and continue to experience various degrees of disruption due to the unprecedented conditions surrounding the pandemic.

While some of our commercial manufacturing facilities had temporarily closed during the first quarter of 2020 through the latter part of the second quarter due to reduced demand for certain of our products, substantially all manufacturing activities had resumed in the third quarter.

In the second half of the year, our commercial businesses have generally experienced an increase in customer demand compared with the first half of 2020.

However, demand has not returned to pre-pandemic levels.

In the first quarter of 2020, following the onset of the pandemic, we strengthened our cash position by issuing $650 million in senior debt and by borrowing $500 million under a new 364-Day Term Loan Credit Agreement.

We also temporarily suspended share repurchases and took other measures to reduce costs and conserve cash, including employee furloughs at many of our commercial businesses and at corporate headquarters, reducing capital expenditures and delaying certain research and development projects.

In the second quarter, we continued most of the measures taken in the first quarter to reduce costs and conserve cash and initiated a restructuring plan at certain of our businesses to further reduce costs.

During the remainder of the year, we continued our focus on managing our businesses through the impacts of the pandemic while investing in future products and technologies.

Key financial highlights for 2020 include:

- Maintained a strong cash position with $2.3 billion in cash and equivalents at the end of the year.

- Repurchased 4.1 million shares of our common stock.

While we expect our commercial businesses, which have been adversely impacted by the pandemic, to slowly recover with the broader economic recovery, we cannot reasonably estimate when customer demand for our products and services may return to pre-pandemic levels.

There are many uncertainties regarding the pandemic, and we continue to closely monitor the impact of the pandemic on all aspects of our business, including how it is impacting our customers, employees, suppliers, vendors, business partners and distribution channels.

See Item 1A.

Risk Factors for additional risks and uncertainties related to the pandemic’s impact on our business.

The ultimate extent of the effects of the pandemic on the company and our consolidated financial position is uncertain and will depend on future developments, including the length and severity of the pandemic, and such effects could exist for an extended period of time, even after the pandemic ends.

Business.

A discussion of our financial condition and operating results for 2020 compared with 2019 is provided below, while a discussion of 2019 compared with 2018 can be found in Item 7.

Management’s Discussion and Analysis of Financial Condition and Results of Operations of our Annual Report on Form 10-K for the year ended January 4, 2020.

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Revenues decreased $2.0 billion, 15%, in 2020, compared with 2019.

- Textron Aviation revenues were lower by $1.2 billion, largely due to lower Citation jet and commercial turboprop volume of $916 million, reflecting a decline in demand related to the pandemic, and lower aftermarket volume of $337 million, reflecting lower aircraft utilization resulting from the pandemic.

- Industrial revenues were lower by $798 million, largely due to lower volume in the Fuel Systems and Functional Components product line, primarily due to manufacturing facility closures in the first half of 2020, and lower volume and mix in the Specialized Vehicles product line, primarily reflecting a decline in demand related to the pandemic.

Cost of sales decreased $1.3 billion, 12%, in 2020, compared with 2019, largely due to lower net volume and mix described above.

The decrease in cost of sales was partially offset by idle facility costs of $142 million, primarily at the Textron Aviation segment, reflecting unfavorable absorption of manufacturing costs attributable to abnormally low production levels resulting from the pandemic and temporary manufacturing facility closures, and a $55 million inventory charge related to the TRU business discussed in Note 17 to the Consolidated Financial Statements in Item 8.

Financial Statements and Supplementary Data.

Selling and administrative expense decreased $107 million, 9%, in 2020, compared with 2019, primarily due to cost reduction activities across our manufacturing segments, principally at the Textron Aviation and Industrial segments.

Financial Statements and Supplementary Data.

| | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| Effective tax rate | | | (9.6%) | | | 13.5% | | | 11.7% | | |

In 2020, the effective tax rate of (9.6)% was lower than the U.S. federal statutory tax rate of 21%, primarily due to an audit settlement with respect to certain state income tax returns that resulted in a $52 million benefit and the favorable impact of research credits.

Financial Statements and Supplementary Data.

Financial Statements and Supplementary Data.

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sold at different profit margins.

Business on pages 3 through 9.

An analysis of our consolidated operating results is set forth below, and a more detailed analysis of our segments’ operating results is provided in the Segment Analysis section on pages 21 through 27.

At the beginning of 2018, we adopted Accounting Standards Update No. 2014-09, _Revenue from Contracts with Customers (ASC 606)_ using a modified retrospective transition method applied to contracts that were not substantially complete at the end of 2017.

We recorded a $90 million adjustment to increase retained earnings to reflect the cumulative impact of adopting this standard at the beginning of 2018, primarily related to certain long-term contracts our Bell segment has with the U.S. Government that converted to the cost-to-cost method for revenue recognition.

For 2019 and 2018, revenues for our U.S. Government contracts were primarily recognized as costs are incurred, while revenues for 2017 were primarily recognized as units were delivered.

The comparative information for 2017 has not been restated and is reported under the accounting standards in effect at that time.

2019 Financial Highlights

| --- | --- | --- |

| | ● | Returned $521 million to our shareholders through share repurchases and dividend payments. |

| | ● | Backlog increased 8% to $9.8 billion, which includes new contracts with the U.S. Government for spares and logistic support for the V-22 tiltrotor aircraft and the H-1 helicopter programs at the Bell segment. |

| ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

Revenues decreased $342 million, 2%, in 2019, compared with 2018.

| | ● | Lower Industrial revenues of $493 million, primarily reflecting a $248 million impact from the 2018 disposition of the Tools and Test Equipment product line and lower volume and mix of $233 million at the remaining product lines, primarily in the Specialized Vehicles product line. |

| | ● | Lower Textron Systems revenues of $139 million, largely reflecting lower volume of $103 million in the Marine and Land Systems product line and $41 million in the Unmanned Systems product line. |

| | ● | Higher Textron Aviation revenues of $216 million, largely due to higher Citation jet volume of $286 million, primarily reflecting the Longitude’s entry into service in the fourth quarter of 2019, and higher aftermarket volume of $44 million, partially offset by lower defense volume. |

Revenues decreased $226 million, 2%, in 2018, compared with 2017, largely driven by the disposition of the Tools and Test Equipment product line within the Industrial segment.

The net revenue decrease included the following factors:

| | ● | Lower Textron Systems revenues of $376 million, primarily reflecting lower volume of $159 million in the Marine and Land Systems product line, along with a decrease due to the discontinuance of our sensor-fuzed weapon product in 2017. |

| | ● | Lower Bell revenues of $137 million, due to lower commercial revenues of $91 million, largely reflecting the mix of aircraft sold in the year, and lower military revenues of $46 million. |

| | ● | Higher Textron Aviation revenues of $285 million, due to higher volume and mix of $185 million and favorable pricing of $100 million. |

| | ● | Higher Industrial revenues of $5 million, primarily due to higher volume of $149 million, largely related to the Specialized Vehicles product line, a favorable impact of $57 million from foreign exchange and the impact from the Arctic Cat acquisition of $49 million. These increases were largely offset by $246 million in lower revenues due to the disposition of the Tools and Test Equipment product line. |

Cost of sales decreased $188 million, 2%, in 2019, compared with 2018, largely resulting from the impact from the disposition of the Tools and Test Equipment product line, improved performance and a favorable impact of $48 million from foreign exchange rate fluctuations, partially offset by an unfavorable impact of $94 million from inflation.

Selling and administrative expense decreased $123 million, 10% in 2019, compared with 2018, primarily reflecting the impact from the disposition of Tools and Test Equipment product line and cost reduction activities in the Specialized Vehicles product line.

In 2018, cost of sales decreased $233 million, 2%, compared with 2017, largely resulting from the disposition of the Tools and Test Equipment product line and lower net volume as described above.

Selling and administrative expense decreased $59 million, 4%, in 2018, compared with 2017, primarily reflecting the impact from the disposition of the Tools and Test Equipment product line.

Interest Expense

Interest expense on the Consolidated Statements of Operations includes interest for both the Finance and Manufacturing borrowing groups with interest related to intercompany borrowings eliminated.

Interest expense for the Finance segment is included within segment profit and includes intercompany interest.

Consolidated interest expense increased $5 million in 2019, compared with 2018, primarily due to higher average debt outstanding.

In 2018, consolidated interest expense decreased $8 million, compared with 2017, primarily due to lower average debt outstanding.

Gain on Business Disposition

On July 2, 2018, we completed the sale of the businesses that manufacture and sell the products in the Tools and Test Equipment product line within our Industrial segment.

We recorded an after-tax gain of $419 million in 2018.

| ​ | ​ | ​ | ​ | ​ | ​ | ​ |

| --- | --- | --- | --- | --- | --- | --- |

| Effective tax rate | 13.5 | % | 11.7 | % | 59.8 | % |

In 2018, our effective tax rate of 11.7% was lower than the U.S. federal statutory tax rate of 21%, primarily due to the disposition of the Tools and Test equipment product line which resulted in a gain taxable primarily in non-U.S. jurisdictions that partially exempt such gains from tax.

The effective tax rate for 2018 also reflects a $25 million benefit recognized upon the reassessment of our reserve for uncertain tax positions based on new information, including interactions with the tax authorities and recent audit settlements.

In addition, we finalized the 2017 impacts of the Tax Cut and Jobs Act (the Tax Act) and recognized a $14 million benefit in the fourth quarter of 2018.

[removed: Foreign] [added: Foreign] Currency Exchange [removed: Risk][added: Risk]

The notional amount of outstanding foreign currency exchange contracts was [removed: $342] [added: $318] million and [removed: $379] [added: $342] million at January [removed: 4, 2020] [added: 2, 2021] and [removed: December 29, 2018,] [added: January 4, 2020,] respectively.

We also [removed: manage] [added: may hedge] exposures to [added: certain of our] foreign currency assets and earnings [removed: primarily] by funding [removed: certain foreign currency-denominated assets] [added: those asset positions] with [removed: liabilities] [added: debt] in the same [added: foreign] currency so [removed: that certain] [added: the] exposures are naturally offset.

[removed: Interest] [added: Interest] Rate [removed: Risk][added: Risk]

[removed: Quantitative] [added: Quantitative] Risk [removed: Measures][added: Measures]

| [removed: ​] | [added: | |] January [removed: 4, 2020] [added: 2, 2021] | | | | | | [removed: December 29, 2018] | | | [added: January 4, 2020] | | | [added: | | | | | |]

| [removed: ​] [added: (*In millions*)] | [removed: Carrying] | | [removed: Fair] [added: Carrying Value*] | | [removed: to] [added: | Fair Value* | | | Sensitivity of Fair Value to] a [removed: 10%] [added: 10% Change] | | [removed: Carrying] | [added: Carrying Value*] | [removed: Fair] | | [removed: to] [added: Fair Value* | | | Sensitivity of Fair Value to] a [removed: 10%] [added: 10% Change] | | [added: |]

| Manufacturing group | [removed: ​] | | [removed: ​] | | [removed: ​] | | [removed: ​] | | [removed: ​] | | [removed: ​] | | [added: | | | | | | | |]

| [removed: _Foreign] [added: *Foreign] currency exchange [removed: risk_] [added: risk*] | [removed: ​] | | [removed: ​] | | [removed: ​] | | [removed: ​] | | [removed: ​] | | [removed: ​] | | [added: | | | | | | | |]

| Debt | [added: | |] $ | [removed: (210)] [added: (10)] | [added: |] $ | [removed: (212)] [added: (10)] | [added: |] $ | [removed: (21)] [added: (1)] | [added: |] $ | [removed: (197)] [added: (210)] | [added: |] $ | [removed: (208)] [added: (212)] | [added: |] $ | (21) | [added: |]

| Foreign currency exchange contracts | | [removed: (1)] | [added: 3] | [added: | | 3 | | | 22 | | |] (1) | | [removed: 20] | [added: (1)] | [removed: (8)] | | [removed: (8)] [added: 20] | | [removed: 50] |

| [removed: *​*] | [added: | |] $ | [removed: (211)] [added: (7)] | [added: |] $ | [removed: (213)] [added: (7)] | [added: |] $ | [removed: (1)] [added: 21] | [added: |] $ | [removed: (205)] [added: (211)] | [added: |] $ | [removed: (216)] [added: (213)] | [added: |] $ | [removed: 29] [added: (1)] | [added: |]

| [removed: _Interest] [added: *Interest] rate [removed: risk_] [added: risk*] | | | | | | | | | | | | | [added: | | | | | | | |]

| Debt | [added: | |] $ | [removed: (3,097)] [added: (3,690)] | [added: |] $ | [removed: (3,249)] [added: (3,986)] | [added: |] $ | [removed: (21)] [added: (16)] | [added: |] $ | [removed: (2,996)] [added: (3,097)] | [added: |] $ | [removed: (2,971)] [added: (3,249)] | [added: |] $ | [removed: (30)] [added: (21)] | [added: |]

| Finance group | | | | | | | | | | | | | [added: | | | | | | | |]

| [removed: _Interest] [added: *Interest] rate [removed: risk_] [added: risk*] | [removed: ​] | [removed: ​] | [removed: ​] | [removed: ​] | [removed: ​] | [removed: ​] | [removed: ​] | [removed: ​] | [removed: ​] | [removed: ​] | [removed: ​] | [removed: ​] | [added: | | | | | | | |]

| Finance receivables | [added: | |] $ | [removed: 493] [added: 549] | [added: |] $ | [removed: 527] [added: 599] | [added: |] $ | 9 | [added: |] $ | [removed: 582] [added: 493] | [added: |] $ | [removed: 584] [added: 527] | [added: |] $ | [removed: 14] [added: 9] | [added: |]

| Debt | | [removed: (686)] | [added: (662)] | [removed: (634)] | | [removed: 1] [added: (587)] | | [removed: (718)] | [added: —] | [removed: (640)] | | [added: (686) | | | (634) | | |] 1 | [added: | |]

[removed: _*] The value represents an asset or [removed: (liability)._][added: (liability).*]

This strategy includes the use of interest rate swap agreements.

At the end of 2020, we had an interest rate swap agreement for a notional amount of $294 million, which effectively converted certain floating-rate debt to a fixed-rate equivalent.

[Table of](#i2d192f77008d45ab8937879d57605ae2_7) [Contents](#i2d192f77008d45ab8937879d57605ae2_7)

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[Table of](#i2d192f77008d45ab8937879d57605ae2_7) [Contents](#i2d192f77008d45ab8937879d57605ae2_7)

We primarily use borrowings denominated in British pound sterling for these purposes.

The impact of foreign currency exchange rate changes on our Consolidated Statements of Operations are as follows:

| ​ | ​ | ​ | ​ | ​ | ​ | ​ |

| --- | --- | --- | --- | --- | --- | --- |

| _(In millions)_ | 2019 | | 2018 | | 2017 | |

| Increase (decrease) in revenues | $ | (66) | $ | 57 | $ | 27 |

| Increase (decrease) in segment profit | | (10) | | 1 | | (1) |

| ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| ​ | ​ | ​ | ​ | ​ | Sensitivity of | | ​ | ​ | ​ | ​ | Sensitivity of | |

| ​ | ​ | ​ | ​ | ​ | Fair Value | | ​ | ​ | ​ | ​ | Fair Value | |

| (_In millions_) | Value* | | Value* | | Change | | Value* | | Value* | | Change | |

​

[removed: Unless otherwise indicated, references] [added: References] to “Textron Inc.,” the “Company,” “we,” “our” and “us” in this Annual Report on Form [removed: 10-K] [added: 10-K, unless otherwise indicated,] refer to Textron Inc. and its consolidated subsidiaries.

We conduct our business through five operating segments: Textron Aviation, Bell, Textron Systems and Industrial, which represent our manufacturing businesses, and Finance, which represents our [added: captive] finance business.

[removed: Textron] [added: Textron] Aviation [removed: Segment][added: Segment]

Aircraft includes sales of business jets, turboprop aircraft, [removed: piston engine aircraft, and] military trainer and defense [added: aircraft and piston engine] aircraft.

The family of jets currently offered by Textron Aviation includes the Citation M2, Citation CJ3+, Citation CJ4, Citation XLS+, Citation [removed: Latitude, Citation Sovereign+] [added: Latitude] and the Citation [removed: Longitude, a super mid-size jet, which achieved type certification and began deliveries in late 2019.][added: Longitude.]

Textron Aviation’s turboprop aircraft include the Beechcraft King Air [removed: C90GTx, King Air 250,] [added: 260,] King Air [removed: 350ER] [added: 360ER] and King Air [removed: 350i,] [added: 360,] and the Cessna Caravan and Grand Caravan EX.

Textron Aviation is developing the Cessna Skycourier, a twin-engine, high-wing, large-utility turboprop aircraft, which [removed: is targeted for] [added: achieved its] first flight in [removed: early] [added: May] 2020.

The Denali, a high-performance single engine turboprop aircraft under development, is [removed: also] expected to achieve its first flight in 2021.

[removed: In addition,] Textron [removed: Aviation’s] [added: Aviation also offers] piston engine aircraft [removed: include] [added: including] the Beechcraft Baron and Bonanza, and the Cessna Skyhawk, Skylane, and the Turbo Stationair HD.

[added: In addition,] Textron Aviation’s military trainer and defense aircraft include the T-6 trainer, which has been used to train pilots from more than 20 [removed: countries.][added: countries, and the AT-6 light attack military aircraft.]

In support of its family of aircraft, Textron Aviation operates a global network of 20 service centers, two of which are co-located with [removed: Bell Helicopter,] [added: Bell,] along with more than 300 authorized independent service centers located throughout the world.

Textron Aviation also provides its customers with around-the-clock parts support and offers a mobile support program with [removed: over] [added: approximately] 70 mobile service units.

In addition, Able Aerospace Services, Inc., a subsidiary of Textron Aviation, [removed: also] provides component and maintenance, repair and overhaul services in support of commercial and military fixed- and rotor-wing aircraft.

[removed: Bell Segment][added: Bell Segment]

Bell supplies advanced military helicopters and [added: provides parts and] support [added: services] to the U.S. Government and to military customers outside the United States.

Bell’s primary U.S. Government programs are [added: for] the [added: production and support of the] V-22 tiltrotor aircraft and the H-1 helicopters.

[added: Through its strategic] alliance with Boeing, Bell produces and supports the V-22 tiltrotor aircraft [added: primarily] for the U.S. Department of [removed: Defense (DoD),] [added: Defense,] and also [removed: for Japan] [added: offers this aircraft to other countries] under the U.S. Government-sponsored foreign military sales program.

While the U.S. Marine Corps is the primary customer for H-1 helicopters, we also sell [removed: H-1] [added: these] helicopters under the U.S. Government-sponsored foreign military sales program.

Bell [removed: is developing] [added: continues its development and refinement of] the V-280 Valor, a next generation vertical lift aircraft as part of the Joint Multi Role Technology Demonstrator (JMR-TD) initiative.

The JMR-TD program is the science and technology precursor to the [removed: Department of Defense’s Future Vertical Lift] [added: FVL] program.

The V-280 achieved its first flight in December 2017 and its first cruise mode flight in May [removed: 2018, and continues to perform ongoing flight testing.][added: 2018.]

In October 2019, Bell announced a new rotorcraft, the Bell 360 Invictus, which it is developing as its entrant for the U.S. Army's Future Attack Reconnaissance Aircraft (FARA) Competitive Prototype [removed: Program.][added: Program, part of the U.S. government's Future Vertical Lift (FVL) family of programs.]

[removed: This] [added: The FARA] program was initiated by the [added: U.S.] Army to develop a successor to the retired Bell OH-58D Kiowa Warrior helicopter.

Through its commercial business, Bell is a leading supplier of commercially certified helicopters and support to corporate, [removed: offshore petroleum exploration and development, utility, charter, police, fire, rescue] [added: private, law enforcement, utility] and emergency medical helicopter operators, and [added: the U.S. and] foreign governments.

The [added: commercial] helicopters currently offered by Bell [removed: for commercial applications] include the [removed: 407GXP,] [added: 429,] 407GXi, [removed: 412EP,] [added: 412EPX,] 412EPI, [removed: 429, 429WLG,] [added: 412EP,] 505 Jet Ranger X and Huey II.

[removed: In addition, the 525 Relentless,] Bell’s first super medium commercial helicopter, [removed: continues flight test activities and] [added: the 525 Relentless,] is [removed: working on] [added: currently in the] certification [added: process] with the Federal Aviation [removed: Administration.][added: Administration (FAA).]

[removed: Textron] [added: Textron] Systems [removed: Segment][added: Segment]

Textron Systems’ [added: operating units are reported under the following] product [removed: lines consist of] [added: lines:] Unmanned Systems, Marine and Land [removed: systems,] [added: Systems] and Simulation, Training and Other.

Textron Systems is a supplier to the defense, aerospace and general aviation [removed: markets, and represents 10%, 10% and 13% of our total revenues in 2019, 2018 and 2017, respectively.][added: markets.]

Unmanned aircraft systems includes the Shadow, the U.S. Army’s premier tactical unmanned aircraft system, which has surpassed one million flight hours since its introduction, and the Aerosonde Small Unmanned Aircraft System, a multi-mission capable unmanned aircraft system that has amassed more than [removed: 400,000] [added: 500,000] flight hours in commercial and military operations around the world.

The Simulation, Training and Other product line includes [removed: products and services provided by] the following [added: operating units and] businesses: [removed: TRU Simulation + Training, Textron Airborne Solutions,] Electronic Systems, [removed: Lycoming, and] Weapons and Sensors [removed: Systems.][added: Systems, Lycoming, Airborne Tactical Advantage Company (ATAC) and TRU Simulation + Training (TRU).]

TRU [removed: Simulation + Training] designs, develops, manufactures, installs, and provides maintenance of advanced flight training devices, including full flight simulators, for [removed: both rotary- and fixed-wing aircraft for] commercial airlines, aircraft original equipment manufacturers (OEMs), flight training centers and training [removed: organizations worldwide.][added: organizations.]

[removed: Textron Airborne Solutions, which includes Airborne Tactical Advantage Company,] [added: ATAC] focuses on live military air-to-air and air-to-ship training and support services for U.S. Navy, Marine and Air Force [removed: pilots.][added: personnel.]

[removed: Industrial Segment][added: Industrial Segment]

Kautex operates over 30 plants in 14 countries in close proximity to our customers, along with [removed: 9] [added: 10] engineering/research and development locations around the world.

[removed: These businesses have a] [added: Their] diversified customer base [removed: that] includes golf courses and resorts, government agencies and municipalities, consumers, outdoor enthusiasts, and commercial and industrial users such as factories, warehouses, airlines, planned communities, hunting preserves, educational and corporate campuses, sporting venues, municipalities and landscaping professionals.

[removed: Finance Segment][added: Finance Segment]

[added: A substantial number of the originations in our finance receivable portfolio are cross-border transactions for aircraft sold outside of the U.S.] In [removed: 2019, 2018] [added: 2020] and [removed: 2017,] [added: 2019,] our Finance group paid our Manufacturing group [removed: $184 million, $177] [added: $195] million and [removed: $174] [added: $184] million, respectively, related to the sale of Textron-manufactured products to third parties that were financed by the Finance group.

[removed: See Finance segment section in] Management’s Discussion and Analysis of Financial Condition and Results of Operations [removed: on page 27] for information about the Finance segment’s credit performance.

[removed: Backlog][added: Backlog]

Total revenues by segment and customer type for 2020 are presented below.


The following description of our business and operating segments should be read in conjunction with Item 7.

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

*Product Development Programs*

[Table of](#i2d192f77008d45ab8937879d57605ae2_7) [Contents](#i2d192f77008d45ab8937879d57605ae2_7)

*Product Development Programs*

In March 2020, the U.S. Army selected the 360 Invictus to move to the second phase of the Competitive Prototype Program.

In March 2020, the U.S. Army awarded Bell a Competitive Demonstration and Risk Reduction contract for the next stage of its Future Long Range Assault Aircraft program.

[Table of](#i2d192f77008d45ab8937879d57605ae2_7) [Contents](#i2d192f77008d45ab8937879d57605ae2_7)

On January 25, 2021, we sold TRU Simulation + Training Canada Inc., which manufactured and maintained flight simulators for commercial airlines.

See Finance Segment section in Item 7.

[Table of](#i2d192f77008d45ab8937879d57605ae2_7) [Contents](#i2d192f77008d45ab8937879d57605ae2_7)

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Our operations, products and services are subject to various government regulations, including regulations related to U.S. government business, international regulation of aviation products and services, and environmental regulations.

We must comply with and are affected by laws and regulations relating to the formation, administration and performance of U.S. Government contracts.

These laws and regulations, among other things, require certification and disclosure of all cost and pricing data in connection with contract negotiation; define allowable and unallowable costs and otherwise govern our right to reimbursement under certain cost-based U.S. Government contracts; and safeguard and restrict the use and dissemination of classified and covered defense information and the exportation of certain products and technical data.

New laws, regulations or procurement requirements, or changes to current ones, can significantly increase our costs, reducing our profitability.

See Aerospace and Defense Industry section in Item 1A.

Risk Factors for additional information related to regulation of U.S. Government business herein.

Commercial aircraft products manufactured by our Textron Aviation and Bell segments are required to comply with FAA regulations in the U.S. and the regulations of other similar aviation regulatory governing authorities internationally, including, the European Aviation Safety Agency.

Maintenance facilities and aftermarket services must also comply with FAA and international regulations.

These regulations address production and quality systems, airworthiness and installation approvals, repair procedures and continuing operational safety.

For an aircraft to be manufactured and sold, the model must receive a type certificate from the appropriate aviation authority, and each aircraft must receive a certificate of airworthiness.

Aircraft outfitting and completions also require approval by the appropriate aviation authority.

See Strategic Risks section in Item 1A.

Risk Factors for additional information with respect to risks related to obtaining certification of new aircraft products.

Financial Statements and Supplementary Data, and Business and Operational Risks and Risks Related to Regulatory and Legal Matters sections in Item 1A.

Risk Factors.

However, laws and regulations may be changed or adopted that impose additional compliance requirements which could necessitate capital expenditures or otherwise increase our costs of doing business, reducing our profitability and negatively impacting our operating results.

[Table of](#i2d192f77008d45ab8937879d57605ae2_7) [Contents](#i2d192f77008d45ab8937879d57605ae2_7)

Human Capital Resources

At January 2, 2021, we employed approximately 33,000 employees worldwide, with approximately 75% located in the U.S. and the remainder located outside of the U.S. Approximately 6,800, or 28%, of our U.S. employees, most of whom work for our Bell and Textron Aviation segments, are represented by unions under collective bargaining agreements, and certain of our non-U.S. employees are represented by organized works councils.

From time to time our collective bargaining agreements expire and come up for renegotiation.

Our success is highly dependent upon our ability to maintain a workforce with the skills necessary for our businesses to succeed.

We need highly skilled personnel in multiple areas including, among others, engineering, manufacturing, information technology, cybersecurity, flight operations, business development and strategy and management.

In order to attract and retain highly skilled employees, we are committed to ensuring a safe and healthy work environment, offering comprehensive compensation and benefit programs, creating great career opportunities and building an engaging, inclusive environment where all employees are treated with dignity and respect.

*Health and Safety*

To maintain and enhance the safety of our employees, we promote a culture of continuous improvement and individual accountability to provide safe workplaces.

We have approximately 35,000 employees worldwide.

Textron Inc. was founded in 1923 and reincorporated in Delaware on July 31, 1967.

A description of the business of each of our segments is set forth below.

The following description of our business should be read in conjunction with Management’s Discussion and Analysis of Financial Condition and Results of Operations on pages 19 through 34 of this Annual Report on Form 10-K.

Information included in this Annual Report on Form 10-K refers to our continuing businesses unless otherwise indicated.

Revenues in the Textron Aviation segment accounted for 38%, 36% and 33% of our total revenues in 2019, 2018 and 2017, respectively.

We are no longer developing the previously announced Hemisphere, a large-cabin jet.

Textron Aviation also offers the AT-6 light attack military aircraft and the Scorpion, a highly affordable, multi-mission aircraft, both of which are not yet in production, pending customer orders.

Textron Aviation has several competitors domestically and internationally in various market segments.

Textron Aviation’s aircraft compete with other aircraft that vary in size, speed, range, capacity and handling characteristics on the basis of price, product quality and reliability, direct operating costs, product support and reputation.

Revenues for Bell accounted for 24%, 23% and 23% of our total revenues in 2019, 2018 and 2017, respectively.

Through its strategic

Aircraft designed through this initiative will compete to replace thousands of aging utility and attack helicopters for the U.S. Armed Forces over the next decade.

Bell competes against a number of competitors throughout the world for its helicopter business and its parts and support business.

Competition is based primarily on price, product quality and reliability, product support, performance and reputation.

Textron Systems competes on the basis of technology, contract performance, price, product quality and reliability, product support and reputation.

Unmanned Systems

Marine and Land Systems

Simulation, Training and Other

On July 2, 2018, we sold our Tools and Test Equipment businesses that were previously included in this segment as discussed in Note 2 to the Consolidated Financial Statements on page 50 of this Annual Report on Form 10-K.

Industrial segment revenues represented 28%, 31% and 30% of our total revenues in 2019, 2018 and 2017, respectively.

Fuel Systems and Functional Components

Our automotive products have several major competitors worldwide, some of which are affiliated with the OEMs that comprise our targeted customer base.

Competition typically is based on a number of factors including price, technology, environmental performance, product quality and reliability, prior experience and available manufacturing capacity.

Specialized Vehicles

We have two major competitors for both golf cars and professional turf-maintenance equipment, and several competitors for off-road utility vehicles, recreational all-terrain and light transportation vehicles, side-by-sides and snowmobiles, aviation ground support equipment, and specialized turf-care products.

Competition is based primarily on price, product quality and reliability, product features, product support and reputation.

A substantial number of the new originations in our finance receivable portfolio are cross-border transactions for aircraft sold outside of the U.S. Finance receivables originated in the U.S. are primarily for purchasers who had difficulty in accessing other sources of financing for the purchase of Textron-manufactured products.

The commercial finance business traditionally is extremely competitive.

Our Finance segment is subject to competition from various types of financing institutions, including banks, leasing companies, commercial finance companies and finance operations of equipment vendors.

Competition within the commercial finance industry primarily is focused on price, term, structure and service.

| ​ | ​ | ​ | ​ | ​ |

| --- | --- | --- | --- | --- |

| *​* | January 4, | | December 29, | |

This business is subject to competition, changes in procurement policies and regulations, the continuing availability of funding, which is dependent upon congressional appropriations, national and international priorities for defense spending, world events, and the size and timing of programs in which we may participate.

Some of these trademarks, trade names and service marks are used in this Annual Report on Form 10-K and other reports, including: A-2PATS; Able Aerospace Services; Able Preferred; Aeronautical Accessories; Aerosonde; ALPHA; Alterra; AH-1Z; Arctic Cat; AT-6; ATAC; AVCOAT; Baron; Bearcat; Beechcraft; Beechcraft T-6; Bell; Bell Helicopter; BIG DOG; BlackWorks McCauley; BLAST; Bonanza; Cadillac Gage; CAP; Caravan; Cessna; Cessna SkyCourier; Citation; Citation Latitude; Citation Longitude; Citation M2; Citation Sovereign; Citation XLS+; CJ1+; CJ2+; CJ3; CJ3+; CJ4; Clairity; CLAW; Commando; Cushman; Customer Advantage Plans; CUSV; Denali; Eclipse; El Tigre; EX1; Express Start; E-Z-GO; E-Z-GO EXPRESS; FAST-N-LATCH; Firecat; FOREVER WARRANTY; Freedom; Fury; GLOBAL MISSION SUPPORT; Grand Caravan; GRIZZLY; H-1; HAULER; Hawker; Huey; Huey II; HUNTSMAN; IE2; Integrated Command Suite; INTELLIBRAKE; Jacobsen; Jet Ranger X; Kautex; King Air; King Air C90GTx; King Air 250; King Air 350; Kiowa Warrior; LF; Lycoming; Lynx; M1117 ASV; McCauley; Mission Critical Support (MCS); MISSIONLINK; Motorfist; MudPro; Mustang; Next Generation Carbon Canister; Next Generation Fuel System; NGCC; NGFS; NightWarden; Odyssey; Pantera; Power Advantage; Premier; Pro-Fit; ProFlight; ProParts; ProPropeller; Prowler; Ransomes; REALCue; REALFeel; Relentless; RIPSAW; RT2; RXV; Safeaero; Scorpion; SEEGEO; Shadow; Shadow Knight; Shadow Master; SKYCOURIER; Skyhawk; Skyhawk SP; Skylane; SkyPLUS; Sno Pro; SnoCross; Sovereign; SNOWMEGEDDON; Speedrack; Stampede; Stationair; Super Cargomaster; Super Medium; SuperCobra; Synturian; Team Arctic; Textron; Textron Airborne Solutions; Textron Aviation; Textron Financial Corporation; Textron GSE; Textron Systems; Thundercat; TrainOnsite; TRUESET; TRU Simulation + Training; TRUCKSTER; TTx; TUG; Turbo Skylane; Turbo Stationair; TRV; TXT; UH-1Y; VALOR; Value-Driven MRO Solutions; V-22 Osprey; V-247; V-280; Wildcat; Wolverine; ZR; 2FIVE; 206; 206L4; 407; 407GXi; 412; 412EPI; 429; 429WLG; 505; 525 and 525 Relentless.

These marks and their related trademark designs and logotypes (and variations of the foregoing) are trademarks, trade names or service marks of Textron Inc., its subsidiaries, affiliates or joint ventures.

Environmental Considerations

We do not believe that existing or pending climate change legislation, regulation, or international treaties or accords are reasonably likely to have a material effect in the foreseeable future on our business or markets nor on our results of operations, capital expenditures or financial position.

We will continue to monitor emerging developments in this area.

[removed: On] [added: 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.

On November 12, 2019, the Court appointed IWA Forest Industry Pension Fund [removed: ("IWA")] [added: (IWA)] as the sole lead plaintiff in the case.

On December 24, 2019, IWA filed an Amended Complaint in the now entitled [removed: _In] [added: *In] re Textron Inc. Securities [removed: Litigation_.][added: Litigation*.]

Bash, Chapter 7 Trustee for Fair Finance Company against [removed: TFC,] [added: Textron Financial Corporation (TFC),] Fortress Credit Corp. and Fair Facility I, LLC.

The Trustee [removed: sought] [added: seeks] avoidance and recovery of alleged fraudulent transfers in the amount of $316 million as well as damages of $223 million on the other claims.

On September 27, 2018, after reconsidering the remanded claims which were based upon civil conspiracy and intentional fraudulent transfer, the trial court granted partial summary judgment in favor of [removed: Textron,] [added: TFC,] dismissing the Trustee’s civil conspiracy claim, as well as a portion of the Trustee’s claim for intentional fraudulent transfer, leaving only a portion of the intentional fraudulent transfer claim to be adjudicated.

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 has opposed.

That appeal remains pending.

A trial for this matter was held in February 2020, and on March 10, 2020, the jury returned a verdict in favor of TFC and against the Trustee.

On the same day, the Court entered judgment in TFC's favor.

On March 23, 2020, the Trustee filed a notice of appeal, which Textron has opposed.

That appeal remains pending.

Textron intends to vigorously defend this lawsuit.

The Trustee also sought trebled damages on all claims under Ohio law.

The trial for this matter began on February 24, 2020.

We intend to continue to vigorously defend this lawsuit.

[removed: Form 10-K][added: Form 10-K]

| ☒ | [added: | |] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | [added: | |]

For the fiscal year [removed: ended January 4, 2020][added: ended January 2, 2021]

| ☐ | [added: | |] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | [added: | |]

For the transition period [removed: from to .][added: from to .]

Commission File [removed: Number 1-5480][added: Number 1-5480]

| [removed: ​ |] Delaware | [removed: ​] | [added: | | | |] 05-0315468 | [removed: ​] | [added: |]

| [removed: ​ |] (State or other jurisdiction of incorporation or organization) | [removed: ​] | [added: | | | |] (I.R.S. Employer Identification No.) | [removed: ​] | [added: |]

| [removed: ​ |] 40 Westminster [removed: Street, Providence, RI] [added: Street, Providence, RI] | [removed: ​] | [added: | | | |] 02903 | [removed: ​] | [added: |]

| [removed: ​ |] (Address of principal executive offices) | [removed: ​] | [added: | | | |] (Zip code) | [removed: ​] | [added: |]

Registrant’s Telephone Number, Including Area Code: [removed: (401) 421-2800][added: (401) 421-2800]

| [removed: ​ |] Title of Each Class | [added: | |] Trading Symbol(s) | [added: | |] Name of Each Exchange on Which Registered | [removed: ​] | [added: |]

| [removed: ​ |] Common Stock — par value $0.125 | [added: | |] TXT | [added: | |] New York Stock Exchange | [removed: ​] | [added: |]

[removed: ⌧Yes ◻] [added: ¨ Yes x] No

[removed: ◻] [added: x] Yes [removed: ⌧] [added: ¨] No

[removed: ⌧] [added: x] Yes [removed: ◻ No][added: ¨No]

| Large accelerated filer [removed: ⌧] | [added: | | x | | | | | | | | |] Accelerated filer [removed: ◻] | [added: | | ☐ | | |]

| Non-accelerated filer [removed: ◻] | [added: | | ☐ | | |] Smaller reporting company [added: | | |] ☐ | [added: | | Emerging growth company | | | ☐ | | |]

[removed: ☐] [added: ☒] Yes [removed: ⌧ No][added: ¨No]

The aggregate market value of the registrant’s Common Stock held by non-affiliates at [removed: June 29, 2019] [added: July 4, 2020] was approximately [removed: $12.2] [added: $7.4] billion based on the New York Stock Exchange closing price for such shares on that date.

At February [removed: 8, 2020, 228,049,518] [added: 6, 2021, 226,284,488] shares of Common Stock were outstanding.

[added: |] Documents Incorporated by Reference [added: | | |]

Part III of this Report incorporates information from certain portions of the registrant’s Definitive Proxy Statement for its Annual Meeting of Shareholders to be held on April [removed: 29, 2020.][added: 28, 2021.]

For the Fiscal Year Ended January [removed: 4, 2020][added: 2, 2021]

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| [Item [removed: 1A.](#Item1ARiskFactors_649083)] [added: 1A.](#i2d192f77008d45ab8937879d57605ae2_16)] | [added: | |] [Risk [removed: Factors](#Item1ARiskFactors_649083)] [added: Factors](#i2d192f77008d45ab8937879d57605ae2_16)] | [removed: ​] | [removed: 9] | [added: [9](#i2d192f77008d45ab8937879d57605ae2_16) | | |]

| [Item [removed: 1B.](#Item1BUnresolvedStaffComments_295452)] [added: 1B.](#i2d192f77008d45ab8937879d57605ae2_19)] | [added: | |] [Unresolved Staff [removed: Comments](#Item1BUnresolvedStaffComments_295452)] [added: Comments](#i2d192f77008d45ab8937879d57605ae2_19)] | [removed: ​] | [removed: 15] | [added: [16](#i2d192f77008d45ab8937879d57605ae2_19) | | |]

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| [Item [removed: 3.](#Item3LegalProceedings_612417)] [added: 3.](#i2d192f77008d45ab8937879d57605ae2_25)] | [added: | |] [Legal [removed: Proceedings](#Item3LegalProceedings_612417)] [added: Proceedings](#i2d192f77008d45ab8937879d57605ae2_25)] | [removed: ​] | [removed: 16] | [added: [17](#i2d192f77008d45ab8937879d57605ae2_25) | | |]

| [Item [removed: 4.](#Item4MineSafetyDisclosures_224985)] [added: 4.](#i2d192f77008d45ab8937879d57605ae2_28)] | [added: | |] [Mine Safety [removed: Disclosures](#Item4MineSafetyDisclosures_224985)] [added: Disclosures](#i2d192f77008d45ab8937879d57605ae2_28)] | [removed: ​] | [removed: 16] | [added: [17](#i2d192f77008d45ab8937879d57605ae2_28) | | |]

| [Item [removed: 5.](#Item5MarketforRegistrantsCommonEquityRel)] [added: 5.](#i2d192f77008d45ab8937879d57605ae2_34)] | [added: | |] [Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity [removed: Securities](#Item5MarketforRegistrantsCommonEquityRel)] [added: Securities](#i2d192f77008d45ab8937879d57605ae2_34)] | [removed: ​] | [removed: 17] | [added: [18](#i2d192f77008d45ab8937879d57605ae2_34) | | |]

| [Item [removed: 6.](#Item6SelectedFinancialData_592994)] [added: 6.](#i2d192f77008d45ab8937879d57605ae2_37)] | [added: | |] [Selected Financial [removed: Data](#Item6SelectedFinancialData_592994)] [added: Data](#i2d192f77008d45ab8937879d57605ae2_37)] | [removed: ​] | [removed: 18] | [added: [19](#i2d192f77008d45ab8937879d57605ae2_37) | | |]

| [Item [removed: 7.](#Item7ManagementsDiscussionandAnalysisofF)] [added: 7.](#i2d192f77008d45ab8937879d57605ae2_40)] | [added: | |] [Management’s Discussion and Analysis of Financial Condition and Results of [removed: Operations](#Item7ManagementsDiscussionandAnalysisofF)] [added: Operations](#i2d192f77008d45ab8937879d57605ae2_40)] | [removed: ​] | [removed: 19] | [added: [20](#i2d192f77008d45ab8937879d57605ae2_40) | | |]

| [Item [removed: 7A.](#Item7AQuantitativeandQualitativeDisclosu)] [added: 7A.](#i2d192f77008d45ab8937879d57605ae2_76)] | [added: | |] [Quantitative and Qualitative Disclosures About Market [removed: Risk](#Item7AQuantitativeandQualitativeDisclosu)] [added: Risk](#i2d192f77008d45ab8937879d57605ae2_76)] | [removed: ​] | [removed: 35] | [added: [32](#i2d192f77008d45ab8937879d57605ae2_76) | | |]

| [Item [removed: 8.](#Item8FinancialStatementsandSupplementary)] [added: 8.](#i2d192f77008d45ab8937879d57605ae2_79)] | [added: | |] [Financial Statements and Supplementary [removed: Data](#Item8FinancialStatementsandSupplementary)] [added: Data](#i2d192f77008d45ab8937879d57605ae2_79)] | [removed: ​] | [removed: 36] | [added: [34](#i2d192f77008d45ab8937879d57605ae2_79) | | |]

| [Item [removed: 9.](#Item9ChangesInandDisagreementsWithAccoun)] [added: 9.](#i2d192f77008d45ab8937879d57605ae2_196)] | [added: | |] [Changes In and Disagreements With Accountants on Accounting and Financial [removed: Disclosure](#Item9ChangesInandDisagreementsWithAccoun)] [added: Disclosure](#i2d192f77008d45ab8937879d57605ae2_196)] | [removed: ​] | [removed: 77] | [added: [73](#i2d192f77008d45ab8937879d57605ae2_196) | | |]

| [Item [removed: 9A.](#Item9AControlsandProcedures_95948)] [added: 9A.](#i2d192f77008d45ab8937879d57605ae2_199)] | [added: | |] [Controls and [removed: Procedures](#Item9AControlsandProcedures_95948)] [added: Procedures](#i2d192f77008d45ab8937879d57605ae2_199)] | [removed: ​] | [removed: 77] | [added: [73](#i2d192f77008d45ab8937879d57605ae2_199) | | |]

| [Item [removed: 10.](#Item10DirectorsExecutiveOfficersandCorpo)] [added: 10.](#i2d192f77008d45ab8937879d57605ae2_208)] | [added: | |] [Directors, Executive Officers and Corporate [removed: Governance](#Item10DirectorsExecutiveOfficersandCorpo)] [added: Governance](#i2d192f77008d45ab8937879d57605ae2_208)] | [removed: ​] | [removed: 79] | [added: [75](#i2d192f77008d45ab8937879d57605ae2_208) | | |]

| [Item [removed: 11.](#Item11ExecutiveCompensation_417717)] [added: 11.](#i2d192f77008d45ab8937879d57605ae2_211)] | [added: | |] [Executive [removed: Compensation](#Item11ExecutiveCompensation_417717)] [added: Compensation](#i2d192f77008d45ab8937879d57605ae2_211)] | [removed: ​] | [removed: 79] | [added: [75](#i2d192f77008d45ab8937879d57605ae2_211) | | |]

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______________________________________________

xYes ¨ No

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Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report.

☐ Yes ☒ No

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[Table of](#i2d192f77008d45ab8937879d57605ae2_7) [Contents](#i2d192f77008d45ab8937879d57605ae2_7)

Textron Inc.

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| [PART I](#i2d192f77008d45ab8937879d57605ae2_10) | | | | | | | | |

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| [PART II](#i2d192f77008d45ab8937879d57605ae2_31) | | | | | | | | |

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| [PART III](#i2d192f77008d45ab8937879d57605ae2_205) | | | | | | | | |

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​

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Textron Inc.

| ​ | ​ | ​ | ​ | ​ |

| --- | --- | --- | --- | --- |

| ​ ​ ​ ​ ​ | ​ | ​ | ​ | ​ |

| | |

| | Emerging growth company ☐ |

| --- | --- | --- | --- |

| [PART I](#PARTI_405086) | ​ | ​ | |

| ​ | ​ | ​ | ​ |

| [PART II](#PARTII_317043) | ​ | ​ | ​ |

| [PART III](#PARTIII_691567) | ​ | ​ | ​ |

| [PART IV](#PARTIV_275061) | ​ | ​ | ​ |

| [Signatures](#Signatures_551295) | ​ | ​ | 84 |

[Table of](#i2d192f77008d45ab8937879d57605ae2_7) [Contents](#i2d192f77008d45ab8937879d57605ae2_7)

On January [removed: 4, 2020,] [added: 2, 2021,] we operated a total of 54 plants located throughout the U.S. and 49 plants outside the U.S. We own [removed: 55] [added: 59] plants and lease the remainder for a total manufacturing space of approximately [removed: 23.7] [added: 23.9] million square feet.

[removed: PART II][added: PART II]

[Table of](#i2d192f77008d45ab8937879d57605ae2_7) [Contents](#i2d192f77008d45ab8937879d57605ae2_7)

The principal market on which our common stock is traded is the New York Stock Exchange under the symbol [removed: “TXT.”] [added: "TXT."] At January [removed: 4, 2020,] [added: 2, 2021,] there were approximately [removed: 7,900] [added: 7,600] record holders of Textron common stock.

[removed: Issuer] [added: Issuer] Repurchases of Equity [removed: Securities][added: Securities]

The following provides information about our fourth quarter [removed: 2019] [added: 2020] repurchases of equity securities that are registered pursuant to Section 12 of the Securities Exchange Act of 1934, as amended:

[removed: _*_ _These] [added: These] shares were purchased pursuant to a plan authorizing the repurchase of up to [removed: 40] [added: 25] million shares of Textron common stock that was announced on [removed: April 16, 2018,] [added: February 25,2020,] which had no expiration [removed: date._][added: date.*]

[removed: Stock] [added: Stock] Performance [removed: Graph][added: Graph]

The following graph compares the total return on a cumulative basis at the end of each year of $100 invested in our common stock on December 31, [removed: 2014] [added: 2015] with the Standard & Poor’s (S&P) 500 Stock Index, the S&P 500 Aerospace & Defense (A&D) Index and the S&P 500 Industrials Index, all of which include Textron.

[removed: ][added: ]

| [removed: ​] | [removed: 2014] | | 2015 | | [added: |] 2016 | | [added: |] 2017 | | [added: |] 2018 | | [added: |] 2019 | | [added: | 2020 | | |]

| | | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| 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 | | |

| October 4, 2020 – November 7, 2020 | | | 75 | | | $ | 38.60 | | 75 | | | 24,050 | | |

| November 8, 2020 – December 5, 2020 | | | 1,205 | | | 43.56 | | | 1,205 | | | 22,845 | | |

| December 6, 2020 – January 2, 2021 | | | 1,555 | | | 47.49 | | | 1,555 | | | 21,290 | | |

| Total | | | 2,835 | | | $ | 45.58 | | 2,835 | | | | | |

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| Textron Inc. | | | $ | 100.00 | | $ | 115.82 | | $ | 135.19 | | $ | 109.20 | | $ | 107.20 | | $ | 116.07 | |

| S&P 500 | | | 100.00 | | | 111.96 | | | 136.40 | | | 129.31 | | | 171.74 | | | 203.04 | | |

| S&P 500 A&D | | | 100.00 | | | 118.90 | | | 168.11 | | | 152.51 | | | 209.19 | | | 169.05 | | |

| S&P 500 Industrials | | | 100.00 | | | 110.12 | | | 134.97 | | | 129.69 | | | 173.16 | | | 212.71 | | |

[Table of](#i2d192f77008d45ab8937879d57605ae2_7) [Contents](#i2d192f77008d45ab8937879d57605ae2_7)

| ​ | ​ | ​ | ​ | ​ | ​ |

| --- | --- | --- | --- | --- | --- |

| ​ | ​ | ​ | ​ | ​ | Maximum |

| ​ | Total | Average Price | | Total Number of | Number of Shares |

| ​ | Number of | Paid per Share | | Shares Purchased as | that may yet be |

| ​ | Shares | (excluding | | part of Publicly | Purchased under |

| Period _(shares in thousands)_ | Purchased * | commissions) | | Announced Plan * | the Plan |

| September 29, 2019 – November 2, 2019 | 275 | $ | 46.75 | 275 | 7,615 |

| November 3, 2019 – November 30, 2019 | — | | — | — | 7,615 |

| December 1, 2019 – January 4, 2020 | 434 | | 44.13 | 434 | 7,181 |

| Total | 709 | $ | 45.14 | 709 | |

On February 25, 2020, 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 2018 that had 6.7 million remaining shares available for repurchase.

| ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| Textron Inc. | $ | 100.00 | $ | 99.81 | $ | 115.60 | $ | 134.93 | $ | 108.99 | $ | 106.99 |

| S&P 500 | | 100.00 | | 101.40 | | 113.53 | | 138.32 | | 131.12 | | 174.15 |

| S&P 500 A&D | | 100.00 | | 105.33 | | 125.25 | | 177.07 | | 160.65 | | 220.35 |

| S&P 500 Industrials | | 100.00 | | 102.95 | | 113.37 | | 138.95 | | 133.52 | | 178.27 |

| [removed: (_Dollars] [added: (*Dollars] in millions, except per share [removed: amounts_)] [added: amounts*)] | [added: | | 2020 | | |] 2019 | | | 2018 | | | 2017 | | | 2016 | | | [removed: 2015 | | |]

| Revenues (a) | [removed: ​] | | | [removed: ​] | | | [removed: ​] | | | [removed: ​] | | | [removed: ​] | | | [added: | |]

| Textron Aviation | [added: | |] $ | [removed: 5,187] [added: 3,974] | | $ | [removed: 4,971] [added: 5,187] | | $ | [removed: 4,686] [added: 4,971] | | $ | [removed: 4,921] [added: 4,686] | | $ | [removed: 4,822] [added: 4,921] | |

| Bell | | [added: | 3,309 | | |] 3,254 | | | 3,180 | | | 3,317 | | | 3,239 | | | [removed: 3,454 | |]

| Textron Systems | | [added: | 1,313 | | |] 1,325 | | | 1,464 | | | 1,840 | | | 1,756 | | | [removed: 1,520 | |]

| Industrial | | [added: | 3,000 | | |] 3,798 | | | 4,291 | | | 4,286 | | | 3,794 | | | [removed: 3,544 | |]

| Finance | | [added: | 55 | | |] 66 | | | 66 | | | 69 | | | 78 | | | [removed: 83 | |]

| Total revenues | [added: | |] $ | [removed: 13,630] [added: 11,651] | | $ | [removed: 13,972] [added: 13,630] | | $ | [removed: 14,198] [added: 13,972] | | $ | [removed: 13,788] [added: 14,198] | | $ | [removed: 13,423] [added: 13,788] | |

| Segment profit | | | | | | | | | | | | | | | | [added: | |]

| Textron Aviation | [added: | |] $ | [removed: 449] [added: 16] | | $ | [removed: 445] [added: 449] | | $ | [removed: 303] [added: 445] | | $ | [removed: 389] [added: 303] | | $ | [removed: 400] [added: 389] | |

| Bell | | [added: | 462 | | |] 435 | | | 425 | | | 415 | | | 386 | | | [removed: 400 | |]

| Textron Systems | | [added: | 152 | | |] 141 | | | 156 | | | 139 | | | 186 | | | [removed: 129 | |]

| Industrial | | [added: | 111 | | |] 217 | | | 218 | | | 290 | | | 329 | | | [removed: 302 | |]

| Finance | | [added: | 10 | | |] 28 | | | 23 | | | 22 | | | 19 | | | [removed: 24 | |]

| Total segment profit | | [added: | 751 | | |] 1,270 | | | 1,267 | | | 1,169 | | | 1,309 | | | [removed: 1,255 | |]

| Corporate expenses and other, net | | [added: | (122) | | |] (110) | | | (119) | | | (132) | | | (172) | | | [removed: (154) | |]

| Interest expense, net for Manufacturing group | | [added: | (145) | | |] (146) | | | (135) | | | (145) | | | (138) | | | [removed: (130) | |]

| Special charges (b) | | [added: | (147) | | |] (72) | | | (73) | | | (130) | | | (123) | | | [removed: — | |]

| Gain on business disposition [removed: (c)] [added: (d)] | | [added: |] — | | | [removed: 444] [added: —] | | | [removed: —] [added: 444] | | | — | | | — | | [added: |]

| Income tax [removed: expense (d)] [added: (expense) benefit (e)] | | [added: | 27 | | |] (127) | | | (162) | | | (456) | | | (33) | | | [removed: (273) | |]

| Income from continuing operations | [added: | |] $ | [removed: 815] [added: 309] | | $ | [removed: 1,222] [added: 815] | | $ | [removed: 306] [added: 1,222] | | $ | [removed: 843] [added: 306] | | $ | [removed: 698] [added: 843] | |

| Earnings per share | | | | | | | | | | | | | | | | [added: | |]

| Basic earnings per share — continuing operations | [added: | |] $ | [removed: 3.52] [added: 1.35] | | $ | [removed: 4.88] [added: 3.52] | | $ | [removed: 1.15] [added: 4.88] | | $ | [removed: 3.11] [added: 1.15] | | $ | [removed: 2.52] [added: 3.11] | |

| Diluted earnings per share — continuing operations | [added: | |] $ | [removed: 3.50] [added: 1.35] | | $ | [removed: 4.83] [added: 3.50] | | $ | [removed: 1.14] [added: 4.83] | | $ | [removed: 3.09] [added: 1.14] | | $ | [removed: 2.50] [added: 3.09] | |

| Basic average shares outstanding [removed: (_in thousands)_] [added: (in thousands)] | | [added: | 228,536 | | |] 231,315 | | | 250,196 | | | 266,380 | | | 270,774 | | | [removed: 276,682 | |]

| Diluted average shares outstanding [removed: (_in thousands)_] [added: (in thousands)] | | [added: | 228,979 | | |] 232,709 | | | 253,237 | | | 268,750 | | | 272,365 | | | [removed: 278,727 | |]

| Common stock information | | | | | | | | | | | | | | | | [added: | |]

| Dividends declared per share | [added: | |] $ | 0.08 | | $ | 0.08 | | $ | 0.08 | | $ | 0.08 | | $ | 0.08 | |

| Book value at year-end | [added: | |] $ | [removed: 24.21] [added: 25.81] | | $ | [removed: 22.04] [added: 24.21] | | $ | [removed: 21.60] [added: 22.04] | | $ | [removed: 20.62] [added: 21.60] | | $ | [removed: 18.10] [added: 20.62] | |

| Price at year-end | [added: | |] $ | [removed: 44.74] [added: 48.33] | | $ | [removed: 45.65] [added: 44.74] | | $ | [removed: 56.59] [added: 45.65] | | $ | [removed: 48.56] [added: 56.59] | | $ | [removed: 42.01] [added: 48.56] | |

| Financial position | | | | | | | | | | | | | | | | [added: | |]

| Total assets | [added: | |] $ | [removed: 15,018] [added: 15,443] | | $ | [removed: 14,264] [added: 15,018] | | $ | [removed: 15,340] [added: 14,264] | | $ | [removed: 15,358] [added: 15,340] | | $ | [removed: 14,708] [added: 15,358] | |

| Manufacturing group debt | [added: | |] $ | [removed: 3,124] [added: 3,707] | | $ | [removed: 3,066] [added: 3,124] | | $ | [removed: 3,088] [added: 3,066] | | $ | [removed: 2,777] [added: 3,088] | | $ | [removed: 2,697] [added: 2,777] | |

| Finance group debt | [added: | |] $ | [removed: 686] [added: 662] | | $ | [removed: 718] [added: 686] | | $ | [removed: 824] [added: 718] | | $ | [removed: 903] [added: 824] | | $ | [removed: 913] [added: 903] | |

| Shareholders’ equity | [added: | |] $ | [removed: 5,518] [added: 5,845] | | $ | [removed: 5,192] [added: 5,518] | | $ | [removed: 5,647] [added: 5,192] | | $ | [removed: 5,574] [added: 5,647] | | $ | [removed: 4,964] [added: 5,574] | |

| Manufacturing group debt-to-capital (net of cash) | | [removed: 26] | [removed: %] [added: 21%] | | [removed: 29] | [removed: %] [added: 26%] | | [removed: 26] | [removed: %] [added: 29%] | | [removed: 23] | [removed: %] [added: 26%] | | [removed: 26] | [removed: %] [added: 23%] | [added: | |]

| Manufacturing group debt-to-capital | | [removed: 36] | [removed: %] [added: 39%] | | [removed: 37] | [removed: %] [added: 36%] | | [removed: 35] | [removed: %] [added: 37%] | | [removed: 33] | [removed: %] [added: 35%] | | [removed: 35] | [removed: %] [added: 33%] | [added: | |]

| Investment data | | | | | | | | [removed: ​] | | | | | | | | [added: | |]