Textron (TXT) 10-K risk factor changes: FY2021 vs FY2020

Our businesses have experienced and continue to experience various degrees of disruption [removed: 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 [added: customers, suppliers or business partners, as well as other disruptions in our supply chains or our customers’ supply chains, particularly in the supply chains serving our recreational vehicle products and in our automotive OEM supply chains, disruptions in which have caused and may continue to cause reduced demand for our automotive products.]

We have experienced and may continue to experience [added: lower revenues and/or] increased costs as a result of these business and production disruptions.

Economic and other impacts from the pandemic [removed: may also] [added: initially resulted in, and could again] result [removed: in future weak] [added: in, reduced] 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 [removed: flown.][added: flown, resulting in a reduction in revenues and/or increased costs.]

The extent to which the pandemic could [added: continue to] 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 [removed: severity] [added: emergence] of [added: variants of] the [removed: disease,] [added: virus that cause severe illness and/or are resistant to] the [added: developed vaccines, the] development of [removed: treatments or] [added: and access to effective treatments, the acceptance of, and access to, effective] 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.

During [removed: 2020,] [added: 2021,] we derived approximately [removed: 30%] [added: 26%] 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 [added: even though a program may continue for several years.]

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

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

The U.S. Government increasingly relies upon competitive contract award types, including indefinite-delivery, [removed: indefinite-quantity] [added: indefinite-quantity, other transaction agreements] and multi-award contracts, which have the potential to create [removed: greater competition and] increased pricing pressure, as well as to increase our cost by requiring that we submit multiple [removed: bids.][added: bids or share in costs.]

In addition, multi-award contracts increase our cost as they require that we make sustained efforts to [removed: obtain] [added: compete for] task orders and delivery orders under the contract.

Further, the competitive bidding process is costly and demands [added: employee and] managerial time to prepare bids and proposals for contracts that may not be awarded to us or may be split among competitors.

Due to the nature of our work under government contracts, we sometimes experience unforeseen technological [added: or schedule] difficulties and cost overruns.

[removed: Under each type of contract, if we] are [removed: unable to control costs or if our initial cost estimates are] incorrect, our cash flows, results of operations and financial condition could be adversely affected.

Furthermore, because of the lengthy research and development cycle involved in bringing certain of our products to market, we cannot predict the economic conditions that will exist when any new product is [removed: complete.][added: complete, and the market for our product offerings does not always develop or continue to expand as we anticipate.]

In addition, our investments in equipment or technology that we believe will enable us to obtain future [removed: service] contracts for our U.S. Government or other customers may not result in contracts or revenues sufficient to offset such investment.

[removed: Furthermore, we] [added: We] cannot be sure that our competitors will not develop competing technologies which gain superior market acceptance compared to our products.

A significant failure in our new product development [removed: efforts] [added: efforts, a substantial change to schedule, a material change in an anticipated market] or the failure of our products or services to achieve [removed: market] [added: customer] acceptance relative to our competitors’ products or [removed: services] [added: services,] could have an adverse effect on our financial condition and results of operations.

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

[removed: In addition, as] [added: As] a U.S. defense contractor, we face [removed: certain] [added: persistent] security threats, including threats to our IT infrastructure and unlawful attempts to gain access to our information via phishing / malware campaigns and other cyberattack methods, as well as threats to the physical security of our facilities and employees, as do our customers, suppliers, subcontractors and joint venture partners.

Due to the evolving nature of security threats, the possibility of future material incidents cannot be completely mitigated, and we may not always be successful in [added: timely] detecting, reporting or responding to cyber incidents.

[added: 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.

During [removed: 2020,] [added: 2021,] we derived approximately [removed: 32%] [added: 31%] of our revenues from international business, including U.S. exports.

[removed: 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 (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 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.

As a [removed: result,] [added: result of the pandemic,] our Finance segment [removed: has] modified a significant number of the loans in its portfolio in order to provide temporary payment relief to its [added: customers and has provided extended payment relief to certain] customers.

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

For example, both U.S. and foreign governments and government agencies regulate the aviation industry, and they have previously and may in the future impose new regulations for additional aircraft security or other requirements or [removed: restrictions, including, for example, restrictions and/or fees related to carbon emissions levels.][added: restrictions.]

Increased regulation [added: and stakeholder expectations] related to global climate change could negatively affect our [removed: business.][added: operating results.]

Our success is highly dependent on our ability to [removed: maintain] [added: hire and retain] a qualified workforce.

Our success is highly dependent upon our ability to [removed: maintain] [added: hire and retain] a workforce with the skills necessary for our businesses to [removed: succeed.][added: develop and manufacture the products desired by our customers.]

[removed: From] [added: In addition, from] time to time we face challenges that may impact employee [removed: retention] [added: retention,] such as workforce reductions and facility consolidations and [removed: closures.][added: closures, and some of our most experienced employees are retirement-eligible which may adversely impact retention.]

Approximately [removed: 6,800,] [added: 7,000,] or [removed: 28%,] [added: 27%,] of our U.S. employees are unionized, and many of our non-U.S. employees are represented by organized councils.

Even if we are successful in obtaining an award, we may encounter bid protests from unsuccessful bidders on new program awards.

Bid protests could result in significant expenses associated with justifying the selection or due to potential program delays, and could result in contract modifications that alter schedule or scope or even cause the loss of the contract award.

Even when a bid protest does not result in the loss of a contract award, the resolution could postpone commencement of contract activity, resulting in additional cost and delay in the recognition of revenue and profit.

Under each type of contract, if we are unable to control costs or if our initial cost estimates

The market for U.S. Government defense business is highly competitive which may affect our ability to win new contracts for major government programs and result in reduced future revenues.

Our defense businesses operate in highly competitive markets in which they participate in rigorous, increasingly competitive bidding processes against other defense companies for U.S. government business.

The competitive bidding process is costly and, in some instances, may require significant research and development and/or engineering efforts to participate.

Despite our best efforts, the U.S. Government customer may choose competitive offerings over our offerings.

The competition from other government contractors, combined with the increasingly competitive nature of the government contract bidding and award process, results in an intensely competitive market environment in which there can be no assurance that our businesses will be selected for government programs with significant long-term revenues.

If we are unable to continue to compete successfully against our current or future competitors or do not win government programs with significant long-term revenues, we may experience declines in future revenues, which could have a material adverse effect on our financial position, results of operations and or cash flows.

For example, certain of our businesses have been, and may continue to be, adversely impacted by suppliers which were unable to perform as anticipated due to impacts of the pandemic.

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 (Brexit); restrictions on

While a majority of these modified loans have returned to paying status, our ultimate recovery on these assets could be delayed or impacted.

Increased worldwide public awareness and concern regarding global climate change has resulted and is likely to continue to result in more legislative and regulatory efforts to address the negative impacts of climate change.

Such laws and regulations may include more restrictive or expansive standards, such as stricter limits on greenhouse gas emissions by our facilities or our products that produce carbon emissions, more prescriptive reporting of environmental, social and governance metrics and/or other compliance requirements.

Because the impact of any future climate change-related legislative, regulatory, or product standard requirements on our global businesses and products is dependent on the timing and design of mandates or standards, we are unable to predict their potential impact at this time.

Moreover, our investors, customers, employees and other stakeholders increasingly expect us to reduce the greenhouse gas emissions generated by our operations and our products and publicly report our plans and progress on these efforts.

Laws and regulations addressing climate change, and our efforts to meet the expectations of our stakeholders, could lead to the necessity of additional investment in product development, changes to our manufacturing processes, sourcing from new suppliers, changes to our facilities and/or equipment and greater internal resources, all of which could increase our costs and negatively impact our business, results of operations, financial condition and competitive position.

Because many of our businesses experience cyclical demand, they face challenges in maintaining their workforce at levels appropriate to market demand which in the past has necessitated workforce reductions at some of our businesses as demand decreased.

Conversely, our businesses sometimes need to increase the size of their workforce in order to keep pace with production needs due to increased customer demand.

Furthermore, for our defense businesses the uncertainty of being awarded follow-on contracts and the related timing can also present difficulties in matching workforce size with contract needs.

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

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.

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.

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.

even though a program may continue for several years.

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

The market for our product offerings does not always develop or continue to expand as we anticipate.

From time to time, we update and/or replace IT systems used by our businesses.

The implementation of new systems can present temporary disruptions of business activities as existing processes are transitioned to the new systems, resulting in productivity issues, including delays in production, shipments or other business operations.

We also outsource certain support functions, including certain global IT infrastructure services, to third-party service providers, and any disruption of such outsourced processes or functions could have a material adverse effect on our operations.

In particular, in the aircraft

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.

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

These modifications will delay our ultimate recovery on these assets.

Should current economic conditions persist or worsen, our

Changes in environmental and climate change laws and regulations, including laws relating to greenhouse gas emissions, could lead to the necessity for new or additional investment in product designs or manufacturing processes and could increase environmental compliance expenditures, including costs to defend regulatory reviews.

Increased public awareness and concern regarding global climate change may result in more international, regional and/or federal requirements to reduce or mitigate global warming and these regulations could mandate stricter limits on greenhouse gas emissions.

If environmental or climate change laws or regulations are either changed or adopted and impose significant operational restrictions and compliance requirements upon our business or our products, they could negatively impact our business, capital expenditures, results of operations, financial condition and competitive position.

In addition, some of our most experienced employees are retirement-eligible.

Key financial highlights for [removed: 2020] [added: 2021] include:

- Generated [removed: $833 million] [added: $1.5 billion] of net cash from operating activities from our manufacturing businesses.

- Invested [removed: $317 million in capital expenditures and $549] [added: $619] million in research and development [removed: projects.][added: projects and $375 million in capital expenditures.]

A discussion of our financial condition and operating results for [removed: 2020] [added: 2021] compared with [removed: 2019] [added: 2020] is provided below, while a discussion of [removed: 2019] [added: 2020] compared with [removed: 2018] [added: 2019] 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 [removed: 4, 2020.][added: 2, 2021.]

| *(Dollars in millions)* | | | [removed: 2020] [added: 2021] | | | [removed: 2019] [added: 2020] | | | [removed: 2018] [added: 2019] | | | [removed: 2020] [added: 2021] | | | [removed: 2019] [added: 2020] | | |

| Revenues | | | $ | [removed: 11,651] [added: 12,382] | | $ | [removed: 13,630] [added: 11,651] | | $ | [removed: 13,972] [added: 13,630] | | [removed: (15)%] [added: 6%] | | | [removed: (2)%] [added: (15)%] | | |

| Cost of sales | | | [removed: 10,094] [added: 10,297] | | | [removed: 11,406] [added: 10,094] | | | [removed: 11,594] [added: 11,406] | | | [removed: (12)%] [added: 2%] | | | [removed: (2)%] [added: (12)%] | | |

| Gross margin as a percentage of Manufacturing revenues | | | [removed: 13.0%] [added: 16.5%] | | | [removed: 15.9%] [added: 13.0%] | | | [removed: 16.6%] [added: 15.9%] | | | | | | | | |

| Selling and administrative expense | | | [removed: 1,045] [added: 1,221] | | | [removed: 1,152] [added: 1,045] | | | [removed: 1,275] [added: 1,152] | | | [removed: (9)%] [added: 17%] | | | [removed: (10)%] [added: (9)%] | | |

| Interest expense | | | [removed: 166] [added: 142] | | | [removed: 171] [added: 166] | | | [removed: 166] [added: 171] | | | [removed: (3)%] [added: (14)%] | | | [removed: 3%] [added: (3)%] | | |

[removed: - Bell] [added: Bell’s] revenues [removed: were higher by] [added: increased] $55 million, [added: 2%, in 2021, compared with 2020, reflecting higher commercial revenues of $195 million, primarily] due to higher [added: volume, partially offset by lower] military revenues of [removed: $225] [added: $140] million, [removed: largely] reflecting [added: lower] spares and [removed: logistics support, partially offset by lower commercial revenues.][added: support volume and the winddown of the H-1 production program.]

[removed: The decrease in cost of sales was] [added: These increases were] partially offset by [added: the impact of costs incurred in 2020, including] idle facility costs of $142 million, primarily at the Textron Aviation segment, [removed: reflecting unfavorable absorption of manufacturing costs attributable to abnormally low production levels resulting from the pandemic] and [removed: temporary manufacturing facility closures, and] a $55 million inventory charge related to the TRU [added: Canada] business discussed in Note [removed: 17] [added: 16] to the Consolidated Financial Statements in Item 8.

Gross margin as a percentage of Manufacturing revenues [removed: decreased 290] [added: increased 350] basis points in [removed: 2020,] [added: 2021,] compared with [removed: 2019,] [added: 2020,] primarily due to [removed: lower] [added: higher] margin at the Textron Aviation segment reflecting [removed: unfavorable impacts from] the [removed: pandemic, including the idle facility costs and inventory valuation charges.][added: impact of higher product sales.]

Special charges of [removed: $147] [added: $25] million and [removed: $72] [added: $147] million in [removed: 2020] [added: 2021] and [removed: 2019,] [added: 2020,] respectively, primarily include restructuring activities and [added: 2020] intangible asset impairment charges as described in Note [removed: 17] [added: 16] to the Consolidated Financial Statements in Item 8.

| | | | [removed: 2020] [added: 2021] | | | [removed: 2019] [added: 2020] | | | [removed: 2018] [added: 2019] | | |

| Effective tax rate | | | [removed: (9.6%)] [added: 14.4%] | | | [removed: 13.5%] [added: (9.6%)] | | | [removed: 11.7%] [added: 13.5%] | | |

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 [added: and development] credits.

In [removed: 2019,] [added: 2021,] the effective tax rate of [removed: 13.5%] [added: 14.4%] was lower than the U.S. federal statutory tax rate of 21%, [removed: primarily] [added: largely] due to [removed: $61] [added: the favorable impact of research and development credits, which included a $12] million [removed: in benefits] [added: benefit] recognized for additional [removed: tax] credits related to prior [removed: years as a result of the completion of a research and development tax credit analysis.][added: years.]

For a full reconciliation of our effective tax rate to the U.S. federal statutory tax rate, see Note [removed: 18] [added: 17] to the Consolidated Financial Statements in Item 8.

Segment profit for the manufacturing segments excludes interest expense, certain corporate expenses, gains/losses on major business dispositions, special charges and an inventory charge related to the 2020 COVID-19 restructuring plan, as discussed in Note [removed: 17] [added: 16] to the Consolidated Financial Statements in Item 8.

Operating expenses for the Manufacturing segments include cost of sales, selling and administrative expense and other non-service components of net periodic benefit [removed: cost/(credit),] [added: cost/(income),] and exclude certain corporate expenses and special charges.

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 [added: sold at different profit margins.]

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 [removed: cost/(credit),] [added: cost/(income),] product line profitability, start-up, ramp up and cost-reduction initiatives or other manufacturing inputs.

Approximately [removed: 30%] [added: 26%] of our [removed: 2020] [added: 2021] revenues were derived from contracts with the U.S. Government, including those under the U.S. Government-sponsored foreign military sales program.

| Aircraft | | | $ | [removed: 2,714] [added: 3,116] | | $ | [removed: 3,592] [added: 2,714] | | $ | [removed: 3,435] [added: 3,592] | | [removed: (24)%] [added: 15%] | | | [removed: 5%] [added: (24)%] | | |

| Aftermarket parts and services | | | [removed: 1,260] [added: 1,450] | | | [removed: 1,595] [added: 1,260] | | | [removed: 1,536] [added: 1,595] | | | [removed: (21)%] [added: 15%] | | | [removed: 4%] [added: (21)%] | | |

| Total revenues | | | [removed: 3,974] [added: 4,566] | | | [removed: 5,187] [added: 3,974] | | | [removed: 4,971] [added: 5,187] | | | [removed: (23)%] [added: 15%] | | | [removed: 4%] [added: (23)%] | | |

| Operating expenses | | | [removed: 3,958] [added: 4,188] | | | [removed: 4,738] [added: 3,958] | | | [removed: 4,526] [added: 4,738] | | | [removed: (16)%] [added: 6%] | | | [removed: 5%] [added: (16)%] | | |

| Segment profit | | | [removed: 16] [added: 378] | | | [removed: 449] [added: 16] | | | [removed: 445] [added: 449] | | | [removed: (96)%] [added: 2,263%] | | | [removed: 1%] [added: (96)%] | | |

| Profit margin | | | [removed: 0.4%] [added: 8.3%] | | | [removed: 8.7%] [added: 0.4%] | | | [removed: 9.0%] [added: 8.7%] | | | | | | | | |

| Backlog | | | $ | [removed: 1,603] [added: 4,120] | | $ | [removed: 1,714] [added: 1,603] | | $ | [removed: 1,791] [added: 1,714] | | [removed: (6)%] [added: 157%] | | | [removed: (4)%] [added: (6)%] | | |

Factors contributing to the [removed: 2020] [added: 2021] year-over-year revenue change are provided below:

| *(In millions)* | | | [removed: 2020] [added: 2021] versus [removed: 2019] [added: 2020] | | |

| Volume and mix | | | [removed: $] [added: 27] | [removed: (1,218)] | |

| Pricing | | | [removed: 5] [added: 73] | | |

| Total change | | | $ | [removed: (1,213)] [added: (54)] | |

We delivered [removed: 132] [added: 167] Citation jets and [removed: 113] [added: 125] commercial turboprops in [removed: 2020,] [added: 2021,] compared with [removed: 206] [added: 132] Citation jets and [removed: 176] [added: 113] commercial turboprops in [removed: 2019.][added: 2020.]

Textron Aviation’s operating expenses [removed: decreased $780] [added: increased $230] million, [removed: 16%,] [added: 6%,] in [removed: 2020,] [added: 2021,] compared with [removed: 2019,] [added: 2020,] largely due to [removed: lower] [added: higher] volume and mix described above.

[removed: A favorable impact from cost reduction activities, including employee furloughs and other actions, was more than offset] [added: Operating expenses in 2020 were also negatively impacted] by [removed: $115 million of] idle facility costs [removed: recognized in the period] [added: of $115 million] and [removed: higher] inventory valuation [removed: charges of $60 million,] [added: charges,] largely resulting from the [removed: pandemic.][added: pandemic, partially offset by cost reduction activities, including employee furloughs instituted during the first half of 2020.]

In 2021, Textron’s revenues increased 6% and segment profit increased 51%, compared with 2020, reflecting higher volume and pricing, along with performance improvements.

Higher earnings and working capital improvements during the year resulted in a year-over-year increase of $636 million in net cash flows from operating activities from our manufacturing businesses.

While most of our commercial businesses have not yet returned to 2019 pre-pandemic levels, we experienced a rebound in customer demand in these businesses during 2021.

Customer demand for our Textron Aviation aircraft products, in particular, increased throughout the year, enabling the business to return to a more normalized and efficient manufacturing cadence and resulted in a $2.5 billion, 157%, increase in backlog.

During the year, we have been impacted by ongoing pandemic-related global supply chain shortages and delays, as well as inflation, primarily in the Industrial segment, and we continue to manage through these challenges.

- Improved our ratio of debt, net of cash and equivalents, to capital to 16%, from 21% in 2020.

- Returned $921 million to our shareholders through repurchasing 13.5 million shares of our common stock.

Revenues increased $731 million, 6%, in 2021, compared with 2020, primarily at the Textron Aviation and Industrial segments.

Textron Aviation revenues were higher by $592 million, largely due to higher Citation jet volume of $330 million, and higher aftermarket volume of $204 million.

Revenues at Industrial were higher by $130 million, largely due to a favorable impact of $142 million from pricing, principally in the Specialized Vehicles product line.

Cost of sales includes cost of products and services sold for the Manufacturing group.

In 2021, cost of sales increased $203 million, 2%, compared with 2020, largely due to higher net volume and mix described above and an unfavorable impact from inflation of $117 million, principally reflecting higher material costs in the Industrial segment.

Selling and administrative expense increased $176 million, 17%, in 2021, compared with 2020, primarily at the Textron Aviation and Industrial segments as more normalized operating activities resumed during 2021 compared to 2020, which included temporary cost reduction activities related to the pandemic, and higher share-based compensation expense due to stock appreciation.

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 decreased $24 million, 14%, in 2021, compared with 2020, primarily due to lower average debt outstanding.

Textron Aviation’s revenues increased $592 million, 15%, in 2021, compared with 2020, largely due to higher Citation jet volume of $330 million and higher aftermarket volume of $204 million, reflecting higher aircraft utilization.

| *(In millions)* | | | 2021 versus 2020 | | |

Performance included the impact of idle facility costs of $115 million in 2020 and lower inventory charges of $59 million, partially offset by higher selling and administrative costs as more normalized operating activities resumed during 2021 compared to 2020, which included temporary cost reduction activities related to the pandemic.

Textron Aviation Backlog

Textron Aviation’s backlog increased $2.5 billion in 2021 as a result of orders in excess of deliveries.

| *(Dollars in millions)* | | | 2021 | | | 2020 | | | 2019 | | | 2021 | | | 2020 | | |

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.

Factors contributing to the 2021 year-over-year revenue change are provided below:

| *(In millions)* | | | 2021 versus 2020 | | |

| Pricing | | | $ | 28 | |

Factors contributing to 2021 year-over-year segment profit change are provided below:

| *(In millions)* | | | 2021 versus 2020 | | |

Bell’s segment profit decreased $54 million, 12%, in 2021, compared with 2020, largely reflecting an unfavorable impact of $36 million from performance, which included higher research and development costs discussed above and higher selling and administrative costs.

The increase in revenues attributed to volume and mix above had an unfavorable impact on segment profit due to the mix of military and commercial products sold.

| *(Dollars in millions)* | | | 2021 | | | 2020 | | | 2019 | | | 2021 | | | 2020 | | |

Factors contributing to the 2021 year-over-year revenue change are provided below:

| *(In millions)* | | | 2021 versus 2020 | | |

Revenues at Textron Systems decreased $40 million, 3%, in 2021, compared with 2020.

Lower volume of $16 million included a $79 million decrease from our fee-for-service contracts, primarily reflecting the impact from the U.S. Army’s withdrawal from Afghanistan, partially offset by higher volume at ATAC of $69 million, primarily from increased demand for its military tactical air services.

The other decrease of $24 million in the table above included the impact of a $28 million reduction in revenues as a result of the cessation of manufacturing at the TRU Simulation + Training Canada Inc. (TRU Canada) facility which occurred in the second quarter of 2020 related to the impact of the pandemic on that business.

In January 2021, we sold TRU Canada as discussed in Note 2 to the Consolidated Financial Statements in Item 8.

Factors contributing to 2021 year-over-year segment profit change are provided below:

| *(In millions)* | | | 2021 versus 2020 | | |

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.

- 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.

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

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

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

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

The revenue decrease included the following factors:

- 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.

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.

sold at different profit margins.

Textron Aviation’s revenues decreased $1.2 billion, 23%, in 2020, compared with 2019, largely due to lower Citation jet volume of $688 million and lower commercial turboprop volume of $228 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.

Idle facility costs reflect unfavorable absorption of manufacturing costs attributable to abnormally low production levels resulting from the pandemic and temporary manufacturing facility closures.

Performance includes $115 million of idle facility costs, described above, and higher inventory valuation charges of $60 million, largely resulting from the pandemic, partially offset by a favorable impact from cost reduction activities described above.

Bell’s revenues increased $55 million, 2%, in 2020, compared with 2019, due to higher military revenues of $225 million, largely reflecting spares and logistics support, partially offset by lower commercial revenues.

Performance and other includes

lower research and development and selling and administrative costs, partially offset by $25 million in lower net favorable program adjustments.

Revenues at Textron Systems decreased $12 million in 2020, compared with 2019, primarily due to lower volume of $36 million in the Simulation, Training and Other product line and $29 million in the Marine and Land Systems product line, partially offset by higher volume of $49 million in the Unmanned Systems product line.

Within the Simulation, Training and Other product line, lower volume of $107 million in the TRU Simulation + Training business, largely due to a decline in demand and order cancellations related to the pandemic, was largely offset by higher volumes at other businesses included in this product line.

| Performance and other | | | (2) | | |

Textron Systems’ segment profit increased $11 million, 8%, in 2020, compared with 2019, primarily due to favorable product mix.

Performance and other includes the impact of an $18 million gain recognized in the second quarter of 2019 related to our contribution of assets to a training business formed with FlightSafety International, Inc.

| Tools and Test Equipment | | | — | | | — | | | 248 | | | —% | | | (100)% | | |

| Other | | | 12 | | |

Industrial segment revenues decreased $798 million, 21%, in 2020, compared with 2019, largely due to lower volume and mix, in both product lines.

The notional amount of outstanding foreign currency exchange contracts was [removed: $318] [added: $272] million and [removed: $342] [added: $318] million at January [removed: 2, 2021] [added: 1, 2022] and January [removed: 4, 2020,] [added: 2, 2021,] respectively.

[removed: At the end of 2020, we] [added: We] had an interest rate swap agreement [removed: for] [added: with] a notional amount of [added: $289 million at January 1, 2022 and] $294 [removed: million,] [added: million at January 2, 2021,] which effectively converted certain floating-rate debt to a fixed-rate equivalent.

| | | | January [removed: 2, 2021] [added: 1, 2022] | | | | | | | | | January [removed: 4, 2020] [added: 2, 2021] | | | | | | | | |

| Foreign currency exchange contracts | | | [removed: 3] [added: 1] | | | [removed: 3] [added: 1] | | | [removed: 22] [added: 21] | | | [removed: (1)] [added: 3] | | | [removed: (1)] [added: 3] | | | [removed: 20] [added: 22] | | |

| Debt | | | $ | [removed: (3,690)] [added: (3,181)] | | $ | [removed: (3,986)] [added: (3,346)] | | $ | [removed: (16)] [added: (24)] | | $ | [removed: (3,097)] [added: (3,690)] | | $ | [removed: (3,249)] [added: (3,986)] | | $ | [removed: (21)] [added: (16)] | |

| Finance receivables | | | $ | [removed: 549] [added: 413] | | $ | [removed: 599] [added: 444] | | $ | [removed: 9] [added: 7] | | $ | [removed: 493] [added: 549] | | $ | [removed: 527] [added: 599] | | $ | 9 | |

| Debt | | | [removed: (662)] [added: (582)] | | | [removed: (587)] [added: (546)] | | | — | | | [removed: (686)] [added: (662)] | | | [removed: (634)] [added: (587)] | | | [removed: 1] [added: —] | | |

| Debt | | | $ | (6) | | $ | (6) | | $ | (1) | | $ | (10) | | $ | (10) | | $ | (1) | |

| | | | $ | (5) | | $ | (5) | | $ | 20 | | $ | (7) | | $ | (7) | | $ | 21 | |

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

| Debt | | | $ | (10) | | $ | (10) | | $ | (1) | | $ | (210) | | $ | (212) | | $ | (21) | |

| | | | $ | (7) | | $ | (7) | | $ | 21 | | $ | (211) | | $ | (213) | | $ | (1) | |

Total revenues by segment and customer type for [removed: 2020] [added: 2021] are presented below.

[removed: ][added: ]

The family of jets currently offered by Textron Aviation includes the Citation [removed: M2,] [added: M2 Gen2,] Citation CJ3+, Citation [removed: CJ4,] [added: CJ4 Gen2,] Citation [removed: XLS+,] [added: XLS Gen2,] Citation Latitude and the Citation Longitude.

In support of its family of aircraft, Textron Aviation operates a global network of [removed: 20] [added: 21] service centers, two of which are co-located with Bell, along with more than 300 authorized independent service centers located throughout the world.

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

For both its military programs and its commercial products, Bell provides post-sale support and service for an installed base of approximately 13,000 helicopters through a network of six Company-operated service centers, four global parts distribution centers and nearly 100 independent service centers located in [removed: over] [added: approximately] 35 countries.

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 Program, part of the U.S. government's Future Vertical Lift (FVL) [removed: family of programs.][added: initiative.]

In March 2020, the U.S. Army awarded Bell a Competitive Demonstration and Risk Reduction contract for the next stage of [removed: its Future Long Range Assault Aircraft program.][added: the FLRAA program; the scope and period of performance for this contract was extended in March 2021.]

[removed: ATAC focuses on] [added: Notable service offerings of the segment include fee-for-service programs using unmanned aircraft systems and] live military air-to-air and air-to-ship training and support services for U.S. Navy, Marine and Air Force [removed: personnel.][added: personnel provided by Airborne Tactical Advantage Company (ATAC).]

Their diversified customer base [added: for the Specialized Vehicles product line] 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.

Sales are made through a [removed: combination of a] network of independent distributors and dealers [removed: worldwide,] [added: worldwide and] the Bass Pro Shops and Cabela’s retail outlets, which sell our products under the Tracker Off-Road brand, [removed: and] [added: as well as] factory direct resources.

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: 2020] [added: 2021] and [removed: 2019,] [added: 2020,] our Finance group paid our Manufacturing group [removed: $195] [added: $100] million and [removed: $184] [added: $195] million, respectively, related to the sale of Textron-manufactured products to third parties that were financed by the Finance group.

Our backlog at the end of [removed: 2020] [added: 2021] and [removed: 2019] [added: 2020] is summarized below:

| *(In millions)* | | | January [removed: 2, 2021] [added: 1, 2022] | | | January [removed: 4, 2020] [added: 2, 2021] | | |

| Bell | | | $ | [removed: 5,342] [added: 3,871] | | $ | [removed: 6,902] [added: 5,342] | |

| Textron Aviation | | | [removed: 1,603] [added: 4,120] | | | [removed: 1,714] [added: 1,603] | | |

| Textron Systems | | | [removed: 2,556] [added: 2,144] | | | [removed: 1,211] [added: 2,556] | | |

| Total backlog | | | $ | [removed: 9,501] [added: 10,135] | | $ | [removed: 9,827] [added: 9,501] | |

Contracts with the U.S. Government, including contracts under the U.S. Government-sponsored foreign military sales program, generated approximately [removed: 30%] [added: 26%] of our consolidated revenues in [removed: 2020,] [added: 2021,] primarily in our Bell and Textron Systems segments.

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 [removed: exportation] [added: export] of certain products and technical data.

For additional information regarding environmental matters, see Note [removed: 19] [added: 18] to the Consolidated Financial Statements in Item 8.

At January [removed: 2, 2021,] [added: 1, 2022,] 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 [removed: 6,800,] [added: 7,000,] or [removed: 28%,] [added: 27%,] 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 [removed: expire and come up for renegotiation.][added: expire.]

Our success is highly dependent upon our ability to [removed: maintain] [added: hire and retain] a workforce with the skills necessary for our businesses to [removed: succeed.][added: develop and manufacture the products desired by our customers.]

We use an annual goal setting process to drive injury rate improvements, and the injury rate reduction goal is a performance metric that is [removed: reported to Textron’s Audit Committee and is] tracked and reported to senior [removed: leadership.][added: leadership and the Audit Committee of the Board of Directors.]

These teams continue to [removed: operate,] [added: operate as needed,] updating enterprise guidance as the pandemic has continued and the medical science and government guidance and orders have evolved.

Textron University, an internal corporate function, provides (i) facilitated face-to-face professional and leadership [removed: development,] [added: development programs,] (ii) web-based general and specialized functional and technical courses and (iii) an online portal to access advanced skills technical training, manage recertification of existing qualifications and other career planning tools and resources.

We believe by employing highly talented, diverse employees, who feel valued, respected and are able to contribute fully, we will improve performance, [removed: innovation and] [added: innovation,] collaboration and [removed: drive] talent retention, all of which [removed: contribute] [added: contributes] to stronger business results and reinforce our reputation as leaders in our industries and communities.

The following table sets forth certain information concerning our executive officers as of February [removed: 19, 2021.][added: 17, 2022.]

| Scott C. Donnelly | | | [removed: 59] [added: 60] | | | Chairman, President and Chief Executive Officer | | |

| Frank T. Connor | | | [removed: 61] [added: 62] | | | Executive Vice President and Chief Financial Officer | | |

| Julie G. Duffy | | | [removed: 55] [added: 56] | | | Executive Vice President, Human Resources | | |

| E. Robert Lupone | | | [removed: 61] [added: 62] | | | Executive Vice President, General Counsel, Secretary and Chief Compliance Officer | | |

- The impact of changes in tax legislation; [removed: and]

- Risks and uncertainties related to the impact of the COVID-19 pandemic on our business and [removed: operations.][added: operations; and]

The aircraft is continuing to progress through the certification process having accomplished over 2,100 hours of flight test activity.

During 2021, Bell continued to progress on its development of the 360 Invictus Prototype.

Bell is continuing development of the V-280 Valor, a next generation vertical lift aircraft that is in competition for the Future Long Range Assault Aircraft (FLRAA) program, which is part of the U.S. Army’s FVL initiative.

The V-280 achieved its first flight in December 2017, conducted over 200 hours of flight testing, and has demonstrated all key performance objectives established by the U.S. Army, including flying at 300 knots airspeed.

The U.S. Army is expected to award the contract for the FLRAA program in 2022.

The businesses in our Textron Systems segment develop and integrate a variety of products and services for U.S. and international military, government and commercial customers to support defense, homeland security, aerospace, infrastructure protection and other customer missions.

Product and service offerings of this segment include unmanned aircraft systems, electronic systems and solutions, advanced marine craft, piston aircraft engines, live military air-to-air and air-to-ship training, weapons and related components, and armored and specialty vehicles.

Notable products developed and produced by the Textron Systems segment include the Shadow, the U.S. Army's premier tactical unmanned aircraft system; the Aerosonde Small Unmanned Aircraft Systems, a multi-mission capable unmanned aircraft system for commercial and military operations; the U.S. Navy's next generation Landing Craft Air Cushion, developed as part of the Ship-to-Shore Connector program; and piston aircraft engines under the Lycoming brand.

Kautex has also developed and begun to market the Pentatonic battery system, a customizable, lightweight battery housing with thermal management capabilities, comprised of either thermoplastic composite or composite metal hybrid, for use in electric vehicles, from hybrid to full battery-powered.

A significant portion of the products sold by these businesses are powered with lithium batteries, greatly reducing the products’ impact on the environment.

Historically, we have been successful in negotiating renewals to expiring agreements without any material disruption of operating activities, and management considers employee relations to be good.

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

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

Bell 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 FVL program.

The V-280 achieved its first flight in December 2017 and its first cruise mode flight in May 2018.

Textron Systems is a supplier to the defense, aerospace and general aviation markets.

This segment sells products to U.S. Government customers and to customers outside the U.S. through foreign military sales sponsored by the U.S. Government and directly through commercial sales channels.

Textron Systems’ operating units are reported under the following product lines: Unmanned Systems, Marine and Land Systems and Simulation, Training and Other.

Our Unmanned Systems product line includes unmanned aircraft systems, unmanned surface systems, mission command hardware and solutions, and worldwide customer support and logistics.

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 500,000 flight hours in commercial and military operations around the world.

Unmanned Systems also provides complete systems solutions to its government and commercial customers through comprehensive program management, operational and maintenance training, technical assistance and logistics support, and end-to-end turnkey mission support.

Our Marine and Land Systems product line includes advanced marine craft, armored vehicles and specialty vehicles supporting fire and rescue applications.

These products are in service with U.S. and international militaries, special operations forces, police forces and civilian entities.

Marine and Land Systems’ primary U.S. Government program is for the development and production of the U.S. Navy’s next generation Landing Craft Air Cushion as part of the Ship-to-Shore Connector program.

The Simulation, Training and Other product line includes the following operating units and businesses: Electronic Systems, Weapons and Sensors Systems, Lycoming, Airborne Tactical Advantage Company (ATAC) and TRU Simulation + Training (TRU).

Electronic Systems provides high technology test equipment, electronic warfare test and training solutions and intelligence software solutions for U.S. and international defense, intelligence and law enforcement communities.

Weapons and Sensors Systems offers advanced precision guided weapons systems, airborne and ground-based sensors and surveillance systems, and protection systems for the defense and aerospace industries.

Lycoming specializes in the engineering, manufacture, service and support of piston aircraft engines for the general aviation and remotely piloted aircraft markets.

TRU designs, develops, manufactures, installs, and provides maintenance of advanced flight training devices, including full flight simulators, for commercial airlines, aircraft original equipment manufacturers (OEMs), flight training centers and training organizations.

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

On August 18, 2020, plaintiffs filed a notice of appeal contesting the dismissal, which Textron [removed: has] 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.

We intend to continue to vigorously defend this lawsuit.

That appeal remains pending.

As previously reported in Textron’s Annual Report on Form 10-K for the fiscal year ended December 31, 2016, on February 7, 2012, a lawsuit was filed in the United States Bankruptcy Court, Northern District of Ohio, Eastern Division (Akron) by Brian A.

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

TFC provided a revolving line of credit of up to $17.5 million to Fair Finance Company from 2002 through 2007.

The complaint alleges numerous counts against TFC, as Fair Finance Company’s working capital lender, including receipt of fraudulent transfers and assisting in fraud perpetrated on Fair Finance investors.

The Trustee 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 November 9, 2012, the Court dismissed all claims against TFC.

The trustee appealed, and on August 23, 2016, the 6th Circuit Court of Appeals reversed the dismissal in part and remanded certain claims back to the trial court.

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 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.

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.

For the fiscal year ended January [removed: 2, 2021][added: 1, 2022]

The aggregate market value of the registrant’s Common Stock held by non-affiliates at July [removed: 4, 2020] [added: 3, 2021] was approximately [removed: $7.4] [added: $15.4] billion based on the New York Stock Exchange closing price for such shares on that date.

At February [removed: 6, 2021, 226,284,488] [added: 5, 2022, 216,682,177] shares of Common Stock were outstanding.

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: 28, 2021.][added: 27, 2022.]

| [Item [removed: 1.](#i2d192f77008d45ab8937879d57605ae2_13)] [added: 1.](#ia3b2c1588ae44834bf6ab6617886767e_13)] | | | [removed: [Business](#i2d192f77008d45ab8937879d57605ae2_13)] [added: [Business](#ia3b2c1588ae44834bf6ab6617886767e_13)] | | | [removed: [3](#i2d192f77008d45ab8937879d57605ae2_13)] [added: [3](#ia3b2c1588ae44834bf6ab6617886767e_13)] | | |

| [Item [removed: 1A.](#i2d192f77008d45ab8937879d57605ae2_16)] [added: 1A.](#ia3b2c1588ae44834bf6ab6617886767e_16)] | | | [Risk [removed: Factors](#i2d192f77008d45ab8937879d57605ae2_16)] [added: Factors](#ia3b2c1588ae44834bf6ab6617886767e_16)] | | | [removed: [9](#i2d192f77008d45ab8937879d57605ae2_16)] [added: [9](#ia3b2c1588ae44834bf6ab6617886767e_16)] | | |

| [Item [removed: 1B.](#i2d192f77008d45ab8937879d57605ae2_19)] [added: 1B.](#ia3b2c1588ae44834bf6ab6617886767e_19)] | | | [Unresolved Staff [removed: Comments](#i2d192f77008d45ab8937879d57605ae2_19)] [added: Comments](#ia3b2c1588ae44834bf6ab6617886767e_19)] | | | [removed: [16](#i2d192f77008d45ab8937879d57605ae2_19)] [added: [16](#ia3b2c1588ae44834bf6ab6617886767e_19)] | | |

| [Item [removed: 2.](#i2d192f77008d45ab8937879d57605ae2_22)] [added: 2.](#ia3b2c1588ae44834bf6ab6617886767e_22)] | | | [removed: [Properties](#i2d192f77008d45ab8937879d57605ae2_22)] [added: [Properties](#ia3b2c1588ae44834bf6ab6617886767e_22)] | | | [removed: [17](#i2d192f77008d45ab8937879d57605ae2_22)] [added: [17](#ia3b2c1588ae44834bf6ab6617886767e_22)] | | |

| [Item [removed: 3.](#i2d192f77008d45ab8937879d57605ae2_25)] [added: 3.](#ia3b2c1588ae44834bf6ab6617886767e_25)] | | | [Legal [removed: Proceedings](#i2d192f77008d45ab8937879d57605ae2_25)] [added: Proceedings](#ia3b2c1588ae44834bf6ab6617886767e_25)] | | | [removed: [17](#i2d192f77008d45ab8937879d57605ae2_25)] [added: [17](#ia3b2c1588ae44834bf6ab6617886767e_25)] | | |

| [Item [removed: 4.](#i2d192f77008d45ab8937879d57605ae2_28)] [added: 4.](#ia3b2c1588ae44834bf6ab6617886767e_28)] | | | [Mine Safety [removed: Disclosures](#i2d192f77008d45ab8937879d57605ae2_28)] [added: Disclosures](#ia3b2c1588ae44834bf6ab6617886767e_28)] | | | [removed: [17](#i2d192f77008d45ab8937879d57605ae2_28)] [added: [17](#ia3b2c1588ae44834bf6ab6617886767e_28)] | | |

| [Item [removed: 5.](#i2d192f77008d45ab8937879d57605ae2_34)] [added: 5.](#ia3b2c1588ae44834bf6ab6617886767e_34)] | | | [Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity [removed: Securities](#i2d192f77008d45ab8937879d57605ae2_34)] [added: Securities](#ia3b2c1588ae44834bf6ab6617886767e_34)] | | | [removed: [18](#i2d192f77008d45ab8937879d57605ae2_34)] [added: [18](#ia3b2c1588ae44834bf6ab6617886767e_34)] | | |

| [Item [removed: 7.](#i2d192f77008d45ab8937879d57605ae2_40)] [added: 7.](#ia3b2c1588ae44834bf6ab6617886767e_40)] | | | [Management’s Discussion and Analysis of Financial Condition and Results of [removed: Operations](#i2d192f77008d45ab8937879d57605ae2_40)] [added: Operations](#ia3b2c1588ae44834bf6ab6617886767e_40)] | | | [removed: [20](#i2d192f77008d45ab8937879d57605ae2_40)] [added: [19](#ia3b2c1588ae44834bf6ab6617886767e_40)] | | |

| [Item [removed: 7A.](#i2d192f77008d45ab8937879d57605ae2_76)] [added: 7A.](#ia3b2c1588ae44834bf6ab6617886767e_76)] | | | [Quantitative and Qualitative Disclosures About Market [removed: Risk](#i2d192f77008d45ab8937879d57605ae2_76)] [added: Risk](#ia3b2c1588ae44834bf6ab6617886767e_76)] | | | [removed: [32](#i2d192f77008d45ab8937879d57605ae2_76)] [added: [30](#ia3b2c1588ae44834bf6ab6617886767e_76)] | | |

| [Item [removed: 8.](#i2d192f77008d45ab8937879d57605ae2_79)] [added: 8.](#ia3b2c1588ae44834bf6ab6617886767e_79)] | | | [Financial Statements and Supplementary [removed: Data](#i2d192f77008d45ab8937879d57605ae2_79)] [added: Data](#ia3b2c1588ae44834bf6ab6617886767e_79)] | | | [removed: [34](#i2d192f77008d45ab8937879d57605ae2_79)] [added: [31](#ia3b2c1588ae44834bf6ab6617886767e_79)] | | |

| [Item [removed: 9.](#i2d192f77008d45ab8937879d57605ae2_196)] [added: 9.](#ia3b2c1588ae44834bf6ab6617886767e_175)] | | | [Changes In and Disagreements With Accountants on Accounting and Financial [removed: Disclosure](#i2d192f77008d45ab8937879d57605ae2_196)] [added: Disclosure](#ia3b2c1588ae44834bf6ab6617886767e_175)] | | | [removed: [73](#i2d192f77008d45ab8937879d57605ae2_196)] [added: [68](#ia3b2c1588ae44834bf6ab6617886767e_175)] | | |

| [Item [removed: 9A.](#i2d192f77008d45ab8937879d57605ae2_199)] [added: 9A.](#ia3b2c1588ae44834bf6ab6617886767e_178)] | | | [Controls and [removed: Procedures](#i2d192f77008d45ab8937879d57605ae2_199)] [added: Procedures](#ia3b2c1588ae44834bf6ab6617886767e_178)] | | | [removed: [73](#i2d192f77008d45ab8937879d57605ae2_199)] [added: [68](#ia3b2c1588ae44834bf6ab6617886767e_178)] | | |

| [Item [removed: 10.](#i2d192f77008d45ab8937879d57605ae2_208)] [added: 10.](#ia3b2c1588ae44834bf6ab6617886767e_187)] | | | [Directors, Executive Officers and Corporate [removed: Governance](#i2d192f77008d45ab8937879d57605ae2_208)] [added: Governance](#ia3b2c1588ae44834bf6ab6617886767e_187)] | | | [removed: [75](#i2d192f77008d45ab8937879d57605ae2_208)] [added: [70](#ia3b2c1588ae44834bf6ab6617886767e_187)] | | |

| [Item [removed: 11.](#i2d192f77008d45ab8937879d57605ae2_211)] [added: 11.](#ia3b2c1588ae44834bf6ab6617886767e_190)] | | | [Executive [removed: Compensation](#i2d192f77008d45ab8937879d57605ae2_211)] [added: Compensation](#ia3b2c1588ae44834bf6ab6617886767e_190)] | | | [removed: [75](#i2d192f77008d45ab8937879d57605ae2_211)] [added: [70](#ia3b2c1588ae44834bf6ab6617886767e_190)] | | |

| [Item [removed: 12.](#i2d192f77008d45ab8937879d57605ae2_214)] [added: 12.](#ia3b2c1588ae44834bf6ab6617886767e_193)] | | | [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder [removed: Matters](#i2d192f77008d45ab8937879d57605ae2_214)] [added: Matters](#ia3b2c1588ae44834bf6ab6617886767e_193)] | | | [removed: [75](#i2d192f77008d45ab8937879d57605ae2_214)] [added: [70](#ia3b2c1588ae44834bf6ab6617886767e_193)] | | |

| [Item [removed: 13.](#i2d192f77008d45ab8937879d57605ae2_217)] [added: 13.](#ia3b2c1588ae44834bf6ab6617886767e_196)] | | | [Certain Relationships and Related Transactions and Director [removed: Independence](#i2d192f77008d45ab8937879d57605ae2_217)] [added: Independence](#ia3b2c1588ae44834bf6ab6617886767e_196)] | | | [removed: [75](#i2d192f77008d45ab8937879d57605ae2_217)] [added: [70](#ia3b2c1588ae44834bf6ab6617886767e_196)] | | |

| [Item [removed: 14.](#i2d192f77008d45ab8937879d57605ae2_220)] [added: 14.](#ia3b2c1588ae44834bf6ab6617886767e_199)] | | | [Principal Accountant Fees and [removed: Services](#i2d192f77008d45ab8937879d57605ae2_220)] [added: Services](#ia3b2c1588ae44834bf6ab6617886767e_199)] | | | [removed: [75](#i2d192f77008d45ab8937879d57605ae2_220)] [added: [70](#ia3b2c1588ae44834bf6ab6617886767e_199)] | | |

| [Item [removed: 15.](#i2d192f77008d45ab8937879d57605ae2_226)] [added: 15.](#ia3b2c1588ae44834bf6ab6617886767e_205)] | | | [Exhibits and Financial Statement [removed: Schedules](#i2d192f77008d45ab8937879d57605ae2_226)] [added: Schedules](#ia3b2c1588ae44834bf6ab6617886767e_205)] | | | [removed: [76](#i2d192f77008d45ab8937879d57605ae2_226)] [added: [71](#ia3b2c1588ae44834bf6ab6617886767e_205)] | | |

| [Item [removed: 16.](#i2d192f77008d45ab8937879d57605ae2_229)] [added: 16.](#ia3b2c1588ae44834bf6ab6617886767e_208)] | | | [Form 10-K [removed: Summary](#i2d192f77008d45ab8937879d57605ae2_229)] [added: Summary](#ia3b2c1588ae44834bf6ab6617886767e_208)] | | | [removed: [79](#i2d192f77008d45ab8937879d57605ae2_229)] [added: [74](#ia3b2c1588ae44834bf6ab6617886767e_208)] | | |

[Table of Content](#ia3b2c1588ae44834bf6ab6617886767e_7)[s](#ia3b2c1588ae44834bf6ab6617886767e_7)

For the Fiscal Year Ended January 1, 2022

| [PART I](#ia3b2c1588ae44834bf6ab6617886767e_10) | | | | | | | | |

| [PART II](#ia3b2c1588ae44834bf6ab6617886767e_31) | | | | | | | | |

| [Item 9C.](#ia3b2c1588ae44834bf6ab6617886767e_1771) | | | [Disclosure Regarding Foreign Jurisdictions that Prevent Inspections](#ia3b2c1588ae44834bf6ab6617886767e_1771) | | | [70](#ia3b2c1588ae44834bf6ab6617886767e_1771) | | |

| [PART III](#ia3b2c1588ae44834bf6ab6617886767e_184) | | | | | | | | |

| [PART IV](#ia3b2c1588ae44834bf6ab6617886767e_202) | | | | | | | | |

| [Signatures](#ia3b2c1588ae44834bf6ab6617886767e_211) | | | | | | [75](#ia3b2c1588ae44834bf6ab6617886767e_211) | | |

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

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

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

| [Item 6.](#i2d192f77008d45ab8937879d57605ae2_37) | | | [Selected Financial Data](#i2d192f77008d45ab8937879d57605ae2_37) | | | [19](#i2d192f77008d45ab8937879d57605ae2_37) | | |

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

| [PART IV](#i2d192f77008d45ab8937879d57605ae2_223) | | | | | | | | |

| [Signatures](#i2d192f77008d45ab8937879d57605ae2_232) | | | | | | [80](#i2d192f77008d45ab8937879d57605ae2_232) | | |

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

On January [removed: 2, 2021,] [added: 1, 2022,] we operated a total of [removed: 54] [added: 52] plants located throughout the U.S. and [removed: 49] [added: 45] plants outside the U.S. We own [removed: 59] [added: 58] plants and lease the remainder for a total manufacturing space of approximately [removed: 23.9] [added: 23.3] million square feet.

[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 "TXT." At January [removed: 2, 2021,] [added: 1, 2022,] there were approximately [removed: 7,600] [added: 5,800] record holders of Textron common stock.

The following provides information about our fourth quarter [removed: 2020] [added: 2021] repurchases of equity securities that are registered pursuant to Section 12 of the Securities Exchange Act of 1934, as amended:

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: 2015] [added: 2016] 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: 2015 | | |] 2016 | | | 2017 | | | 2018 | | | 2019 | | | 2020 | | | [added: 2021 | | |]

| October 3, 2021 – November 6, 2021 | | | 1,025 | | | $ | 72.19 | | 1,025 | | | 11,270 | | |

| November 7, 2021 – December 4, 2021 | | | 1,915 | | | 74.78 | | | 1,915 | | | 9,355 | | |

| December 5, 2021 – January 1, 2022 | | | 1,598 | | | 73.76 | | | 1,598 | | | 7,757 | | |

| Total | | | 4,538 | | | $ | 73.84 | | 4,538 | | | | | |

On January 25, 2022, we announced the authorization of 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 that had 7.8 million remaining shares available for repurchase.

| Textron Inc. | | | $ | 100.00 | | $ | 116.72 | | $ | 94.28 | | $ | 92.55 | | $ | 100.22 | | $ | 160.28 | |

| S&P 500 | | | 100.00 | | | 121.83 | | | 115.49 | | | 153.40 | | | 181.35 | | | 233.41 | | |

| S&P 500 A&D | | | 100.00 | | | 141.38 | | | 128.27 | | | 175.93 | | | 142.18 | | | 160.98 | | |

| S&P 500 Industrials | | | 100.00 | | | 122.56 | | | 117.77 | | | 157.25 | | | 193.16 | | | 247.04 | | |

| 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 | | | | | |

| 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)

| [Consolidated Statements of Operations for each of the years in the three-year period [removed: ended](#i2d192f77008d45ab8937879d57605ae2_82)] [added: ended](#ia3b2c1588ae44834bf6ab6617886767e_82)] January [removed: 2, 2021] [added: 1, 2022] | | | | | | | | | [removed: [35](#i2d192f77008d45ab8937879d57605ae2_82)] [added: [32](#ia3b2c1588ae44834bf6ab6617886767e_82)] | | |

| [Consolidated Statements of Comprehensive Income for each of the years in the three-year period [removed: ended](#i2d192f77008d45ab8937879d57605ae2_85)] [added: ended](#ia3b2c1588ae44834bf6ab6617886767e_85)] January [removed: 2, 2021] [added: 1, 2022] | | | | | | | | | [removed: [36](#i2d192f77008d45ab8937879d57605ae2_85)] [added: [33](#ia3b2c1588ae44834bf6ab6617886767e_85)] | | |

| [Consolidated Balance Sheets as [removed: of](#i2d192f77008d45ab8937879d57605ae2_88)] [added: of](#ia3b2c1588ae44834bf6ab6617886767e_88)] January [added: 1, 2022 [and](#ia3b2c1588ae44834bf6ab6617886767e_88) January] 2, 2021 [removed: [and](#i2d192f77008d45ab8937879d57605ae2_88) January 4, 2020] | | | | | | | | | [removed: [37](#i2d192f77008d45ab8937879d57605ae2_88)] [added: [34](#ia3b2c1588ae44834bf6ab6617886767e_88)] | | |

| [Consolidated Statements of Shareholders’ Equity for each of the years in the three-year period [removed: ended](#i2d192f77008d45ab8937879d57605ae2_91)] [added: ended](#ia3b2c1588ae44834bf6ab6617886767e_91)] January [removed: 2, 2021] [added: 1, 2022] | | | | | | | | | [removed: [38](#i2d192f77008d45ab8937879d57605ae2_91)] [added: [35](#ia3b2c1588ae44834bf6ab6617886767e_91)] | | |

| [Consolidated Statements of Cash Flows for each of the years in the three-year period [removed: ended](#i2d192f77008d45ab8937879d57605ae2_94)] [added: ended](#ia3b2c1588ae44834bf6ab6617886767e_94)] January [removed: 2, 2021] [added: 1, 2022] | | | | | | | | | [removed: [39](#i2d192f77008d45ab8937879d57605ae2_94)] [added: [36](#ia3b2c1588ae44834bf6ab6617886767e_94)] | | |

| [Notes to the Consolidated Financial [removed: Statements](#i2d192f77008d45ab8937879d57605ae2_97)] [added: Statements](#ia3b2c1588ae44834bf6ab6617886767e_97)] | | | | | | | | | | | |

| | | | [Note [removed: 1.](#i2d192f77008d45ab8937879d57605ae2_100)] [added: 1.](#ia3b2c1588ae44834bf6ab6617886767e_100)] | | | [Summary of Significant Accounting [removed: Policies](#i2d192f77008d45ab8937879d57605ae2_100)] [added: Policies](#ia3b2c1588ae44834bf6ab6617886767e_100)] | | | [removed: [41](#i2d192f77008d45ab8937879d57605ae2_100)] [added: [38](#ia3b2c1588ae44834bf6ab6617886767e_100)] | | |

| | | | [Note [removed: 2.](#i2d192f77008d45ab8937879d57605ae2_106)] [added: 2.](#ia3b2c1588ae44834bf6ab6617886767e_103)] | | | [Business [removed: Disposition](#i2d192f77008d45ab8937879d57605ae2_106)s] [added: Disposition](#ia3b2c1588ae44834bf6ab6617886767e_103)] | | | [removed: [47](#i2d192f77008d45ab8937879d57605ae2_106)] [added: [44](#ia3b2c1588ae44834bf6ab6617886767e_103)] | | |

| | | | [Note [removed: 3.](#i2d192f77008d45ab8937879d57605ae2_109)] [added: 3.](#ia3b2c1588ae44834bf6ab6617886767e_106)] | | | [Goodwill and Intangible [removed: Assets](#i2d192f77008d45ab8937879d57605ae2_109)] [added: Assets](#ia3b2c1588ae44834bf6ab6617886767e_106)] | | | [removed: [47](#i2d192f77008d45ab8937879d57605ae2_109)] [added: [44](#ia3b2c1588ae44834bf6ab6617886767e_106)] | | |

| | | | [Note [removed: 4.](#i2d192f77008d45ab8937879d57605ae2_112)] [added: 4.](#ia3b2c1588ae44834bf6ab6617886767e_109)] | | | [Accounts Receivable and Finance [removed: Receivables](#i2d192f77008d45ab8937879d57605ae2_112)] [added: Receivables](#ia3b2c1588ae44834bf6ab6617886767e_109)] | | | [removed: [48](#i2d192f77008d45ab8937879d57605ae2_112)] [added: [45](#ia3b2c1588ae44834bf6ab6617886767e_109)] | | |

| | | | [Note [removed: 6.](#i2d192f77008d45ab8937879d57605ae2_118)] [added: 6.](#ia3b2c1588ae44834bf6ab6617886767e_115)] | | | [Property, Plant and Equipment, [removed: Net](#i2d192f77008d45ab8937879d57605ae2_118)] [added: Net](#ia3b2c1588ae44834bf6ab6617886767e_115)] | | | [removed: [50](#i2d192f77008d45ab8937879d57605ae2_118)] [added: [47](#ia3b2c1588ae44834bf6ab6617886767e_115)] | | |

| [removed: | | | [Note 7.](#i2d192f77008d45ab8937879d57605ae2_124)] [added: Other assets] | | | [removed: [Other Assets](#i2d192f77008d45ab8937879d57605ae2_124)] [added: 67] | | | [removed: [50](#i2d192f77008d45ab8937879d57605ae2_124)] [added: 86] | | |

| | | | [removed: [Note 8.](#i2d192f77008d45ab8937879d57605ae2_127)] [added: [Note](#ia3b2c1588ae44834bf6ab6617886767e_121) [7](#ia3b2c1588ae44834bf6ab6617886767e_121)[.](#ia3b2c1588ae44834bf6ab6617886767e_121)] | | | [Other Current [removed: Liabilities](#i2d192f77008d45ab8937879d57605ae2_127)] [added: Liabilities](#ia3b2c1588ae44834bf6ab6617886767e_121)] | | | [removed: [51](#i2d192f77008d45ab8937879d57605ae2_127)] [added: [47](#ia3b2c1588ae44834bf6ab6617886767e_121)] | | |

| | | | [removed: [Note 10.](#i2d192f77008d45ab8937879d57605ae2_136)] [added: [Note](#ia3b2c1588ae44834bf6ab6617886767e_130) [9](#ia3b2c1588ae44834bf6ab6617886767e_130)[.](#ia3b2c1588ae44834bf6ab6617886767e_130)] | | | [Debt and Credit [removed: Facilities](#i2d192f77008d45ab8937879d57605ae2_136)] [added: Facilities](#ia3b2c1588ae44834bf6ab6617886767e_130)] | | | [removed: [52](#i2d192f77008d45ab8937879d57605ae2_136)] [added: [48](#ia3b2c1588ae44834bf6ab6617886767e_130)] | | |

| | | | [removed: [Note.11.](#i2d192f77008d45ab8937879d57605ae2_142)] [added: [Note.1](#ia3b2c1588ae44834bf6ab6617886767e_133)[0](#ia3b2c1588ae44834bf6ab6617886767e_133)[.](#ia3b2c1588ae44834bf6ab6617886767e_133)] | | | [Derivative Instruments and Fair Value [removed: Measurements](#i2d192f77008d45ab8937879d57605ae2_142)] [added: Measurements](#ia3b2c1588ae44834bf6ab6617886767e_133)] | | | [removed: [53](#i2d192f77008d45ab8937879d57605ae2_142)] [added: [49](#ia3b2c1588ae44834bf6ab6617886767e_133)] | | |

| | | | [Note [removed: 13.](#i2d192f77008d45ab8937879d57605ae2_148)] [added: 1](#ia3b2c1588ae44834bf6ab6617886767e_139)[2](#ia3b2c1588ae44834bf6ab6617886767e_139)[.](#ia3b2c1588ae44834bf6ab6617886767e_139)] | | | [Segment and Geographic [removed: Data](#i2d192f77008d45ab8937879d57605ae2_148)] [added: Data](#ia3b2c1588ae44834bf6ab6617886767e_139)] | | | [removed: [55](#i2d192f77008d45ab8937879d57605ae2_148)] [added: [52](#ia3b2c1588ae44834bf6ab6617886767e_139)] | | |

| | | | [Note [removed: 15.](#i2d192f77008d45ab8937879d57605ae2_160)] [added: 1](#ia3b2c1588ae44834bf6ab6617886767e_148)[4](#ia3b2c1588ae44834bf6ab6617886767e_148)[.](#ia3b2c1588ae44834bf6ab6617886767e_148)] | | | [Share-Based [removed: Compensation](#i2d192f77008d45ab8937879d57605ae2_160)] [added: Compensation](#ia3b2c1588ae44834bf6ab6617886767e_148)] | | | [removed: [59](#i2d192f77008d45ab8937879d57605ae2_160)] [added: [55](#ia3b2c1588ae44834bf6ab6617886767e_148)] | | |

| | | | [Note [removed: 19.](#i2d192f77008d45ab8937879d57605ae2_178)] [added: 1](#ia3b2c1588ae44834bf6ab6617886767e_160)[8](#ia3b2c1588ae44834bf6ab6617886767e_160)[.](#ia3b2c1588ae44834bf6ab6617886767e_160)] | | | [Commitments and [removed: Contingencies](#i2d192f77008d45ab8937879d57605ae2_178)] [added: Contingencies](#ia3b2c1588ae44834bf6ab6617886767e_160)] | | | [removed: [69](#i2d192f77008d45ab8937879d57605ae2_178)] [added: [65](#ia3b2c1588ae44834bf6ab6617886767e_160)] | | |

| | | | [removed: [Note 20.](#i2d192f77008d45ab8937879d57605ae2_181)] [added: [Note](#ia3b2c1588ae44834bf6ab6617886767e_163) [19](#ia3b2c1588ae44834bf6ab6617886767e_163)[.](#ia3b2c1588ae44834bf6ab6617886767e_163)] | | | [Supplemental Cash Flow [removed: Information](#i2d192f77008d45ab8937879d57605ae2_181)] [added: Information](#ia3b2c1588ae44834bf6ab6617886767e_163)] | | | [removed: [69](#i2d192f77008d45ab8937879d57605ae2_181)] [added: [65](#ia3b2c1588ae44834bf6ab6617886767e_163)] | | |

| [Report of Independent Registered Public Accounting [removed: Firm](#i2d192f77008d45ab8937879d57605ae2_184)] [added: Firm](#ia3b2c1588ae44834bf6ab6617886767e_166)] | | | | | | | | | [removed: [70](#i2d192f77008d45ab8937879d57605ae2_184)] [added: [66](#ia3b2c1588ae44834bf6ab6617886767e_166)] | | |

| [added: | | |] [Schedule II – Valuation and Qualifying [removed: Accounts](#i2d192f77008d45ab8937879d57605ae2_193) | | |] [added: Accounts](#ia3b2c1588ae44834bf6ab6617886767e_172)] | | | | | | [removed: [73](#i2d192f77008d45ab8937879d57605ae2_193)] [added: [68](#ia3b2c1588ae44834bf6ab6617886767e_172)] | | |

For each of the years in the three-year period ended January [removed: 2, 2021][added: 1, 2022]

| *(In millions, except per share data)* | | | [removed: 2020] [added: 2021] | | | [removed: 2019] [added: 2020] | | | [removed: 2018] [added: 2019] | | |

| Finance revenues | | | [removed: 55] [added: 49] | | | [removed: 66] [added: 55] | | | 66 | | |

| Total revenues | | | [removed: 11,651] [added: 12,382] | | | [removed: 13,630] [added: 11,651] | | | [removed: 13,972] [added: 13,630] | | |

| Selling and administrative expense | | | [removed: 1,045] [added: 1,221] | | | [removed: 1,152] [added: 1,045] | | | [removed: 1,275] [added: 1,152] | | |

| Interest expense | | | [removed: 166] [added: 142] | | | [removed: 171] [added: 166] | | | [removed: 166] [added: 171] | | |

| Special charges | | | [removed: 147] [added: 25] | | | [removed: 72] [added: 147] | | | [removed: 73] [added: 72] | | |

| Non-service components of pension and postretirement income, net | | | [removed: (83)] [added: (159)] | | | [removed: (113)] [added: (83)] | | | [removed: (76)] [added: (113)] | | |

| Gain on business disposition | | | [removed: —] [added: (17)] | | | — | | | [removed: (444)] [added: —] | | |

| Total costs, expenses and other | | | [removed: 11,369] [added: 11,509] | | | [removed: 12,688] [added: 11,369] | | | [removed: 12,588] [added: 12,688] | | |

| Income [added: from continuing operations] before income taxes | | | [removed: 282] [added: 873] | | | [removed: 942] [added: 282] | | | [removed: 1,384] [added: 942] | | |

| Income tax expense (benefit) | | | [removed: (27)] [added: 126] | | | [removed: 127] [added: (27)] | | | [removed: 162] [added: 127] | | |

| Net income | | | $ | [removed: 309] [added: 746] | | $ | [removed: 815] [added: 309] | | $ | [removed: 1,222] [added: 815] | |

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

| *(In millions)* | | | [removed: 2020] [added: 2021] | | | [removed: 2019] [added: 2020] | | | [removed: 2018] [added: 2019] | | |

| Pension and postretirement benefits adjustments, net of reclassifications | | | [removed: 31] [added: 981] | | | [removed: (84)] [added: 31] | | | [removed: (74)] [added: (84)] | | |

| Foreign currency translation adjustments, net of reclassifications | | | [removed: 78] [added: (37)] | | | [removed: (4)] [added: 78] | | | [removed: (43)] [added: (4)] | | |

| Deferred gains (losses) on hedge contracts, net of reclassifications | | | [removed: (1)] [added: 2] | | | [removed: 3] [added: (1)] | | | [removed: (13)] [added: 3] | | |

| Total other comprehensive income (loss), net of tax | | | [removed: 108] [added: 946] | | | [removed: (85)] [added: 108] | | | [removed: (130)] [added: (85)] | | |

| | | | [Note 5.](#ia3b2c1588ae44834bf6ab6617886767e_112) | | | [Inventories](#ia3b2c1588ae44834bf6ab6617886767e_112) | | | [47](#ia3b2c1588ae44834bf6ab6617886767e_112) | | |

| | | | [Note](#ia3b2c1588ae44834bf6ab6617886767e_124) [8](#ia3b2c1588ae44834bf6ab6617886767e_124)[.](#ia3b2c1588ae44834bf6ab6617886767e_124) | | | [Leases](#ia3b2c1588ae44834bf6ab6617886767e_124) | | | [48](#ia3b2c1588ae44834bf6ab6617886767e_124) | | |

| | | | [Note 1](#ia3b2c1588ae44834bf6ab6617886767e_136)[1](#ia3b2c1588ae44834bf6ab6617886767e_136)[.](#ia3b2c1588ae44834bf6ab6617886767e_136) | | | [Shareholders’ Equity](#ia3b2c1588ae44834bf6ab6617886767e_136) | | | [50](#ia3b2c1588ae44834bf6ab6617886767e_136) | | |

| | | | [Note 1](#ia3b2c1588ae44834bf6ab6617886767e_142)[3](#ia3b2c1588ae44834bf6ab6617886767e_142)[.](#ia3b2c1588ae44834bf6ab6617886767e_142) | | | [Revenues](#ia3b2c1588ae44834bf6ab6617886767e_142) | | | [53](#ia3b2c1588ae44834bf6ab6617886767e_142) | | |

| | | | [Note 1](#ia3b2c1588ae44834bf6ab6617886767e_151)[5](#ia3b2c1588ae44834bf6ab6617886767e_151)[.](#ia3b2c1588ae44834bf6ab6617886767e_151) | | | [Retirement Plans](#ia3b2c1588ae44834bf6ab6617886767e_151) | | | [57](#ia3b2c1588ae44834bf6ab6617886767e_151) | | |

| | | | [Note 1](#ia3b2c1588ae44834bf6ab6617886767e_157)[7](#ia3b2c1588ae44834bf6ab6617886767e_157)[.](#ia3b2c1588ae44834bf6ab6617886767e_157) | | | [Income Taxes](#ia3b2c1588ae44834bf6ab6617886767e_157) | | | [62](#ia3b2c1588ae44834bf6ab6617886767e_157) | | |

| Manufacturing product revenues | | | $ | 10,541 | | $ | 9,720 | | $ | 11,690 | |

| Manufacturing service revenues | | | 1,792 | | | 1,876 | | | 1,874 | | |

| Cost of products sold | | | 8,955 | | | 8,715 | | | 9,982 | | |

| Cost of services sold | | | 1,342 | | | 1,379 | | | 1,424 | | |

| Income from continuing operations | | | $ | 747 | | $ | 309 | | $ | 815 | |

| Loss from discontinued operations | | | (1) | | | — | | | — | | |

| Continuing operations | | | $ | 3.33 | | $ | 1.35 | | $ | 3.52 | |

| Continuing operations | | | $ | 3.30 | | $ | 1.35 | | $ | 3.50 | |

For each of the years in the three-year period ended January 1, 2022

| Other comprehensive income | | | — | | | — | | | — | | | — | | | 946 | | | 946 | | |

| Retirement of treasury stock | | | (2) | | | (134) | | | 967 | | | (831) | | | — | | | — | | |

| Balance at January 1, 2022 | | | $ | 28 | | $ | 1,863 | | $ | (157) | | $ | 5,870 | | $ | (789) | | $ | 6,815 | |

For each of the years in the three-year period ended January 1, 2022

| Income from continuing operations | | | $ | 747 | | $ | 309 | | $ | 815 | |

For each of the years in the three-year period ended January 1, 2022

| Income from continuing operations | | | $ | 740 | | $ | 301 | | $ | 793 | | $ | 7 | | $ | 8 | | $ | 22 | |

Revenue is classified as product or service revenue based on the predominant attributes of each performance obligation.

Product and service revenues and their related costs are reported on separate lines on the Consolidated Statement of Operations for 2021, and prior periods have been reclassified to conform to this presentation.

The percentage is based on a combination of factors, including historical loss

The discount rate used to

For positions meeting this recognition threshold, the benefit is measured as the largest

On January 25, 2021, we completed the sale of TRU Simulation + Training Canada Inc. (TRU Canada) within our Textron Systems segment for net cash proceeds of $38 million and recorded an after-tax gain of $17 million.

| Balance at January 1, 2022 | | | $ | 631 | | $ | 35 | | $ | 1,010 | | $ | 473 | | $ | 2,149 | |

| | | | 862 | | | 823 | | |

| *(In millions)* | | | January 1, 2022 | | | January 2, 2021 | | |

At January 1, 2022, 56% of our finance receivables were distributed internationally and 44% throughout the U.S., compared with 59% and 41%, respectively, at January 2, 2021.

Since the first quarter of 2020, the Finance segment has worked with certain customers impacted by the pandemic to provide payment relief through loan modifications.

The majority of these modified loans have returned to paying principal and interest.

For finance receivables categorized as nonaccrual, 72% were originated from 2017 to 2019.

| *(In millions)* | | | January 1, 2022 | | | January 2, 2021 | | |

| Allowance for credit losses on impaired finance receivables | | | 4 | | | 7 | | |

| *(In millions)* | | | January 1, 2022 | | | January 2, 2021 | | |

| *(In millions)* | | | January 1, 2022 | | | January 2, 2021 | | |

| | | | | | | | | | | | | 7,426 | | | 7,212 | | |

| | | | [Note 5.](#i2d192f77008d45ab8937879d57605ae2_115) | | | [Inventories](#i2d192f77008d45ab8937879d57605ae2_115) | | | [50](#i2d192f77008d45ab8937879d57605ae2_115) | | |

| | | | [Note 9.](#i2d192f77008d45ab8937879d57605ae2_130) | | | [Leases](#i2d192f77008d45ab8937879d57605ae2_130) | | | [51](#i2d192f77008d45ab8937879d57605ae2_130) | | |

| | | | [Note 12.](#i2d192f77008d45ab8937879d57605ae2_145) | | | [Shareholders’ Equity](#i2d192f77008d45ab8937879d57605ae2_145) | | | [54](#i2d192f77008d45ab8937879d57605ae2_145) | | |

| | | | [Note 14.](#i2d192f77008d45ab8937879d57605ae2_154) | | | [Revenues](#i2d192f77008d45ab8937879d57605ae2_154) | | | [57](#i2d192f77008d45ab8937879d57605ae2_154) | | |

| | | | [Note 16.](#i2d192f77008d45ab8937879d57605ae2_163) | | | [Retirement Plans](#i2d192f77008d45ab8937879d57605ae2_163) | | | [61](#i2d192f77008d45ab8937879d57605ae2_163) | | |

| | | | [Note 17.](#i2d192f77008d45ab8937879d57605ae2_169) | | | [Special Charges](#i2d192f77008d45ab8937879d57605ae2_169) | | | [65](#i2d192f77008d45ab8937879d57605ae2_169) | | |

| | | | [Note 18.](#i2d192f77008d45ab8937879d57605ae2_172) | | | [Income Taxes](#i2d192f77008d45ab8937879d57605ae2_172) | | | [66](#i2d192f77008d45ab8937879d57605ae2_172) | | |

| [Quarterly Data for](#i2d192f77008d45ab8937879d57605ae2_190) 2020 [and](#i2d192f77008d45ab8937879d57605ae2_190) 2019 [(Unaudited)](#i2d192f77008d45ab8937879d57605ae2_190) | | | | | | | | | [72](#i2d192f77008d45ab8937879d57605ae2_190) | | |

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

| Manufacturing revenues | | | $ | 11,596 | | $ | 13,564 | | $ | 13,906 | |

| Cost of sales | | | 10,094 | | | 11,406 | | | 11,594 | | |

| Basic | | | $ | 1.35 | | $ | 3.52 | | $ | 4.88 | |

| Diluted | | | $ | 1.35 | | $ | 3.50 | | $ | 4.83 | |

| Balance at December 30, 2017 | | | $ | 33 | | $ | 1,669 | | $ | (48) | | $ | 5,368 | | $ | (1,375) | | $ | 5,647 | |

| Adoption of ASC 606 | | | — | | | — | | | — | | | 90 | | | — | | | 90 | | |

| Other comprehensive loss | | | — | | | — | | | — | | | — | | | (130) | | | (130) | | |

| Reclassification of stranded tax effects | | | — | | | — | | | — | | | 257 | | | (257) | | | — | | |

| Retirement of treasury stock | | | (3) | | | (189) | | | 1,702 | | | (1,510) | | | — | | | — | | |

| Net income | | | $ | 301 | | $ | 793 | | $ | 1,198 | | $ | 8 | | $ | 22 | | $ | 24 | |

At the beginning of 2020, we adopted Accounting Standards Update No. 2016-13, *Financial Instruments - Credit Losses*.

This standard changed the prior incurred loss model to a forward-looking current expected credit loss model for most financial assets, such as trade and finance receivables, contract assets and other instruments.

There was no significant impact on our Consolidated Financial Statements upon adoption of the standard.

multiple performance obligations.

The 2018 favorable adjustments included $145 million, largely related to overhead rate improvements and risk retirements associated with contracts in the Bell segment.

In 2020, 2019 and 2018, gross unfavorable adjustments totaled $76 million, $82 million and $53 million, respectively.

years, estimated future taxable income and available tax planning strategies.

Business Dispositions

On November 25, 2020, we reached a definitive agreement to sell TRU Simulation + Training Canada Inc. within our Textron Systems segment.

At January 2, 2021, the assets and liabilities of this business met the criteria to be classified as held for sale and are recorded at the lower of the carrying value or fair value, less cost to sell.

The net carrying amounts classified as held for sale in the Consolidated Balance Sheet included $78 million of assets, primarily inventories, recorded in Other current assets and $77 million of liabilities, primarily contract liabilities, recorded in Other current liabilities.

The transaction closed on January 25, 2021, and we expect to record an after-tax gain of approximately $10 million in the first quarter of 2021.

On July 2, 2018, we completed the sale of the businesses that manufacture and sell the products in our Tools and Test Equipment product line within our Industrial segment for net cash proceeds of $807 million.

We recorded an after-tax gain of $419 million related to this disposition.

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

| Balance at December 29, 2018 | | | $ | 614 | | $ | 31 | | $ | 1,100 | | $ | 473 | | $ | 2,218 | |

| Acquisition | | | — | | | — | | | 4 | | | — | | | 4 | | |

In 2020, we recognized $47 million of intangible asset impairment charges, primarily related to indefinite-lived assets as discussed in Note 17.

| | | | 823 | | | 950 | | |

In March 2020, due to the economic impact of the COVID-19 pandemic and at the request of certain of our customers, we began working with them to provide temporary payment relief through loan modifications.

Of the modifications occurring during 2020, contracts for 32 customers, or $129 million of finance receivables, were categorized as troubled debt restructurings.

We performed an evaluation of the effectiveness of our disclosure controls and procedures as of January [removed: 2, 2021.][added: 1, 2022.]

Based on this evaluation, the CEO and CFO concluded that our disclosure controls and procedures were operating and effective as of January [removed: 2, 2021.][added: 1, 2022.]

Based on our evaluation under the 2013 Framework, we have concluded that Textron Inc. maintained, in all material respects, effective internal control over financial reporting as of January [removed: 2, 2021.][added: 1, 2022.]

The independent registered public accounting firm, Ernst & Young [removed: LLP,] [added: LLP (PCAOB ID: 42),] has audited the Consolidated Financial Statements of Textron Inc. and has issued an attestation report on Textron’s internal controls over financial reporting as of January [removed: 2, 2021,] [added: 1, 2022,] as stated in its report, which is included herein.

We have audited Textron Inc.’s internal control over financial reporting as of January [removed: 2, 2021,] [added: 1, 2022,] based on criteria established in Internal Control— Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 Framework), (the COSO criteria).

In our opinion, Textron, Inc. (the Company) maintained, in all material respects, effective internal control over financial reporting as of January [removed: 2, 2021,] [added: 1, 2022,] based on the COSO criteria.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Consolidated Balance Sheets of the Company as of January [removed: 2, 2021] [added: 1, 2022] and January [removed: 4, 2020,] [added: 2, 2021,] and the related Consolidated Statements of Operations, Comprehensive Income, [removed: Shareholder’s] [added: Shareholders'] Equity and Cash Flows for each of the three years in the period ended January [removed: 2, 2021,] [added: 1, 2022,] and the related notes and the financial statement schedule contained on page [removed: 73,] [added: 68,] of the Company and our report dated February [removed: 19, 2021] [added: 17, 2022] expressed an unqualified opinion thereon.

February 17, 2022

February 19, 2021

PART III

Not applicable.

PART III

The information appearing under “ELECTION OF DIRECTORS — Nominees for Director,” “CORPORATE GOVERNANCE — Corporate Governance Guidelines and Policies,” “— Code of Ethics,” and “— Board Committees — *Audit Committee*,” in the Proxy Statement for our [removed: 2021] [added: 2022] Annual Meeting of Shareholders is incorporated by reference into this Annual Report on Form 10-K.

The information appearing under “CORPORATE GOVERNANCE — Compensation of Directors,” “COMPENSATION COMMITTEE REPORT,” “COMPENSATION DISCUSSION AND ANALYSIS” and “EXECUTIVE COMPENSATION” in the Proxy Statement for our [removed: 2021] [added: 2022] Annual Meeting of Shareholders is incorporated by reference into this Annual Report on Form 10-K.

The information appearing under “SECURITY OWNERSHIP” and “EXECUTIVE COMPENSATION – Equity Compensation Plan Information” in the Proxy Statement for our [removed: 2021] [added: 2022] Annual Meeting of Shareholders is incorporated by reference into this Annual Report on Form 10-K.

The information appearing under “CORPORATE GOVERNANCE — Director Independence” and “EXECUTIVE COMPENSATION — Transactions with Related Persons” in the Proxy Statement for our [removed: 2021] [added: 2022] Annual Meeting of Shareholders is incorporated by reference into this Annual Report on Form 10-K.

The information appearing under “RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM — Fees to Independent Auditors” in the Proxy Statement for our [removed: 2021] [added: 2022] Annual Meeting of Shareholders is incorporated by reference into this Annual Report on Form 10-K.

Financial Statements and Schedules — See Index on Page [removed: 34.][added: 31.]

| 4.1B | | | | | | [Amendment to Support Agreement, dated as of December 23, 2015, by and between Textron Inc. and Textron Financial Corporation. Incorporated by reference to Exhibit 4.1B to Textron’s Annual Report on Form 10-K for the fiscal year ended January 2, [removed: 2016.](https://www.sec.gov/Archives/edgar/data/217346/000110465916099562/a15-23451_1ex4d1b.htm)] [added: 2016](https://www.sec.gov/Archives/edgar/data/217346/000110465916099562/a15-23451_1ex4d1b.htm) [(SEC File No. 1-5480)](https://www.sec.gov/Archives/edgar/data/217346/000110465916099562/a15-23451_1ex4d1b.htm)[.](https://www.sec.gov/Archives/edgar/data/217346/000110465916099562/a15-23451_1ex4d1b.htm)] | | |

| 4.2 | | | | | | [Description of registrant’s [removed: securities.](https://www.sec.gov/Archives/edgar/data/217346/000110465920024773/ex-4d6.htm) [Incorporated] [added: securities. Incorporated] by reference to [removed: Exhibit](https://www.sec.gov/Archives/edgar/data/217346/000110465920024773/ex-4d6.htm) [4.6] [added: Exhibit 4.6] to Textron's Annual Report on Form 10-K for the fiscal year ended January 4, 2020.](https://www.sec.gov/Archives/edgar/data/217346/000110465920024773/ex-4d6.htm) | | |

| [removed: 10.2A] [added: 10.2] | | | | | | [removed: [Textron] [added: [Amended and Restated Textron] Inc. Short-Term Incentive Plan. Incorporated by reference to Exhibit [removed: 10.2] [added: 10.1] to Textron’s Quarterly Report on Form 10-Q for the fiscal quarter ended [removed: April 1, 2017.](https://www.sec.gov/Archives/edgar/data/217346/000110465917026335/a17-8816_1ex10d2.htm)] [added: October 3, 2020.](https://www.sec.gov/Archives/edgar/data/217346/000021734620000069/q3202010qex-101.htm)] | | |

| [removed: 10.2B] [added: 10.3A] | | | | | | [removed: [Amended and Restated Textron] [added: [Textron] Inc. [removed: Short-Term] [added: 2015 Long-Term] Incentive [removed: Plan.](https://www.sec.gov/Archives/edgar/data/217346/000021734620000069/q3202010qex-101.htm) [Incorporated] [added: Plan. Incorporated] by reference to Exhibit 10.1 to Textron’s Quarterly Report on Form 10-Q for the fiscal quarter ended [removed: October 3, 2020.](https://www.sec.gov/Archives/edgar/data/217346/000021734620000069/q3202010qex-101.htm)] [added: July 4, 2015](https://www.sec.gov/Archives/edgar/data/217346/000110465915054257/a15-11861_1ex10d1.htm) [](https://www.sec.gov/Archives/edgar/data/217346/000110465915054257/a15-11861_1ex10d1.htm)[(SEC File No. 1-5480)](https://www.sec.gov/Archives/edgar/data/217346/000110465915054257/a15-11861_1ex10d1.htm)[.](https://www.sec.gov/Archives/edgar/data/217346/000110465915054257/a15-11861_1ex10d1.htm)] | | |

| [removed: 10.3A] [added: 10.3B] | | | | | | [removed: [Textron Inc.] [added: [Form of Non-Qualified Stock Option Agreement under] 2015 Long-Term Incentive Plan. Incorporated by reference to Exhibit 10.1 to Textron’s Quarterly Report on Form 10-Q for the fiscal quarter ended [removed: July 4, 2015.](https://www.sec.gov/Archives/edgar/data/217346/000110465915054257/a15-11861_1ex10d1.htm)] [added: April 2, 2016](https://www.sec.gov/Archives/edgar/data/217346/000110465916114825/a16-6092_1ex10d1.htm) [(SEC F](https://www.sec.gov/Archives/edgar/data/217346/000110465916114825/a16-6092_1ex10d1.htm)[ile No. 1-5480)](https://www.sec.gov/Archives/edgar/data/217346/000110465916114825/a16-6092_1ex10d1.htm)[.](https://www.sec.gov/Archives/edgar/data/217346/000110465916114825/a16-6092_1ex10d1.htm)] | | |

| [removed: 10.3B] [added: 10.3D] | | | | | | [Form of [removed: Non-Qualified Stock Option] [added: Performance Share Unit Grant] Agreement under 2015 Long-Term Incentive Plan. Incorporated by reference to Exhibit [removed: 10.1] [added: 10.3] to Textron’s Quarterly Report on Form 10-Q for the fiscal quarter ended April 2, [removed: 2016.](https://www.sec.gov/Archives/edgar/data/217346/000110465916114825/a16-6092_1ex10d1.htm)] [added: 2016](https://www.sec.gov/Archives/edgar/data/217346/000110465916114825/a16-6092_1ex10d3.htm) [(SEC File No. 1-5480)](https://www.sec.gov/Archives/edgar/data/217346/000110465916114825/a16-6092_1ex10d3.htm)[.](https://www.sec.gov/Archives/edgar/data/217346/000110465916114825/a16-6092_1ex10d3.htm)] | | |

| 10.3C | | | | | | [Form of Stock-Settled Restricted Stock Unit (with Dividend Equivalents) Grant Agreement under 2015 Long-Term Incentive Plan. Incorporated by reference to Exhibit 10.2 to Textron’s Quarterly Report on Form 10-Q for the fiscal quarter ended April 2, [removed: 2016.](https://www.sec.gov/Archives/edgar/data/217346/000110465916114825/a16-6092_1ex10d2.htm)] [added: 2016](https://www.sec.gov/Archives/edgar/data/217346/000110465916114825/a16-6092_1ex10d2.htm) [(SEC File No. 1-5480)](https://www.sec.gov/Archives/edgar/data/217346/000110465916114825/a16-6092_1ex10d2.htm)[.](https://www.sec.gov/Archives/edgar/data/217346/000110465916114825/a16-6092_1ex10d2.htm)] | | |

| [removed: 10.3D] [added: 10.3E] | | | | | | [Form of Performance Share Unit Grant Agreement under 2015 Long-Term Incentive Plan. Incorporated by reference to Exhibit [removed: 10.3] [added: 10.2] to Textron’s Quarterly Report on Form 10-Q for the fiscal quarter ended April [removed: 2, 2016.](https://www.sec.gov/Archives/edgar/data/217346/000110465916114825/a16-6092_1ex10d3.htm)] [added: 4, 2020.](https://www.sec.gov/Archives/edgar/data/217346/000110465920055073/txt-20200404xex10d2.htm)] | | |

| [removed: 10.3E] [added: 10.3F] | | | | | | [Form of [removed: Performance Share] [added: Stock-Settled Restricted Stock] Unit [added: (with Dividend Equivalents)] Grant Agreement under 2015 Long-Term Incentive Plan. Incorporated by reference to Exhibit [removed: 10.](https://www.sec.gov/Archives/edgar/data/217346/000110465920055073/txt-20200404xex10d2.htm)[2](https://www.sec.gov/Archives/edgar/data/217346/000110465920055073/txt-20200404xex10d2.htm) [to Textron’s] [added: 10.1 to Textron's] Quarterly Report on Form 10-Q for the fiscal quarter [removed: ended](https://www.sec.gov/Archives/edgar/data/217346/000110465920055073/txt-20200404xex10d2.htm) [April] [added: ended April] 4, [removed: 2](https://www.sec.gov/Archives/edgar/data/217346/000110465920055073/txt-20200404xex10d2.htm)[0](https://www.sec.gov/Archives/edgar/data/217346/000110465920055073/txt-20200404xex10d2.htm)[20](https://www.sec.gov/Archives/edgar/data/217346/000110465920055073/txt-20200404xex10d2.htm)[.](https://www.sec.gov/Archives/edgar/data/217346/000110465920055073/txt-20200404xex10d2.htm)] [added: 2020.](https://www.sec.gov/Archives/edgar/data/217346/000110465920055073/txt-20200404xex10d1.htm)] | | |

| 10.4 | | | | | | [Textron Spillover Savings Plan, effective October 5, 2015. Incorporated by reference to Exhibit 10.4 to Textron’s Annual Report on Form 10-K for the fiscal year ended January 2, [removed: 2016.](https://www.sec.gov/Archives/edgar/data/217346/000110465916099562/a15-23451_1ex10d4.htm)] [added: 2016](https://www.sec.gov/Archives/edgar/data/217346/000110465916099562/a15-23451_1ex10d4.htm) [(SEC File No. 1-5480)](https://www.sec.gov/Archives/edgar/data/217346/000110465916099562/a15-23451_1ex10d4.htm)[.](https://www.sec.gov/Archives/edgar/data/217346/000110465916099562/a15-23451_1ex10d4.htm)] | | |

| 10.6 | | | | | | [Deferred Income Plan for Textron Executives, Effective October 5, 2015. Incorporated by reference to Exhibit 10.6 to Textron’s Annual Report on Form 10-K for the fiscal year ended January 2, [removed: 2016.](https://www.sec.gov/Archives/edgar/data/217346/000110465916099562/a15-23451_1ex10d6.htm)] [added: 2016](https://www.sec.gov/Archives/edgar/data/217346/000110465916099562/a15-23451_1ex10d6.htm) [(SEC File No. 1-5480)](https://www.sec.gov/Archives/edgar/data/217346/000110465916099562/a15-23451_1ex10d6.htm)[.](https://www.sec.gov/Archives/edgar/data/217346/000110465916099562/a15-23451_1ex10d6.htm)] | | |

| 10.7E | | | | | | [Amendment No. 4 to Deferred Income Plan for Non-Employee Directors, as Amended and Restated Effective January 1, [removed: 2009](https://www.sec.gov/Archives/edgar/data/217346/000110465920024773/ex-10d7e.htm)[. Incorporated](https://www.sec.gov/Archives/edgar/data/217346/000110465920024773/ex-10d7e.htm) [by] [added: 2009. Incorporated by] reference to Exhibit 10.7E to Textron's Annual Report on [removed: F](https://www.sec.gov/Archives/edgar/data/217346/000110465920024773/ex-10d7e.htm)[o](https://www.sec.gov/Archives/edgar/data/217346/000110465920024773/ex-10d7e.htm)[rm] [added: Form] 10-K for [removed: the](https://www.sec.gov/Archives/edgar/data/217346/000110465920024773/ex-10d7e.htm) [fiscal] [added: the fiscal] year ended [removed: January](https://www.sec.gov/Archives/edgar/data/217346/000110465920024773/ex-10d7e.htm) [4](https://www.sec.gov/Archives/edgar/data/217346/000110465920024773/ex-10d7e.htm)[, 20](https://www.sec.gov/Archives/edgar/data/217346/000110465920024773/ex-10d7e.htm)[20](https://www.sec.gov/Archives/edgar/data/217346/000110465920024773/ex-10d7e.htm)[.](https://www.sec.gov/Archives/edgar/data/217346/000110465920024773/ex-10d7e.htm)] [added: January 4, 2020.](https://www.sec.gov/Archives/edgar/data/217346/000110465920024773/ex-10d7e.htm)] | | |

| 10.10 | | | | | | [Form of Indemnity Agreement between Textron and its non-employee directors (approved by the Nominating and Corporate Governance Committee of the Board of Directors on July 21, 2009 and entered into with all non-employee directors, effective as of August 1, [removed: 2009).] [added: 2009](https://www.sec.gov/Archives/edgar/data/217346/000021734609000156/indemnityagmtdirector.htm) [or as of such later date as the director joined the Board](https://www.sec.gov/Archives/edgar/data/217346/000021734609000156/indemnityagmtdirector.htm)[).] Incorporated by reference to Exhibit 10.1 to Textron’s Quarterly Report on Form 10-Q for the fiscal quarter ended October 3, 2009. (SEC File No. 1-5480)](https://www.sec.gov/Archives/edgar/data/217346/000021734609000156/indemnityagmtdirector.htm) | | |

| 10.11C | | | | | | [Amended and Restated Hangar License and Services Agreement, made and entered into as of October 1, 2015, between Textron Inc. and Mr. Donnelly’s limited liability company. Incorporated by reference to Exhibit 10.2 to Textron’s Quarterly Report on Form 10-Q for the fiscal quarter ended October 3, [removed: 2015.](https://www.sec.gov/Archives/edgar/data/217346/000110465915073479/a15-17798_1ex10d2.htm)] [added: 2015](https://www.sec.gov/Archives/edgar/data/217346/000110465915073479/a15-17798_1ex10d2.htm) [(SEC](https://www.sec.gov/Archives/edgar/data/217346/000110465915073479/a15-17798_1ex10d2.htm) [File](https://www.sec.gov/Archives/edgar/data/217346/000110465915073479/a15-17798_1ex10d2.htm) [No. 1-5480)](https://www.sec.gov/Archives/edgar/data/217346/000110465915073479/a15-17798_1ex10d2.htm)[.](https://www.sec.gov/Archives/edgar/data/217346/000110465915073479/a15-17798_1ex10d2.htm)] | | |

| 10.12B | | | | | | [Amended and Restated Hangar License and Services Agreement, made and entered into on July 24, 2015, between Textron Inc. and Mr. Connor’s limited liability company. Incorporated by reference to Exhibit 10.3 to Textron’s Quarterly Report on Form 10-Q for the fiscal quarter ended October 3, [removed: 2015.](https://www.sec.gov/Archives/edgar/data/217346/000110465915073479/a15-17798_1ex10d3.htm)] [added: 2015](https://www.sec.gov/Archives/edgar/data/217346/000110465915073479/a15-17798_1ex10d3.htm) [(SEC File No. 1-5480)](https://www.sec.gov/Archives/edgar/data/217346/000110465915073479/a15-17798_1ex10d3.htm)[.](https://www.sec.gov/Archives/edgar/data/217346/000110465915073479/a15-17798_1ex10d3.htm)] | | |

| 10.15 | | | | | | [Textron Inc. 2015 Long-Term Incentive Plan Equity Program for Non-Employee [removed: Directors](https://www.sec.gov/Archives/edgar/data/217346/000110465920024773/ex-10d15.htm)[.](https://www.sec.gov/Archives/edgar/data/217346/000110465920024773/ex-10d15.htm) [Incorporated] [added: Directors. Incorporated] by reference to Exhibit [removed: 10.1](https://www.sec.gov/Archives/edgar/data/217346/000110465920024773/ex-10d15.htm)[5](https://www.sec.gov/Archives/edgar/data/217346/000110465920024773/ex-10d15.htm) [to] [added: 10.15 to] Textron's Annual Report on Form 10-K for the fiscal year ended January 4, [removed: 2020](https://www.sec.gov/Archives/edgar/data/217346/000110465920024773/ex-10d15.htm)[. (SEC File No. 1-5480)](https://www.sec.gov/Archives/edgar/data/217346/000110465920024773/ex-10d15.htm)[.](https://www.sec.gov/Archives/edgar/data/217346/000110465920024773/ex-10d15.htm)] [added: 2020](https://www.sec.gov/Archives/edgar/data/217346/000110465920024773/ex-10d15.htm).] | | |

| 21 | | | | | | [Certain subsidiaries of Textron. Other subsidiaries, which considered in the aggregate do not constitute a significant subsidiary, are omitted from such [removed: list.](https://www.sec.gov/Archives/edgar/data/217346/000021734621000019/q4202010k-exx21.htm)] [added: list.](https://www.sec.gov/Archives/edgar/data/217346/000021734622000005/q4202110k-exx21.htm)] | | |

| 23 | | | | | | [Consent of Independent Registered Public Accounting [removed: Firm.](https://www.sec.gov/Archives/edgar/data/217346/000021734621000019/q4202010k-exx23.htm)] [added: Firm.](https://www.sec.gov/Archives/edgar/data/217346/000021734622000005/q4202110k-exx23.htm)] | | |

| 24 | | | | | | [Power of [removed: attorney.](https://www.sec.gov/Archives/edgar/data/217346/000021734621000019/q4202010k-exx24.htm)] [added: attorney.](https://www.sec.gov/Archives/edgar/data/217346/000021734622000005/q4202110k-exx24.htm)] | | |

| 31.1 | | | | | | [Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of [removed: 2002.](https://www.sec.gov/Archives/edgar/data/217346/000021734621000019/q4202010k-exx311.htm)] [added: 2002.](https://www.sec.gov/Archives/edgar/data/217346/000021734622000005/q4202110k-exx311.htm)] | | |

| 31.2 | | | | | | [Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of [removed: 2002.](https://www.sec.gov/Archives/edgar/data/217346/000021734621000019/q4202010k-exx312.htm)] [added: 2002.](https://www.sec.gov/Archives/edgar/data/217346/000021734622000005/q4202110k-exx312.htm)] | | |

| 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 [removed: 2002.](https://www.sec.gov/Archives/edgar/data/217346/000021734621000019/q4202010k-ex321.htm)] [added: 2002.](https://www.sec.gov/Archives/edgar/data/217346/000021734622000005/q4202110k-exx321.htm)] | | |

| 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 [removed: 2002.](https://www.sec.gov/Archives/edgar/data/217346/000021734621000019/q4202010k-ex322.htm)] [added: 2002.](https://www.sec.gov/Archives/edgar/data/217346/000021734622000005/q4202110k-exx322.htm)] | | |

| 101 | | | | | | The following materials from Textron Inc.’s Annual Report on Form 10-K for the year ended January [removed: 2, 2021,] [added: 1, 2022,] formatted in Inline 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 Shareholders’ Equity, (v) the Consolidated Statements of Cash Flows, (vi) the Notes to the Consolidated Financial Statements, and (vii) Schedule II – Valuation and Qualifying Accounts. | | |

| 10.16 | | | | | | [Director Compensation.](https://www.sec.gov/Archives/edgar/data/217346/000021734622000005/q4202110k-exx1016.htm) | | |

| | | | | | | | | |

| 10.3F | | | | | | [Form of Stock-Settled Restricted Stock Unit (with Dividend Equivalents) Grant Agreement under 2015 Long-Term Incentive Plan](https://www.sec.gov/Archives/edgar/data/217346/000110465920055073/txt-20200404xex10d1.htm)[.](https://www.sec.gov/Archives/edgar/data/217346/000110465920055073/txt-20200404xex10d1.htm) [Incorporated by reference to Exhibit 10.1 to Textron's Quarterly Report on F](https://www.sec.gov/Archives/edgar/data/217346/000110465920055073/txt-20200404xex10d1.htm)[o](https://www.sec.gov/Archives/edgar/data/217346/000110465920055073/txt-20200404xex10d1.htm)[rm 10-Q for the fiscal quarter ended](https://www.sec.gov/Archives/edgar/data/217346/000110465920055073/txt-20200404xex10d1.htm) [April 4, 2020.](https://www.sec.gov/Archives/edgar/data/217346/000110465920055073/txt-20200404xex10d1.htm) | | |

| 10.16 | | | | | | [Director Compensation](https://www.sec.gov/Archives/edgar/data/217346/000110465920024773/ex-10d16.htm)[. Incorporated by reference to Exh](https://www.sec.gov/Archives/edgar/data/217346/000110465920024773/ex-10d16.htm)[ibit 10.16 to Textron's Annual Report on Form 10-K for the fiscal year ended January 4, 2020](https://www.sec.gov/Archives/edgar/data/217346/000110465920024773/ex-10d16.htm) [(SEC File No. 1-5480)](https://www.sec.gov/Archives/edgar/data/217346/000110465920024773/ex-10d16.htm)[.](https://www.sec.gov/Archives/edgar/data/217346/000110465920024773/ex-10d16.htm) | | |

Pursuant to the requirement of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this Annual Report on Form 10-K to be signed on its behalf by the undersigned, thereunto duly authorized on this [removed: 19th] [added: 17th] day of February [removed: 2021.][added: 2022.]

Pursuant to the requirements of the Securities Exchange Act of 1934, this Annual Report on Form 10-K has been signed below on this [removed: 19th] [added: 17th] day of February [removed: 2021] [added: 2022] by the following persons on behalf of the registrant and in the capacities indicated:

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

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

| (*Dollars in millions, except per share amounts*) | | | 2020 | | | 2019 | | | 2018 | | | 2017 | | | 2016 | | |

| Revenues (a) | | | | | | | | | | | | | | | | | |

| Textron Aviation | | | $ | 3,974 | | $ | 5,187 | | $ | 4,971 | | $ | 4,686 | | $ | 4,921 | |

| Bell | | | 3,309 | | | 3,254 | | | 3,180 | | | 3,317 | | | 3,239 | | |

| Textron Systems | | | 1,313 | | | 1,325 | | | 1,464 | | | 1,840 | | | 1,756 | | |

| Industrial | | | 3,000 | | | 3,798 | | | 4,291 | | | 4,286 | | | 3,794 | | |

| Finance | | | 55 | | | 66 | | | 66 | | | 69 | | | 78 | | |

| Total revenues | | | $ | 11,651 | | $ | 13,630 | | $ | 13,972 | | $ | 14,198 | | $ | 13,788 | |

| Segment profit | | | | | | | | | | | | | | | | | |

| Textron Aviation | | | $ | 16 | | $ | 449 | | $ | 445 | | $ | 303 | | $ | 389 | |

| Bell | | | 462 | | | 435 | | | 425 | | | 415 | | | 386 | | |

| Textron Systems | | | 152 | | | 141 | | | 156 | | | 139 | | | 186 | | |

| Industrial | | | 111 | | | 217 | | | 218 | | | 290 | | | 329 | | |

| Finance | | | 10 | | | 28 | | | 23 | | | 22 | | | 19 | | |

| Total segment profit | | | 751 | | | 1,270 | | | 1,267 | | | 1,169 | | | 1,309 | | |

| Corporate expenses and other, net | | | (122) | | | (110) | | | (119) | | | (132) | | | (172) | | |

| Interest expense, net for Manufacturing group | | | (145) | | | (146) | | | (135) | | | (145) | | | (138) | | |

| Special charges (b) | | | (147) | | | (72) | | | (73) | | | (130) | | | (123) | | |

| Inventory charge (c) | | | (55) | | | — | | | — | | | — | | | — | | |

| Gain on business disposition (d) | | | — | | | — | | | 444 | | | — | | | — | | |

| Income tax (expense) benefit (e) | | | 27 | | | (127) | | | (162) | | | (456) | | | (33) | | |

| Income from continuing operations | | | $ | 309 | | $ | 815 | | $ | 1,222 | | $ | 306 | | $ | 843 | |

| Earnings per share | | | | | | | | | | | | | | | | | |

| Basic earnings per share — continuing operations | | | $ | 1.35 | | $ | 3.52 | | $ | 4.88 | | $ | 1.15 | | $ | 3.11 | |

| Diluted earnings per share — continuing operations | | | $ | 1.35 | | $ | 3.50 | | $ | 4.83 | | $ | 1.14 | | $ | 3.09 | |

| Basic average shares outstanding (in thousands) | | | 228,536 | | | 231,315 | | | 250,196 | | | 266,380 | | | 270,774 | | |

| Diluted average shares outstanding (in thousands) | | | 228,979 | | | 232,709 | | | 253,237 | | | 268,750 | | | 272,365 | | |

| Common stock information | | | | | | | | | | | | | | | | | |

| Dividends declared per share | | | $ | 0.08 | | $ | 0.08 | | $ | 0.08 | | $ | 0.08 | | $ | 0.08 | |

| Book value at year-end | | | $ | 25.81 | | $ | 24.21 | | $ | 22.04 | | $ | 21.60 | | $ | 20.62 | |

| Price at year-end | | | $ | 48.33 | | $ | 44.74 | | $ | 45.65 | | $ | 56.59 | | $ | 48.56 | |

| Financial position | | | | | | | | | | | | | | | | | |

| Total assets | | | $ | 15,443 | | $ | 15,018 | | $ | 14,264 | | $ | 15,340 | | $ | 15,358 | |

| Manufacturing group debt | | | $ | 3,707 | | $ | 3,124 | | $ | 3,066 | | $ | 3,088 | | $ | 2,777 | |

| Finance group debt | | | $ | 662 | | $ | 686 | | $ | 718 | | $ | 824 | | $ | 903 | |

| Shareholders’ equity | | | $ | 5,845 | | $ | 5,518 | | $ | 5,192 | | $ | 5,647 | | $ | 5,574 | |

| Manufacturing group debt-to-capital (net of cash) | | | 21% | | | 26% | | | 29% | | | 26% | | | 23% | | |

| Manufacturing group debt-to-capital | | | 39% | | | 36% | | | 37% | | | 35% | | | 33% | | |