Item 1. Financial Statements

TEXTRON INC.

Consolidated Statements of Operations (Unaudited)

			Three Months Ended						Six Months Ended
(In millions, except per share amounts)			June 28, 2025			June 29, 2024			June 28, 2025			June 29, 2024
Revenues
Manufacturing product revenues			$	3,197		$	2,842		$	5,968		$	5,274
Manufacturing service revenues			504			673			1,023			1,361
Finance revenues			15			12			31			27
Total revenues			3,716			3,527			7,022			6,662
Costs, expenses and other
Cost of products sold			2,630			2,281			4,907			4,206
Cost of services sold			377			553			772			1,098
Research and development costs			137			105			269			249
Selling and administrative expense			303			293			601			609
Interest expense, net			31			25			60			45
Special charges			4			13			4			27
Non-service components of pension and postretirement income, net			(67)			(66)			(133)			(132)
Total costs, expenses and other			3,415			3,204			6,480			6,102
Income from continuing operations before income taxes			301			323			542			560
Income tax expense			56			63			90			99
Income from continuing operations			245			260			452			461
Loss from discontinued operations			—			(1)			—			(1)
Net income			$	245		$	259		$	452		$	460
Basic earnings per share
Continuing operations			$	1.36		$	1.37		$	2.49		$	2.41
Diluted earnings per share
Continuing operations			$	1.35		$	1.35		$	2.48		$	2.38

See Notes to the Consolidated Financial Statements.

TEXTRON INC.

Consolidated Statements of Comprehensive Income (Unaudited)

			Three Months Ended						Six Months Ended
(In millions)			June 28, 2025			June 29, 2024			June 28, 2025			June 29, 2024
Net income			$	245		$	259		$	452		$	460
Other comprehensive income (loss), net of tax
Pension and postretirement benefits adjustments, net of reclassifications			—			1			—			2
Foreign currency translation adjustments, net of reclassifications			91			(14)			131			(47)
Deferred gains (losses) on hedge contracts, net of reclassifications			5			1			4			(4)
Other comprehensive income (loss)			96			(12)			135			(49)
Comprehensive income			$	341		$	247		$	587		$	411

See Notes to the Consolidated Financial Statements.

TEXTRON INC.

Consolidated Balance Sheets (Unaudited)

(Dollars in millions)			June 28, 2025			December 28, 2024
Assets
Manufacturing group
Cash and equivalents			$	1,352		$	1,386
Accounts receivable, net			877			949
Inventories			4,338			4,071
Other current assets			777			687
Total current assets			7,344			7,093
Property, plant and equipment, less accumulated depreciation and amortization of $5,666 and $5,471, respectively			2,490			2,529
Goodwill			2,319			2,288
Other assets			4,239			4,248
Total Manufacturing group assets			16,392			16,158
Finance group
Cash and equivalents			82			55
Finance receivables, net			585			603
Other assets			17			22
Total Finance group assets			684			680
Total assets			$	17,076		$	16,838
Liabilities and shareholders’ equity
Liabilities
Manufacturing group
Current portion of long-term debt			$	356		$	357
Accounts payable			1,101			943
Other current liabilities			2,903			3,094
Total current liabilities			4,360			4,394
Other liabilities			1,848			1,945
Long-term debt			3,038			2,890
Total Manufacturing group liabilities			9,246			9,229
Finance group
Other liabilities			57			64
Debt			340			341
Total Finance group liabilities			397			405
Total liabilities			9,643			9,634
Shareholders’ equity
Common stock			23			23
Capital surplus			2,041			1,960
Treasury stock			(514)			(82)
Retained earnings			6,052			5,607
Accumulated other comprehensive loss			(169)			(304)
Total shareholders’ equity			7,433			7,204
Total liabilities and shareholders’ equity			$	17,076		$	16,838
Common shares outstanding (in thousands)			178,156			182,964

See Notes to the Consolidated Financial Statements.

TEXTRON INC.

Consolidated Statements of Cash Flows (Unaudited)

For the Six Months Ended June 28, 2025 and June 29, 2024, respectively

			Consolidated
(In millions)			2025			2024
Cash flows from operating activities
Income from continuing operations			$	452		$	461
Adjustments to reconcile income from continuing operations to net cash provided by operating activities:
Non-cash items:
Depreciation and amortization			192			178
Deferred income taxes			(22)			(34)
Gain on business disposition			(4)			—
Other, net			73			61
Changes in assets and liabilities:
Accounts receivable, net			54			10
Inventories			(284)			(467)
Other assets			(70)			167
Accounts payable			163			107
Other liabilities			(200)			(46)
Income taxes, net			46			10
Pension, net			(117)			(112)
Captive finance receivables, net			(26)			7
Other operating activities, net			7			19
Net cash provided by operating activities of continuing operations			264			361
Net cash used in operating activities of discontinued operations			(1)			(1)
Net cash provided by operating activities			263			360
Cash flows from investing activities
Capital expenditures			(134)			(140)
Net proceeds from corporate-owned life insurance policies			57			26
Net proceeds from business disposition			16			—
Proceeds from sale of property, plant and equipment			9			3
Net cash used in business acquisitions			(1)			(13)
Finance receivables repaid			17			31
Finance receivables originated			(21)			(18)
Proceeds from the disposition of leveraged leases			59			—
Other investing activities, net			15			—
Net cash provided by (used in) investing activities			17			(111)
Cash flows from financing activities
Net proceeds from long-term debt			495			—
Principal payments on long-term debt and nonrecourse debt			(364)			(374)
Purchases of Textron common stock			(429)			(675)
Proceeds from options exercised			10			73
Dividends paid			(7)			(8)
Other financing activities, net			(15)			(25)
Net cash used in financing activities			(310)			(1,009)
Effect of exchange rate changes on cash and equivalents			23			(10)
Net decrease in cash and equivalents			(7)			(770)
Cash and equivalents at beginning of period			1,441			2,181
Cash and equivalents at end of period			$	1,434		$	1,411

See Notes to the Consolidated Financial Statements.

TEXTRON INC.

Consolidated Statements of Cash Flows (Unaudited) (Continued)

For the Six Months Ended June 28, 2025 and June 29, 2024, respectively

			Manufacturing Group						Finance Group
(In millions)			2025			2024			2025			2024
Cash flows from operating activities
Income from continuing operations			$	435		$	441		$	17		$	20
Adjustments to reconcile income from continuing operations to net cash provided by operating activities:
Non-cash items:
Depreciation and amortization			192			178			—			—
Deferred income taxes			(3)			(34)			(19)			—
Gain on business disposition			(4)			—			—			—
Other, net			73			73			—			(12)
Changes in assets and liabilities:
Accounts receivable, net			54			10			—			—
Inventories			(284)			(467)			—			—
Other assets			(69)			168			(1)			(1)
Accounts payable			163			107			—			—
Other liabilities			(195)			(42)			(5)			(4)
Income taxes, net			29			12			17			(2)
Pension, net			(117)			(112)			—			—
Other operating activities, net			7			19			—			—
Net cash provided by operating activities of continuing operations			281			353			9			1
Net cash used in operating activities of discontinued operations			(1)			(1)			—			—
Net cash provided by operating activities			280			352			9			1
Cash flows from investing activities
Capital expenditures			(134)			(140)			—			—
Net proceeds from corporate-owned life insurance policies			57			26			—			—
Net proceeds from business disposition			16			—			—			—
Proceeds from sale of property, plant and equipment			9			3			—			—
Net cash used in business acquisitions			(1)			(13)			—			—
Finance receivables repaid			—			—			81			78
Finance receivables originated			—			—			(111)			(58)
Proceeds from the disposition of leveraged leases			—			—			59			—
Other investing activities, net			15			—			—			—
Net cash provided by (used in) investing activities			(38)			(124)			29			20
Cash flows from financing activities
Net proceeds from long-term debt			495			—			—			—
Principal payments on long-term debt and nonrecourse debt			(353)			(359)			(11)			(15)
Purchases of Textron common stock			(429)			(675)			—			—
Proceeds from options exercised			10			73			—			—
Dividends paid			(7)			(8)			—			—
Other financing activities, net			(15)			(25)			—			—
Net cash used in financing activities			(299)			(994)			(11)			(15)
Effect of exchange rate changes on cash and equivalents			23			(10)			—			—
Net increase (decrease) in cash and equivalents			(34)			(776)			27			6
Cash and equivalents at beginning of period			1,386			2,121			55			60
Cash and equivalents at end of period			$	1,352		$	1,345		$	82		$	66

See Notes to the Consolidated Financial Statements.

TEXTRON INC.

Notes to the Consolidated Financial Statements (Unaudited)

Note 1. Basis of Presentation

Our Consolidated Financial Statements include the accounts of Textron Inc. (Textron) and its majority-owned subsidiaries. We have prepared these unaudited consolidated financial statements in accordance with accounting principles generally accepted in the U.S. for interim financial information. Accordingly, these interim financial statements do not include all of the information and footnotes required by accounting principles generally accepted in the U.S. for complete financial statements. The consolidated interim financial statements included in this quarterly report should be read in conjunction with the consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 28, 2024. In the opinion of management, the interim financial statements reflect all adjustments (consisting only of normal recurring adjustments) that are necessary for the fair presentation of our consolidated financial position, results of operations and cash flows for the interim periods presented. The results of operations for the interim periods are not necessarily indicative of the results to be expected for the full year.

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

Use of Estimates

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

Contract Estimates

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

In the second quarter of 2025 and 2024, our cumulative catch-up adjustments increased segment profit by $8 million and $18 million, respectively, and net income by $6 million and $14 million, respectively ($0.03 and $0.07 per diluted share, respectively). In the first half of 2025 and 2024, our cumulative catch-up adjustments increased segment profit by $25 million and $31 million, respectively, and net income by $19 million and $24 million, respectively ($0.10 and $0.12 per diluted share, respectively).

Note 2. Accounts Receivable and Finance Receivables

Accounts Receivable

Accounts receivable is composed of the following:

(In millions)			June 28, 2025			December 28, 2024
Commercial			$	800		$	738
U.S. Government contracts			96			230
			896			968
Allowance for credit losses			(19)			(19)
Total accounts receivable, net			$	877		$	949

Finance Receivables

Finance receivables are presented in the following table:

(In millions)			June 28, 2025			December 28, 2024
Finance receivables			$	605		$	622
Allowance for credit losses			(20)			(19)
Total finance receivables, net			$	585		$	603

Finance Receivable Portfolio Quality

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

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

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

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

(Dollars in millions)			June 28, 2025			December 28, 2024
Performing			$	569		$	612
Watchlist			33			—
Nonaccrual			3			10
Nonaccrual as a percentage of finance receivables			0.50%			1.61%
Current and less than 31 days past due			$	596		$	609
31-60 days past due			9			13
60+ days contractual delinquency as a percentage of finance receivables			—%			—%

At June 28, 2025, 47% of our performing finance receivables were originated since the beginning of 2023 and 27% were originated from 2020 to 2022 with the remainder prior to 2020. For finance receivables categorized as watchlist, 100% were originated from 2023 to 2024, and for nonaccrual, 100% were originated prior to 2021.

On a quarterly basis, we evaluate individual larger balance accounts for impairment. A finance receivable is considered impaired when it is probable that we will be unable to collect all amounts due according to the contractual terms of the loan agreement based on our review of the credit quality indicators described above. Impaired finance receivables include both nonaccrual accounts and accounts for which full collection of principal and interest remains probable, but the account’s original terms have been, or are expected to be, significantly modified. If the modification specifies an interest rate equal to or greater than a market rate for a finance receivable with comparable risk, the account is not considered impaired in years subsequent to the modification. Our impaired finance receivables were insignificant at June 28, 2025 and December 28, 2024.

Note 3. Inventories

Inventories are composed of the following:

(In millions)			June 28, 2025			December 28, 2024
Finished goods			$	1,179		$	1,138
Work in process			2,026			1,769
Raw materials and components			1,133			1,164
Total inventories			$	4,338		$	4,071

Note 4. Accounts Payable and Warranty Liability

Accounts Payable

Supplier Financing Arrangement

We have a financing arrangement with one of our suppliers for a maximum amount of $200 million that extends payment terms for up to 190 days from the receipt of goods and provides for the supplier to be paid by a financial institution earlier than maturity. This financing arrangement expires in April 2027. At June 28, 2025 and December 28, 2024, the amount due under the supplier financing arrangement was $112 million and $50 million, respectively.

Warranty Liability

Changes in our current and non-current warranty liability are as follows:

			Six Months Ended
(In millions)			June 28, 2025			June 29, 2024
Beginning of period			$	173		$	172
Provision			38			38
Changes to estimates			24			2
Settlements			(45)			(36)
Other*			(9)			(4)
End of period			$	181		$	172

** Other includes business dispositions and currency translation adjustments.*

Note 5. Leases

We primarily lease certain manufacturing plants, offices, warehouses, training and service centers at various locations worldwide that are classified as either operating or finance leases. Our leases have remaining lease terms up to 26 years, which include options to extend the lease term for periods up to 20 years when it is reasonably certain the option will be exercised.

Operating lease cost totaled $18 million in both the second quarter of 2025 and 2024, and $36 million in both the first half of 2025 and 2024. Cash paid for operating leases approximated the lease cost and is classified in cash flows from operating activities. Noncash transactions related to operating leases totaled $3 million and $28 million in the first half of 2025 and 2024, respectively, reflecting new or modified leases and changes from the reassessment of lease options. In the first half of 2024, non-cash transactions also included the recognition of a $72 million asset and liability related to a new finance lease. Finance lease, variable and short-term lease costs were not significant.

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

(Dollars in millions)			June 28, 2025			December 28, 2024
Operating leases:
Other assets			$	340		$	360
Other current liabilities			54			55
Other liabilities			299			316
Weighted-average remaining lease term (in years)			9.5			10.0
Weighted-average discount rate			4.85%			4.84%
Finance leases:
Property, plant and equipment, less accumulated amortization of $11 million and $9 million, respectively			$	96		$	95
Long-term debt, including current portion			99			97
Weighted-average remaining lease term (in years)			6.5			5.9
Weighted-average discount rate			6.65%			6.72%

At June 28, 2025, maturities of our operating lease liabilities on an undiscounted basis totaled $36 million for the remainder of 2025, $61 million for 2026, $51 million for 2027, $46 million for 2028, $42 million for 2029 and $211 million thereafter.

Note 6. Debt

Under our shelf registration statement, on February 13, 2025, we issued $500 million of SEC-registered fixed-rate notes due in May 2035 with an annual interest rate of 5.50%. The net proceeds of the issuance totaled $495 million, after deducting underwriting discounts, commissions and offering expenses.

Note 7. Derivative Instruments and Fair Value Measurements

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

Assets and Liabilities Recorded at Fair Value on a Recurring Basis

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

Our foreign currency exchange contracts are measured at fair value using the market method valuation technique. The inputs to this technique utilize current foreign currency exchange forward market rates published by third-party leading financial news and data providers. These are observable data that represent the rates that the financial institution uses for contracts entered into at that date; however, they are not based on actual transactions, so they are classified as Level 2. At June 28, 2025 and December 28, 2024, we had foreign currency exchange contracts with notional amounts upon which the contracts were based of $651 million and $464 million, respectively. At June 28, 2025, the fair value amounts of our foreign currency exchange contracts were a $12 million asset and a $14 million liability. At December 28, 2024, the fair value amount of our foreign currency exchange contracts were a $5 million asset and a $19 million liability.

Our Finance group enters into interest rate swap agreements to mitigate certain exposures to fluctuations in interest rates. By using these contracts, we are able to convert floating-rate cash flows to fixed-rate cash flows. These agreements are designated as cash flow hedges. The fair value of our interest rate swap agreements is determined using values published by third-party leading financial news and data providers. These values are observable data that represent the value that financial institutions use for contracts entered into at that date, but are not based on actual transactions, so they are classified as Level 2. The fair value of our outstanding interest rate swap agreements was a $2 million and an $8 million asset at June 28, 2025 and December 28, 2024, respectively.

At June 28, 2025 and December 28, 2024, our Finance group had interest rate swap agreements related to our Floating Rate Junior Subordinated Notes for an aggregate notional amount of $264 million that effectively converts the variable-rate interest for these Notes to a weighted-average fixed rate of 5.20%. These agreements have maturities ranging from August 2025 to August 2029. At June 28, 2025 and December 28, 2024, we also had a swap agreement related to these Notes with a notional amount of $30 million and a weighted-average fixed rate of 5.10% that has a forward start date of August 15, 2025 and matures on August 15, 2030.

Assets and Liabilities Not Recorded at Fair Value

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

			June 28, 2025						December 28, 2024
			Carrying			Estimated			Carrying			Estimated
(In millions)			Value			Fair Value			Value			Fair Value
Manufacturing group
Debt, excluding leases			$	(3,312)		$	(3,211)		$	(3,164)		$	(2,989)
Finance group
Finance receivables, excluding leases			476			506			439			454
Debt			(340)			(313)			(341)			(311)

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

Note 8. Shareholders’ Equity

A reconciliation of Shareholders’ equity is presented below:

(In millions)			Common Stock			Capital Surplus			Treasury Stock			Retained Earnings			Accumulated Other Comprehensive Loss			Total Shareholders' Equity
Three months ended June 28, 2025
Beginning of period			$	23		$	2,005		$	(299)		$	5,811		$	(265)		$	7,275
Net income			—			—			—			245			—			245
Other comprehensive income			—			—			—			—			96			96
Share-based compensation activity			—			36			—			—			—			36
Dividends declared			—			—			—			(4)			—			(4)
Purchases of common stock, including excise tax*			—			—			(215)			—			—			(215)
End of period			$	23		$	2,041		$	(514)		$	6,052		$	(169)		$	7,433
Three months ended June 29, 2024
Beginning of period			$	25		$	2,012		$	(484)		$	6,059		$	(681)		$	6,931
Net income			—			—			—			259			—			259
Other comprehensive loss			—			—			—			—			(12)			(12)
Share-based compensation activity			—			38			—			—			—			38
Dividends declared			—			—			—			(4)			—			(4)
Purchases of common stock, including excise tax*			—			—			(360)			—			—			(360)
End of period			$	25		$	2,050		$	(844)		$	6,314		$	(693)		$	6,852
Six months ended June 28, 2025
Beginning of period			$	23		$	1,960		$	(82)		$	5,607		$	(304)		$	7,204
Net income			—			—			—			452			—			452
Other comprehensive income			—			—			—			—			135			135
Share-based compensation activity			—			81			—			—			—			81
Dividends declared			—			—			—			(7)			—			(7)
Purchases of common stock, including excise tax*			—			—			(432)			—			—			(432)
End of period			$	23		$	2,041		$	(514)		$	6,052		$	(169)		$	7,433
Six months ended June 29, 2024
Beginning of period			$	24		$	1,910		$	(165)		$	5,862		$	(644)		$	6,987
Net income			—			—			—			460			—			460
Other comprehensive loss			—			—			—			—			(49)			(49)
Share-based compensation activity			1			140			—			—			—			141
Dividends declared			—			—			—			(8)			—			(8)
Purchases of common stock, including excise tax*			—			—			(679)			—			—			(679)
End of period			$	25		$	2,050		$	(844)		$	6,314		$	(693)		$	6,852

*Includes amounts accrued for excise tax imposed on common share repurchases that totaled $1 million and $3 million for the second quarter and first half of 2025, respectively, and $2 million and $4 million for the second quarter and first half of 2024, respectively.

Dividends per share of common stock were $0.02 for both the second quarter of 2025 and 2024 and $0.04 for both the first half of 2025 and 2024.

Earnings Per Share

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

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

			Three Months Ended						Six Months Ended
(In thousands)			June 28, 2025			June 29, 2024			June 28, 2025			June 29, 2024
Basic weighted-average shares outstanding			179,958			189,746			181,168			191,273
Dilutive effect of stock options			1,133			2,109			1,211			2,085
Diluted weighted-average shares outstanding			181,091			191,855			182,379			193,358

In the second quarter and first half of 2025, stock options to purchase 2.9 million and 2.5 million shares of common stock, respectively, were excluded from the calculation of diluted weighted-average shares outstanding as their effect would have been anti-dilutive. Stock options to purchase 1.0 million shares of common stock were excluded from the calculation of diluted weighted-average shares outstanding for both the second quarter and first half of 2024 as their effect would have been anti-dilutive.

Accumulated Other Comprehensive Loss and Other Comprehensive Income (Loss)

The components of Accumulated other comprehensive loss are presented below:

(In millions)			Pension and Postretirement Benefits Adjustments			Foreign Currency Translation Adjustments			Deferred Gains (Losses) on Hedge Contracts			Accumulated Other Comprehensive Loss
Balance at December 28, 2024			$	(179)		$	(120)		$	(5)		$	(304)
Other comprehensive income before reclassifications			—			133			3			136
Reclassified from Accumulated other comprehensive loss			—			(2)			1			(1)
Balance at June 28, 2025			$	(179)		$	11		$	(1)		$	(169)
Balance at December 30, 2023			$	(598)		$	(49)		$	3		$	(644)
Other comprehensive loss before reclassifications			—			(47)			(4)			(51)
Reclassified from Accumulated other comprehensive loss			2			—			—			2
Balance at June 29, 2024			$	(596)		$	(96)		$	(1)		$	(693)

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

			June 28, 2025									June 29, 2024
(In millions)			Pre-Tax Amount			Tax (Expense) Benefit			After-tax Amount			Pre-Tax Amount			Tax (Expense) Benefit			After-tax Amount
Three Months Ended
Pension and postretirement benefits adjustments:
Amortization of net actuarial gain*			$	(2)		$	1		$	(1)		$	(1)		$	—		$	(1)
Amortization of prior service cost*			2			(1)			1			2			—			2
Pension and postretirement benefits adjustments, net			—			—			—			1			—			1
Foreign currency translation adjustments:
Foreign currency translation adjustments			93			—			93			(14)			—			(14)
Business disposition			(2)			—			(2)			—			—			—
Foreign currency translation adjustments, net			91			—			91			(14)			—			(14)
Deferred gains on hedge contracts:
Current deferrals			8			(3)			5			1			—			1
Reclassification adjustments			—			—			—			(1)			1			—
Deferred gains on hedge contracts, net			8			(3)			5			—			1			1
Total			$	99		$	(3)		$	96		$	(13)		$	1		$	(12)
Six Months Ended
Pension and postretirement benefits adjustments:
Amortization of net actuarial gain*			$	(4)		$	1		$	(3)		$	(2)		$	—		$	(2)
Amortization of prior service cost*			4			(1)			3			4			—			4
Pension and postretirement benefits adjustments, net			—			—			—			2			—			2
Foreign currency translation adjustments:
Foreign currency translation adjustments			133			—			133			(47)			—			(47)
Business disposition			(2)			—			(2)			—			—			—
Foreign currency translation adjustments, net			131			—			131			(47)			—			(47)
Deferred gains (losses) on hedge contracts:
Current deferrals			5			(2)			3			(6)			2			(4)
Reclassification adjustments			2			(1)			1			(2)			2			—
Deferred gains (losses) on hedge contracts, net			7			(3)			4			(8)			4			(4)
Total			$	138		$	(3)		$	135		$	(53)		$	4		$	(49)

*These components of other comprehensive income (loss) are included in the computation of net periodic pension cost (income). See Note 14 of our 2024 Annual Report on Form 10-K for additional information.

Note 9. Segment Financial Information

We operate in, and report financial information for, the following six operating segments: Textron Aviation, Bell, Textron Systems, Industrial, Textron eAviation and Finance. Segment profit for the manufacturing segments excludes the non-service components of pension and postretirement income, net; LIFO inventory provision; intangible asset amortization; interest expense, net for Manufacturing group; certain corporate expenses; gains/losses on major business dispositions; and special charges. The measurement for the Finance segment includes interest income and expense along with intercompany interest income and expense.

Our revenues and expenses by segment are provided below:

(In millions)			Textron Aviation			Bell			Textron Systems			Industrial			Textron eAviation			Finance			Total
Three months ended June 28, 2025
Revenues			$	1,517		$	1,016		$	321		$	839		$	8		$	15		$	3,716
Costs and expenses:
Cost of sales			1,171			841			244			698			7			—			2,961
Research and development costs			53			38			15			20			11			—			137
Selling and administrative expense			113			57			22			67			6			2			267
Interest expense, net			—			—			—			—			—			5			5
Segment profit (loss)			$	180		$	80		$	40		$	54		$	(16)		$	8		$	346
Three months ended June 29, 2024
Revenues			$	1,475		$	794		$	323		$	914		$	9		$	12		$	3,527
Costs and expenses:
Cost of sales			1,119			649			246			775			9			—			2,798
Research and development costs			51			7			15			18			14			—			105
Selling and administrative expense			110			56			27			79			4			—			276
Interest expense, net			—			—			—			—			—			5			5
Segment profit (loss)			$	195		$	82		$	35		$	42		$	(18)		$	7		$	343
Six months ended June 28, 2025
Revenues			$	2,729		$	1,999		$	617		$	1,631		$	15		$	31		$	7,022
Costs and expenses:
Cost of sales			2,100			1,644			463			1,376			13			—			5,596
Research and development costs			110			77			23			34			25			—			269
Selling and administrative expense			212			108			51			137			10			4			522
Interest expense, net			—			—			—			—			—			9			9
Segment profit (loss)			$	307		$	170		$	80		$	84		$	(33)		$	18		$	626
Six months ended June 29, 2024
Revenues			$	2,663		$	1,521		$	629		$	1,806		$	16		$	27		$	6,662
Costs and expenses:
Cost of sales			2,010			1,214			468			1,533			15			—			5,240
Research and development costs			103			46			33			38			29			—			249
Selling and administrative expense			212			99			55			164			8			(8)			530
Interest expense, net			—			—			—			—			—			10			10
Segment profit (loss)			$	338		$	162		$	73		$	71		$	(36)		$	25		$	633

A reconciliation of segment profit to Income from continuing operations before income taxes is presented below:

			Three Months Ended						Six Months Ended
(In millions)			June 28, 2025			June 29, 2024			June 28, 2025			June 29, 2024
Segment profit			$	346		$	343		$	626		$	633
Unallocated amounts:
Corporate expenses and other, net			(36)			(17)			(79)			(79)
Interest expense, net for Manufacturing group			(26)			(20)			(51)			(35)
LIFO inventory provision			(38)			(27)			(67)			(47)
Intangible asset amortization			(8)			(9)			(16)			(17)
Special charges			(4)			(13)			(4)			(27)
Non-service components of pension and postretirement income, net			67			66			133			132
Income from continuing operations before income taxes			$	301		$	323		$	542		$	560

Other information by segment is provided below:

			Capital Expenditures												Depreciation and Amortization
			Three Months Ended						Six Months Ended						Three Months Ended						Six Months Ended
(In millions)			June 28, 2025			June 29, 2024			June 28, 2025			June 29, 2024			June 28, 2025			June 29, 2024			June 28, 2025			June 29, 2024
Textron Aviation			$	37		$	34		$	62		$	61		$	40		$	37		$	77		$	73
Bell			18			18			33			37			28			20			50			39
Textron Systems			8			7			13			15			12			12			24			23
Industrial			15			14			25			25			17			17			34			35
Textron eAviation			—			1			1			2			2			2			4			4
Corporate			—			—			—			—			1			2			3			4
Total			$	78		$	74		$	134		$	140		$	100		$	90		$	192		$	178

Our assets by segment are summarized below:

(In millions)																		June 28, 2025			December 28, 2024
Textron Aviation																		$	4,823		$	4,624
Bell																		3,062			2,992
Textron Systems																		2,044			2,036
Industrial																		2,391			2,378
Textron eAviation																		317			286
Finance																		684			680
Corporate																		3,755			3,842
Total assets																		$	17,076		$	16,838

Note 10. Revenues

Disaggregation of Revenues

Our revenues disaggregated by major product type are presented below:

			Three Months Ended						Six Months Ended
(In millions)			June 28, 2025			June 29, 2024			June 28, 2025			June 29, 2024
Aircraft			$	1,010		$	975		$	1,739		$	1,707
Aftermarket parts and services			507			500			990			956
Textron Aviation			$	1,517		$	1,475		$	2,729		$	2,663
Military aircraft and support programs			648			499			1,282			979
Commercial helicopters, parts and services			368			295			717			542
Bell			$	1,016		$	794		$	1,999		$	1,521
Textron Systems			$	321		$	323		$	617		$	629
Fuel systems and functional components			483			492			933			980
Specialized vehicles			356			422			698			826
Industrial			$	839		$	914		$	1,631		$	1,806
Textron eAviation			$	8		$	9		$	15		$	16
Finance			$	15		$	12		$	31		$	27
Total revenues			$	3,716		$	3,527		$	7,022		$	6,662

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

(In millions)			Textron Aviation			Bell			Textron Systems			Industrial			Textron eAviation			Finance			Total
Three months ended June 28, 2025
Customer type:
Commercial			$	1,431		$	361		$	76		$	829		$	8		$	15		$	2,720
U.S. Government			86			655			245			10			—			—			996
Total revenues			$	1,517		$	1,016		$	321		$	839		$	8		$	15		$	3,716
Geographic location:
United States			$	1,079		$	820		$	293		$	454		$	4		$	5		$	2,655
Europe			153			12			10			166			2			1			344
Other international			285			184			18			219			2			9			717
Total revenues			$	1,517		$	1,016		$	321		$	839		$	8		$	15		$	3,716
Three months ended June 29, 2024
Customer type:
Commercial			$	1,343		$	288		$	79		$	908		$	9		$	12		$	2,639
U.S. Government			132			506			244			6			—			—			888
Total revenues			$	1,475		$	794		$	323		$	914		$	9		$	12		$	3,527
Geographic location:
United States			$	1,147		$	639		$	283		$	497		$	5		$	4		$	2,575
Europe			91			14			12			183			3			—			303
Other international			237			141			28			234			1			8			649
Total revenues			$	1,475		$	794		$	323		$	914		$	9		$	12		$	3,527
Six months ended June 28, 2025
Customer type:
Commercial			$	2,574		$	722		$	146		$	1,614		$	15		$	31		$	5,102
U.S. Government			155			1,277			471			17			—			—			1,920
Total revenues			$	2,729		$	1,999		$	617		$	1,631		$	15		$	31		$	7,022
Geographic location:
United States			$	1,991		$	1,502		$	562		$	862		$	7		$	9		$	4,933
Europe			239			68			22			330			5			1			665
Other international			499			429			33			439			3			21			1,424
Total revenues			$	2,729		$	1,999		$	617		$	1,631		$	15		$	31		$	7,022
Six months ended June 29, 2024
Customer type:
Commercial			$	2,498		$	527		$	151		$	1,792		$	16		$	27		$	5,011
U.S. Government			165			994			478			14			—			—			1,651
Total revenues			$	2,663		$	1,521		$	629		$	1,806		$	16		$	27		$	6,662
Geographic location:
United States			$	2,097		$	1,198		$	557		$	957		$	9		$	8		$	4,826
Europe			153			37			25			381			5			5			606
Other international			413			286			47			468			2			14			1,230
Total revenues			$	2,663		$	1,521		$	629		$	1,806		$	16		$	27		$	6,662

Remaining Performance Obligations

Our remaining performance obligations, which is the equivalent of our backlog, represent the expected transaction price allocated to our contracts that we expect to recognize as revenues in future periods when we perform under the contracts. These remaining obligations exclude unexercised contract options and potential orders under ordering-type contracts such as Indefinite Delivery, Indefinite Quantity contracts. At June 28, 2025, we had $16.9 billion in remaining performance obligations of which we expect to recognize revenues of approximately 73% through 2026, an additional 24% through 2028, and the balance thereafter.

Contract Assets and Liabilities

Assets and liabilities related to our contracts with customers are reported on a contract-by-contract basis at the end of each reporting period. At June 28, 2025 and December 28, 2024, contract assets totaled $453 million and $345 million, respectively, and contract liabilities totaled $1.9 billion at both dates, reflecting timing differences between revenues recognized, billings and payments from customers. We recognized revenues of $691 million and $660 million in the first half of 2025 and 2024, respectively, that were included in the contract liability balance at the beginning of each year.

Note 11. Retirement Plans

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

			Three Months Ended						Six Months Ended
(In millions)			June 28, 2025			June 29, 2024			June 28, 2025			June 29, 2024
Pension Benefits
Service cost			$	15		$	17		$	31		$	34
Interest cost			94			91			188			181
Expected return on plan assets			(162)			(159)			(324)			(318)
Amortization of net actuarial loss			—			1			—			2
Amortization of prior service cost			3			3			5			5
Net periodic benefit income*			$	(50)		$	(47)		$	(100)		$	(96)
Postretirement Benefits Other Than Pensions
Service cost			$	1		$	1		$	1		$	1
Interest cost			1			1			3			3
Amortization of net actuarial gain			(2)			(2)			(4)			(4)
Amortization of prior service credit			(1)			(1)			(1)			(1)
Net periodic benefit income			$	(1)		$	(1)		$	(1)		$	(1)

** Excludes the cost associated with the defined contribution component, included in certain of our U.S.-based defined benefit pension plans, that totaled $2 million and $5 million for the second quarter and first half of 2025, respectively, and $2 million* and $6 million for the second quarter and first half of 2024, respectively.

Note 12. Special Charges

In connection with the termination of certain U.S. Government development programs, we initiated restructuring actions in the second quarter of 2025 to reduce operating expenses through headcount reductions and other actions at the Textron Systems segment. As a result, we recorded special charges of $8 million in the second quarter of 2025, which included severance costs of $5 million and contract termination costs of $3 million. Headcount reductions are expected to total approximately 85 positions, representing less than 1% of our global workforce. We expect the restructuring actions to be substantially completed in the third quarter of 2025.

In the second quarter of 2025, we completed the previously announced strategic review of the Powersports product line and on April 23, 2025, we closed on the sale of the Powersports business, including the Arctic Cat brand and its operations. Net cash proceeds from the sale were $16 million and we recorded a pre-tax gain of $4 million, which is included in special charges.

In the second quarter and first half of 2024, we recognized special charges of $13 million and $27 million, respectively, related to a 2023 restructuring plan.

Our restructuring reserve activity, which includes the restructuring actions discussed above and the 2023 plan, is summarized below:

(In millions)			Severance Costs			Contract Terminations and Other			Total
Balance at December 28, 2024			$	37		$	34		$	71
Provision			5			3			8
Cash paid			(11)			(15)			(26)
Business disposition			(7)			(15)			(22)
Foreign currency translation			3			—			3
Balance at June 28, 2025			$	27		$	7		$	34

The majority of the remaining cash outlays of $34 million are expected to be paid in the second half of 2025.

Note 13. Income Taxes

Our effective tax rate was 18.6% and 19.5% for the second quarter of 2025 and 2024, respectively, and 16.6% and 17.7% for the first half of 2025 and 2024, respectively. Our effective tax rate was lower than the U.S. federal statutory rate of 21%, largely due to the favorable impact of research and development credits and tax deductions for foreign-derived intangible income.

On July 4, 2025, the One Big Beautiful Bill Act (the Act) was enacted and changed certain sections of U.S. income tax law. Among other things, the Act makes permanent 1) the option to deduct domestic research and development expenditures immediately in the year incurred, 2) the deduction of the full cost of eligible assets in the first year placed in service and 3) the EBITDA-based business interest expense limitation as well as modifications to the international tax framework. While we are still assessing these changes and the effects of the Act on our consolidated financial statements, we expect the Act to increase our cash flows from operating activities for the full year 2025 and increase our effective tax rate for the full year 2025.

Note 14. Commitments and Contingencies

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