Cover
Cover - shares | 6 Months Ended | |
Jul. 02, 2022 | Jul. 15, 2022 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Jul. 02, 2022 | |
Document Transition Report | false | |
Entity File Number | 1-5480 | |
Entity Registrant Name | Textron Inc. | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 05-0315468 | |
Entity Address, Address Line One | 40 Westminster Street | |
Entity Address, City or Town | Providence | |
Entity Address, State or Province | RI | |
Entity Address, Postal Zip Code | 02903 | |
City Area Code | 401 | |
Local Phone Number | 421-2800 | |
Title of 12(b) Security | Common stock, $0.125 par value | |
Trading Symbol | TXT | |
Security Exchange Name | NYSE | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 211,531,587 | |
Entity Central Index Key | 0000217346 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2022 | |
Document Fiscal Period Focus | Q2 | |
Amendment Flag | false |
Consolidated Statements of Oper
Consolidated Statements of Operations (Unaudited) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jul. 02, 2022 | Jul. 03, 2021 | Jul. 02, 2022 | Jul. 03, 2021 | |
Revenues | ||||
Total revenues | $ 3,154,000,000 | $ 3,191,000,000 | $ 6,155,000,000 | $ 6,070,000,000 |
Costs, expenses and other | ||||
Selling and administrative expense | 278,000,000 | 314,000,000 | 583,000,000 | 612,000,000 |
Interest expense | 32,000,000 | 36,000,000 | 65,000,000 | 76,000,000 |
Non-service components of pension and postretirement income, net | (60,000,000) | (39,000,000) | (121,000,000) | (79,000,000) |
Special charges | 0 | 4,000,000 | 0 | 10,000,000 |
Gain on business disposition | 0 | (2,000,000) | 0 | (17,000,000) |
Total costs, expenses and other | 2,891,000,000 | 2,973,000,000 | 5,660,000,000 | 5,662,000,000 |
Income from continuing operations before income taxes | 263,000,000 | 218,000,000 | 495,000,000 | 408,000,000 |
Income tax expense | 45,000,000 | 34,000,000 | 84,000,000 | 53,000,000 |
Income from continuing operations | 218,000,000 | 184,000,000 | 411,000,000 | 355,000,000 |
Loss from discontinued operations | (1,000,000) | (1,000,000) | (1,000,000) | (1,000,000) |
Net income | $ 217,000,000 | $ 183,000,000 | $ 410,000,000 | $ 354,000,000 |
Basic Earnings per share | ||||
Continuing operations (in dollars per share) | $ 1.01 | $ 0.82 | $ 1.90 | $ 1.57 |
Discontinued operations (in dollars per share) | 0 | (0.01) | 0 | (0.01) |
Basic Earnings per share (in dollars per share) | 1.01 | 0.81 | 1.90 | 1.56 |
Diluted Earnings per share | ||||
Continuing operations (in dollars per share) | 1 | 0.81 | 1.88 | 1.56 |
Discontinued operations (in dollars per share) | 0 | (0.01) | 0 | (0.01) |
Diluted Earnings per share (in dollars per share) | $ 1 | $ 0.80 | $ 1.88 | $ 1.55 |
Manufacturing group | ||||
Costs, expenses and other | ||||
Gain on business disposition | $ 0 | $ (17,000,000) | ||
Income from continuing operations | 395,000,000 | 358,000,000 | ||
Finance group | ||||
Revenues | ||||
Total revenues | $ 14,000,000 | $ 12,000,000 | 30,000,000 | 27,000,000 |
Costs, expenses and other | ||||
Gain on business disposition | 0 | 0 | ||
Income from continuing operations | 16,000,000 | (3,000,000) | ||
Product | ||||
Costs, expenses and other | ||||
Cost of products/services sold | 2,304,000,000 | 2,271,000,000 | 4,373,000,000 | 4,332,000,000 |
Product | Manufacturing group | ||||
Revenues | ||||
Total revenues | 2,689,000,000 | 2,666,000,000 | 5,137,000,000 | 5,069,000,000 |
Service | ||||
Costs, expenses and other | ||||
Cost of products/services sold | 337,000,000 | 389,000,000 | 760,000,000 | 728,000,000 |
Service | Manufacturing group | ||||
Revenues | ||||
Total revenues | $ 451,000,000 | $ 513,000,000 | $ 988,000,000 | $ 974,000,000 |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive Income (Unaudited) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jul. 02, 2022 | Jul. 03, 2021 | Jul. 02, 2022 | Jul. 03, 2021 | |
Statement of Comprehensive Income [Abstract] | ||||
Net income | $ 217 | $ 183 | $ 410 | $ 354 |
Other comprehensive income (loss), net of tax | ||||
Pension and postretirement benefits adjustments, net of reclassifications | 17 | 30 | 34 | 60 |
Foreign currency translation adjustments, net of reclassifications | (90) | 15 | (104) | (3) |
Deferred gains (losses) on hedge contracts, net of reclassifications | (3) | 2 | 4 | 6 |
Other comprehensive income (loss) | (76) | 47 | (66) | 63 |
Comprehensive income | $ 141 | $ 230 | $ 344 | $ 417 |
Consolidated Balance Sheets (Un
Consolidated Balance Sheets (Unaudited) - USD ($) shares in Thousands, $ in Millions | Jul. 02, 2022 | Jan. 01, 2022 |
Assets | ||
Inventories | $ 3,739 | $ 3,468 |
Finance receivables, net | 561 | 605 |
Total assets | 15,879 | 15,827 |
Liabilities | ||
Total liabilities | 9,078 | 9,012 |
Shareholders’ equity | ||
Common stock | 28 | 28 |
Capital surplus | 1,953 | 1,863 |
Treasury stock | (596) | (157) |
Retained earnings | 6,271 | 5,870 |
Accumulated other comprehensive loss | (855) | (789) |
Total shareholders’ equity | 6,801 | 6,815 |
Total liabilities and shareholders’ equity | $ 15,879 | $ 15,827 |
Common shares outstanding (in shares) | 211,825 | 216,935 |
Manufacturing group | ||
Assets | ||
Cash and equivalents | $ 1,764 | $ 1,922 |
Accounts receivable, net | 876 | 838 |
Inventories | 3,739 | 3,468 |
Other current assets | 972 | 1,018 |
Total current assets | 7,351 | 7,246 |
Property, plant and equipment, less accumulated depreciation and amortization of $4,945 and $4,888, respectively | 2,469 | 2,538 |
Goodwill | 2,278 | 2,149 |
Other assets | 3,113 | 3,027 |
Total assets | 15,211 | 14,960 |
Liabilities | ||
Current portion of long-term debt | 7 | 6 |
Accounts payable | 807 | 786 |
Other current liabilities | 2,660 | 2,344 |
Total current liabilities | 3,474 | 3,136 |
Other liabilities | 1,956 | 2,005 |
Long-term debt | 3,177 | 3,179 |
Total liabilities | 8,607 | 8,320 |
Finance group | ||
Assets | ||
Cash and equivalents | 77 | 195 |
Finance receivables, net | 561 | 605 |
Other assets | 30 | 67 |
Total assets | 668 | 867 |
Liabilities | ||
Other liabilities | 89 | 110 |
Debt | 382 | 582 |
Total liabilities | $ 471 | $ 692 |
Consolidated Balance Sheets (_2
Consolidated Balance Sheets (Unaudited) (Parenthetical) - USD ($) $ in Millions | Jul. 02, 2022 | Jan. 01, 2022 |
Statement of Financial Position [Abstract] | ||
Accumulated depreciation and amortization | $ 4,945 | $ 4,888 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Millions | 6 Months Ended | |
Jul. 02, 2022 | Jul. 03, 2021 | |
Cash flows from operating activities | ||
Income from continuing operations | $ 411 | $ 355 |
Non-cash items: | ||
Depreciation and amortization | 191 | 188 |
Deferred income taxes | (118) | 16 |
Gain on business disposition | 0 | (17) |
Other, net | 55 | 64 |
Changes in assets and liabilities: | ||
Accounts receivable, net | (48) | (38) |
Inventories | (246) | (162) |
Other assets | 85 | 22 |
Accounts payable | 24 | 188 |
Other liabilities | 269 | 103 |
Income taxes, net | 32 | 8 |
Pension, net | (83) | (42) |
Captive finance receivables, net | 35 | 89 |
Other operating activities, net | 8 | (1) |
Net cash provided by (used in) operating activities of continuing operations | 615 | 773 |
Net cash used in operating activities of discontinued operations | (2) | (1) |
Net cash provided by (used in) operating activities | 613 | 772 |
Cash flows from investing activities | ||
Capital expenditures | (114) | (128) |
Net cash used in business acquisitions | (198) | 0 |
Net proceeds from corporate-owned life insurance policies | 25 | 0 |
Proceeds from sale of property, plant and equipment | 18 | 0 |
Net proceeds from business disposition | 0 | 38 |
Finance receivables repaid | 21 | 19 |
Other investing activities, net | 44 | 6 |
Net cash provided by (used in) investing activities | (204) | (65) |
Cash flows from financing activities | ||
Decrease in short-term debt | (15) | 0 |
Principal payments on long-term debt and nonrecourse debt | (223) | (553) |
Purchases of Textron common stock | (439) | (287) |
Dividends paid | (9) | (9) |
Proceeds from options exercised | 32 | 77 |
Other financing activities, net | (4) | (2) |
Net cash used in financing activities | (658) | (774) |
Effect of exchange rate changes on cash and equivalents | (27) | 1 |
Net increase (decrease) in cash and equivalents | (276) | (66) |
Cash and equivalents at beginning of period | 2,117 | 2,254 |
Cash and equivalents at end of period | $ 1,841 | $ 2,188 |
Consolidated Statements of Ca_2
Consolidated Statements of Cash Flows (Unaudited) - Manufacturing Group and Finance Group - USD ($) $ in Millions | 6 Months Ended | |
Jul. 02, 2022 | Jul. 03, 2021 | |
Cash flows from operating activities | ||
Income from continuing operations | $ 411 | $ 355 |
Non-cash items: | ||
Depreciation and amortization | 191 | 188 |
Deferred income taxes | (118) | 16 |
Gain on business disposition | 0 | (17) |
Other, net | 55 | 64 |
Changes in assets and liabilities: | ||
Accounts receivable, net | (48) | (38) |
Inventories | (246) | (162) |
Other assets | 85 | 22 |
Accounts payable | 24 | 188 |
Other liabilities | 269 | 103 |
Income taxes, net | 32 | 8 |
Pension, net | (83) | (42) |
Other operating activities, net | 8 | (1) |
Net cash provided by (used in) operating activities of continuing operations | 615 | 773 |
Net cash used in operating activities of discontinued operations | (2) | (1) |
Net cash provided by (used in) operating activities | 613 | 772 |
Cash flows from investing activities | ||
Capital expenditures | (114) | (128) |
Net cash used in business acquisitions | (198) | 0 |
Net proceeds from corporate-owned life insurance policies | 25 | 0 |
Proceeds from sale of property, plant and equipment | 18 | 0 |
Net proceeds from business disposition | 0 | 38 |
Finance receivables repaid | 21 | 19 |
Other investing activities, net | 44 | 6 |
Net cash provided by (used in) investing activities | (204) | (65) |
Cash flows from financing activities | ||
Decrease in short-term debt | (15) | 0 |
Principal payments on long-term debt and nonrecourse debt | (223) | (553) |
Purchases of Textron common stock | (439) | (287) |
Dividends paid | (9) | (9) |
Proceeds from options exercised | 32 | 77 |
Other financing activities, net | (4) | (2) |
Net cash used in financing activities | (658) | (774) |
Effect of exchange rate changes on cash and equivalents | (27) | 1 |
Net increase (decrease) in cash and equivalents | (276) | (66) |
Cash and equivalents at beginning of period | 2,117 | 2,254 |
Cash and equivalents at end of period | 1,841 | 2,188 |
Manufacturing group | ||
Cash flows from operating activities | ||
Income from continuing operations | 395 | 358 |
Non-cash items: | ||
Depreciation and amortization | 191 | 183 |
Deferred income taxes | (106) | 18 |
Gain on business disposition | 0 | (17) |
Other, net | 62 | 66 |
Changes in assets and liabilities: | ||
Accounts receivable, net | (48) | (38) |
Inventories | (246) | (162) |
Other assets | 85 | 23 |
Accounts payable | 24 | 188 |
Other liabilities | 279 | 103 |
Income taxes, net | 28 | 0 |
Pension, net | (83) | (42) |
Other operating activities, net | 8 | (1) |
Net cash provided by (used in) operating activities of continuing operations | 589 | 679 |
Net cash used in operating activities of discontinued operations | (2) | (1) |
Net cash provided by (used in) operating activities | 587 | 678 |
Cash flows from investing activities | ||
Capital expenditures | (114) | (128) |
Net cash used in business acquisitions | (198) | 0 |
Net proceeds from corporate-owned life insurance policies | 25 | 0 |
Proceeds from sale of property, plant and equipment | 18 | 0 |
Net proceeds from business disposition | 0 | 38 |
Finance receivables repaid | 0 | 0 |
Finance receivables originated | 0 | 0 |
Other investing activities, net | 0 | 0 |
Net cash provided by (used in) investing activities | (269) | (90) |
Cash flows from financing activities | ||
Decrease in short-term debt | (15) | 0 |
Principal payments on long-term debt and nonrecourse debt | (14) | (519) |
Purchases of Textron common stock | (439) | (287) |
Dividends paid | (9) | (9) |
Proceeds from options exercised | 32 | 77 |
Other financing activities, net | (4) | (2) |
Net cash used in financing activities | (449) | (740) |
Effect of exchange rate changes on cash and equivalents | (27) | 1 |
Net increase (decrease) in cash and equivalents | (158) | (151) |
Cash and equivalents at beginning of period | 1,922 | 2,146 |
Cash and equivalents at end of period | 1,764 | 1,995 |
Finance group | ||
Cash flows from operating activities | ||
Income from continuing operations | 16 | (3) |
Non-cash items: | ||
Depreciation and amortization | 0 | 5 |
Deferred income taxes | (12) | (2) |
Gain on business disposition | 0 | 0 |
Other, net | (7) | (2) |
Changes in assets and liabilities: | ||
Accounts receivable, net | 0 | 0 |
Inventories | 0 | 0 |
Other assets | 0 | (1) |
Accounts payable | 0 | 0 |
Other liabilities | (10) | 0 |
Income taxes, net | 4 | 8 |
Pension, net | 0 | 0 |
Other operating activities, net | 0 | 0 |
Net cash provided by (used in) operating activities of continuing operations | (9) | 5 |
Net cash used in operating activities of discontinued operations | 0 | 0 |
Net cash provided by (used in) operating activities | (9) | 5 |
Cash flows from investing activities | ||
Capital expenditures | 0 | 0 |
Net cash used in business acquisitions | 0 | 0 |
Net proceeds from corporate-owned life insurance policies | 0 | 0 |
Proceeds from sale of property, plant and equipment | 0 | 0 |
Net proceeds from business disposition | 0 | 0 |
Finance receivables repaid | 79 | 137 |
Finance receivables originated | (23) | (29) |
Other investing activities, net | 44 | 6 |
Net cash provided by (used in) investing activities | 100 | 114 |
Cash flows from financing activities | ||
Decrease in short-term debt | 0 | 0 |
Principal payments on long-term debt and nonrecourse debt | (209) | (34) |
Purchases of Textron common stock | 0 | 0 |
Dividends paid | 0 | 0 |
Proceeds from options exercised | 0 | 0 |
Other financing activities, net | 0 | 0 |
Net cash used in financing activities | (209) | (34) |
Effect of exchange rate changes on cash and equivalents | 0 | 0 |
Net increase (decrease) in cash and equivalents | (118) | 85 |
Cash and equivalents at beginning of period | 195 | 108 |
Cash and equivalents at end of period | $ 77 | $ 193 |
Basis of Presentation
Basis of Presentation | 6 Months Ended |
Jul. 02, 2022 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation | Basis of Presentation Our Consolidated Financial Statements include the accounts of Textron Inc. (Textron) and its majority-owned subsidiaries. We have prepared these unaudited consolidated financial statements in accordance with accounting principles generally accepted in the U.S. for interim financial information. Accordingly, these interim financial statements do not include all of the information and footnotes required by accounting principles generally accepted in the U.S. for complete financial statements. The consolidated interim financial statements included in this quarterly report should be read in conjunction with the consolidated financial statements included in our Annual Report on Form 10-K for the year ended January 1, 2022. In the opinion of management, the interim financial statements reflect all adjustments (consisting only of normal recurring adjustments) that are necessary for the fair presentation of our consolidated financial position, results of operations and cash flows for the interim periods presented. The results of operations for the interim periods are not necessarily indicative of the results to be expected for the full year. Our financings are conducted through two separate borrowing groups. The Manufacturing group consists of Textron consolidated with its majority-owned subsidiaries that operate in the Textron Aviation, Bell, Textron Systems and Industrial segments, and our new reporting segment, Textron eAviation, formed in the second quarter of 2022. Textron eAviation includes the operating results of Pipistrel, a manufacturer of electrically powered aircraft acquired on April 15, 2022, as discussed in Note 2, along with other research and development initiatives related to sustainable aviation solutions. The Finance group, which also is the Finance segment, consists of Textron Financial Corporation and its consolidated subsidiaries. We designed this framework to enhance our borrowing power by separating the Finance group. Our Manufacturing group operations include the development, production and delivery of tangible goods and services, while our Finance group provides financial services. Due to the fundamental differences between each borrowing group’s activities, investors, rating agencies and analysts use different measures to evaluate each group’s performance. To support those evaluations, we present balance sheet and cash flow information for each borrowing group within the Consolidated Financial Statements. All significant intercompany transactions are eliminated from the Consolidated Financial Statements, including retail financing activities for inventory sold by our Manufacturing group and financed by our Finance group. Use of Estimates We prepare our financial statements in conformity with generally accepted accounting principles, which require us to make estimates and assumptions that affect the amounts reported in the financial statements. Actual results could differ from those estimates. Our estimates and assumptions are reviewed periodically, and the effects of changes, if any, are reflected in the Consolidated Statements of Operations in the period that they are determined. Contract Estimates For contracts where revenue is recognized over time, we recognize changes in estimated contract revenues, costs and profits using the cumulative catch-up method of accounting. This method recognizes the cumulative effect of changes on current and prior periods with the impact of the change from inception-to-date recorded in the current period. Anticipated losses on contracts are recognized in full in the period in which the losses become probable and estimable. In the second quarter of 2022, our cumulative catch-up adjustments decreased segment profit by $4 million and net income by $3 million, $0.01 per diluted share. In the second quarter of 2021, our cumulative catch-up adjustments increased segment profit by $15 million and net income by $11 million, $0.05 per diluted share. Gross favorable profit adjustments totaled $25 million and $40 million in the second quarter of 2022 and 2021, respectively, and gross unfavorable profit adjustments totaled $29 million and $25 million, respectively. We reduced revenues by $21 million and recognized revenues of $20 million in the second quarter of 2022 and 2021, respectively, from performance obligations satisfied in prior periods that related to changes in profit booking rates. |
Business Acquisition
Business Acquisition | 6 Months Ended |
Jul. 02, 2022 | |
Business Combination and Asset Acquisition [Abstract] | |
Business Acquisition | Business Acquisition On April 15, 2022, we acquired Pipistrel, a manufacturer of electrically powered aircraft, for a cash purchase price of $240 million, which included the assumption of $35 million of debt and other contractual obligations under the agreement and a final fixed payment of $21 million due in 2024. Beginning in the second quarter of 2022, this business is included in a new reporting segment, Textron eAviation, which combines the operating results of Pipistrel along with other research and development initiatives related to sustainable aviation solutions. |
Accounts Receivable and Finance
Accounts Receivable and Finance Receivables | 6 Months Ended |
Jul. 02, 2022 | |
Receivables [Abstract] | |
Accounts Receivable and Finance Receivables | Accounts Receivable and Finance Receivables Accounts Receivable Accounts receivable is composed of the following: (In millions) July 2, January 1, Commercial $ 767 $ 704 U.S. Government contracts 133 158 900 862 Allowance for credit losses (24) (24) Total accounts receivable, net $ 876 $ 838 Finance Receivables Finance receivables are presented in the following table: (In millions) July 2, January 1, Finance receivables $ 586 $ 630 Allowance for credit losses (25) (25) Total finance receivables, net $ 561 $ 605 Finance Receivable Portfolio Quality We internally assess the quality of our finance receivables based on a number of key credit quality indicators and statistics such as delinquency, loan balance to estimated collateral value and the financial strength of individual borrowers and guarantors. Because many of these indicators are difficult to apply across an entire class of receivables, we evaluate individual loans on a quarterly basis and classify these loans into three categories based on the key credit quality indicators for the individual loan. These three categories are performing, watchlist and nonaccrual. We classify finance receivables as nonaccrual if credit quality indicators suggest full collection of principal and interest is doubtful. In addition, we automatically classify accounts as nonaccrual once they are contractually delinquent by more than three months unless collection of principal and interest is not doubtful. Accounts are classified as watchlist when credit quality indicators have deteriorated as compared with typical underwriting criteria, and we believe collection of full principal and interest is probable but not certain. All other finance receivables that do not meet the watchlist or nonaccrual categories are classified as performing. We measure delinquency based on the contractual payment terms of our finance receivables. In determining the delinquency aging category of an account, any/all principal and interest received is applied to the most past-due principal and/or interest amounts due. If a significant portion of the contractually due payment is delinquent, the entire finance receivable balance is reported in accordance with the most past-due delinquency aging category. Finance receivables categorized based on the credit quality indicators and by the delinquency aging category are summarized as follows: (Dollars in millions) July 2, January 1, Performing $ 518 $ 536 Nonaccrual 68 94 Nonaccrual as a percentage of finance receivables 11.60% 14.92% Current and less than 31 days past due $ 577 $ 624 31-60 days past due 4 5 61-90 days past due 5 — Over 90 days past due — 1 60+ days contractual delinquency as a percentage of finance receivables 0.85% 0.16% At July 2, 2022, 39% of our performing finance receivables were originated since the beginning of 2020 and 27% were originated from 2017 to 2019. For finance receivables categorized as nonaccrual, 7% were originated since the beginning of 2020 and 70% were originated from 2017 to 2019. On a quarterly basis, we evaluate individual larger balance accounts for impairment. A finance receivable is considered impaired when it is probable that we will be unable to collect all amounts due according to the contractual terms of the loan agreement based on our review of the credit quality indicators described above. Impaired finance receivables include both nonaccrual accounts and accounts for which full collection of principal and interest remains probable, but the account’s original terms have been, or are expected to be, significantly modified. If the modification specifies an interest rate equal to or greater than a market rate for a finance receivable with comparable risk, the account is not considered impaired in years subsequent to the modification. A summary of finance receivables and the allowance for credit losses, based on the results of our impairment evaluation, is provided below. The finance receivables included in this table specifically exclude leveraged leases in accordance with U.S. generally accepted accounting principles. (In millions) July 2, January 1, Finance receivables evaluated collectively $ 428 $ 441 Finance receivables evaluated individually 68 94 Allowance for credit losses based on collective evaluation 21 21 Allowance for credit losses based on individual evaluation 4 4 Impaired finance receivables with specific allowance for credit losses $ 25 $ 33 Impaired finance receivables with no specific allowance for credit losses 43 61 Unpaid principal balance of impaired finance receivables 82 109 Allowance for credit losses on impaired finance receivables 4 4 Average recorded investment of impaired finance receivables 80 117 |
Inventories
Inventories | 6 Months Ended |
Jul. 02, 2022 | |
Inventory Disclosure [Abstract] | |
Inventories | Inventories Inventories are composed of the following: (In millions) July 2, January 1, Finished goods $ 1,110 $ 1,071 Work in process 1,705 1,548 Raw materials and components 924 849 Total inventories $ 3,739 $ 3,468 |
Warranty Liability
Warranty Liability | 6 Months Ended |
Jul. 02, 2022 | |
Payables and Accruals [Abstract] | |
Warranty Liability | Warranty Liability Changes in our warranty liability are as follows: Six Months Ended (In millions) July 2, July 3, Beginning of period $ 127 $ 119 Provision 34 31 Settlements (34) (35) Adjustments* 10 1 End of period $ 137 $ 116 * Adjustments include changes to prior year estimates, new issues on prior year sales, acquisitions and currency translation adjustments. |
Leases
Leases | 6 Months Ended |
Jul. 02, 2022 | |
Leases [Abstract] | |
Leases | Leases We primarily lease certain manufacturing plants, offices, warehouses, training and service centers at various locations worldwide through operating leases. Our operating leases have remaining lease terms up to 27 years, which include options to extend the lease term for periods up to 25 years when it is reasonably certain the option will be exercised. Operating lease cost totaled $17 million and $16 million in the second quarter of 2022 and 2021, respectively, and $34 million and $32 million in the first half of 2022 and 2021, respectively. Variable and short-term lease costs were not significant. Cash paid for operating leases totaled $35 million and $33 million in the first half of 2022 and 2021, respectively, and is classified in cash flows from operating activities. Noncash transactions totaled $17 million and $63 million in the first half of 2022 and 2021, respectively, reflecting the recognition of operating lease assets and liabilities for new or extended leases. Balance sheet and other information related to our operating leases is as follows: (Dollars in millions) July 2, January 1, Other assets $ 359 $ 374 Other current liabilities 56 56 Other liabilities 310 325 Weighted-average remaining lease term (in years) 10.1 10.5 Weighted-average discount rate 3.22% 3.19% At July 2, 2022, maturities of our operating lease liabilities on an undiscounted basis totaled $35 million for the remainder of 2022, $65 million for 2023, $55 million for 2024, $47 million for 2025, $35 million for 2026 and $217 million thereafter. |
Derivative Instruments and Fair
Derivative Instruments and Fair Value Measurements | 6 Months Ended |
Jul. 02, 2022 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Derivative Instruments and Fair Value Measurements | Derivative Instruments and Fair Value Measurements We measure fair value at the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. We prioritize the assumptions that market participants would use in pricing the asset or liability into a three-tier fair value hierarchy. This fair value hierarchy gives the highest priority (Level 1) to quoted prices in active markets for identical assets or liabilities and the lowest priority (Level 3) to unobservable inputs in which little or no market data exist, requiring companies to develop their own assumptions. Observable inputs that do not meet the criteria of Level 1, which include quoted prices for similar assets or liabilities in active markets or quoted prices for identical assets and liabilities in markets that are not active, are categorized as Level 2. Level 3 inputs are those that reflect our estimates about the assumptions market participants would use in pricing the asset or liability based on the best information available in the circumstances. Valuation techniques for assets and liabilities measured using Level 3 inputs may include methodologies such as the market approach, the income approach or the cost approach and may use unobservable inputs such as projections, estimates and management’s interpretation of current market data. These unobservable inputs are utilized only to the extent that observable inputs are not available or cost effective to obtain. Assets and Liabilities Recorded at Fair Value on a Recurring Basis We manufacture and sell our products in a number of countries throughout the world, and, therefore, we are exposed to movements in foreign currency exchange rates. We primarily utilize foreign currency exchange contracts with maturities of no more than three years to manage this volatility. These contracts qualify as cash flow hedges and are intended to offset the effect of exchange rate fluctuations on forecasted sales, inventory purchases and overhead expenses. Net gains and losses recognized in earnings and Accumulated other comprehensive loss on cash flow hedges, including gains and losses related to hedge ineffectiveness, were not significant in the periods presented. Our foreign currency exchange contracts are measured at fair value using the market method valuation technique. The inputs to this technique utilize current foreign currency exchange forward market rates published by third-party leading financial news and data providers. These are observable data that represent the rates that the financial institution uses for contracts entered into at that date; however, they are not based on actual transactions, so they are classified as Level 2. At July 2, 2022 and January 1, 2022, we had foreign currency exchange contracts with notional amounts upon which the contracts were based of $264 million and $272 million, respectively. At July 2, 2022, the fair value amounts of our foreign currency exchange contracts were a $3 million asset and a $4 million liability. At January 1, 2022, the fair value amounts of our foreign currency exchange contracts were a $4 million asset and a $3 million liability. Our Finance group enters into interest rate swap agreements to mitigate certain exposures to fluctuations in interest rates. By using these contracts, we are able to convert floating-rate cash flows to fixed-rate cash flows. These agreements are designated as cash flow hedges. At July 2, 2022, we had a swap agreement for a notional amount of $272 million with a maturity of August 2023, and a swap agreement for a notional amount of $25 million, maturing in June 2025, with a combined fair value of a $7 million asset. At January 1, 2022, we had a swap agreement for a notional amount of $289 million with a maturity of August 2023 and an insignificant fair value. The fair value of these swap agreements is determined using values published by third-party leading financial news and data providers. These values are observable data that represent the value that financial institutions use for contracts entered into at that date, but are not based on actual transactions, so they are classified as Level 2. Assets and Liabilities Not Recorded at Fair Value The carrying value and estimated fair value of our financial instruments that are not reflected in the financial statements at fair value are as follows: July 2, 2022 January 1, 2022 Carrying Estimated Carrying Estimated (In millions) Value Fair Value Value Fair Value Manufacturing group Debt, excluding leases $ (3,178) $ (2,974) $ (3,181) $ (3,346) Finance group Finance receivables, excluding leases 381 351 413 444 Debt (382) (310) (582) (546) Fair value for the Manufacturing group debt is determined using market observable data for similar transactions (Level 2). The fair value for the Finance group debt was determined primarily based on discounted cash flow analyses using observable market inputs from debt with similar duration, subordination and credit default expectations (Level 2). Fair value estimates for finance receivables were determined based on internally developed discounted cash flow models primarily utilizing significant unobservable inputs (Level 3), which include estimates of the rate of return, financing cost, capital structure and/or discount rate expectations of current market participants combined with estimated loan cash flows based on credit losses, payment rates and expectations of borrowers’ ability to make payments on a timely basis. |
Shareholders' Equity
Shareholders' Equity | 6 Months Ended |
Jul. 02, 2022 | |
Equity [Abstract] | |
Shareholders' Equity | Shareholders’ Equity A reconciliation of Shareholders’ equity is presented below: (In millions) Common Capital Treasury Retained Accumulated Total Three months ended July 2, 2022 Beginning of period $ 28 $ 1,924 $ (314) $ 6,058 $ (779) $ 6,917 Net income — — — 217 — 217 Other comprehensive loss — — — — (76) (76) Share-based compensation activity — 29 — — — 29 Dividends declared — — — (4) — (4) Purchases of common stock — — (282) — — (282) End of period $ 28 $ 1,953 $ (596) $ 6,271 $ (855) $ 6,801 Three months ended July 3, 2021 Beginning of period $ 29 $ 1,845 $ (294) $ 6,139 $ (1,723) $ 5,996 Net income — — — 183 — 183 Other comprehensive income — — — — 47 47 Share-based compensation activity — 75 — — — 75 Dividends declared — — — (4) — (4) Purchases of common stock — — (196) — — (196) End of period $ 29 $ 1,920 $ (490) $ 6,318 $ (1,676) $ 6,101 Six months ended July 2, 2022 Beginning of period $ 28 $ 1,863 $ (157) $ 5,870 $ (789) $ 6,815 Net income — — — 410 — 410 Other comprehensive loss — — — — (66) (66) Share-based compensation activity — 90 — — — 90 Dividends declared — — — (9) — (9) Purchases of common stock — — (439) — — (439) End of period $ 28 $ 1,953 $ (596) $ 6,271 $ (855) $ 6,801 Six months ended July 3, 2021 Beginning of period $ 29 $ 1,785 $ (203) $ 5,973 $ (1,739) $ 5,845 Net income — — — 354 — 354 Other comprehensive income — — — — 63 63 Share-based compensation activity — 135 — — — 135 Dividends declared — — — (9) — (9) Purchases of common stock — — (287) — — (287) End of period $ 29 $ 1,920 $ (490) $ 6,318 $ (1,676) $ 6,101 Dividends per share of common stock were $0.02 for both the second quarter of 2022 and 2021 and $0.04 for both the first half of 2022 and 2021. Earnings Per Share We calculate basic and diluted earnings per share (EPS) based on net income, which approximates income available to common shareholders for each period. Basic EPS is calculated using the two-class method, which includes the weighted-average number of common shares outstanding during the period and restricted stock units to be paid in stock that are deemed participating securities as they provide nonforfeitable rights to dividends. Diluted EPS considers the dilutive effect of all potential future common stock, including stock options. The weighted-average shares outstanding for basic and diluted EPS are as follows: Three Months Ended Six Months Ended (In thousands) July 2, July 3, July 2, July 3, Basic weighted-average shares outstanding 214,587 225,963 215,799 226,486 Dilutive effect of stock options 2,071 2,483 2,334 1,810 Diluted weighted-average shares outstanding 216,658 228,446 218,133 228,296 For both the second quarter and first half of 2022, stock options to purchase 1.0 million shares of common stock were excluded from the calculation of diluted weighted-average shares outstanding as their effect would have been anti-dilutive. For the first half of 2021, stock options to purchase 2.1 million shares of common stock were excluded from the calculation of diluted weighted-average shares outstanding as their effect would have been anti-dilutive. Accumulated Other Comprehensive Loss and Other Comprehensive Income The components of Accumulated other comprehensive loss are presented below: (In millions) Pension and Foreign Deferred Accumulated Balance at January 1, 2022 $ (799) $ 9 $ 1 $ (789) Other comprehensive loss before reclassifications — (104) 4 (100) Reclassified from Accumulated other comprehensive loss 34 — — 34 Balance at July 2, 2022 $ (765) $ (95) $ 5 $ (855) Balance at January 2, 2021 $ (1,780) $ 42 $ (1) $ (1,739) Other comprehensive loss before reclassifications — (17) 6 (11) Reclassified from Accumulated other comprehensive loss 60 14 — 74 Balance at July 3, 2021 $ (1,720) $ 39 $ 5 $ (1,676) The before and after-tax components of Other comprehensive income (loss) are presented below: July 2, 2022 July 3, 2021 (In millions) Pre-Tax Tax After-tax Pre-Tax Tax After-tax Three Months Ended Pension and postretirement benefits adjustments: Amortization of net actuarial loss* $ 21 $ (6) $ 15 $ 38 $ (9) $ 29 Amortization of prior service cost* 2 — 2 2 (1) 1 Pension and postretirement benefits adjustments, net 23 (6) 17 40 (10) 30 Foreign currency translation adjustments (90) — (90) 15 — 15 Deferred gains (losses) on hedge contracts: Current deferrals (5) 2 (3) 2 — 2 Deferred gains (losses) on hedge contracts, net (5) 2 (3) 2 — 2 Total $ (72) $ (4) $ (76) $ 57 $ (10) $ 47 Six Months Ended Pension and postretirement benefits adjustments: Amortization of net actuarial loss* $ 42 $ (11) $ 31 $ 76 $ (18) $ 58 Amortization of prior service cost* 4 (1) 3 4 (2) 2 Pension and postretirement benefits adjustments, net 46 (12) 34 80 (20) 60 Foreign currency translation adjustments: Foreign currency translation adjustments (104) — (104) (17) — (17) Business disposition — — — 14 — 14 Foreign currency translation adjustments, net (104) — (104) (3) — (3) Deferred gains on hedge contracts: Current deferrals 5 (1) 4 7 (1) 6 Deferred gains on hedge contracts, net 5 (1) 4 7 (1) 6 Total $ (53) $ (13) $ (66) $ 84 $ (21) $ 63 |
Segment Information
Segment Information | 6 Months Ended |
Jul. 02, 2022 | |
Segment Reporting [Abstract] | |
Segment Information | Segment Information Through the first quarter of 2022, we operated in, and reported financial information for, the following five business segments: Textron Aviation, Bell, Textron Systems, Industrial and Finance. Beginning in the second quarter of 2022, we formed a new reporting segment within the Manufacturing group, Textron eAviation, which includes the operating results of Pipistrel, a manufacturer of electrically powered aircraft that we acquired on April 15, 2022, as discussed in Note 2, along with other research and development initiatives related to sustainable aviation solutions. Segment profit is an important measure used for evaluating performance and for decision-making purposes. Segment profit for the manufacturing segments excludes interest expense, certain corporate expenses, gains/losses on major business dispositions and special charges. The measurement for the Finance segment includes interest income and expense along with intercompany interest income and expense. Our revenues by segment, along with a reconciliation of segment profit to income from continuing operations before income taxes, are included in the table below: Three Months Ended Six Months Ended (In millions) July 2, July 3, July 2, July 3, Revenues Textron Aviation $ 1,284 $ 1,161 $ 2,324 $ 2,026 Bell 687 891 1,521 1,737 Textron Systems 293 333 566 661 Industrial 871 794 1,709 1,619 Textron eAviation 5 — 5 — Finance 14 12 30 27 Total revenues $ 3,154 $ 3,191 $ 6,155 $ 6,070 Segment Profit Textron Aviation $ 155 $ 96 $ 276 $ 143 Bell 63 110 161 215 Textron Systems 42 48 75 99 Industrial 41 32 84 79 Textron eAviation (8) — (8) — Finance 10 3 19 9 Segment profit 303 289 607 545 Corporate expenses and other, net (12) (37) (56) (77) Interest expense, net for Manufacturing group (28) (32) (56) (67) Special charges — (4) — (10) Gain on business disposition — 2 — 17 Income from continuing operations before income taxes $ 263 $ 218 $ 495 $ 408 |
Revenues
Revenues | 6 Months Ended |
Jul. 02, 2022 | |
Revenue from Contract with Customer [Abstract] | |
Revenues | Revenues Disaggregation of Revenues Our revenues disaggregated by major product type are presented below: Three Months Ended Six Months Ended (In millions) July 2, July 3, July 2, July 3, Aircraft $ 856 $ 797 $ 1,502 $ 1,332 Aftermarket parts and services 428 364 822 694 Textron Aviation 1,284 1,161 2,324 2,026 Military aircraft and support programs 402 572 999 1,149 Commercial helicopters, parts and services 285 319 522 588 Bell 687 891 1,521 1,737 Textron Systems 293 333 566 661 Fuel systems and functional components 435 440 899 937 Specialized vehicles 436 354 810 682 Industrial 871 794 1,709 1,619 Textron eAviation 5 — 5 — Finance 14 12 30 27 Total revenues $ 3,154 $ 3,191 $ 6,155 $ 6,070 Our revenues for our segments by customer type and geographic location are presented below: (In millions) Textron Bell Textron Industrial Textron eAviation Finance Total Three months ended July 2, 2022 Customer type: Commercial $ 1,253 $ 279 $ 19 $ 862 $ 5 $ 14 $ 2,432 U.S. Government 31 408 274 9 — — 722 Total revenues $ 1,284 $ 687 $ 293 $ 871 $ 5 $ 14 $ 3,154 Geographic location: United States $ 776 $ 504 $ 268 $ 466 $ 1 $ 5 $ 2,020 Europe 239 43 10 185 3 — 480 Other international 269 140 15 220 1 9 654 Total revenues $ 1,284 $ 687 $ 293 $ 871 $ 5 $ 14 $ 3,154 Three months ended July 3, 2021 Customer type: Commercial $ 1,127 $ 350 $ 67 $ 787 $ — $ 12 $ 2,343 U.S. Government 34 541 266 7 — — 848 Total revenues $ 1,161 $ 891 $ 333 $ 794 $ — $ 12 $ 3,191 Geographic location: United States $ 885 $ 677 $ 297 $ 406 $ — $ 6 $ 2,271 Europe 122 47 9 192 — 1 371 Other international 154 167 27 196 — 5 549 Total revenues $ 1,161 $ 891 $ 333 $ 794 $ — $ 12 $ 3,191 Six months ended July 2, 2022 Customer type: Commercial $ 2,274 $ 513 $ 38 $ 1,697 $ 5 $ 30 $ 4,557 U.S. Government 50 1,008 528 12 — — 1,598 Total revenues $ 2,324 $ 1,521 $ 566 $ 1,709 $ 5 $ 30 $ 6,155 Geographic location: United States $ 1,508 $ 1,174 $ 514 $ 892 $ 1 $ 10 $ 4,099 Europe 358 71 18 375 3 1 826 Other international 458 276 34 442 1 19 1,230 Total revenues $ 2,324 $ 1,521 $ 566 $ 1,709 $ 5 $ 30 $ 6,155 Six months ended July 3, 2021 Customer type: Commercial $ 1,973 $ 616 $ 125 $ 1,607 $ — $ 27 $ 4,348 U.S. Government 53 1,121 536 12 — — 1,722 Total revenues $ 2,026 $ 1,737 $ 661 $ 1,619 $ — $ 27 $ 6,070 Geographic location: United States $ 1,494 $ 1,293 $ 586 $ 784 $ — $ 14 $ 4,171 Europe 206 83 19 428 — 1 737 Other international 326 361 56 407 — 12 1,162 Total revenues $ 2,026 $ 1,737 $ 661 $ 1,619 $ — $ 27 $ 6,070 Remaining Performance Obligations Our remaining performance obligations, which is the equivalent of our backlog, represent the expected transaction price allocated to our contracts that we expect to recognize as revenues in future periods when we perform under the contracts. These remaining obligations exclude unexercised contract options and potential orders under ordering-type contracts such as Indefinite Delivery, Indefinite Quantity contracts. At July 2, 2022, we had $13.2 billion in remaining performance obligations of which we expect to recognize revenues of approximately 75% through 2023, an additional 21% through 2025, and the balance thereafter. |
Retirement Plans
Retirement Plans | 6 Months Ended |
Jul. 02, 2022 | |
Retirement Benefits [Abstract] | |
Retirement Plans | Retirement PlansWe provide defined benefit pension plans and other postretirement benefits to eligible employees. The components of net periodic benefit (income) cost for these plans are as follows: Three Months Ended Six Months Ended (In millions) July 2, July 3, July 2, July 3, Pension Benefits Service cost $ 27 $ 29 $ 54 $ 58 Interest cost 68 63 136 126 Expected return on plan assets (153) (144) (306) (288) Amortization of net actuarial loss 22 38 44 77 Amortization of prior service cost 3 3 6 6 Net periodic benefit income* $ (33) $ (11) $ (66) $ (21) Postretirement Benefits Other Than Pensions Service cost $ — $ — $ 1 $ 1 Interest cost 2 2 3 3 Amortization of net actuarial gain (1) — (2) (1) Amortization of prior service credit (1) (1) (2) (2) Net periodic benefit cost $ — $ 1 $ — $ 1 |
Special Charges
Special Charges | 6 Months Ended |
Jul. 02, 2022 | |
Special Charges [Abstract] | |
Special Charges | Special Charges In the second quarter and first half of 2021, we recognized special charges of $4 million and $10 million, respectively, related to a restructuring plan initiated in 2020 in response to the economic challenges and uncertainty resulting from the COVID-19 pandemic. There were no special charges recorded in the second quarter and first half of 2022. Our restructuring reserve activity is summarized below: (In millions) Severance Contract Total Balance at January 1, 2022 $ 19 $ 9 $ 28 Cash paid (10) (1) (11) Foreign currency translation (1) — (1) Balance at July 2, 2022 $ 8 $ 8 $ 16 |
Income Taxes
Income Taxes | 6 Months Ended |
Jul. 02, 2022 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income TaxesOur effective tax rate for the second quarter and first half of 2022 was 17.1% and 17.0%, respectively. In the second quarter and first half of 2022, the effective tax rate was lower than the U.S. federal statutory rate of 21%, largely due to the favorable impact of research and development credits. Our effective tax rate for the second quarter and first half of 2021 was 15.6% and 13.0%, respectively. In the second quarter and first half of 2021, the effective tax rate was lower than the U.S. federal statutory rate of 21%, largely due to the favorable impact of research and development credits. In the first half of 2021, the effective tax rate also included a $12 million benefit recognized for additional research and development credits related to prior years. |
Commitments and Contingencies
Commitments and Contingencies | 6 Months Ended |
Jul. 02, 2022 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and ContingenciesWe are subject to legal proceedings and other claims arising out of the conduct of our business, including proceedings and claims relating to commercial and financial transactions; government contracts; alleged lack of compliance with applicable laws and regulations; production partners; product liability; patent and trademark infringement; employment disputes; and environmental, safety and health matters. Some of these legal proceedings and claims seek damages, fines or penalties in substantial amounts or remediation of environmental contamination. As a government contractor, we are subject to audits, reviews and investigations to determine whether our operations are being conducted in accordance with applicable regulatory requirements. Under federal government procurement regulations, certain claims brought by the U.S. Government could result in our suspension or debarment from U.S. Government contracting for a period of time. On the basis of information presently available, we do not believe that existing proceedings and claims will have a material effect on our financial position or results of operations. |
Basis of Presentation (Policies
Basis of Presentation (Policies) | 6 Months Ended |
Jul. 02, 2022 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Use of Estimates | Use of Estimates We prepare our financial statements in conformity with generally accepted accounting principles, which require us to make estimates and assumptions that affect the amounts reported in the financial statements. Actual results could differ from those estimates. Our estimates and assumptions are reviewed periodically, and the effects of changes, if any, are reflected in the Consolidated Statements of Operations in the period that they are determined. |
Accounts Receivable and Finan_2
Accounts Receivable and Finance Receivables (Tables) | 6 Months Ended |
Jul. 02, 2022 | |
Receivables [Abstract] | |
Accounts Receivable | Accounts receivable is composed of the following: (In millions) July 2, January 1, Commercial $ 767 $ 704 U.S. Government contracts 133 158 900 862 Allowance for credit losses (24) (24) Total accounts receivable, net $ 876 $ 838 |
Finance Receivables | Finance receivables are presented in the following table: (In millions) July 2, January 1, Finance receivables $ 586 $ 630 Allowance for credit losses (25) (25) Total finance receivables, net $ 561 $ 605 |
Finance Receivables Categorized Based On Credit Quality Indicators | Finance receivables categorized based on the credit quality indicators and by the delinquency aging category are summarized as follows: (Dollars in millions) July 2, January 1, Performing $ 518 $ 536 Nonaccrual 68 94 Nonaccrual as a percentage of finance receivables 11.60% 14.92% Current and less than 31 days past due $ 577 $ 624 31-60 days past due 4 5 61-90 days past due 5 — Over 90 days past due — 1 60+ days contractual delinquency as a percentage of finance receivables 0.85% 0.16% |
Finance Receivables By Delinquency Aging Category | Finance receivables categorized based on the credit quality indicators and by the delinquency aging category are summarized as follows: (Dollars in millions) July 2, January 1, Performing $ 518 $ 536 Nonaccrual 68 94 Nonaccrual as a percentage of finance receivables 11.60% 14.92% Current and less than 31 days past due $ 577 $ 624 31-60 days past due 4 5 61-90 days past due 5 — Over 90 days past due — 1 60+ days contractual delinquency as a percentage of finance receivables 0.85% 0.16% |
Finance Receivables and Allowance For Credit Losses Based on Impairment Evaluation | A summary of finance receivables and the allowance for credit losses, based on the results of our impairment evaluation, is provided below. The finance receivables included in this table specifically exclude leveraged leases in accordance with U.S. generally accepted accounting principles. (In millions) July 2, January 1, Finance receivables evaluated collectively $ 428 $ 441 Finance receivables evaluated individually 68 94 Allowance for credit losses based on collective evaluation 21 21 Allowance for credit losses based on individual evaluation 4 4 Impaired finance receivables with specific allowance for credit losses $ 25 $ 33 Impaired finance receivables with no specific allowance for credit losses 43 61 Unpaid principal balance of impaired finance receivables 82 109 Allowance for credit losses on impaired finance receivables 4 4 Average recorded investment of impaired finance receivables 80 117 |
Inventories (Tables)
Inventories (Tables) | 6 Months Ended |
Jul. 02, 2022 | |
Inventory Disclosure [Abstract] | |
Inventories | Inventories are composed of the following: (In millions) July 2, January 1, Finished goods $ 1,110 $ 1,071 Work in process 1,705 1,548 Raw materials and components 924 849 Total inventories $ 3,739 $ 3,468 |
Warranty Liability (Tables)
Warranty Liability (Tables) | 6 Months Ended |
Jul. 02, 2022 | |
Payables and Accruals [Abstract] | |
Changes in Warranty Liability | Changes in our warranty liability are as follows: Six Months Ended (In millions) July 2, July 3, Beginning of period $ 127 $ 119 Provision 34 31 Settlements (34) (35) Adjustments* 10 1 End of period $ 137 $ 116 * Adjustments include changes to prior year estimates, new issues on prior year sales, acquisitions and currency translation adjustments. |
Leases (Tables)
Leases (Tables) | 6 Months Ended |
Jul. 02, 2022 | |
Leases [Abstract] | |
Schedule of Balance Sheet and Other Information | Balance sheet and other information related to our operating leases is as follows: (Dollars in millions) July 2, January 1, Other assets $ 359 $ 374 Other current liabilities 56 56 Other liabilities 310 325 Weighted-average remaining lease term (in years) 10.1 10.5 Weighted-average discount rate 3.22% 3.19% |
Derivative Instruments and Fa_2
Derivative Instruments and Fair Value Measurements (Tables) | 6 Months Ended |
Jul. 02, 2022 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Carrying Value and Estimated and Fair Value of Financial Instruments | The carrying value and estimated fair value of our financial instruments that are not reflected in the financial statements at fair value are as follows: July 2, 2022 January 1, 2022 Carrying Estimated Carrying Estimated (In millions) Value Fair Value Value Fair Value Manufacturing group Debt, excluding leases $ (3,178) $ (2,974) $ (3,181) $ (3,346) Finance group Finance receivables, excluding leases 381 351 413 444 Debt (382) (310) (582) (546) |
Shareholders' Equity (Tables)
Shareholders' Equity (Tables) | 6 Months Ended |
Jul. 02, 2022 | |
Equity [Abstract] | |
Schedule of Shareholder's Equity | A reconciliation of Shareholders’ equity is presented below: (In millions) Common Capital Treasury Retained Accumulated Total Three months ended July 2, 2022 Beginning of period $ 28 $ 1,924 $ (314) $ 6,058 $ (779) $ 6,917 Net income — — — 217 — 217 Other comprehensive loss — — — — (76) (76) Share-based compensation activity — 29 — — — 29 Dividends declared — — — (4) — (4) Purchases of common stock — — (282) — — (282) End of period $ 28 $ 1,953 $ (596) $ 6,271 $ (855) $ 6,801 Three months ended July 3, 2021 Beginning of period $ 29 $ 1,845 $ (294) $ 6,139 $ (1,723) $ 5,996 Net income — — — 183 — 183 Other comprehensive income — — — — 47 47 Share-based compensation activity — 75 — — — 75 Dividends declared — — — (4) — (4) Purchases of common stock — — (196) — — (196) End of period $ 29 $ 1,920 $ (490) $ 6,318 $ (1,676) $ 6,101 Six months ended July 2, 2022 Beginning of period $ 28 $ 1,863 $ (157) $ 5,870 $ (789) $ 6,815 Net income — — — 410 — 410 Other comprehensive loss — — — — (66) (66) Share-based compensation activity — 90 — — — 90 Dividends declared — — — (9) — (9) Purchases of common stock — — (439) — — (439) End of period $ 28 $ 1,953 $ (596) $ 6,271 $ (855) $ 6,801 Six months ended July 3, 2021 Beginning of period $ 29 $ 1,785 $ (203) $ 5,973 $ (1,739) $ 5,845 Net income — — — 354 — 354 Other comprehensive income — — — — 63 63 Share-based compensation activity — 135 — — — 135 Dividends declared — — — (9) — (9) Purchases of common stock — — (287) — — (287) End of period $ 29 $ 1,920 $ (490) $ 6,318 $ (1,676) $ 6,101 |
Schedule of Weighted-Average Shares Outstanding for Basic and Diluted EPS | The weighted-average shares outstanding for basic and diluted EPS are as follows: Three Months Ended Six Months Ended (In thousands) July 2, July 3, July 2, July 3, Basic weighted-average shares outstanding 214,587 225,963 215,799 226,486 Dilutive effect of stock options 2,071 2,483 2,334 1,810 Diluted weighted-average shares outstanding 216,658 228,446 218,133 228,296 |
Schedule of Components of Accumulated Other Comprehensive Loss | The components of Accumulated other comprehensive loss are presented below: (In millions) Pension and Foreign Deferred Accumulated Balance at January 1, 2022 $ (799) $ 9 $ 1 $ (789) Other comprehensive loss before reclassifications — (104) 4 (100) Reclassified from Accumulated other comprehensive loss 34 — — 34 Balance at July 2, 2022 $ (765) $ (95) $ 5 $ (855) Balance at January 2, 2021 $ (1,780) $ 42 $ (1) $ (1,739) Other comprehensive loss before reclassifications — (17) 6 (11) Reclassified from Accumulated other comprehensive loss 60 14 — 74 Balance at July 3, 2021 $ (1,720) $ 39 $ 5 $ (1,676) |
Schedule of Before and After-Tax Components of Other Comprehensive Income (Loss) | The before and after-tax components of Other comprehensive income (loss) are presented below: July 2, 2022 July 3, 2021 (In millions) Pre-Tax Tax After-tax Pre-Tax Tax After-tax Three Months Ended Pension and postretirement benefits adjustments: Amortization of net actuarial loss* $ 21 $ (6) $ 15 $ 38 $ (9) $ 29 Amortization of prior service cost* 2 — 2 2 (1) 1 Pension and postretirement benefits adjustments, net 23 (6) 17 40 (10) 30 Foreign currency translation adjustments (90) — (90) 15 — 15 Deferred gains (losses) on hedge contracts: Current deferrals (5) 2 (3) 2 — 2 Deferred gains (losses) on hedge contracts, net (5) 2 (3) 2 — 2 Total $ (72) $ (4) $ (76) $ 57 $ (10) $ 47 Six Months Ended Pension and postretirement benefits adjustments: Amortization of net actuarial loss* $ 42 $ (11) $ 31 $ 76 $ (18) $ 58 Amortization of prior service cost* 4 (1) 3 4 (2) 2 Pension and postretirement benefits adjustments, net 46 (12) 34 80 (20) 60 Foreign currency translation adjustments: Foreign currency translation adjustments (104) — (104) (17) — (17) Business disposition — — — 14 — 14 Foreign currency translation adjustments, net (104) — (104) (3) — (3) Deferred gains on hedge contracts: Current deferrals 5 (1) 4 7 (1) 6 Deferred gains on hedge contracts, net 5 (1) 4 7 (1) 6 Total $ (53) $ (13) $ (66) $ 84 $ (21) $ 63 |
Segment Information (Tables)
Segment Information (Tables) | 6 Months Ended |
Jul. 02, 2022 | |
Segment Reporting [Abstract] | |
Revenues by Segment and Reconciliation of Segment Profit Income (Loss) Before Income Taxes | Our revenues by segment, along with a reconciliation of segment profit to income from continuing operations before income taxes, are included in the table below: Three Months Ended Six Months Ended (In millions) July 2, July 3, July 2, July 3, Revenues Textron Aviation $ 1,284 $ 1,161 $ 2,324 $ 2,026 Bell 687 891 1,521 1,737 Textron Systems 293 333 566 661 Industrial 871 794 1,709 1,619 Textron eAviation 5 — 5 — Finance 14 12 30 27 Total revenues $ 3,154 $ 3,191 $ 6,155 $ 6,070 Segment Profit Textron Aviation $ 155 $ 96 $ 276 $ 143 Bell 63 110 161 215 Textron Systems 42 48 75 99 Industrial 41 32 84 79 Textron eAviation (8) — (8) — Finance 10 3 19 9 Segment profit 303 289 607 545 Corporate expenses and other, net (12) (37) (56) (77) Interest expense, net for Manufacturing group (28) (32) (56) (67) Special charges — (4) — (10) Gain on business disposition — 2 — 17 Income from continuing operations before income taxes $ 263 $ 218 $ 495 $ 408 |
Revenues (Tables)
Revenues (Tables) | 6 Months Ended |
Jul. 02, 2022 | |
Revenue from Contract with Customer [Abstract] | |
Disaggregation of Revenue | Our revenues disaggregated by major product type are presented below: Three Months Ended Six Months Ended (In millions) July 2, July 3, July 2, July 3, Aircraft $ 856 $ 797 $ 1,502 $ 1,332 Aftermarket parts and services 428 364 822 694 Textron Aviation 1,284 1,161 2,324 2,026 Military aircraft and support programs 402 572 999 1,149 Commercial helicopters, parts and services 285 319 522 588 Bell 687 891 1,521 1,737 Textron Systems 293 333 566 661 Fuel systems and functional components 435 440 899 937 Specialized vehicles 436 354 810 682 Industrial 871 794 1,709 1,619 Textron eAviation 5 — 5 — Finance 14 12 30 27 Total revenues $ 3,154 $ 3,191 $ 6,155 $ 6,070 Our revenues for our segments by customer type and geographic location are presented below: (In millions) Textron Bell Textron Industrial Textron eAviation Finance Total Three months ended July 2, 2022 Customer type: Commercial $ 1,253 $ 279 $ 19 $ 862 $ 5 $ 14 $ 2,432 U.S. Government 31 408 274 9 — — 722 Total revenues $ 1,284 $ 687 $ 293 $ 871 $ 5 $ 14 $ 3,154 Geographic location: United States $ 776 $ 504 $ 268 $ 466 $ 1 $ 5 $ 2,020 Europe 239 43 10 185 3 — 480 Other international 269 140 15 220 1 9 654 Total revenues $ 1,284 $ 687 $ 293 $ 871 $ 5 $ 14 $ 3,154 Three months ended July 3, 2021 Customer type: Commercial $ 1,127 $ 350 $ 67 $ 787 $ — $ 12 $ 2,343 U.S. Government 34 541 266 7 — — 848 Total revenues $ 1,161 $ 891 $ 333 $ 794 $ — $ 12 $ 3,191 Geographic location: United States $ 885 $ 677 $ 297 $ 406 $ — $ 6 $ 2,271 Europe 122 47 9 192 — 1 371 Other international 154 167 27 196 — 5 549 Total revenues $ 1,161 $ 891 $ 333 $ 794 $ — $ 12 $ 3,191 Six months ended July 2, 2022 Customer type: Commercial $ 2,274 $ 513 $ 38 $ 1,697 $ 5 $ 30 $ 4,557 U.S. Government 50 1,008 528 12 — — 1,598 Total revenues $ 2,324 $ 1,521 $ 566 $ 1,709 $ 5 $ 30 $ 6,155 Geographic location: United States $ 1,508 $ 1,174 $ 514 $ 892 $ 1 $ 10 $ 4,099 Europe 358 71 18 375 3 1 826 Other international 458 276 34 442 1 19 1,230 Total revenues $ 2,324 $ 1,521 $ 566 $ 1,709 $ 5 $ 30 $ 6,155 Six months ended July 3, 2021 Customer type: Commercial $ 1,973 $ 616 $ 125 $ 1,607 $ — $ 27 $ 4,348 U.S. Government 53 1,121 536 12 — — 1,722 Total revenues $ 2,026 $ 1,737 $ 661 $ 1,619 $ — $ 27 $ 6,070 Geographic location: United States $ 1,494 $ 1,293 $ 586 $ 784 $ — $ 14 $ 4,171 Europe 206 83 19 428 — 1 737 Other international 326 361 56 407 — 12 1,162 Total revenues $ 2,026 $ 1,737 $ 661 $ 1,619 $ — $ 27 $ 6,070 |
Retirement Plans (Tables)
Retirement Plans (Tables) | 6 Months Ended |
Jul. 02, 2022 | |
Retirement Benefits [Abstract] | |
Schedule of Components of Net Periodic Benefit (Income) Cost | The components of net periodic benefit (income) cost for these plans are as follows: Three Months Ended Six Months Ended (In millions) July 2, July 3, July 2, July 3, Pension Benefits Service cost $ 27 $ 29 $ 54 $ 58 Interest cost 68 63 136 126 Expected return on plan assets (153) (144) (306) (288) Amortization of net actuarial loss 22 38 44 77 Amortization of prior service cost 3 3 6 6 Net periodic benefit income* $ (33) $ (11) $ (66) $ (21) Postretirement Benefits Other Than Pensions Service cost $ — $ — $ 1 $ 1 Interest cost 2 2 3 3 Amortization of net actuarial gain (1) — (2) (1) Amortization of prior service credit (1) (1) (2) (2) Net periodic benefit cost $ — $ 1 $ — $ 1 |
Special Charges (Tables)
Special Charges (Tables) | 6 Months Ended |
Jul. 02, 2022 | |
Special Charges [Abstract] | |
Schedule of Restructuring Reserve Activity | Our restructuring reserve activity is summarized below: (In millions) Severance Contract Total Balance at January 1, 2022 $ 19 $ 9 $ 28 Cash paid (10) (1) (11) Foreign currency translation (1) — (1) Balance at July 2, 2022 $ 8 $ 8 $ 16 |
Basis of Presentation (Details)
Basis of Presentation (Details) $ / shares in Units, $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jul. 02, 2022 USD ($) $ / shares | Jul. 03, 2021 USD ($) $ / shares | Jul. 02, 2022 USD ($) borrowingGroup $ / shares | Jul. 03, 2021 USD ($) $ / shares | |
Basis of Presentation | ||||
Number of borrowing groups | borrowingGroup | 2 | |||
Cumulative catch-up method | ||||
Basis of Presentation | ||||
Cumulative catch up adjustments, increase (decease) in segment profit | $ (4) | $ 15 | $ (21) | $ 29 |
Change in accounting estimate financial effect, increase (decrease) in net income | $ (3) | $ 11 | $ (16) | $ 22 |
Change in accounting estimate financial effect increase (decrease) in earnings per diluted share (in dollars per share) | $ / shares | $ (0.01) | $ 0.05 | $ (0.07) | $ 0.10 |
Gross favorable adjustments | $ 25 | $ 40 | $ 41 | $ 76 |
Gross unfavorable adjustments | 29 | 25 | 62 | 47 |
Revenue (reduced) recognized from performance obligations satisfied in prior periods | $ (21) | $ 20 | $ (33) | $ 38 |
Business Acquisition (Details)
Business Acquisition (Details) - Pipistrel $ in Millions | Apr. 15, 2022 USD ($) |
Business Acquisition [Line Items] | |
Purchase price | $ 240 |
Assumption of debt and other contractual obligations | 35 |
Final fixed purchase price payment | 21 |
Purchase price allocated to goodwill | 142 |
Purchase price allocated to intangible assets | $ 76 |
Accounts Receivable and Finan_3
Accounts Receivable and Finance Receivables - Accounts Receivable (Details) - Manufacturing group - USD ($) $ in Millions | Jul. 02, 2022 | Jan. 01, 2022 |
Accounts Receivable | ||
Accounts receivable, gross | $ 900 | $ 862 |
Allowance for credit losses | (24) | (24) |
Total accounts receivable, net | 876 | 838 |
Commercial | ||
Accounts Receivable | ||
Accounts receivable, gross | 767 | 704 |
U.S. Government | ||
Accounts Receivable | ||
Accounts receivable, gross | $ 133 | $ 158 |
Accounts Receivable and Finan_4
Accounts Receivable and Finance Receivables - Finance Receivables (Details) - USD ($) $ in Millions | Jul. 02, 2022 | Jan. 01, 2022 |
Finance Receivables | ||
Finance receivables | $ 586 | $ 630 |
Allowance for credit losses | (25) | (25) |
Total finance receivables, net | $ 561 | $ 605 |
Accounts Receivable and Finan_5
Accounts Receivable and Finance Receivables - Finance Receivable Portfolio Quality (Details) - USD ($) $ in Millions | 6 Months Ended | |
Jul. 02, 2022 | Jan. 01, 2022 | |
Finance Receivable Portfolio Quality | ||
Finance receivables | $ 586 | $ 630 |
60+ days contractual delinquency as a percentage of finance receivables | 0.85% | 0.16% |
Current and less than 31 days past due | ||
Finance Receivable Portfolio Quality | ||
Finance receivables | $ 577 | $ 624 |
31-60 days past due | ||
Finance Receivable Portfolio Quality | ||
Finance receivables | 4 | 5 |
61-90 days past due | ||
Finance Receivable Portfolio Quality | ||
Finance receivables | 5 | 0 |
Over 90 days past due | ||
Finance Receivable Portfolio Quality | ||
Finance receivables | $ 0 | $ 1 |
Performing | ||
Finance Receivable Portfolio Quality | ||
Financing receivable originating since the beginning of 2020 | 39% | |
Financing receivable originating from 2017 to 2019 | 27% | |
Nonperforming | ||
Finance Receivable Portfolio Quality | ||
Nonaccrual as a percentage of finance receivables | 11.60% | 14.92% |
Nonperforming | Nonaccrual | ||
Finance Receivable Portfolio Quality | ||
Finance receivables | $ 68 | $ 94 |
Financing receivable originating since the beginning of 2020 | 7% | |
Financing receivable originating from 2017 to 2019 | 70% | |
Nonperforming | Minimum | ||
Finance Receivable Portfolio Quality | ||
Number of months of contractual delinquency to classify accounts as nonaccrual unless such collection is not doubtful | 3 months | |
Performing | ||
Finance Receivable Portfolio Quality | ||
Finance receivables | $ 518 | $ 536 |
Accounts Receivable and Finan_6
Accounts Receivable and Finance Receivables - Finance Receivables and Allowance for Losses Based on the Results of Impairment Evaluation (Details) - USD ($) $ in Millions | 6 Months Ended | 12 Months Ended |
Jul. 02, 2022 | Jan. 01, 2022 | |
Finance receivables | ||
Finance receivables evaluated collectively | $ 428 | $ 441 |
Finance receivables evaluated individually | 68 | 94 |
Allowance for credit losses based on collective evaluation | 21 | 21 |
Allowance for credit losses based on individual evaluation | 4 | 4 |
Impaired finance receivables with specific allowance for credit losses | 25 | 33 |
Impaired finance receivables with no specific allowance for credit losses | 43 | 61 |
Unpaid principal balance of impaired finance receivables | 82 | 109 |
Allowance for credit losses on impaired finance receivables | 4 | 4 |
Average recorded investment of impaired finance receivables | $ 80 | $ 117 |
Inventories (Details)
Inventories (Details) - USD ($) $ in Millions | Jul. 02, 2022 | Jan. 01, 2022 |
Inventories | ||
Finished goods | $ 1,110 | $ 1,071 |
Work in process | 1,705 | 1,548 |
Raw materials and components | 924 | 849 |
Total inventories | $ 3,739 | $ 3,468 |
Warranty Liability (Details)
Warranty Liability (Details) - USD ($) $ in Millions | 6 Months Ended | |
Jul. 02, 2022 | Jul. 03, 2021 | |
Changes in warranty liability | ||
Beginning of period | $ 127 | $ 119 |
Provision | 34 | 31 |
Settlements | (34) | (35) |
Adjustments | 10 | 1 |
End of period | $ 137 | $ 116 |
Leases - Narrative (Details)
Leases - Narrative (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jul. 02, 2022 | Jul. 03, 2021 | Jul. 02, 2022 | Jul. 03, 2021 | |
Leases [Abstract] | ||||
Remaining lease terms | 27 years | 27 years | ||
Operating lease - option to extend | true | |||
Operating lease - option to extend the lease, term | 25 years | 25 years | ||
Operating lease cost | $ 17 | $ 16 | $ 34 | $ 32 |
Cash paid for operating lease liabilities | 35 | 33 | ||
Noncash lease transactions | $ 17 | $ 63 |
Leases - Balance Sheet and Othe
Leases - Balance Sheet and Other Information (Details) - USD ($) $ in Millions | Jul. 02, 2022 | Jan. 01, 2022 |
Operating leases: | ||
Operating Lease, Right-of-Use Asset, Statement of Financial Position [Extensible Enumeration] | Other assets | Other assets |
Other assets | $ 359 | $ 374 |
Operating Lease, Liability, Current, Statement of Financial Position [Extensible Enumeration] | Other current liabilities | Other current liabilities |
Other current liabilities | $ 56 | $ 56 |
Operating Lease, Liability, Noncurrent, Statement of Financial Position [Extensible Enumeration] | Other liabilities | Other liabilities |
Other liabilities | $ 310 | $ 325 |
Weighted-average remaining lease term (in years) | ||
Weighted-average remaining lease term (in years) | 10 years 1 month 6 days | 10 years 6 months |
Weighted-average discount rate | ||
Weighted-average discount rate | 3.22% | 3.19% |
Leases - Maturity of Lease Liab
Leases - Maturity of Lease Liabilities (Details) $ in Millions | Jul. 02, 2022 USD ($) |
Operating Leases | |
Remainder of 2022 | $ 35 |
2023 | 65 |
2024 | 55 |
2025 | 47 |
2026 | 35 |
Thereafter | $ 217 |
Derivative Instruments and Fa_3
Derivative Instruments and Fair Value Measurements - Assets and Liabilities Recorded at Fair Value on a Recurring Basis (Details) - USD ($) $ in Millions | 6 Months Ended | |
Jul. 02, 2022 | Jan. 01, 2022 | |
Manufacturing group | ||
Assets and Liabilities Recorded at Fair Value on a Recurring Basis | ||
Forward exchange contracts maximum maturity period | 3 years | |
Manufacturing group | Foreign currency exchange contracts | Cash Flow Hedging | ||
Assets and Liabilities Recorded at Fair Value on a Recurring Basis | ||
Notional amounts | $ 264 | $ 272 |
Manufacturing group | Foreign currency exchange contracts | Cash Flow Hedging | Level 2 | ||
Assets and Liabilities Recorded at Fair Value on a Recurring Basis | ||
Derivative asset, fair value | 3 | 4 |
Derivative liability, fair value | 4 | 3 |
Finance group | Interest rate swap | Cash Flow Hedging | ||
Assets and Liabilities Recorded at Fair Value on a Recurring Basis | ||
Derivative asset, fair value | 7 | |
Finance group | Interest rate swap, maturing in August 2023 | Cash Flow Hedging | ||
Assets and Liabilities Recorded at Fair Value on a Recurring Basis | ||
Notional amounts | 272 | $ 289 |
Finance group | Interest rate swap, maturing in June 2025 | Cash Flow Hedging | ||
Assets and Liabilities Recorded at Fair Value on a Recurring Basis | ||
Notional amounts | $ 25 |
Derivative Instruments and Fa_4
Derivative Instruments and Fair Value Measurements - Assets and Liabilities not Recorded at Fair Value (Details) - USD ($) $ in Millions | Jul. 02, 2022 | Jan. 01, 2022 |
Manufacturing group | Carrying Value | ||
Financial instruments not reflected at fair value | ||
Debt | $ (3,178) | $ (3,181) |
Manufacturing group | Estimated Fair value | ||
Financial instruments not reflected at fair value | ||
Debt | (2,974) | (3,346) |
Finance group | Carrying Value | ||
Financial instruments not reflected at fair value | ||
Debt | (382) | (582) |
Finance receivables, excluding leases | 381 | 413 |
Finance group | Estimated Fair value | ||
Financial instruments not reflected at fair value | ||
Debt | (310) | (546) |
Finance receivables, excluding leases | $ 351 | $ 444 |
Shareholders' Equity - Reconcil
Shareholders' Equity - Reconciliation of Shareholders' Equity (Details) - USD ($) $ / shares in Units, $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jul. 02, 2022 | Jul. 03, 2021 | Jul. 02, 2022 | Jul. 03, 2021 | |
Increase (Decrease) in Stockholders' Equity | ||||
Balance at beginning of period | $ 6,917 | $ 5,996 | $ 6,815 | $ 5,845 |
Net income | 217 | 183 | 410 | 354 |
Other comprehensive income (loss) | (76) | 47 | (66) | 63 |
Share-based compensation activity | 29 | 75 | 90 | 135 |
Dividends declared | (4) | (4) | (9) | (9) |
Purchases of common stock | (282) | (196) | (439) | (287) |
Balance at end of period | $ 6,801 | $ 6,101 | $ 6,801 | $ 6,101 |
Dividends per share of common stock (in dollars per share) | $ 0.02 | $ 0.02 | $ 0.04 | $ 0.04 |
Common Stock | ||||
Increase (Decrease) in Stockholders' Equity | ||||
Balance at beginning of period | $ 28 | $ 29 | $ 28 | $ 29 |
Balance at end of period | 28 | 29 | 28 | 29 |
Capital Surplus | ||||
Increase (Decrease) in Stockholders' Equity | ||||
Balance at beginning of period | 1,924 | 1,845 | 1,863 | 1,785 |
Share-based compensation activity | 29 | 75 | 90 | 135 |
Balance at end of period | 1,953 | 1,920 | 1,953 | 1,920 |
Treasury Stock | ||||
Increase (Decrease) in Stockholders' Equity | ||||
Balance at beginning of period | (314) | (294) | (157) | (203) |
Purchases of common stock | (282) | (196) | (439) | (287) |
Balance at end of period | (596) | (490) | (596) | (490) |
Retained Earnings | ||||
Increase (Decrease) in Stockholders' Equity | ||||
Balance at beginning of period | 6,058 | 6,139 | 5,870 | 5,973 |
Net income | 217 | 183 | 410 | 354 |
Dividends declared | (4) | (4) | (9) | (9) |
Balance at end of period | 6,271 | 6,318 | 6,271 | 6,318 |
Accumulated Other Comprehensive Loss | ||||
Increase (Decrease) in Stockholders' Equity | ||||
Balance at beginning of period | (779) | (1,723) | (789) | (1,739) |
Other comprehensive income (loss) | (76) | 47 | (66) | 63 |
Balance at end of period | $ (855) | $ (1,676) | $ (855) | $ (1,676) |
Shareholders' Equity - Earnings
Shareholders' Equity - Earnings Per Share (Details) - shares shares in Thousands | 3 Months Ended | 6 Months Ended | ||
Jul. 02, 2022 | Jul. 03, 2021 | Jul. 02, 2022 | Jul. 03, 2021 | |
Weighted-average shares outstanding for basic and diluted EPS | ||||
Basic weighted-average shares outstanding (in shares) | 214,587 | 225,963 | 215,799 | 226,486 |
Dilutive effect of stock options (in shares) | 2,071 | 2,483 | 2,334 | 1,810 |
Diluted weighted-average shares outstanding (in shares) | 216,658 | 228,446 | 218,133 | 228,296 |
Stock options | ||||
Weighted-average shares outstanding for basic and diluted EPS | ||||
Anti-dilutive effect of weighted average shares (in shares) | 1,000 | 1,000 | 2,100 |
Shareholders' Equity - Accumula
Shareholders' Equity - Accumulated Other Comprehensive Loss and Other Comprehensive Income (Details) - USD ($) $ in Millions | 6 Months Ended | |
Jul. 02, 2022 | Jul. 03, 2021 | |
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||
Balance at beginning of period | $ 6,815 | $ 5,845 |
Other comprehensive loss before reclassifications | (100) | (11) |
Reclassified from Accumulated other comprehensive loss | 34 | 74 |
Balance at end of period | 6,801 | 6,101 |
Accumulated Other Comprehensive Loss | ||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||
Balance at beginning of period | (789) | (1,739) |
Balance at end of period | (855) | (1,676) |
Pension and Postretirement Benefits Adjustments | ||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||
Balance at beginning of period | (799) | (1,780) |
Other comprehensive loss before reclassifications | 0 | 0 |
Reclassified from Accumulated other comprehensive loss | 34 | 60 |
Balance at end of period | (765) | (1,720) |
Foreign Currency Translation Adjustments | ||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||
Balance at beginning of period | 9 | 42 |
Other comprehensive loss before reclassifications | (104) | (17) |
Reclassified from Accumulated other comprehensive loss | 0 | 14 |
Balance at end of period | (95) | 39 |
Deferred Gains (Losses) on Hedge Contracts | ||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||
Balance at beginning of period | 1 | (1) |
Other comprehensive loss before reclassifications | 4 | 6 |
Reclassified from Accumulated other comprehensive loss | 0 | 0 |
Balance at end of period | $ 5 | $ 5 |
Shareholders' Equity - Before a
Shareholders' Equity - Before and After Tax Components of Other Comprehensive Income (Loss) (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jul. 02, 2022 | Jul. 03, 2021 | Jul. 02, 2022 | Jul. 03, 2021 | |
Pension and postretirement benefits adjustments, pre-tax: | ||||
Amortization of net actuarial loss, pre-tax | $ 21 | $ 38 | $ 42 | $ 76 |
Amortization of prior service cost, pre-tax | 2 | 2 | 4 | 4 |
Pension and postretirement benefits adjustments, net, pre-tax | 23 | 40 | 46 | 80 |
Pension and postretirement benefits adjustments, tax: | ||||
Amortization of net actuarial loss, tax (expense) benefit | (6) | (9) | (11) | (18) |
Amortization of prior service cost, tax (expense) benefit | 0 | (1) | (1) | (2) |
Pension and postretirement benefits adjustments, net, tax (expense) benefit | (6) | (10) | (12) | (20) |
Pension and postretirement benefits adjustments, after-tax: | ||||
Amortization of net actuarial loss, after-tax | 15 | 29 | 31 | 58 |
Amortization of prior period service cost, after-tax | 2 | 1 | 3 | 2 |
Pension and postretirement benefits adjustments, net, after-tax | 17 | 30 | 34 | 60 |
Foreign currency translation adjustments, pre-tax: | ||||
Foreign currency translation adjustments, pre-tax | (104) | (17) | ||
Business disposition, pre-tax | 0 | 14 | ||
Foreign currency translation adjustments, net, pre-tax | (90) | 15 | (104) | (3) |
Foreign currency translation adjustments, tax: | ||||
Foreign currency translation adjustments, tax (expense) benefit | 0 | 0 | ||
Business disposition, tax (expense) benefit | 0 | 0 | ||
Foreign currency translation adjustments, net, tax (expense) benefit | 0 | 0 | 0 | 0 |
Foreign currency translation adjustments, after-tax: | ||||
Foreign currency translation adjustments, after-tax | (104) | (17) | ||
Business disposition, after-tax | 0 | 14 | ||
Foreign currency translation adjustments, net, after-tax | (90) | 15 | (104) | (3) |
Deferred gains (losses) on hedge contracts, pre-tax: | ||||
Current deferrals, pre-tax | (5) | 2 | 5 | 7 |
Deferred gains on hedge contracts, net, pre-tax | (5) | 2 | 5 | 7 |
Deferred gains (losses) on hedge contracts, tax: | ||||
Current deferrals, tax (expense) benefit | 2 | 0 | (1) | (1) |
Deferred gains on hedge contracts, net, tax (expense) benefit | 2 | 0 | (1) | (1) |
Deferred gains (losses) on hedge contracts, after-tax: | ||||
Current deferrals, after-tax | (3) | 2 | 4 | 6 |
Deferred gains on hedge contracts, net, after-tax | (3) | 2 | 4 | 6 |
Other comprehensive income (loss), pre-tax | (72) | 57 | (53) | 84 |
Other comprehensive income (loss), tax (expense) benefit | (4) | (10) | (13) | (21) |
Other comprehensive income (loss) | $ (76) | $ 47 | $ (66) | $ 63 |
Segment Information - Operating
Segment Information - Operating and Reportable Segments (Details) | 3 Months Ended |
Apr. 02, 2022 businessSegment | |
Operating and reportable business segments | |
Number of business operating segments | 5 |
Number of reportable business segments | 5 |
Segment Information - Revenue b
Segment Information - Revenue by Segment and Reconciliation of Segment Profit to Income Before Income Taxes (Details) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jul. 02, 2022 | Jul. 03, 2021 | Jul. 02, 2022 | Jul. 03, 2021 | |
Revenues | ||||
Total revenues | $ 3,154,000,000 | $ 3,191,000,000 | $ 6,155,000,000 | $ 6,070,000,000 |
Reconciliation of segment profit to income from continuing operations before income taxes | ||||
Special charges | 0 | (4,000,000) | 0 | (10,000,000) |
Gain on business disposition | 0 | 2,000,000 | 0 | 17,000,000 |
Income from continuing operations before income taxes | 263,000,000 | 218,000,000 | 495,000,000 | 408,000,000 |
Operating Segment | ||||
Reconciliation of segment profit to income from continuing operations before income taxes | ||||
Segment profit | 303,000,000 | 289,000,000 | 607,000,000 | 545,000,000 |
Reconciling Items | ||||
Reconciliation of segment profit to income from continuing operations before income taxes | ||||
Corporate expenses and other, net | (12,000,000) | (37,000,000) | (56,000,000) | (77,000,000) |
Special charges | 0 | (4,000,000) | 0 | (10,000,000) |
Gain on business disposition | 0 | 2,000,000 | 0 | 17,000,000 |
Textron Aviation | ||||
Revenues | ||||
Total revenues | 1,284,000,000 | 1,161,000,000 | 2,324,000,000 | 2,026,000,000 |
Bell | ||||
Revenues | ||||
Total revenues | 687,000,000 | 891,000,000 | 1,521,000,000 | 1,737,000,000 |
Textron Systems | ||||
Revenues | ||||
Total revenues | 293,000,000 | 333,000,000 | 566,000,000 | 661,000,000 |
Industrial | ||||
Revenues | ||||
Total revenues | 871,000,000 | 794,000,000 | 1,709,000,000 | 1,619,000,000 |
Textron eAviation | ||||
Revenues | ||||
Total revenues | 5,000,000 | 0 | 5,000,000 | 0 |
Finance | ||||
Revenues | ||||
Total revenues | 14,000,000 | 12,000,000 | 30,000,000 | 27,000,000 |
Finance | Operating Segment | ||||
Reconciliation of segment profit to income from continuing operations before income taxes | ||||
Segment profit | 10,000,000 | 3,000,000 | ||
Manufacturing group | ||||
Reconciliation of segment profit to income from continuing operations before income taxes | ||||
Gain on business disposition | 0 | 17,000,000 | ||
Manufacturing group | Reconciling Items | ||||
Reconciliation of segment profit to income from continuing operations before income taxes | ||||
Interest expense, net for Manufacturing group | (28,000,000) | (32,000,000) | (56,000,000) | (67,000,000) |
Manufacturing group | Textron Aviation | Operating Segment | ||||
Revenues | ||||
Total revenues | 1,284,000,000 | 1,161,000,000 | 2,324,000,000 | 2,026,000,000 |
Reconciliation of segment profit to income from continuing operations before income taxes | ||||
Segment profit | 155,000,000 | 96,000,000 | 276,000,000 | 143,000,000 |
Manufacturing group | Bell | Operating Segment | ||||
Revenues | ||||
Total revenues | 687,000,000 | 891,000,000 | 1,521,000,000 | 1,737,000,000 |
Reconciliation of segment profit to income from continuing operations before income taxes | ||||
Segment profit | 63,000,000 | 110,000,000 | 161,000,000 | 215,000,000 |
Manufacturing group | Textron Systems | Operating Segment | ||||
Revenues | ||||
Total revenues | 293,000,000 | 333,000,000 | 566,000,000 | 661,000,000 |
Reconciliation of segment profit to income from continuing operations before income taxes | ||||
Segment profit | 42,000,000 | 48,000,000 | 75,000,000 | 99,000,000 |
Manufacturing group | Industrial | Operating Segment | ||||
Revenues | ||||
Total revenues | 871,000,000 | 794,000,000 | 1,709,000,000 | 1,619,000,000 |
Reconciliation of segment profit to income from continuing operations before income taxes | ||||
Segment profit | 41,000,000 | 32,000,000 | 84,000,000 | 79,000,000 |
Manufacturing group | Textron eAviation | Operating Segment | ||||
Revenues | ||||
Total revenues | 5,000,000 | 0 | 5,000,000 | 0 |
Reconciliation of segment profit to income from continuing operations before income taxes | ||||
Segment profit | (8,000,000) | 0 | (8,000,000) | 0 |
Finance group | ||||
Revenues | ||||
Total revenues | 14,000,000 | 12,000,000 | 30,000,000 | 27,000,000 |
Reconciliation of segment profit to income from continuing operations before income taxes | ||||
Gain on business disposition | 0 | 0 | ||
Finance group | Finance | Operating Segment | ||||
Revenues | ||||
Total revenues | $ 14,000,000 | $ 12,000,000 | 30,000,000 | 27,000,000 |
Reconciliation of segment profit to income from continuing operations before income taxes | ||||
Segment profit | $ 19,000,000 | $ 9,000,000 |
Revenues - Disaggregation of Re
Revenues - Disaggregation of Revenue (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jul. 02, 2022 | Jul. 03, 2021 | Jul. 02, 2022 | Jul. 03, 2021 | |
Revenues | ||||
Revenues | $ 3,154 | $ 3,191 | $ 6,155 | $ 6,070 |
United States | ||||
Revenues | ||||
Revenues | 2,020 | 2,271 | 4,099 | 4,171 |
Europe | ||||
Revenues | ||||
Revenues | 480 | 371 | 826 | 737 |
Other international | ||||
Revenues | ||||
Revenues | 654 | 549 | 1,230 | 1,162 |
Commercial | ||||
Revenues | ||||
Revenues | 2,432 | 2,343 | 4,557 | 4,348 |
U.S. Government | ||||
Revenues | ||||
Revenues | 722 | 848 | 1,598 | 1,722 |
Textron Aviation | ||||
Revenues | ||||
Revenues | 1,284 | 1,161 | 2,324 | 2,026 |
Textron Aviation | United States | ||||
Revenues | ||||
Revenues | 776 | 885 | 1,508 | 1,494 |
Textron Aviation | Europe | ||||
Revenues | ||||
Revenues | 239 | 122 | 358 | 206 |
Textron Aviation | Other international | ||||
Revenues | ||||
Revenues | 269 | 154 | 458 | 326 |
Textron Aviation | Commercial | ||||
Revenues | ||||
Revenues | 1,253 | 1,127 | 2,274 | 1,973 |
Textron Aviation | U.S. Government | ||||
Revenues | ||||
Revenues | 31 | 34 | 50 | 53 |
Textron Aviation | Aircraft | ||||
Revenues | ||||
Revenues | 856 | 797 | 1,502 | 1,332 |
Textron Aviation | Aftermarket parts and services | ||||
Revenues | ||||
Revenues | 428 | 364 | 822 | 694 |
Bell | ||||
Revenues | ||||
Revenues | 687 | 891 | 1,521 | 1,737 |
Bell | United States | ||||
Revenues | ||||
Revenues | 504 | 677 | 1,174 | 1,293 |
Bell | Europe | ||||
Revenues | ||||
Revenues | 43 | 47 | 71 | 83 |
Bell | Other international | ||||
Revenues | ||||
Revenues | 140 | 167 | 276 | 361 |
Bell | Commercial | ||||
Revenues | ||||
Revenues | 279 | 350 | 513 | 616 |
Bell | U.S. Government | ||||
Revenues | ||||
Revenues | 408 | 541 | 1,008 | 1,121 |
Bell | Military aircraft and support programs | ||||
Revenues | ||||
Revenues | 402 | 572 | 999 | 1,149 |
Bell | Commercial helicopters, parts and services | ||||
Revenues | ||||
Revenues | 285 | 319 | 522 | 588 |
Textron Systems | ||||
Revenues | ||||
Revenues | 293 | 333 | 566 | 661 |
Textron Systems | United States | ||||
Revenues | ||||
Revenues | 268 | 297 | 514 | 586 |
Textron Systems | Europe | ||||
Revenues | ||||
Revenues | 10 | 9 | 18 | 19 |
Textron Systems | Other international | ||||
Revenues | ||||
Revenues | 15 | 27 | 34 | 56 |
Textron Systems | Commercial | ||||
Revenues | ||||
Revenues | 19 | 67 | 38 | 125 |
Textron Systems | U.S. Government | ||||
Revenues | ||||
Revenues | 274 | 266 | 528 | 536 |
Industrial | ||||
Revenues | ||||
Revenues | 871 | 794 | 1,709 | 1,619 |
Industrial | United States | ||||
Revenues | ||||
Revenues | 466 | 406 | 892 | 784 |
Industrial | Europe | ||||
Revenues | ||||
Revenues | 185 | 192 | 375 | 428 |
Industrial | Other international | ||||
Revenues | ||||
Revenues | 220 | 196 | 442 | 407 |
Industrial | Commercial | ||||
Revenues | ||||
Revenues | 862 | 787 | 1,697 | 1,607 |
Industrial | U.S. Government | ||||
Revenues | ||||
Revenues | 9 | 7 | 12 | 12 |
Industrial | Fuel systems and functional components | ||||
Revenues | ||||
Revenues | 435 | 440 | 899 | 937 |
Industrial | Specialized vehicles | ||||
Revenues | ||||
Revenues | 436 | 354 | 810 | 682 |
Textron eAviation | ||||
Revenues | ||||
Revenues | 5 | 0 | 5 | 0 |
Textron eAviation | United States | ||||
Revenues | ||||
Revenues | 1 | 0 | 1 | 0 |
Textron eAviation | Europe | ||||
Revenues | ||||
Revenues | 3 | 0 | 3 | 0 |
Textron eAviation | Other international | ||||
Revenues | ||||
Revenues | 1 | 0 | 1 | 0 |
Textron eAviation | Commercial | ||||
Revenues | ||||
Revenues | 5 | 0 | 5 | 0 |
Textron eAviation | U.S. Government | ||||
Revenues | ||||
Revenues | 0 | 0 | 0 | 0 |
Finance | ||||
Revenues | ||||
Revenues | 14 | 12 | 30 | 27 |
Finance | United States | ||||
Revenues | ||||
Revenues | 5 | 6 | 10 | 14 |
Finance | Europe | ||||
Revenues | ||||
Revenues | 0 | 1 | 1 | 1 |
Finance | Other international | ||||
Revenues | ||||
Revenues | 9 | 5 | 19 | 12 |
Finance | Commercial | ||||
Revenues | ||||
Revenues | 14 | 12 | 30 | 27 |
Finance | U.S. Government | ||||
Revenues | ||||
Revenues | $ 0 | $ 0 | $ 0 | $ 0 |
Revenues - Remaining Performanc
Revenues - Remaining Performance Obligations (Details) $ in Billions | Jul. 02, 2022 USD ($) |
Remaining Performance Obligation, Expected Timing of Satisfaction | |
Remaining performance obligation | $ 13.2 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2022-07-03 | |
Remaining Performance Obligation, Expected Timing of Satisfaction | |
Remaining performance obligation, percent | 75% |
Remaining performance obligation, expected timing of satisfaction | 18 months |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2023-12-31 | |
Remaining Performance Obligation, Expected Timing of Satisfaction | |
Remaining performance obligation, percent | 21% |
Remaining performance obligation, expected timing of satisfaction | 24 months |
Revenues - Contract Assets and
Revenues - Contract Assets and Liabilities (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | |||
Jul. 02, 2022 | Jul. 03, 2021 | Jul. 02, 2022 | Jul. 03, 2021 | Jan. 01, 2022 | |
Contract Assets and Liabilities | |||||
Contract assets | $ 643 | $ 643 | $ 717 | ||
Contract liabilities | 1,600 | 1,600 | $ 1,200 | ||
Revenue recognized included in contract liabilities | $ 293 | $ 170 | $ 499 | $ 448 |
Retirement Plans (Details)
Retirement Plans (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jul. 02, 2022 | Jul. 03, 2021 | Jul. 02, 2022 | Jul. 03, 2021 | |
Pension Benefits | ||||
Net periodic benefit cost (credit) | ||||
Service cost | $ 27 | $ 29 | $ 54 | $ 58 |
Interest cost | 68 | 63 | 136 | 126 |
Expected return on plan assets | (153) | (144) | (306) | (288) |
Amortization of net actuarial loss | 22 | 38 | 44 | 77 |
Amortization of prior service cost | 3 | 3 | 6 | 6 |
Net periodic benefit (income) cost | (33) | (11) | (66) | (21) |
Pension Benefits | United States | ||||
Net periodic benefit cost (credit) | ||||
Defined contribution component | 3 | 3 | 7 | 6 |
Postretirement Benefits Other Than Pensions | ||||
Net periodic benefit cost (credit) | ||||
Service cost | 0 | 0 | 1 | 1 |
Interest cost | 2 | 2 | 3 | 3 |
Amortization of net actuarial loss | (1) | 0 | (2) | (1) |
Amortization of prior service cost | (1) | (1) | (2) | (2) |
Net periodic benefit (income) cost | $ 0 | $ 1 | $ 0 | $ 1 |
Special Charges - Narrative (De
Special Charges - Narrative (Details) - USD ($) | 3 Months Ended | 6 Months Ended | |||
Jul. 02, 2022 | Jul. 03, 2021 | Jul. 02, 2022 | Jul. 03, 2021 | Jan. 01, 2022 | |
Restructuring and Related Activities [Abstract] | |||||
Special charges | $ 0 | $ 4,000,000 | $ 0 | $ 10,000,000 | |
Remaining cash outlays | $ 16,000,000 | $ 16,000,000 | $ 28,000,000 |
Special Charges - Restructuring
Special Charges - Restructuring Reserve Activity (Details) $ in Millions | 6 Months Ended |
Jul. 02, 2022 USD ($) | |
Restructuring Reserve [Roll Forward] | |
Beginning balance | $ 28 |
Cash paid | (11) |
Foreign currency translation | (1) |
Ending balance | 16 |
Severance Costs | |
Restructuring Reserve [Roll Forward] | |
Beginning balance | 19 |
Cash paid | (10) |
Foreign currency translation | (1) |
Ending balance | 8 |
Contract Terminations and Other | |
Restructuring Reserve [Roll Forward] | |
Beginning balance | 9 |
Cash paid | (1) |
Foreign currency translation | 0 |
Ending balance | $ 8 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jul. 02, 2022 | Jul. 03, 2021 | Jul. 02, 2022 | Jul. 03, 2021 | |
Income Tax Disclosure [Abstract] | ||||
Effective income tax rate | 17.10% | 15.60% | 17% | 13% |
U.S. federal statutory income tax rate | 21% | 21% | 21% | 21% |
Tax benefit recognized for additional research and development credits | $ 12 |