Textron (TXT) 10-K 25 Feb 10 2010 FY Annual report Financial data

Document and Company Informatio

Document and Company Information (USD $)
	12 Months Ended Jan. 02, 2010	Feb. 13, 2010	Jul. 04, 2009
Document And Company Information [Abstract]
Entity Registrant Name	TEXTRON INC
Entity Central Index Key	0000217346
Document Type	10-K
Document Period End Date	2010-01-02
Amendment Flag	false
Current Fiscal Year End Date	--01-02
Entity Well-known Seasoned Issuer	Yes
Entity Voluntary Filers	No
Entity Current Reporting Status	Yes
Entity Filer Category	Large Accelerated Filer
Entity Public Float			$2,512,000,000
Entity Common Stock, Shares Outstanding		272,621,010

Consolidated Statements of Oper

Consolidated Statements of Operations (USD $)
In Millions	12 Months Ended Jan. 02, 2010	12 Months Ended Jan. 03, 2009	12 Months Ended Dec. 29, 2007
Manufacturing Group
Costs, expenses and other
Income (loss) from continuing operations	$133	$785	$721
Income from discontinued operations, net of income taxes	42	162	51
Net income (loss)	175	947	772
Finance Group
Costs, expenses and other
Provision for losses on finance receivables	267	234	33
Income (loss) from continuing operations	(206)	(461)	145
Net income (loss)	(206)	(461)	145
Consolidated
Revenues
Manufacturing revenues	10,139	13,287	11,520
Finance revenues	361	723	875
Total revenues	10,500	14,010	12,395
Costs, expenses and other
Cost of sales	8,468	10,583	9,099
Selling and administrative	1,344	1,606	1,545
Special charges	317	526	0
Provision for losses on finance receivables	267	234	33
Interest expense	309	448	507
Interest income	(6)	(16)	(23)
Gain on sale of assets	(50)	0	0
Total costs, expenses and other	10,649	13,381	11,161
Income (loss) from continuing operations before income taxes	(149)	629	1,234
Income tax expense (benefit)	(76)	305	368
Income (loss) from continuing operations	(73)	324	866
Income from discontinued operations, net of income taxes	42	162	51
Net income (loss)	($31)	$486	$917
Basic earnings per share
Continuing operations	-0.28	1.32	3.47
Discontinued operations	0.16	0.65	0.2
Basic earnings per share	-0.12	1.97	3.67
Diluted earnings per share
Continuing operations	-0.28	1.29	3.4
Discontinued operations	0.16	0.65	0.2
Diluted earnings per share	-0.12	1.94	3.6

Consolidated Balance Sheets

Consolidated Balance Sheets (USD $)
In Millions	Jan. 02, 2010	Jan. 03, 2009
Manufacturing Group
Assets
Cash and cash equivalents	$1,748	$531
Accounts receivable, net	894	894
Inventories	2,273	3,093
Other current assets	960	584
Assets of discontinued operations	58	334
Total current assets	5,933	5,436
Property, plant and equipment, net	1,968	2,088
Goodwill	1,622	1,698
Other assets	1,905	1,465
Total assets	11,428	10,687
Liabilities
Current portion of long-term debt and short-term debt	134	876
Accounts payable	569	1,101
Accrued liabilities	2,027	2,609
Liabilities of discontinued operations	138	195
Total current liabilities	2,868	4,781
Other liabilities	3,127	2,926
Long-term debt	3,450	1,693
Total liabilities	9,445	9,400
Finance Group
Assets
Cash and cash equivalents	144	16
Finance receivables held for investment, net	5,865	6,724
Finance receivables held for sale	819	1,658
Other assets	684	946
Total assets	7,512	9,344
Liabilities
Other liabilities	866	540
Deferred income taxes	136	337
Debt	5,667	7,388
Total liabilities	6,669	8,265
Consolidated
Assets
Cash and cash equivalents	1,892	547
Total assets	18,940	20,031
Liabilities
Total liabilities	16,114	17,665
Shareholders' equity
Common stock (277.4 million and 253.1 million shares issued, respectively, and 272.3 million and 242.0 million shares outstanding, respectively)	35	32
Capital surplus	1,369	1,229
Retained earnings	2,973	3,025
Accumulated other comprehensive loss	(1,321)	(1,422)
Total shareholders' equity including cost of treasury shares	3,056	2,866
Less cost of treasury shares	230	500
Total shareholders' equity	2,826	2,366
Total liabilities and shareholders' equity	18,940	20,031
Consolidated | Series A, $2.08 Preferred stock
Shareholders' equity
Preferred stock	0	2
Total shareholders' equity	0	2
Consolidated | Series B, $1.40 Preferred stock
Shareholders' equity
Preferred stock	0	0
Total shareholders' equity	$0	$0

Consolidated Balance Sheets (Pa

Consolidated Balance Sheets (Parenthetical) (USD $)
Share data in Millions, except Per Share data	Jan. 02, 2010	Jan. 03, 2009
Shareholders' equity
Series A cumulative convertible preferred stock , Dividend rate	2.08	2.08
Series B convertible preferred dividend stock, Dividend rate	1.4	1.4
Consolidated
Shareholders' equity
Common stock, shares issued	277.4	253.1
Common stock, shares outstanding	272.3	242

Statements of Shareholders Equi

Statements of Shareholders Equity (Consolidated, USD $)
In Millions	Common Stock	Capital Surplus	Treasury Stock	Retained Earnings	Accumulated Other Comprehensive Loss		Series A, $2.08 Preferred stock	Series B, $1.40 Preferred stock
Balance at Dec. 30, 2006	$26	$1,786	($4,740)	$6,211	($644)	$2,649	$4	$6
Net income (loss)				917		917
Other comprehensive income:
Foreign currency translation adjustment					57	57
Deferred gains (losses) on hedge contracts					53	53
Pension adjustments					96	96
Reclassification adjustments					38	38
Total other comprehensive income						1,161
Impact of adoption of new accounting standards				(11)		(11)
Retirement of treasury shares	(10)	(770)	4,911	(4,123)		0	(2)	(6)
Stock split issued in the form of a stock dividend	16			(16)		0
Dividends declared ($0.85, $0.92 and $0.08 per share for 2007, 2008 and 2009, respectively)				(212)		(212)
Share-based compensation		41				41
Exercise of stock options		101				101
Purchases of common stock			(295)			(295)
Issuance of common stock under employee stock plans		8	38			46
Income tax impact of employee stock transactions		27				27
Balance at Dec. 29, 2007	32	1,193	(86)	2,766	(400)	3,507	2	0
Net income (loss)				486		486
Other comprehensive income:
Foreign currency translation adjustment					(195)	(195)
Deferred gains (losses) on hedge contracts					(73)	(73)
Pension adjustments					(803)	(803)
Reclassification adjustments					14	14
Reclassification due to sale of Fluid & Power					35	35
Total other comprehensive income						(536)
Dividends declared ($0.85, $0.92 and $0.08 per share for 2007, 2008 and 2009, respectively)				(227)		(227)
Share-based compensation		50				50
Exercise of stock options		39				39
Purchases of common stock			(533)			(533)
Issuance of common stock under employee stock plans		(66)	119			53
Income tax impact of employee stock transactions		13				13
Balance at Jan. 03, 2009	32	1,229	(500)	3,025	(1,422)	2,366	2	0
Net income (loss)				(31)		(31)
Other comprehensive income:
Foreign currency translation adjustment					23	23
Deferred gains (losses) on hedge contracts					67	67
Pension adjustments					(25)	(25)
Reclassification adjustments					21	21
Pension curtailment					15	15
Total other comprehensive income						70
Dividends declared ($0.85, $0.92 and $0.08 per share for 2007, 2008 and 2009, respectively)				(21)		(21)
Share-based compensation		30				30
Purchase of convertible note hedge		(140)				(140)
Equity component of convertible debt issuance		134				134
Issuance of common stock and warrants	3	330				333
Issuance of common stock under employee stock plans		(210)	270			60
Redemption of preferred stock		1				(1)	(2)
Income tax impact of employee stock transactions		(5)				(5)
Balance at Jan. 02, 2010	$35	$1,369	($230)	$2,973	($1,321)	$2,826	$0	$0

Statements of Equity (Parenthet

Statements of Equity (Parenthetical) (Retained Earnings, Consolidated, USD $)
	12 Months Ended Jan. 02, 2010	12 Months Ended Jan. 03, 2009	12 Months Ended Dec. 29, 2007
Retained Earnings | Consolidated
Dividends declared per share $0.85, $0.92 and $0.08 in the year 2007, 2008 and 2009 respectively	0.08	0.92	0.85

Consolidated Statements of Cash

Consolidated Statements of Cash Flows (USD $)
In Millions	12 Months Ended Jan. 02, 2010	12 Months Ended Jan. 03, 2009	12 Months Ended Dec. 29, 2007
Manufacturing Group
Cash flows from operating activities
Net income (loss)	$175	$947	$772
Income from discontinued operations	42	162	51
Income (loss) from continuing operations	133	785	721
Adjustments to reconcile income from continuing operations to net cash provided by (used in) operating activities:
Dividends received from Finance group	349	142	135
Capital contributions paid to Finance group	(270)	(625)	0
Non-cash items:
Depreciation and amortization	373	360	282
Goodwill and other asset impairment charges	144	11	1
Other, net	112	103	87
Deferred income taxes	(61)	51	4
Changes in assets and liabilities:
Accounts receivable, net	17	15	(38)
Inventories	810	(648)	(436)
Other assets	(157)	(21)	(43)
Accounts payable	(535)	276	35
Accrued and other liabilities	(183)	(56)	387
Other operating activities, net	6	14	9
Net cash provided by operating activities of continuing operations	738	407	1,144
Net cash provided by (used in) operating activities of discontinued operations	(17)	(14)	64
Net cash provided by operating activities	721	393	1,208
Cash flows from investing activities
Net cash used in acquisitions	0	(109)	(1,092)
Net proceeds from sale of businesses	0	0	(14)
Capital expenditures	(238)	(537)	(369)
Other investing activities, net	(50)	9	6
Net cash provided by (used in) investing activities of continuing operations	(288)	(637)	(1,469)
Net cash provided by investing activities of discontinued operations	211	471	58
Net cash provided by (used in) investing activities	(77)	(166)	(1,411)
Cash flows from financing activities
Increase (decrease) in short-term debt	(869)	867	(42)
Proceeds from long-term lines of credit	1,230	0	0
Payments on long-term lines of credit	(63)	0	0
Proceeds from issuance of long-term debt	595	0	348
Principal payments on long-term debt	(392)	(348)	(50)
Proceeds (payments) on borrowings against officers' life insurance policies	(412)	222	0
Intergroup financing	(280)	(133)	0
Proceeds from issuance of convertible notes, net of fees paid	582	0	0
Purchase of convertible note hedge	(140)
Proceeds from issuance of common stock and warrants	333	0	0
Proceeds from option exercises	0	40	103
Excess tax benefit on stock options	0	10	24
Purchases of Textron common stock	0	(533)	(304)
Dividends paid	(21)	(284)	(154)
Net cash provided by (used in) financing activities of continuing operations	563	(159)	(75)
Net cash used in financing activities of discontinued operations	0	(2)	(2)
Net cash provided by (used in) financing activities	563	(161)	(77)
Effect of exchange rate changes on cash and cash equivalents	10	(6)	18
Net increase (decrease) in cash and cash equivalents	1,217	60	(262)
Cash and cash equivalents at beginning of year	531	471	733
Cash and cash equivalents at end of year	1,748	531	471
Finance Group
Cash flows from operating activities
Net income (loss)	(206)	(461)	145
Income (loss) from continuing operations	(206)	(461)	145
Non-cash items:
Depreciation and amortization	36	40	40
Provision for losses on finance receivables held for investment	267	234	33
Portfolio losses on finance receivables	162	0	0
Valuation allowance on finance receivables held for sale	(15)	293	0
Goodwill and other asset impairment charges	0	180	0
Other, net	(30)	0	0
Deferred income taxes	(204)	(94)	(7)
Changes in assets and liabilities:
Other assets	(5)	18	19
Accrued and other liabilities	166	(54)	36
Other operating activities, net	25	11	(4)
Net cash provided by operating activities of continuing operations	196	167	262
Net cash provided by operating activities	196	167	262
Cash flows from investing activities
Finance receivables originated or purchased	(3,659)	(11,879)	(13,124)
Finance receivables repaid	4,804	11,245	11,863
Proceeds on receivables sales, including securitizations	644	631	994
Capital expenditures	0	(8)	(10)
Proceeds from sale of repossessed assets and properties	236	22	23
Retained interests	117	15	8
Purchase of marketable securities	0	(100)	0
Other investing activities, net	11	10	(35)
Net cash provided by (used in) investing activities of continuing operations	2,153	(64)	(281)
Net cash provided by (used in) investing activities	2,153	(64)	(281)
Cash flows from financing activities
Increase (decrease) in short-term debt	(768)	(649)	(370)
Proceeds from long-term lines of credit	1,740	0	0
Payments on long-term lines of credit	0	0	0
Proceeds from issuance of long-term debt	323	1,461	1,878
Principal payments on long-term debt	(3,771)	(1,574)	(1,344)
Intergroup financing	280	133	0
Capital contributions paid to Finance group under Support Agreement	270	625	0
Capital contributions paid to Cessna Export Finance Corp.	40	0	0
Dividends paid	(349)	(142)	(135)
Net cash provided by (used in) financing activities of continuing operations	(2,235)	(146)	29
Net cash provided by (used in) financing activities	(2,235)	(146)	29
Effect of exchange rate changes on cash and cash equivalents	14	(1)	3
Net increase (decrease) in cash and cash equivalents	128	(44)	13
Cash and cash equivalents at beginning of year	16	60	47
Cash and cash equivalents at end of year	144	16	60
Consolidated
Cash flows from operating activities
Net income (loss)	(31)	486	917
Income from discontinued operations	42	162	51
Income (loss) from continuing operations	(73)	324	866
Non-cash items:
Depreciation and amortization	409	400	322
Provision for losses on finance receivables held for investment	267	234	33
Portfolio losses on finance receivables	162	0	0
Valuation allowance on finance receivables held for sale	(15)	293	0
Goodwill and other asset impairment charges	144	191	1
Other, net	82	103	87
Deferred income taxes	(265)	(43)	(3)
Changes in assets and liabilities:
Accounts receivable, net	17	15	(38)
Inventories	803	(662)	(453)
Other assets	(152)	9	(14)
Accounts payable	(535)	276	35
Accrued and other liabilities	(20)	(110)	443
Captive finance receivables, net	177	(291)	(299)
Other operating activities, net	31	25	5
Net cash provided by operating activities of continuing operations	1,032	764	985
Net cash provided by (used in) operating activities of discontinued operations	(17)	(14)	64
Net cash provided by operating activities	1,015	750	1,049
Cash flows from investing activities
Finance receivables originated or purchased	(3,005)	(10,860)	(11,964)
Finance receivables repaid	4,011	10,630	11,059
Proceeds on receivables sales, including securitizations	594	518	917
Net cash used in acquisitions	0	(109)	(1,092)
Net proceeds from sale of businesses	0	0	(14)
Capital expenditures	(238)	(545)	(379)
Proceeds from sale of repossessed assets and properties	236	22	23
Retained interests	117	15	8
Purchase of marketable securities	0	(100)	0
Other investing activities, net	13	21	(22)
Net cash provided by (used in) investing activities of continuing operations	1,728	(408)	(1,464)
Net cash provided by investing activities of discontinued operations	211	471	58
Net cash provided by (used in) investing activities	1,939	63	(1,406)
Cash flows from financing activities
Increase (decrease) in short-term debt	(1,637)	218	(412)
Proceeds from long-term lines of credit	2,970	0	0
Payments on long-term lines of credit	(63)	0	0
Proceeds from issuance of long-term debt	918	1,461	2,226
Principal payments on long-term debt	(4,163)	(1,922)	(1,394)
Proceeds (payments) on borrowings against officers' life insurance policies	(412)	222	0
Proceeds from issuance of convertible notes, net of fees paid	582	0	0
Purchase of convertible note hedge	(140)
Proceeds from issuance of common stock and warrants	333	0	0
Proceeds from option exercises	0	40	103
Excess tax benefit on stock options	0	10	24
Purchases of Textron common stock	0	(533)	(304)
Dividends paid	(21)	(284)	(154)
Net cash provided by (used in) financing activities of continuing operations	(1,633)	(788)	89
Net cash used in financing activities of discontinued operations	0	(2)	(2)
Net cash provided by (used in) financing activities	(1,633)	(790)	87
Effect of exchange rate changes on cash and cash equivalents	24	(7)	21
Net increase (decrease) in cash and cash equivalents	1,345	16	(249)
Cash and cash equivalents at beginning of year	547	531	780
Cash and cash equivalents at end of year	$1,892	$547	$531

Summary of Significant Accounti

Summary of Significant Accounting Policies
	12 Months Ended Jan. 02, 2010
Summary of Significant Accounting Policies [Abstract]
Summary of Significant Accounting Policies	Note 1. Summary of Significant Accounting Policies Principles of Consolidation and Financial Statement Presentation Our Consolidated Financial Statements include the accounts of Textron Inc. and its majority-owned subsidiaries. As discussed in Note 2, on April3, 2009, we sold HR Textron, and in November2008, we completed the sale of our Fluid Power business unit. Both of these businesses have been classified as discontinued operations, and all prior period information has been recast to reflect this presentation. Our financings are conducted through two separate borrowing groups. The Manufacturing group consists of Textron Inc. consolidated with its majority-owned subsidiaries that operate in the Cessna, Bell, Textron Systems and Industrial segments. The Finance group, which also is the Finance segment, consists of Textron Financial Corporation (TFC), its subsidiaries and the securitization trusts consolidated into it, along with two other finance subsidiaries owned by Textron Inc. 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 groups activities, investors, rating agencies and analysts use different measures to evaluate each groups performance. To support those evaluations, we present balance sheet and cash flow information for each borrowing group within the Consolidated Financial Statements. Our Finance group provides captive financing for retail purchases and leases for new and used aircraft and equipment manufactured by our Manufacturing group. In the Consolidated Statements of Cash Flows, cash received from customers or from securitizations is reflected as operating activities when received from third parties. However, in the cash flow information provided for the separate borrowing groups, cash flows related to captive financing activities are reflected based on the operations of each group. For example, when product is sold by our Manufacturing group to a customer and is financed by the Finance group, the origination of the finance receivable is recorded within investing activities as a cash outflow in the Finance groups statement of cash flows. Meanwhile, in the Manufacturing groups statement of cash flows, the cash received from the Finance group on the customers behalf is recorded within operating cash flows as a cash inflow. Although cash is transferred between the two borrowing groups, there is no cash transaction reported in the consolidated cash flows at the time of the original financing. These captive financing activities, along with all significant intercompany transactions, are reclassified or eliminated in consolidation. We have evaluated subsequent events up to the time of our filing with the Securities and Exchange Commission on February25, 2010, which is the date that these financial statements were issued. Use of Estimates We prepare our financial statements in conformity with generally accepted accounting principles, which requ

Discontinued Operations

Discontinued Operations
	12 Months Ended Jan. 02, 2010
Discontinued Operations [Abstract]
Discontinued Operations	Note 2. Discontinued Operations On April3, 2009, we sold HR Textron, an operating unit previously reported within the Textron Systems segment, for $376million in cash proceeds. The sale resulted in an after-tax gain of $8million after final settlement and net after-tax proceeds of approximately $280million. In November2008, we completed the sale of the Fluid Power business unit and recorded an after-tax gain of $111million. We received approximately $527million in cash proceeds from the sale, along with a six-year note with a face value of $28million. In connection with the final settlement of the transaction in the third quarter of 2009, we also received a five-year note with a face value of $30million, which had no significant impact on the net gain from disposition. These notes are recorded in the Consolidated Balance Sheet net of a valuation allowance. The HR Textron and Fluid Power businesses met the discontinued operations criteria and have been included in discontinued operations for all periods presented in our Consolidated Financial Statements. At January2, 2010, the assets and liabilities of our discontinued businesses primarily relate to income taxes. At January3, 2009, the assets of our discontinued businesses included $167million of goodwill, $66 million in inventory, $30million in accounts receivables, $27million in property, plant and equipment and $44million in other assets. Liabilities of our discontinued operations at January3, 2009 included accounts payable and accrued expenses and other liabilities, primarily related to income taxes. Upon the sale of Fluid Power, we retained sponsorship of a defined benefit pension plan for former employees and retirees of the U.K.-based businesses. No additional benefits can be earned under this plan. Revenue, results of operations and gains on disposal for our discontinued businesses are as follows: (In millions) 2009 2008 2007 Revenue $ 48 $ 796 $ 830 Income (loss)from discontinued operations before income taxes (2 ) 63 69 Income tax expense (benefit) (38 ) 12 20 Operating income from discontinued operations, net of income taxes 36 51 49 Net gain on disposals, net of income taxes 6 111 2 Income from discontinued operations, net of income taxes $ 42 $ 162 $ 51 We generally use a centralized approach to the cash management and financing of our manufacturing operations and, accordingly, do not allocate debt or interest expense to our discontinued businesses. Any debt and related interest expense of a specific entity within a business is recorded by the respective entity. General corporate overhead previously allocated to the businesses for reporting purposes is excluded from amounts reported as discontinued operations.

Business Acquisitions, Goodwill

Business Acquisitions, Goodwill and Intangible Assets
	12 Months Ended Jan. 02, 2010
Business Acquisitions, Goodwill and Intangible Assets [Abstract]
Business Acquisitions, Goodwill and Intangible Assets	Note 3. Business Acquisitions, Goodwill and Intangible Assets Goodwill The changes in the carrying amount of goodwill, by segment, are as follows: Textron (In millions) Cessna Bell Systems Industrial Finance Total Balance at December30, 2006 $ 322 $ 17 $ 311 $ 368 $ 169 $ 1,187 Acquisitions 1 857 11 869 Foreign currency translation 13 13 Other (17 ) (17 ) Balance at December29, 2007 322 18 1,151 392 169 2,052 Acquisitions and purchase price adjustments (5 ) (44 ) (49 ) Adjustment related to business sold (134 ) (134 ) Transfers 17 (17 ) Impairment (169 ) (169 ) Foreign currency translation (2 ) (2 ) Balance at January3, 2009 322 30 956 390 1,698 Impairment (80 ) (80 ) Foreign currency translation 2 2 Other 2 2 Balance at January2, 2010 $ 322 $ 30 $ 958 $ 312 $ $ 1,622 We recorded an impairment charge of $80million in 2009 based on lower forecasted revenues and profits related to the effects of the economic recession on the Golf Turfcare reporting unit. In 2008, based on current market conditions and the plan to downsize the Finance segment, we recorded an impairment charge of $169million to eliminate all goodwill at the Finance segment. See Notes 10 and 12 for more information on these charges. Acquired Intangible Assets Our acquired intangible assets are summarized below: January 2, 2010 January 3, 2009 Weighted- Average Amortization Gross Gross Period Carrying Accumulated Carrying Accumulated (Dollars in millions) (In years) Amount Amortization Net Amount Amortization Net Customer agreements and contractual relationships 13 $ 407 $ (77 ) $ 330 $ 407 $ (43 ) $ 364 Patents and technology 10 101 (43 ) 58 112 (35 ) 77 Trademarks 19 34 (14 ) 20 37 (12 ) 25 Other 8 19 (15 ) 4 18 (13 ) 5 $ 561 $ (149 ) $ 412 $ 574 $ (103 ) $ 471 Amortization expense totaled $52million in 2009, $53million in 2008 and $23million in 2007. Amortization expense is estimated to be approximately $50million, $49million, $48milli

Accounts Receivable

Accounts Receivable
	12 Months Ended Jan. 02, 2010
Accounts Receivable [Abstract]
Accounts Receivable	Note 4. Accounts Receivable Accounts receivable is comprised of the following: January 2, January 3, (In millions) 2010 2009 Commercial $ 470 $ 496 U.S. Government contracts 447 422 917 918 Allowance for doubtful accounts (23 ) (24 ) $ 894 $ 894 We have unbillable receivables on U.S. Government contracts that arise when the revenues we have appropriately recognized based on performance cannot be billed yet under terms of the contract. Unbillable receivables within accounts receivable totaled $170million at January2, 2010 and $157million at January3, 2009. Long-term contract receivables due from the U.S. Government exclude significant amounts billed but unpaid due to contractual retainage provisions.

Finance Receivables and Securit

Finance Receivables and Securitizations
	12 Months Ended Jan. 02, 2010
Finance Receivables and Securitizations [Abstract]
Finance Receivables and Securitizations	Note 5. Finance Receivables and Securitizations Our Finance group manages and services finance receivables for a variety of investors, participants and third-party portfolio owners. We do not have a retained financial interest or credit risk in the performance of the serviced portfolio, and, therefore, performance of these portfolios is limited to billing and collection activities. A reconciliation of our managed and serviced finance receivables to finance receivables held for investment, net is provided below: January 2, January 3, (In millions) 2010 2009 Total managed and serviced finance receivables $ 8,283 $ 12,173 Less: Nonrecourse participations sold to independent investors 765 820 Less: Third-party portfolio servicing 463 532 Total managed finance receivables 7,055 10,821 Less: Securitized receivables 30 2,248 Owned finance receivables 7,025 8,573 Less: Finance receivables held for sale 819 1,658 Finance receivables held for investment 6,206 6,915 Allowance for loan losses (341 ) (191 ) Finance receivables held for investment, net $ 5,865 $ 6,724 Finance receivables held for investment at January2, 2010 and January3, 2009 include approximately $629million and $1.1billion of receivables that have been legally sold to special purpose entities (SPE), which are consolidated subsidiaries of TFC. The assets of the SPEs are pledged as collateral for their debt, which is reflected as securitized on-balance sheet debt in Note 8. Third-party investors have no legal recourse to TFC beyond the credit enhancement provided by the assets of the SPEs. Our finance receivables are diversified across geographic region, borrower industry and type of collateral. At January2, 2010, 70% of our managed finance receivables were distributed throughout the U.S., compared with 77% at the end of 2008. The most significant collateral concentration was in general aviation, which accounted for 35% of managed receivables at the end of 2009 and 26% at the end of 2008. Industry concentrations in the resort and golf industries accounted for 19% and 18%, respectively, of managed receivables at January2, 2010, compared with 13% and 16%, respectively, at the end of 2008. Finance receivables include installment contracts, revolving loans, golf course and resort mortgages, distribution finance receivables, and finance and leveraged leases. Installment contracts and finance leases have initial terms ranging from two to 20years and are secured by the financed equipment, and, in many instances, by the personal guarantee of the principals or recourse arrangements with the originating vendor. Installment contracts generally require the customer to pay a significant down payment, along with periodic scheduled principal payments that reduce the outstanding balance through the term of the loan. Finance leases include residual values expected to be realized at contractual maturity. Leases with no significant residual value at the end of the c

Inventories

Inventories
	12 Months Ended Jan. 02, 2010
Inventories [Abstract]
Inventories	Note 6. Inventories Inventories are comprised of the following: (In millions) January 2, 2010 January 3, 2009 Finished goods $ 735 $ 1,081 Work in process 1,861 1,866 Raw materials and components 613 765 3,209 3,712 Progress/milestone payments (936 ) (619 ) $ 2,273 $ 3,093 Inventories valued by the LIFO method totaled $1.3billion and $2.0billion at January2, 2010 and January3, 2009, respectively. Had our LIFO inventories been valued at current costs, their carrying values would have been approximately $414million and $363million higher at those respective dates. Inventories related to long-term contracts, net of progress/milestone payments, were $366million at January2, 2010 and $741million at January3, 2009.

Property, Plant and Equipment,

Property, Plant and Equipment, net
	12 Months Ended Jan. 02, 2010
Property, Plant and Equipment, net [Abstract]
Property, Plant and Equipment, net	Note 7. Property, Plant and Equipment, Net Our Manufacturing groups property, plant and equipment, net are comprised of the following: January 2, January 3, (In millions) 2010 2009 Land and buildings $ 1,426 $ 1,289 Machinery and equipment 3,208 3,235 4,634 4,524 Accumulated depreciation and amortization (2,666 ) (2,436 ) $ 1,968 $ 2,088 Assets under capital leases totaled $218million and $194million and had accumulated amortization of $36million and $30million at the end of 2009 and 2008, respectively. Depreciation expense for the Manufacturing group totaled $317million in 2009, $302million in 2008 and $256 million in 2007. We have incurred asset retirement obligations primarily related to costs to remove and dispose of underground storage tanks and asbestos materials used in insulation, adhesive fillers and floor tiles. There is no legal requirement to remove these items, and there currently is no plan to remodel the related facilities or otherwise cause the impacted items to require disposal. Since these asset retirement obligations are not estimable, there is no related liability recorded in the Consolidated Balance Sheets.

Debt and Credit Facilities

Debt and Credit Facilities
	12 Months Ended Jan. 02, 2010
Debt and Credit Facilities [Abstract]
Debt and Credit Facilities	Note 8. Debt and Credit Facilities Our debt and credit facilities are summarized below: January 2, January 3, (In millions) 2010 2009 Manufacturing group: Short-term debt: Commercial paper (weighted-average rate of 6.4%) $ $ 867 Current portion of long-term debt 134 9 Total short-term debt 134 876 Long-term senior debt: Medium-term notes due 2010 to 2011 (average rate of 9.85%) 13 17 4.50% due 2010 128 250 Credit line borrowings due 2012 (weighted-average rate of 0.96%) 1,167 6.50% due 2012 154 300 3.875% due 2013 345 429 4.50% convertible senior notes due 2013 471 6.20% due 2015 350 5.60% due 2017 350 350 7.25% due 2019 250 6.625% due 2020 240 219 Other (average rate of 3.65% and 3.93%, respectively) 116 137 3,584 1,702 Current portion of long-term debt (134 ) (9 ) Total long-term debt 3,450 1,693 Total Manufacturing group debt $ 3,584 $ 2,569 Finance group: Commercial paper (weighted-average rate of 5.64%) $ $ 743 Other short-term debt 25 Medium-term fixed-rate and variable-rate notes*: Due 2009 (weighted-average rate of 4.07%) 1,534 Due 2010 (weighted-average rate of 2.09% and 3.85%, respectively) 1,635 2,315 Due 2011 (weighted-average rate of 2.94% and 4.42%, respectively) 419 727 Due 2012 (weighted-average rate of 4.43%) 52 52 Due 2013 (weighted-average rate of 4.49% and 4.82%, respectively) 578 578 Due 2014 (weighted-average rate of 5.07%) 111 111 Due 2015 and thereafter (weighted-average rate of 4.07% and 4.98%, respectively) 232 41 Credit line borrowings due 2012 (weighted-average rate of 0.91%) 1,740 Securitized on-balance sheet debt (weighted-average rate of 1.45% and 3.09%, respectively) 559 853 6% Fixed-to-Floating Rate Junior Subordinated Notes 300 300 Fair value adjustments and unamortized discount 41 109 Total Finance group debt $ 5,667 $ 7,388 * Variable-rate notes totaled $1.4billion and $2.5billion at January2, 2010 and January3, 2009, respectively. The Manufacturing group had a weighted-average interest rate on commercial paper borrowings of 4.6% and 4.3% in 2009 and 2008, respectively. The Finance group had a weighted-average interest rate on commercial paper borrowings of 4.37% and 3.63% in 2009 and 2008, respectively. Both borrowing groups extinguished through open market repurchases an aggregate of $745 million in outstanding debt securities prior to maturity during 2009, resulting in gains of $54 million. Also in 2009, both borrowing groups completed separate cash tender offers for up to a $650 million aggregate principal amount of five separate series of outst

Derivatives

Derivatives
	12 Months Ended Jan. 02, 2010
Derivatives [Abstract]
Derivatives	Note 9. Derivatives Our exposure to loss from nonperformance by the counterparties to our derivative agreements at the end of 2009 is minimal. We do not anticipate nonperformance by counterparties in the periodic settlements of amounts due. We historically have minimized this potential for risk by entering into contracts exclusively with major, financially sound counterparties having no less than a long-term bond rating of A. The credit risk generally is limited to the amount by which the counterparties contractual obligations exceed our obligations to the counterparty. We continuously monitor our exposures to ensure that we limit our risks. Fair Value Hedges Our Finance group enters into interest rate exchange agreements to mitigate exposure to changes in the fair value of its fixed-rate receivables and debt due to fluctuations in interest rates. By using these agreements, we are able to convert our fixed-rate cash flows to floating-rate cash flows. Cash Flow Hedges 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. The primary purpose of our foreign currency hedging activities is to manage the volatility associated with foreign currency purchases of materials, foreign currency sales of products, and other assets and liabilities created in the normal course of business. We primarily utilize forward exchange contracts and purchased options with maturities of no more than 18months that qualify as cash flow hedges. These are intended to offset the effect of exchange rate fluctuations on forecasted sales, inventory purchases and overhead expenses. At the end of 2009, we had a net deferred gain of $27 million in OCI related to these cash flow hedges. As the underlying transactions occur, we expect to reclassify a $4million gain into earnings in the next 12months and $23million of gains in the following 12-month period. Net Investment Hedges We hedge our net investment position in major currencies and generate foreign currency interest payments that offset other transactional exposures in these currencies. To accomplish this, we borrow directly in foreign currency and designate a portion of foreign currency debt as a hedge of net investments. We also may utilize currency forwards as hedges of our related foreign net investments. Currency effects on the effective portion of these hedges, which are reflected in the cumulative translation adjustment account within OCI, produced a $15million after-tax loss in 2009, resulting in an accumulated net loss balance of $12million at the end of 2009. The ineffective portion of these hedges was insignificant. Stock-Based Compensation Hedges We historically have managed the expense related to certain stock-based compensation awards using cash settlement forward contracts on our common stock. The use of these forward contracts modifies compensation expense exposure to changes in the stock price with the intent to reduce potential variability. Cash received or paid on the contract settlement is included in cash flows from operating activities, consistent with the

Fair Values of Assets and Liabi

Fair Values of Assets and Liabilities
	12 Months Ended Jan. 02, 2010
Fair Values of Assets and Liabilities [Abstract]
Fair Values of Assets and Liabilities	Note 10. Fair Values of Assets and Liabilities 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. The assumptions that market participants would use in pricing the asset or liability (the inputs) are prioritized 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, and 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 managements 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 The table below presents the assets and liabilities measured at fair value on a recurring basis categorized by the level of inputs used in the valuation of each asset and liability: January 2, 2010 January 3, 2009 (In millions) Level 1 Level 2 Level 3 Level 1 Level 2 Level 3 Assets Manufacturing group Foreign currency exchange contracts $ $ 57 $ $ $ 2 $ Forward contracts for Textron Inc. stock 7 Finance group Derivative financial instruments 61 133 Total assets $ 7 $ 118 $ $ $ 135 $ Liabilities Manufacturing group Forward contracts for Textron Inc. stock $ $ $ $ 98 $ $ Foreign currency exchange contracts 5 84 Finance group Derivative financial instruments 17 21 Total liabilities $ $ 22 $ $ 98 $ 105 $ Valuation Techniques Foreign currency exchange contracts are measured at fair value using the market method valuation technique. The inputs to thi

Shareholders Equity

Shareholders Equity
	12 Months Ended Jan. 02, 2010
Stockholders' Equity [Abstract]
Shareholders' Equity	Note 11. Shareholders Equity Capital Stock We have authorization for 15million shares of preferred stock with no par value and 500 million shares of $0.125 par value common stock. In December2009, we elected to redeem all outstanding shares of our $2.08 Cumulative Convertible Preferred Stock, SeriesA and our $1.40 Convertible Preferred Dividend Stock, SeriesB. As part of the redemption, approximately 45,600 and 21,300 shares of SeriesA and SeriesB preferred stock, respectively, were converted at the stated conversion rate (8.8 for SeriesA and 7.2 for SeriesB) into approximately 554,000 shares of common stock, and the remaining unconverted shares were paid in cash at the stated redemption rate. At the end of 2008 and 2007, we had approximately 67,000 and 72,000 shares, respectively, of SeriesA issued and outstanding and approximately 34,000 and 36,000 shares, respectively, of SeriesB issued and outstanding. Outstanding common stock activity for the three years ended January2, 2010 is presented below: (In thousands) 2009 2008 2007 Beginning balance 242,041 250,061 251,192 Purchases (11,649 ) (5,902 ) Exercise of stock options 10 1,147 3,404 Conversion of preferred stock to common stock 556 60 89 Issued to Textron Savings Plan 5,460 2,060 994 Common stock offering 23,805 Other issuances 400 362 284 Ending balance 272,272 242,041 250,061 Reserved Shares of Common Stock At the end of 2009, common stock reserved for the conversion of convertible debt, the exercise of outstanding stock options and warrants, and the issuance of shares upon vesting of outstanding restricted stock units totaled 143million shares. See the 4.50% Convertible Senior Notes section in Note 8 for information on our convertible debt. Income per Common Share In the first quarter of 2009, we adopted the new accounting standard for determining whether instruments granted in share-based payment transactions are participating securities. This new standard requires us to include any unvested share-based payment awards that contain nonforfeitable rights to dividends or dividend equivalents (whether paid or unpaid) as participating securities in our basic earnings per share calculation. We have granted certain restricted stock units that are deemed participating securities under this new standard, and, as a result, prior period basic and diluted weighted-average shares outstanding have been recast to conform to the new calculation. The adoption of this standard reduced our basic and diluted earnings per share by $0.01 in 2008, and there was no impact in 2007. We calculate basic and diluted earnings per share based on net income, which approximates income available to common shareholders for each period. Basic earnings per share 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 securi

Special Charges

Special Charges
	12 Months Ended Jan. 02, 2010
Special Charges [Abstract]
Special Charges	Note 12. Special Charges Special charges include restructuring charges of $237million and $64million in 2009 and 2008, respectively. In 2009, special charges also includes a goodwill impairment charge of $80 million in the Industrial segment. In the fourth quarter of 2008, in connection with our decision to sell the non-captive portion of our Finance business, we incurred an initial mark-to-market adjustment of $293million that was made when we classified certain finance receivables from held for investment to held for sale and a goodwill impairment charge in the Finance segment of $169 million, which are both included in special charges. There were no special charges in 2007. Special charges by segment are as follows: Restructuring Program Curtailment Contract Total Severance Charges, Asset Terminations Total Other Special (In millions) Costs Net Impairments and Other Restructuring Charges Charges 2009 Cessna $ 80 $ 26 $ 54 $ 7 $ 167 $ $ 167 Finance 11 1 1 13 13 Corporate 34 1 35 35 Industrial 6 (4 ) 3 5 80 85 Bell 9 9 9 Textron Systems 5 2 1 8 8 $ 145 $ 25 $ 54 $ 13 $ 237 $ 80 $ 317 2008 Cessna $ 5 $ $ $ $ 5 $ $ 5 Finance 15 11 1 27 462 489 Corporate 6 6 6 Industrial 16 9 25 25 Textron Systems 1 1 1 $ 43 $ $ 20 $ 1 $ 64 $ 462 $ 526 Restructuring Program In the fourth quarter of 2008, we initiated a restructuring program to reduce overhead costs and improve productivity across the company, which includes corporate and segment direct and indirect workforce reductions and streamlining of administrative overhead, and announced the exit of portions of our commercial finance business. This program was expanded in 2009 to include additional workforce reductions, primarily at Cessna, Corporate and Bell, the cancellation of the Citation Columbus development project, the streamlining and reorganization of senior management and the consolidation of certain operations at Cessna. By the end of 2010, we expect to have eliminated approximately 10, 800 positions worldwide representing approximately 25% of our global workforce since the inception of the program. As of January2, 2010, we have terminated approximately 10,400 employees and have exited 23 leased and owned facilities and plants under this program. We record restructuring costs in special c

Share-Based Compensation

Share-Based Compensation
	12 Months Ended Jan. 02, 2010
Share-Based Compensation [Abstract]
Share-Based Compensation	Note 13. Share-Based Compensation Our 2007 Long-Term Incentive Plan (the Plan) succeeds the 1999 Long-Term Incentive Plan and authorizes awards to our key employees in the form of options to purchase our shares, restricted stock, restricted stock units, stock appreciation rights, performance stock awards and other awards. Options to purchase our shares have a maximum term of 10years and generally vest ratably over a three-year period. Restricted stock unit awards generally vest one-third each in the third, fourth and fifth year following the year of grant. These awards generally were paid in shares of common stock until the first quarter of 2009, when we began issuing restricted stock units settled in cash only; these awards vest in equal installments over five years. Since 2008, all restricted stock units have been issued with the right to receive dividend equivalents. A maximum of 12 million shares is authorized for issuance for all purposes under the Plan plus any shares that become available upon cancellation, forfeiture or expiration of awards granted under the 1999 Long-Term Incentive Plan. No more than 12million shares may be awarded pursuant to incentive stock options, and no more than 3million shares may be awarded pursuant to restricted stock or other full value awards intended to be paid in shares. The Plan also authorizes performance share units paid in cash based upon the value of our common stock. Payouts under performance share units vary based on certain performance criteria generally measured over a three-year period. The performance share units vest at the end of three years. Through our Deferred Income Plan for Textron Executives (the DIP), we provide participants the opportunity to voluntarily defer up to 25% of their base salary and up to 100% of annual, long-term incentive and other compensation. Effective January1, 2008, the maximum amount deferred for annual, long-term incentive and other compensation decreased to 80%. Elective deferrals may be put into either a stock unit account or an interest bearing account. We generally contribute a 10% premium on amounts deferred into the stock unit account. Executives who are eligible to participate in the DIP who have not achieved and/or maintained the required minimum stock ownership level are required to defer annual incentive compensation in excess of 100% of the executives annual target into a deferred stock unit account and are not entitled to the 10% premium contribution on the amount deferred. Participants cannot move amounts between the two accounts while actively employed by us and cannot receive distributions until termination of employment. Compensation costs for awards with only service conditions that vest ratably are recognized on a straight-line basis over the requisite service period for each separately vesting portion of the award. The compensation expense that has been recorded in net income for our share-based compensation plans is as follows: (In millions) 2009 2008 2007 Compensation (income)expense $ 81 $ (78 ) $ 150 Hedge expense (income)on forward contracts 2 100 (53

Retirement Plans

Retirement Plans
	12 Months Ended Jan. 02, 2010
Retirement Plans [Abstract]
Retirement Plans	Note 14. Retirement Plans Our defined benefit and defined contribution plans cover substantially all of our employees. A significant number of our U.S.-based employees participate in the Textron Retirement Plan, which is designed to be a floor-offset arrangement with both a defined benefit component and a defined contribution component. The defined benefit component of the arrangement includes the Textron Master Retirement Plan (TMRP)and the Bell Helicopter Textron Master Retirement Plan (BHTMRP), and the defined contribution component is the Retirement Account Plan (RAP). The defined benefit component provides a minimum guaranteed benefit (or floor benefit). Under the RAP, participants are eligible to receive contributions from Textron of 2% of their eligible compensation but may not make contributions to the plan. Upon retirement, participants receive the greater of the floor benefit or the value of the RAP. Both the TMRP and the BHTMRP are subject to the provisions of the Employee Retirement Income Security Act of 1974 (ERISA). We also have domestic and foreign funded and unfunded defined benefit pension plans that cover certain of our U.S. and foreign employees. In addition, several defined contribution plans are sponsored by our various businesses. The largest such plan is the Textron Savings Plan, which is a qualified 401(k) plan subject to ERISA in which a significant number of our U.S.-based employees participate. Our defined contribution plans cost approximately $96million in 2009, $110 million in 2008 and $82million in 2007. We also provide postretirement benefits other than pensions for certain retired employees in the U.S., which include healthcare, dental care, Medicare PartB reimbursement and life insurance benefits. Periodic Benefit Cost The components of our net periodic benefit cost and other amounts recognized in OCI are as follows: Postretirement Benefits Pension Benefits Other than Pensions (In millions) 2009 2008 2007 2009 2008 2007 Net periodic benefit cost: Service cost $ 116 $ 141 $ 127 $ 8 $ 8 $ 8 Interest cost 310 302 271 38 40 39 Expected return on plan assets (386 ) (404 ) (369 ) Amortization of prior service cost (credit) 18 19 18 (5 ) (5 ) (4 ) Amortization of net loss 10 19 40 8 15 20 Curtailment and special termination charges 34 (5 ) Net periodic benefit cost $ 102 $ 77 $ 87 $ 44 $ 58 $ 63 Other changes in plan assets and benefit obligations recognized in OCI (including foreign exchange): Amortization of net loss $ (10 ) $ (19 ) $ (40 ) $ (8 ) $ (15 ) $ (20 ) Net loss (gain)arising during the year (93 ) 1,329 (30 ) 24 (32 ) (52 ) Amortization of prior

Income Taxes

Income Taxes
	12 Months Ended Jan. 02, 2010
Income Taxes [Abstract]
Income Taxes	Note 15. Income Taxes We conduct business globally and, as a result, file numerous consolidated and separate income tax returns in the U.S. federal, various state and non-U.S. jurisdictions. For all of our U.S. subsidiaries, we file a consolidated federal income tax return. Income (loss)from continuing operations before income taxes is as follows: (In millions) 2009 2008 2007 U.S. $ (229 ) $ 598 $ 1,090 Non-U.S. 80 31 144 Total $ (149 ) $ 629 $ 1,234 Income tax expense (benefit)for continuing operations is summarized as follows: (In millions) 2009 2008 2007 Current: Federal $ 160 $ 317 $ 328 State 17 16 20 Non-U.S. (8 ) 14 51 169 347 399 Deferred: Federal (238 ) (61 ) 7 State (22 ) 5 (24 ) Non-U.S. 15 14 (14 ) (245 ) (42 ) (31 ) Income tax expense (benefit) $ (76 ) $ 305 $ 368 The current federal and state provisions for 2009 include $85million of tax related to the sale of certain leverage leases in the Finance segment for which we had previously recorded significant deferred tax liabilities. The tax is expected to be paid over a period of years in accordance with a prior settlement with the Internal Revenue Service. The following table reconciles the federal statutory income tax rate to our effective income tax rate: 2009 2008 2007 Federal statutory income tax rate (35.0 )% 35.0 % 35.0 % Increase (decrease)in taxes resulting from: State income taxes 0.4 2.3 1.0 Goodwill impairment 18.5 8.4 Non-U.S. tax rate differential (13.5 ) (5.7 ) (0.5 ) Valuation allowance on contingent receipts (7.3 ) (0.5 ) Research credit (4.7 ) (1.9 ) (0.8 ) Unrecognized tax benefits and related interest (4.1 ) 3.4 1.2 Change in status of subsidiary (3.6 ) 5.0 Manufacturing deduction (3.1 ) (2.8 ) (1.6 ) Equity hedge loss (income) 0.5 6.2 (1.5 ) Other, net 0.9 (0.8 ) (3.0 ) Effective income tax rate (51.0 )% 48.6 % 29.8 % The amount of income taxes we pay is subject to ongoing audits by U.S. federal, state and non-U.S. tax authorities, which may result in proposed assessments. Our estimate for the potential outcome for any uncertain tax issue is highly judgmental. We assess our income tax positions and record tax benefits for all years subject to examination based upon managements evaluation of the facts, circumstances and information available at the reporting date. For those tax positions for which it is more likely than not that a tax benefit will be sustained, we record th

Commitments and Contingencies

Commitments and Contingencies
	12 Months Ended Jan. 02, 2010
Commitments and Contingencies [Abstract]
Commitments and Contingencies	Note 16. Commitments and Contingencies We 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; compliance with applicable laws and regulations; production partners; product liability; employment; 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 being suspended or debarred 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. ARH Program Termination On October16, 2008, we received notification from the U.S. Department of Defense that it would not certify the continuation of the Armed Reconnaissance Helicopter (ARH)program to Congress under the Nunn-McCurdy Act, resulting in the termination of the program for the convenience of the government. The ARH program included a development phase, covered by the System Development and Demonstration (SDD)contract, and a production phase. We submitted our claim for the termination costs for the SDD contract in October2009 and believe that these costs are fully recoverable from the U.S. Government. Prior to termination of the program, we obtained inventory and incurred vendor obligations for long-lead time materials related to the anticipated Low Rate Initial Production (LRIP)contracts to maintain the program schedule based on our belief that the LRIP contracts would be awarded. We have since terminated these vendor contracts and are negotiating to settle our termination obligations. In October2009, we filed a claim with the U.S. Government to request reimbursement of costs expended in support of the LRIP program. On December17, 2009, we received a decision from the Contracting Officer of the Department of the Army that denied this claim in its entirety. We plan to appeal this decision in the first quarter of 2010. At January2, 2010, our reserves related to this program totaled $50million, which we believe are adequate to cover our exposure. Environmental Remediation As with other industrial enterprises engaged in similar businesses, we are involved in a number of remedial actions under various federal and state laws and regulations relating to the environment that impose liability on companies to clean up, or contribute to the cost of cleaning up, sites on which hazardous wastes or materials were disposed or released. Our accrued environmental liabilities relate to disposal costs, U.S. Environmental Protection Agency oversight costs, legal fees, and operating and maintenance costs for both currently and formerly ow

Research and Development

Research and Development
	12 Months Ended Jan. 02, 2010
Research and Development [Abstract]
Research and Development	Note 17. Research and Development Company-funded and customer-funded research and development costs are as follows: (In millions) 2009 2008 2007 Company-funded $ 401 $ 465 $ 358 Customer-funded 443 501 446 Total research and development $ 844 $ 966 $ 804 Our customer-funded research and development costs primarily are related to U.S. Government contracts, including development contracts for the V-22, H-1, Intelligent Battlefield Systems and the Unmanned Aircraft System, and, prior to termination, the ARH and VH-71.

Guarantees and Indemnifications

Guarantees and Indemnifications
	12 Months Ended Jan. 02, 2010
Guarantees and Indemnifications [Abstract]
Guarantees and Indemnifications	Note 18. Guarantees and Indemnifications During 2009, we entered into contracts to sell used aircraft that entitle the customer to resell the aircraft back to us at predetermined values ranging from 80% to 100% of the customers purchase price for a limited period of time, generally not exceeding 24months for used aircraft and 36months for used fractional share interests. Revenue recognition on these sales has been deferred and totaled $186million at January2, 2010. In connection with the disposition of certain businesses, we indemnified the purchasers for remediation costs related to pre-existing environmental conditions to the extent they exist at the sold locations and certain retained litigation matters. In addition, we have other obligations arising from sales of businesses, including representations and warranties and related indemnities for tax and employment matters. We have estimated the fair value of uncapped indemnifications at approximately $21million, which is reflected as a liability in our Consolidated Balance Sheet. The maximum potential payment cannot be determined for these uncapped indemnifications, while the maximum potential payment related to capped obligations is $17million. The fair value of the capped obligations is estimated to be insignificant. At January2, 2010, we did not believe there were any capped or uncapped matters that could have a significant adverse effect on our financial position, results of operations or liquidity. During 2009 and 2008, we incurred approximately $5million and $2million, respectively, in environmental remediation costs related to these guarantees. We enter into software license agreements with customers through our Overwatch Systems business. These software license agreements generally include certain provisions for indemnifying customers against liabilities if our software products infringe a third partys intellectual property rights. To date, we have not incurred any material costs as a result of such indemnifications and have not accrued any liabilities related to such obligations. The risk that we will be required to perform on any of these indemnifications is low. In June2009, we received notification that the VH-71 helicopter program was terminated for convenience by the U.S. Government, and the related performance guarantee was canceled in October 2009. Warranty and Product Maintenance Contracts We provide limited warranty and product maintenance programs, including parts and labor, for certain products for periods ranging from one to five years. We estimate the costs that may be incurred under warranty programs and record a liability in the amount of such costs at the time product revenue is recognized. Factors that affect this liability include the number of products sold, historical and anticipated rates of warranty claims, and cost per claim. We assess the adequacy of our recorded warranty and product maintenance liabilities periodically and adjust the amounts as necessary. Additionally, we may establish warranty liabilities related to the issuance of aircraft service bulletins for aircraft no longer covered under the limited warranty programs. C

Supplemental Cash Flow and Othe

Supplemental Cash Flow and Other Information
	12 Months Ended Jan. 02, 2010
Supplemental Cash Flow and Other Information [Abstract]
Supplemental Cash Flow and Other Information	Note 19. Supplemental Cash Flow and Other Information Supplemental Cash Flow Information We have made the following cash payments: (In millions) 2009 2008 2007 Interest paid: Manufacturing group $ 116 $ 139 $ 114 Finance group 171 310 388 Taxes paid, net of refunds received: Manufacturing group 49 346 307 Finance group (75 ) 52 48 Discontinued operations 156 15 (75 ) Cash paid for interest by the Manufacturing group includes amounts paid to our Finance group of $1 million and $2million in 2008 and 2007, respectively. Cash paid for interest by the Finance group includes amounts paid to the Manufacturing group of $3million in both 2009 and 2008. Accrued Liabilities The accrued liabilities of our Manufacturing group are summarized below: January 2, January 3, (In millions) 2010 2009 Customer deposits $ 791 $ 992 Warranty and product maintenance contracts 263 278 Salaries, wages and employer taxes 244 300 Postretirement benefits other than pension 85 82 Deferred revenue 72 140 Forward contract on Textron Inc. stock 98 Foreign exchange rate forward contracts, net 5 84 Other 567 635 Total accrued liabilities $ 2,027 $ 2,609

Segment and Geographic Data

Segment and Geographic Data
	12 Months Ended Jan. 02, 2010
Segment and Geographic Data [Abstract]
Segment and Geographic Data	Note 20. Segment and Geographic Data We operate in, and report financial information for, the following five business segments: Cessna, Bell, Textron Systems, Industrial and Finance. The accounting policies of the segments are the same as those described in Note 1. Cessna products include Citation business jets, Caravan single engine turboprops, single engine piston aircraft, and aftermarket services sold to a diverse base of corporate and individual buyers. Bell products include military and commercial helicopters, tiltrotor aircraft and related spare parts for U.S. and non-U.S. governments in the defense and aerospace industries and general aviation markets. Textron Systems products include armored security vehicles, advanced marine craft, precision weapons, airborne and ground-based surveillance systems and services, the Unmanned Aircraft System, training and simulation systems and countersniper devices, intelligence and situational awareness software for U.S. and non-U.S. governments in the defense and aerospace industries, and general aviation markets. Industrial products and markets include the following: Kautex products include blow-molded fuel systems, marketed primarily to automobile original equipment manufacturers, as well as bottles and plastic containers for various uses; Greenlee products include powered equipment, electrical and fiber optic assemblies, principally used in the electrical construction and maintenance, plumbing, wiring, telecommunications and data communications industries; and E-Z-GO and Jacobsen products include golf cars, specialized turf-care vehicles that are marketed primarily to golf courses, resort communities, municipalities, sporting venues, and commercial and industrial users. Finance provided secured commercial loans and leases primarily in North America to the aviation, golf equipment, asset-based lending, distribution finance, golf mortgage, hotel, structured capital and timeshare markets through the fourth quarter of 2008, when we announced a plan to exit the non-captive portion of the commercial finance business of the segment, while retaining the captive portion of the business that supports customer purchases of products that we manufacture. 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 and special charges. The measurement for the Finance segment includes interest income and expense and excludes special charges. Provisions for losses on finance receivables involving the sale or lease of our products are recorded by the selling manufacturing division when our Finance group has recourse to the Manufacturing group. Our revenues by segment, along with a reconciliation of segment profit to income from continuing operations before income taxes, are as follows: Revenues Segment Profit (Loss) (In millions) 2009 2008 2007 2009 2008 2007 Cessna $ 3,320 $ 5,662 $ 5,000 $ 198 $ 905 $ 865

Valuation and Qualifying Accoun

Valuation and Qualifying Accounts
	12 Months Ended Jan. 02, 2010
Valuation and Qualifying Accounts [Abstract]
Schedule II - Valuation and Qualifying Accounts	Schedule Of Valuation And Qualifying Accounts Disclosure ScheduleII Valuation and Qualifying Accounts (In millions) 2009 2008 2007 Manufacturing Group Allowance for doubtful accounts Balance at beginning of year $ 24 $ 29 $ 29 Charged to costs and expenses 8 5 3 Deductions from reserves* (9 ) (10 ) (3 ) Balance at end of year $ 23 $ 24 $ 29 Reserves for recourse liability to Finance group Balance at beginning of year $ 21 $ 22 $ 39 Charged to costs and expenses 6 5 2 Cash paid (9 ) (1 ) (20 ) Net deductions from reserves* (1 ) (5 ) 1 Balance at end of year $ 17 $ 21 $ 22 Inventory FIFO reserves Balance at beginning of year $ 114 $ 81 $ 68 Charged to costs and expenses 126 65 33 Deductions from reserves* (82 ) (32 ) (20 ) Balance at end of year $ 158 $ 114 $ 81 Finance Group Allowance for losses on finance receivables held for investment Balance at beginning of year $ 191 $ 89 $ 93 Provision for losses 267 234 33 Transfer to valuation allowance for finance receivables held for sale (2 ) (44 ) Deductions from reserves* (115 ) (88 ) (37 ) Balance at end of year $ 341 $ 191 $ 89 * Deductions primarily include uncollectible accounts written off (less recoveries), inventory disposals and currency translation adjustments.