Textron (TXT) 10-Q 27 Oct 17 2017 Q3 Quarterly report Financial data

Document and Entity Information

Document and Entity Information - shares	9 Months Ended
	Sep. 30, 2017	Oct. 13, 2017
Document and Entity Information
Entity Registrant Name	TEXTRON INC
Entity Central Index Key	217,346
Document Type	10-Q
Document Period End Date	Sep. 30, 2017
Amendment Flag	false
Current Fiscal Year End Date	--12-30
Entity Current Reporting Status	Yes
Entity Filer Category	Large Accelerated Filer
Entity Common Stock, Shares Outstanding		263,420,348
Document Fiscal Year Focus	2,017
Document Fiscal Period Focus	Q3

Consolidated Statements of Oper

Consolidated Statements of Operations - USD ($) $ in Millions		3 Months Ended		9 Months Ended
		Sep. 30, 2017	Oct. 01, 2016	Sep. 30, 2017	Oct. 01, 2016
Revenues
Manufacturing revenues		$ 3,466	$ 3,231	$ 10,127	$ 9,903
Finance revenues		18	20	54	60
Total revenues		3,484	3,251	10,181	9,963
Costs, expenses and other
Cost of sales		2,877	2,661	8,451	8,185
Selling and administrative expense		335	323	987	949
Interest expense		44	45	129	132
Special charges		25	115	75	115
Total costs, expenses and other		3,281	3,144	9,642	9,381
Income from continuing operations before income taxes		203	107	539	582
Income tax benefit (expense)		(44)	192	(127)	46
Income from continuing operations		159	299	412	628
Income from discontinued operations, net of income taxes	[1]		122	1	120
Net income		$ 159	$ 421	$ 413	$ 748
Basic earnings per share
Continuing operations (in dollars per share)		$ 0.60	$ 1.11	$ 1.54	$ 2.32
Discontinued operations (in dollars per share)			0.45		0.44
Basic earnings per share (in dollars per share)		0.60	1.56	1.54	2.76
Diluted earnings per share
Continuing operations (in dollars per share)		0.60	1.10	1.53	2.31
Discontinued operations (in dollars per share)			0.45		0.44
Diluted earnings per share (in dollars per share)		0.60	1.55	1.53	2.75
Dividends per share
Common stock (in dollars per share)		$ 0.02	$ 0.02	$ 0.06	$ 0.06
[1]	Income from discontinued operations, net of income taxes for the three and nine months ended October 1, 2016 primarily includes the settlement of a U.S. federal income tax audit. See Note 12 for additional information.

Consolidated Statements of Comp

Consolidated Statements of Comprehensive Income - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Oct. 01, 2016	Sep. 30, 2017	Oct. 01, 2016
Consolidated Statements of Comprehensive Income
Net income	$ 159	$ 421	$ 413	$ 748
Other comprehensive income, net of tax:
Pension and postretirement benefits adjustments, net of reclassifications	23	16	70	52
Foreign currency translation adjustments	34	4	98	8
Deferred gains (losses) on hedge contracts, net of reclassifications	10	(2)	18	23
Other comprehensive income	67	18	186	83
Comprehensive income	$ 226	$ 439	$ 599	$ 831

Consolidated Balance Sheets

Consolidated Balance Sheets - USD ($) shares in Thousands, $ in Millions	Sep. 30, 2017	Dec. 31, 2016
Assets
Cash and equivalents	$ 1,294	$ 1,298
Inventories	4,518	4,464
Finance receivables, net	824	935
Total assets	15,875	15,358
Liabilities
Total liabilities	10,057	9,784
Shareholders' equity
Common stock	34	34
Capital surplus	1,711	1,599
Treasury stock	(451)
Retained earnings	5,943	5,546
Accumulated other comprehensive loss	(1,419)	(1,605)
Total shareholders' equity	5,818	5,574
Total liabilities and shareholders' equity	$ 15,875	$ 15,358
Common shares outstanding	263,410	270,287
Manufacturing group
Assets
Cash and equivalents	$ 1,104	$ 1,137
Accounts receivable, net	1,344	1,064
Inventories	4,518	4,464
Other current assets	408	388
Total current assets	7,374	7,053
Property, plant and equipment, less accumulated depreciation and amortization of $4,212 and $4,123	2,701	2,581
Goodwill	2,354	2,113
Other assets	2,269	2,331
Total assets	14,698	14,078
Liabilities
Short-term debt and current portion of long-term debt	364	363
Accounts payable	1,173	1,273
Accrued liabilities	2,504	2,257
Total current liabilities	4,041	3,893
Other liabilities	1,931	2,354
Long-term debt	3,078	2,414
Total liabilities	9,050	8,661
Finance group
Assets
Cash and equivalents	190	161
Finance receivables, net	824	935
Other assets	163	184
Total assets	1,177	1,280
Liabilities
Other liabilities	166	220
Debt	841	903
Total liabilities	$ 1,007	$ 1,123

Consolidated Balance Sheets (Pa

Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Millions	Sep. 30, 2017	Dec. 31, 2016
Consolidated Balance Sheets
Accumulated depreciation and amortization	$ 4,212	$ 4,123

Consolidated Statements of Cash

Consolidated Statements of Cash Flows - USD ($) $ in Millions		9 Months Ended
		Sep. 30, 2017	Oct. 01, 2016
Cash flows from operating activities
Net income		$ 413	$ 748
Less: Income from discontinued operations	[1]	1	120
Income from continuing operations		412	628
Non-cash items:
Depreciation and amortization		332	331
Deferred income taxes		140	30
Asset impairments		25	36
Other, net		73	76
Changes in assets and liabilities:
Accounts receivable, net		(220)	(92)
Inventories		88	(637)
Other assets		3	56
Accounts payable		(178)	146
Accrued and other liabilities		(44)	(290)
Income taxes, net		(40)	(216)
Pension, net		(276)	21
Captive finance receivables, net		76	54
Other operating activities, net		(6)	2
Net cash provided by (used in) operating activities of continuing operations		385	145
Net cash used in operating activities of discontinued operations		(24)	(2)
Net cash provided by (used in) operating activities		361	143
Cash flows from investing activities
Net cash used in acquisitions		(330)	(179)
Capital expenditures		(276)	(306)
Finance receivables repaid		27	40
Other investing activities, net		48	53
Net cash provided by (used in) investing activities		(531)	(392)
Cash flows from financing activities
Proceeds from long-term debt		682	520
Increase in short-term debt		2	110
Principal payments on long-term debt and nonrecourse debt		(116)	(433)
Purchases of Textron common stock		(451)	(215)
Dividends paid		(16)	(16)
Other financing activities, net		36	20
Net cash provided by (used in) financing activities		137	(14)
Effect of exchange rate changes on cash and equivalents		29	(3)
Net increase (decrease) in cash and equivalents		(4)	(266)
Cash and equivalents at beginning of period		1,298	1,005
Cash and equivalents at end of period		1,294	739
Manufacturing group
Cash flows from operating activities
Net income		400	733
Less: Income from discontinued operations		1	120
Income from continuing operations		399	613
Non-cash items:
Depreciation and amortization		322	322
Deferred income taxes		141	35
Asset impairments		25	36
Other, net		75	74
Changes in assets and liabilities:
Accounts receivable, net		(220)	(92)
Inventories		89	(639)
Other assets		8	85
Accounts payable		(178)	146
Accrued and other liabilities		(36)	(283)
Income taxes, net		4	(212)
Pension, net		(276)	21
Dividends received from Finance group			29
Other operating activities, net		(6)	2
Net cash provided by (used in) operating activities of continuing operations		347	137
Net cash used in operating activities of discontinued operations		(24)	(2)
Net cash provided by (used in) operating activities		323	135
Cash flows from investing activities
Net cash used in acquisitions		(330)	(179)
Capital expenditures		(276)	(306)
Other investing activities, net		7	5
Net cash provided by (used in) investing activities		(599)	(480)
Cash flows from financing activities
Proceeds from long-term debt		645	345
Increase in short-term debt		2	110
Principal payments on long-term debt and nonrecourse debt		(3)	(253)
Purchases of Textron common stock		(451)	(215)
Dividends paid		(16)	(16)
Other financing activities, net		37	20
Net cash provided by (used in) financing activities		214	(9)
Effect of exchange rate changes on cash and equivalents		29	(3)
Net increase (decrease) in cash and equivalents		(33)	(357)
Cash and equivalents at beginning of period		1,137	946
Cash and equivalents at end of period		1,104	589
Finance group
Cash flows from operating activities
Net income		13	15
Income from continuing operations		13	15
Non-cash items:
Depreciation and amortization		10	9
Deferred income taxes		(1)	(5)
Other, net		(2)	2
Changes in assets and liabilities:
Other assets		(5)	(3)
Accrued and other liabilities		(8)	(7)
Income taxes, net		(44)	(4)
Net cash provided by (used in) operating activities of continuing operations		(37)	7
Net cash provided by (used in) operating activities		(37)	7
Cash flows from investing activities
Finance receivables repaid		220	220
Finance receivables originated		(117)	(126)
Other investing activities, net		40	24
Net cash provided by (used in) investing activities		143	118
Cash flows from financing activities
Proceeds from long-term debt		37	175
Principal payments on long-term debt and nonrecourse debt		(113)	(180)
Dividends paid			(29)
Other financing activities, net		(1)
Net cash provided by (used in) financing activities		(77)	(34)
Net increase (decrease) in cash and equivalents		29	91
Cash and equivalents at beginning of period		161	59
Cash and equivalents at end of period		$ 190	$ 150
[1]	Income from discontinued operations, net of income taxes for the three and nine months ended October 1, 2016 primarily includes the settlement of a U.S. federal income tax audit. See Note 12 for additional information.

Basis of Presentation

Basis of Presentation	9 Months Ended
	Sep. 30, 2017
Basis of Presentation
Basis of Presentation	Note 1. Basis of Presentation Our Consolidated Financial Statements include the accounts of Textron Inc. (Textron) and its majority-owned subsidiaries. We have prepared these unaudited consolidated financial statements in accordance with accounting principles generally accepted in the U.S. for interim financial information. Accordingly, these interim financial statements do not include all of the information and footnotes required by accounting principles generally accepted in the U.S. for complete financial statements. The consolidated interim financial statements included in this quarterly report should be read in conjunction with the consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2016. 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 Consolidated Statements of Cash Flows contained in these interim financial statements also reflect classification adjustments which impacted the cash flows from operating activities of continuing operations and from investing activities reported in our preliminary condensed cash flows schedules included in an attachment to our earnings press release filed as Exhibit 99.1 to our Current Report on Form 8-K filed on October 19, 2017. 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. 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. We periodically change our estimates of revenues and costs on certain long-term contracts that are accounted for under the percentage-of-completion method of accounting. These changes in estimates increased income from continuing operations before income taxes in the third quarter of 2017 and 2016 by $5 million and $18 million, respectively, ($3 million and $11 million after tax, or $0.01 and $0.04 per diluted share, respectively). For the third quarter of 2017 and 2016, the gross favorable program profit adjustments totaled $20 million and $21 million, respectively, and the gross unfavorable program profit adjustments totaled $15 million and $3 million, respectively. The changes in estimates increased income from continuing operations before income taxes in the first nine months of 2017 and 2016 by $2 million and $57 million, respectively, ($1 million and $36 million after tax, or $0.00 and $0.13 per diluted share, respectively). For the first nine months of 2017 and 2016, the gross favorable program profit adjustments totaled $63 million and $74 million, respectively, and the gross unfavorable program profit adjustments totaled $61 million and $17 million, respectively. New Accounting Pronouncements In May 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2014-09, Revenue from Contracts with Customers , that outlines a five-step revenue recognition model based on the principle that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods and services. The standard is effective as of the beginning of 2018 for public companies and may be adopted either retrospectively or on a modified retrospective basis . We expect to apply the standard on a modified retrospective basis, with a cumulative catch-up adjustment recognized at the beginning of 2018. Based on our review and analysis of our contracts through the end of the third quarter of 2017, we believe that the standard will primarily impact our Bell and Textron Systems segments, which have long-term production contracts with the U.S. Government as these contracts currently use the units-of-delivery accounting method; under the new standard, these contracts will transition to a model that recognizes revenue over time, principally as costs are incurred, resulting in earlier revenue recognition. In 2016, approximately 25% of our revenues were from contracts with the U.S. Government. We do not expect that the new standard will have a significant impact on revenue recognition for our Textron Aviation and Industrial segments. For these segments, we expect to continue to primarily recognize revenue for contracts at the point in time when the customer accepts delivery of the goods provided. We are currently evaluating the new disclosure requirements of the standard and expect to complete our assessment of the cumulative effect of adopting the standard in the fourth quarter of 2017. Our evaluation of the standard will continue through the adoption date, including any impacts related to new contracts awarded and any new or emerging interpretations of the standard. We are in the process of implementing changes to business processes, systems and internal controls required to implement and account for the new standard. In February 2016, the FASB issued ASU No. 2016-02, Leases , that requires lessees to recognize all leases with a term greater than 12 months on the balance sheet as right-to-use assets and lease liabilities , while lease expenses would continue to be recognized in the statement of operations in a manner similar to current accounting guidance. Under the current accounting guidance, we are not required to recognize assets and liabilities arising from operating leases on the balance sheet. The new standard is effective for our company at the beginning of 2019 and early adoption is permitted. Entities must adopt the standard on a modified retrospective basis whereby it would be applied at the beginning of the earliest comparative year. While we continue to evaluate the impact of the standard on our consolidated financial statements, we expect that it will materially increase our assets and liabilities on our consolidated balance sheet as we recognize the rights and corresponding obligations related to our operating leases . In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments – Credit Losses. For most financial assets, such as trade and other receivables, loans and other instruments, this standard changes the current incurred loss model to a forward-looking expected credit loss model, which generally will result in the earlier recognition of allowances for losses. The new standard is effective for our company at the beginning of 2020 with early adoption permitted beginning in 2019. Entities are required to apply the provisions of the standard through a cumulative-effect adjustment to retained earnings as of the effective date. We are currently evaluating the impact of the standard on our consolidated financial statements. In March 2017, the FASB issued ASU No. 2017-07, Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost . This standard requires companies to present only the service cost component of net periodic benefit costs in operating income in the same line as other employee compensation costs, while the other components of net periodic benefit costs must be excluded from operating income. In addition, only the service cost component will be eligible for capitalization into inventory. This standard is effective for our company at the beginning of 2018. The reclassification of the other components of net periodic benefit cost out of operating income must be applied retrospectively, while the change in the amount companies may capitalize into inventory can be applied prospectively. We are evaluating the impact of this standard and do not expect it to have a material impact on our consolidated financial statements.

Business Acquisitions

Business Acquisitions	9 Months Ended
	Sep. 30, 2017
Business Acquisitions
Business Acquisitions	Note 2. Business Acquisitions On March 6, 2017, we completed the acquisition of Arctic Cat Inc. (Arctic Cat), a publicly-held company (NASDAQ: ACAT), pursuant to a cash tender offer for $18.50 per share, followed by a short-form merger. Arctic Cat manufactures and markets all-terrain vehicles, side-by-sides and snowmobiles, in addition to related parts, garments and accessories. The cash paid for this business, including repayment of debt and net of cash acquired, totaled $316 million. Arctic Cat provides a platform to expand our product portfolio and increase our distribution channel to support growth within our Textron Specialized Vehicles business in the Industrial segment. The operating results of Arctic Cat are included in the Consolidated Statements of Operations since the closing date. We allocated the consideration paid for this business on a preliminary basis to the assets acquired and liabilities assumed based on their estimated fair values at the acquisition date. We expect to finalize the purchase accounting as soon as reasonably possible during the one-year measurement period. Based on the preliminary allocation, $221 million has been allocated to goodwill, related to expected synergies and the value of the assembled workforce, and $75 million to intangible assets, which includes $18 million of indefinite-lived assets related to tradenames. The definite-lived intangible assets are primarily related to customer/dealer relationships and technology, which will be amortized over 8 to 20 years. We determined the value of the intangible assets using the relief-from-royalty and multi-period excess earnings methods, which utilize significant unobservable inputs, or Level 3 inputs, as defined by the fair value hierarchy. Under these valuation methods, we are required to make estimates and assumptions about sales, operating margins, growth rates, royalty rates and discount rates based on anticipated cash flows and marketplace data. Approximately $5 million of the goodwill is deductible for tax purposes.

Retirement Plans

Retirement Plans	9 Months Ended
	Sep. 30, 2017
Retirement Plans
Retirement Plans	Note 3. Retirement Plans We provide defined benefit pension plans and other postretirement benefits to eligible employees. The components of net periodic benefit cost (credit) for these plans are as follows: Three Months Ended Nine Months Ended (In millions) September 30, October 1, September 30, October 1, Pension Benefits Service cost $ $ 25 $ $ 74 Interest cost 84 254 Expected return on plan assets (123) (368) Amortization of net actuarial loss 26 78 Amortization of prior service cost 4 11 Net periodic benefit cost $ $ 16 $ $ 49 Postretirement Benefits Other Than Pensions Service cost $ $ 1 $ $ 2 Interest cost 4 12 Amortization of prior service credit (6) (17) Net periodic benefit cost (credit) $ $ (1) $ $ (3) In September 2017, we made a $300 million discretionary contribution to fund a U.S. pension plan.

Earnings Per Share

Earnings Per Share	9 Months Ended
	Sep. 30, 2017
Earnings Per Share
Earnings Per Share	Note 4. 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 Nine Months Ended (In thousands) September 30, October 1, September 30, October 1, Basic weighted-average shares outstanding 264,624 Dilutive effect of stock options Diluted weighted-average shares outstanding Stock options to purchase 1.5 million and 1.2 million shares of common stock are excluded from the calculation of diluted weighted-average shares outstanding for the three and nine months ended September 30, 2017, respectively, as their effect would have been anti-dilutive. Stock options to purchase 3.5 million and 3.6 million shares of common stock are excluded from the calculation of diluted weighted-average shares outstanding for both the three and nine months ended October 1, 2016, as their effect would have been anti-dilutive.

Accounts Receivable and Finance

Accounts Receivable and Finance Receivables	9 Months Ended
	Sep. 30, 2017
Accounts Receivable and Finance Receivables
Accounts Receivable and Finance Receivables	Note 5. Accounts Receivable and Finance Receivables Accounts Receivable Accounts receivable is composed of the following: (In millions) September 30, December 31, Commercial $ $ U.S. Government contracts Allowance for doubtful accounts Total $ $ We have unbillable receivables, primarily 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 $201 million at September 30, 2017 and $178 million at December 31, 2016. Finance Receivables Finance receivables are presented in the following table: (In millions) September 30, December 31, Finance receivables * $ $ Allowance for losses Total finance receivables, net $ $ * Includes finance receivables held for sale of $30 million at both September 30, 2017 and December 31, 2016. Credit Quality Indicators and Nonaccrual Finance Receivables 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. Accrual of interest income is suspended for these accounts and all cash collections are generally applied to reduce the net investment balance. Once we conclude that the collection of all principal and interest is no longer doubtful, we resume the accrual of interest and recognize previously suspended interest income at the time either a) the loan becomes contractually current through payment according to the original terms of the loan, or b) if the loan has been modified, following a period of performance under the terms of the modification. 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. Delinquency 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) September 30, December 31, Performing $ $ Watchlist Nonaccrual Nonaccrual as a percentage of finance receivables Less than 31 days past due $ $ 31-60 days past due 61-90 days past due Over 90 days past due 60 + days contractual delinquency as a percentage of finance receivables Impaired Loans On a quarterly basis, we evaluate individual finance receivables for impairment in non-homogeneous portfolios and larger balance accounts in homogeneous loan portfolios. 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. Interest income recognized on impaired loans was not significant in the first nine months of 2017 or 2016. A summary of impaired finance receivables, excluding leveraged leases, and the average recorded investment is provided below: (In millions) September 30, December 31, Recorded investment: Impaired loans with related allowance for losses $ $ Impaired loans with no related allowance for losses Total $ $ Unpaid principal balance $ $ Allowance for losses on impaired loans Average recorded investment A summary of the allowance for losses on finance receivables, based on how the underlying finance receivables are evaluated for impairment, is provided below. The finance receivables reported in this table specifically exclude leveraged leases in accordance with U.S. generally accepted accounting principles. (In millions) September 30, December 31, Allowance based on collective evaluation $ $ Allowance based on individual evaluation Finance receivables evaluated collectively Finance receivables evaluated individually

Inventories

Inventories	9 Months Ended
	Sep. 30, 2017
Inventories
Inventories	Note 6. Inventories Inventories are composed of the following: (In millions) September 30, December 31, Finished goods $ $ Work in process Raw materials and components Progress/milestone payments Total $ $

Warranty Liability

Warranty Liability	9 Months Ended
	Sep. 30, 2017
Warranty Liability
Warranty Liability	Note 7. Warranty Liability Changes in our warranty liability are as follows: Nine Months Ended (In millions) September 30, October 1, Beginning of period $ $ Provision Settlements Acquisitions Adjustments* End of period $ $ * Adjustments include changes to prior year estimates, new issues on prior year sales and currency translation adjustments.

Debt

Debt	9 Months Ended
	Sep. 30, 2017
Debt
Debt	Note 8. Debt Under our shelf registration statement, on September 13, 2017, we issued $300 million of fixed-rate notes due March 1, 2028 that bear an annual interest rate of 3.375%. The net proceeds of the issuance totaled $298 million, after deducting underwriting discounts, commissions and offering expenses. In addition, on March 6, 2017, we issued $350 million of fixed-rate notes due March 15, 2027 that bear an annual interest rate of 3.65%, with net proceeds totaling $347 million.

Derivative Instruments and Fair

Derivative Instruments and Fair Value Measurements	9 Months Ended
	Sep. 30, 2017
Derivative Instruments and Fair Value Measurements
Derivative Instruments and Fair Value Measurements	Note 9. 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 September 30, 2017 and December 31, 2016, we had foreign currency exchange contracts with notional amounts upon which the contracts were based of $569 million and $665 million, respectively. At September 30, 2017, the fair value amounts of our foreign currency exchange contracts were a $19 million asset and an $9 million liability. At December 31, 2016, the fair value amounts of our foreign currency exchange contracts were a $7 million asset and a $17 million liability. 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 a net investment. We record changes in the fair value of these contracts in other comprehensive income to the extent they are effective as cash flow hedges. Currency effects on the effective portion of these hedges, which are reflected in the foreign currency translation adjustments within Accumulated other comprehensive loss, were not significant in the periods presented. Assets Recorded at Fair Value on a Nonrecurring Basis During the periods ended September 30, 2017 and December 31, 2016, the Finance group’s impaired nonaccrual finance receivables of $26 million and $44 million, respectively, were measured at fair value on a nonrecurring basis using significant unobservable inputs (Level 3). Impaired nonaccrual finance receivables represent assets recorded at fair value on a nonrecurring basis since the measurement of required reserves on our impaired finance receivables is significantly dependent on the fair value of the underlying collateral. For impaired nonaccrual finance receivables secured by aviation assets, the fair values of collateral are determined primarily based on the use of industry pricing guides. Fair value measurements recorded on impaired finance receivables were not significant for both the third quarter and first nine months of 2017 and 2016. 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: September 30, 2017 December 31, 2016 (In millions) Carrying Estimated Carrying Estimated Manufacturing group Debt, excluding leases $ $ $ $ Finance group Finance receivables, excluding leases Debt 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.

Accumulated Other Comprehensive

Accumulated Other Comprehensive Loss and Other Comprehensive Income	9 Months Ended
	Sep. 30, 2017
Accumulated Other Comprehensive Loss and Other Comprehensive Income
Accumulated Other Comprehensive Loss and Other Comprehensive Income	Note 10. Accumulated Other Comprehensive Loss and Other Comprehensive Income The components of Accumulated Other Comprehensive Loss are presented below: (In millions) Pension and Foreign Deferred Gains (Losses) on Hedge Contracts Accumulated Other Comprehensive Loss For the nine months ended September 30, 2017 Beginning of period $ $ $ $ Other comprehensive income before reclassifications — Reclassified from Accumulated other comprehensive loss — Other comprehensive income End of period $ $ $ $ For the nine months ended October 1, 2016 Beginning of period $ $ $ $ Other comprehensive income before reclassifications Reclassified from Accumulated other comprehensive loss — Other comprehensive income End of period $ $ $ $ The before and after-tax components of other comprehensive income are presented below: September 30, 2017 October 1, 2016 (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* $ $ $ $ $ $ Amortization of prior service cost (credit)* Pension and postretirement benefits adjustments, net Deferred gains (losses) on hedge contracts: Current deferrals — Reclassification adjustments — — Deferred gains (losses) on hedge contracts, net — Foreign currency translation adjustments Total $ $ $ $ $ $ Nine Months Ended Pension and postretirement benefits adjustments: Amortization of net actuarial loss* $ $ $ $ $ $ Amortization of prior service cost (credit)* Unrealized gains — — — Pension and postretirement benefits adjustments, net Deferred gains on hedge contracts: Current deferrals Reclassification adjustments Deferred gains on hedge contracts, net Foreign currency translation adjustments Total $ $ $ $ $ $ *These components of other comprehensive income are included in the computation of net periodic pension cost. See Note 11 of our 2016 Annual Report on Form 10-K for additional information.

Special Charges

Special Charges	9 Months Ended
	Sep. 30, 2017
Special Charges
Special Charges	Note 11. Special Charges In the third quarter of 2016, we initiated a plan to restructure and realign our businesses by implementing headcount reductions, facility consolidations and other actions in order to improve overall operating efficiency across Textron. In connection with this plan, w e recorded special charges of $15 million and $42 million in the third quarter and first nine months of 2017, respectively, and $115 million of special charges in both the third quarter and first nine months of 2016 . Since the inception of the 2016 plan, we have incurred a total of $84 million of severance costs, $63 million of asset impairments and $18 million in contract terminations and other costs. Of these amounts, $67 million was incurred at Textron Systems, $63 million at Textron Aviation, $29 million at Industrial and $6 million at Bell and Corporate. The total headcount reduction under this plan is expected to be approximately 2,000 positions, representing approximately 5% of our workforce. In connection with the acquisition of Arctic Cat, as discussed in Note 2, we initiated a restructuring plan in the first quarter of 2017 to integrate this business into our Textron Specialized Vehicles business within the Industrial segment to reduce operating redundancies and maximize efficiencies. As a result of this plan, we recorded restructuring charges of $8 million and $27 million in the third quarter and first nine months of 2017, respectively. Under this plan, we have incurred a total of $19 million of severance costs, largely related to change-of-control provisions, and $8 million of contract termination and other costs. In addition, we recorded $2 million and $6 million of acquisition-related transaction and integration costs in the third quarter and first nine months of 2017, respectively. We expect both the 2016 Plan and the Arctic Cat plan to be complete by the end of 2017 with approximately $10 million in aggregate special charges expected in the fourth quarter of 2017. Special charges recorded for both plans are as follows: (In millions) Severance Asset Contract Acquisition Total Special For the three months ended September 30, 2017 Industrial $ $ $ $ $ Textron Aviation — — — Textron Systems — $ $ $ $ $ For the three months ended October 1, 2016 Industrial $ $ $ — $ — $ Textron Aviation — — Textron Systems — Bell — — — $ $ $ $ — $ For the nine months ended September 30, 2017 Industrial $ $ $ $ $ Textron Aviation — — Textron Systems — $ $ $ $ $ For the nine months ended October 1, 2016 Industrial $ $ $ — $ — $ Textron Aviation — — Textron Systems — Bell — — — $ $ $ $ — $ An analysis of our restructuring reserve activity for both plans in the first nine months of 2017 is summarized below: (In millions) Severance Contract Total Balance at December 31, 2016 $ $ $ Provision for Arctic Cat plan Provision for 2016 plan Reversals* Cash paid Balance at September 30, 2017 $ $ $ *Primarily related to favorable contract negotiations in the Textron Systems segment. We expect cash payments for both restructuring plans to be approximately $30 million in the fourth quarter of 2017. Severance costs generally are paid on a lump-sum basis and include outplacement costs, which are paid in accordance with normal payment terms.

Income Taxes

Income Taxes	9 Months Ended
	Sep. 30, 2017
Income Taxes
Income Taxes	Note 12. Income Taxes Income tax expense equated to an effective income tax rate of 21.7% and 23.6% in the third quarter and first nine months of 2017, respectively. The third quarter of 2017 included a net discrete tax benefit of $15 million, largely related to state income taxes, which included a unitary filing election that resulted in a non-recurring benefit in the quarter and state refund claims. We recognized an income tax benefit of $192 million in the third quarter of 2016 and $46 million in the first nine months of 2016, largely related to a settlement with the U.S. Internal Revenue Service Office of Appeals for our 1998 to 2008 tax years, which resulted in a $206 million benefit recognized in continuing operations. We also recognized a $113 million benefit in discontinued operations related to the settlement. In addition to the $206 million benefit, the effective tax rate for the third quarter of 2016 was favorably impacted by $9 million in higher qualified research and development expenses and $7 million from a change in the mix of our earnings from U.S. to non-U.S., which includes jurisdictions with lower tax rates than the U.S. federal statutory rate. Our U.S. earnings declined primarily due to the impact of restructuring activities as discussed in Note 11.

Commitments and Contingencies

Commitments and Contingencies	9 Months Ended
	Sep. 30, 2017
Commitments and Contingencies
Commitments and Contingencies	Note 13. 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; 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.

Segment Information

Segment Information	9 Months Ended
	Sep. 30, 2017
Segment Information
Segment Information	Note 14. Segment Information We operate in, and report financial information for, the following five business segments: Textron Aviation, Bell, Textron Systems, Industrial and Finance. 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 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 as follows: Three Months Ended Nine Months Ended (In millions) September 30, October 1, September 30, October 1, Revenues Textron Aviation $ $ $ $ Bell Textron Systems Industrial Finance Total revenues $ $ $ $ Segment Profit Textron Aviation $ $ $ $ Bell Textron Systems Industrial Finance Segment profit Corporate expenses and other, net Interest expense, net for Manufacturing group Special charges Income from continuing operations before income taxes $ $ $ $

Basis of Presentation (Policies

Basis of Presentation (Policies)	9 Months Ended
	Sep. 30, 2017
Basis of Presentation
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. We periodically change our estimates of revenues and costs on certain long-term contracts that are accounted for under the percentage-of-completion method of accounting. These changes in estimates increased income from continuing operations before income taxes in the third quarter of 2017 and 2016 by $5 million and $18 million, respectively, ($3 million and $11 million after tax, or $0.01 and $0.04 per diluted share, respectively). For the third quarter of 2017 and 2016, the gross favorable program profit adjustments totaled $20 million and $21 million, respectively, and the gross unfavorable program profit adjustments totaled $15 million and $3 million, respectively. The changes in estimates increased income from continuing operations before income taxes in the first nine months of 2017 and 2016 by $2 million and $57 million, respectively, ($1 million and $36 million after tax, or $0.00 and $0.13 per diluted share, respectively). For the first nine months of 2017 and 2016, the gross favorable program profit adjustments totaled $63 million and $74 million, respectively, and the gross unfavorable program profit adjustments totaled $61 million and $17 million, respectively.
New Accounting Pronouncements	New Accounting Pronouncements In May 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2014-09, Revenue from Contracts with Customers , that outlines a five-step revenue recognition model based on the principle that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods and services. The standard is effective as of the beginning of 2018 for public companies and may be adopted either retrospectively or on a modified retrospective basis . We expect to apply the standard on a modified retrospective basis, with a cumulative catch-up adjustment recognized at the beginning of 2018. Based on our review and analysis of our contracts through the end of the third quarter of 2017, we believe that the standard will primarily impact our Bell and Textron Systems segments, which have long-term production contracts with the U.S. Government as these contracts currently use the units-of-delivery accounting method; under the new standard, these contracts will transition to a model that recognizes revenue over time, principally as costs are incurred, resulting in earlier revenue recognition. In 2016, approximately 25% of our revenues were from contracts with the U.S. Government. We do not expect that the new standard will have a significant impact on revenue recognition for our Textron Aviation and Industrial segments. For these segments, we expect to continue to primarily recognize revenue for contracts at the point in time when the customer accepts delivery of the goods provided. We are currently evaluating the new disclosure requirements of the standard and expect to complete our assessment of the cumulative effect of adopting the standard in the fourth quarter of 2017. Our evaluation of the standard will continue through the adoption date, including any impacts related to new contracts awarded and any new or emerging interpretations of the standard. We are in the process of implementing changes to business processes, systems and internal controls required to implement and account for the new standard. In February 2016, the FASB issued ASU No. 2016-02, Leases , that requires lessees to recognize all leases with a term greater than 12 months on the balance sheet as right-to-use assets and lease liabilities , while lease expenses would continue to be recognized in the statement of operations in a manner similar to current accounting guidance. Under the current accounting guidance, we are not required to recognize assets and liabilities arising from operating leases on the balance sheet. The new standard is effective for our company at the beginning of 2019 and early adoption is permitted. Entities must adopt the standard on a modified retrospective basis whereby it would be applied at the beginning of the earliest comparative year. While we continue to evaluate the impact of the standard on our consolidated financial statements, we expect that it will materially increase our assets and liabilities on our consolidated balance sheet as we recognize the rights and corresponding obligations related to our operating leases . In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments – Credit Losses. For most financial assets, such as trade and other receivables, loans and other instruments, this standard changes the current incurred loss model to a forward-looking expected credit loss model, which generally will result in the earlier recognition of allowances for losses. The new standard is effective for our company at the beginning of 2020 with early adoption permitted beginning in 2019. Entities are required to apply the provisions of the standard through a cumulative-effect adjustment to retained earnings as of the effective date. We are currently evaluating the impact of the standard on our consolidated financial statements. In March 2017, the FASB issued ASU No. 2017-07, Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost . This standard requires companies to present only the service cost component of net periodic benefit costs in operating income in the same line as other employee compensation costs, while the other components of net periodic benefit costs must be excluded from operating income. In addition, only the service cost component will be eligible for capitalization into inventory. This standard is effective for our company at the beginning of 2018. The reclassification of the other components of net periodic benefit cost out of operating income must be applied retrospectively, while the change in the amount companies may capitalize into inventory can be applied prospectively. We are evaluating the impact of this standard and do not expect it to have a material impact on our consolidated financial statements.

Retirement Plans (Tables)

Retirement Plans (Tables)	9 Months Ended
	Sep. 30, 2017
Retirement Plans
Components of net periodic benefit cost (credit)	Three Months Ended Nine Months Ended (In millions) September 30, October 1, September 30, October 1, Pension Benefits Service cost $ $ 25 $ $ 74 Interest cost 84 254 Expected return on plan assets (123) (368) Amortization of net actuarial loss 26 78 Amortization of prior service cost 4 11 Net periodic benefit cost $ $ 16 $ $ 49 Postretirement Benefits Other Than Pensions Service cost $ $ 1 $ $ 2 Interest cost 4 12 Amortization of prior service credit (6) (17) Net periodic benefit cost (credit) $ $ (1) $ $ (3)

Earnings Per Share (Tables)

Earnings Per Share (Tables)	9 Months Ended
	Sep. 30, 2017
Earnings Per Share
Weighted-average shares outstanding for basic and diluted EPS	Three Months Ended Nine Months Ended (In thousands) September 30, October 1, September 30, October 1, Basic weighted-average shares outstanding Dilutive effect of stock options Diluted weighted-average shares outstanding

Accounts Receivable and Finan24

Accounts Receivable and Finance Receivables (Tables)	9 Months Ended
	Sep. 30, 2017
Accounts Receivable and Finance Receivables
Accounts receivable	(In millions) September 30, December 31, Commercial $ $ U.S. Government contracts Allowance for doubtful accounts Total $ $
Finance receivables	(In millions) September 30, December 31, Finance receivables * $ $ Allowance for losses Total finance receivables, net $ $ * Includes finance receivables held for sale of $30 million at both September 30, 2017 and December 31, 2016.
Finance receivables by credit quality indicator and by delinquency aging category	(Dollars in millions) September 30, December 31, Performing $ $ Watchlist Nonaccrual Nonaccrual as a percentage of finance receivables Less than 31 days past due $ $ 31-60 days past due 61-90 days past due Over 90 days past due 60 + days contractual delinquency as a percentage of finance receivables
Summary of impaired finance receivables, excluding leveraged leases, and the average recorded investment	(In millions) September 30, December 31, Recorded investment: Impaired loans with related allowance for losses $ $ Impaired loans with no related allowance for losses Total $ $ Unpaid principal balance $ $ Allowance for losses on impaired loans Average recorded investment
Allowance for losses on finance receivables on an individual and on a collective basis	(In millions) September 30, December 31, Allowance based on collective evaluation $ $ Allowance based on individual evaluation Finance receivables evaluated collectively Finance receivables evaluated individually

Inventories (Tables)

Inventories (Tables)	9 Months Ended
	Sep. 30, 2017
Inventories
Inventories	(In millions) September 30, December 31, Finished goods $ $ Work in process Raw materials and components Progress/milestone payments Total $ $

Warranty Liability (Tables)

Warranty Liability (Tables)	9 Months Ended
	Sep. 30, 2017
Warranty Liability
Changes in warranty liability	Nine Months Ended (In millions) September 30, October 1, Beginning of period $ $ Provision Settlements Acquisitions Adjustments* End of period $ $ * Adjustments include changes to prior year estimates, new issues on prior year sales and currency translation adjustments.

Derivative Instruments and Fa27

Derivative Instruments and Fair Value Measurements (Tables)	9 Months Ended
	Sep. 30, 2017
Derivative Instruments and Fair Value Measurements
Carrying value and estimated fair value of financial instruments	September 30, 2017 December 31, 2016 (In millions) Carrying Estimated Carrying Estimated Manufacturing group Debt, excluding leases $ $ $ $ Finance group Finance receivables, excluding leases Debt

Accumulated Other Comprehensi28

Accumulated Other Comprehensive Loss and Other Comprehensive Income (Tables)	9 Months Ended
	Sep. 30, 2017
Accumulated Other Comprehensive Loss and Other Comprehensive Income
Schedule of components of Accumulated Other Comprehensive Loss	(In millions) Pension and Foreign Deferred Gains (Losses) on Hedge Contracts Accumulated Other Comprehensive Loss For the nine months ended September 30, 2017 Beginning of period $ $ $ $ Other comprehensive income before reclassifications — Reclassified from Accumulated other comprehensive loss — Other comprehensive income End of period $ $ $ $ For the nine months ended October 1, 2016 Beginning of period $ $ $ $ Other comprehensive income before reclassifications Reclassified from Accumulated other comprehensive loss — Other comprehensive income End of period $ $ $ $
Schedule of before and after-tax components of other comprehensive income	September 30, 2017 October 1, 2016 (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* $ $ $ $ $ $ Amortization of prior service cost (credit)* Pension and postretirement benefits adjustments, net Deferred gains (losses) on hedge contracts: Current deferrals — Reclassification adjustments — — Deferred gains (losses) on hedge contracts, net — Foreign currency translation adjustments Total $ $ $ $ $ $ Nine Months Ended Pension and postretirement benefits adjustments: Amortization of net actuarial loss* $ $ $ $ $ $ Amortization of prior service cost (credit)* Unrealized gains — — — Pension and postretirement benefits adjustments, net Deferred gains on hedge contracts: Current deferrals Reclassification adjustments Deferred gains on hedge contracts, net Foreign currency translation adjustments Total $ $ $ $ $ $ *These components of other comprehensive income are included in the computation of net periodic pension cost. See Note 11 of our 2016 Annual Report on Form 10-K for additional information.

Special Charges (Tables)

Special Charges (Tables)	9 Months Ended
	Sep. 30, 2017
Special Charges
Schedule of special charges	(In millions) Severance Asset Contract Acquisition Total Special For the three months ended September 30, 2017 Industrial $ $ $ $ $ Textron Aviation — — — Textron Systems — $ $ $ $ $ For the three months ended October 1, 2016 Industrial $ $ $ — $ — $ Textron Aviation — — Textron Systems — Bell — — — $ $ $ $ — $ For the nine months ended September 30, 2017 Industrial $ $ $ $ $ Textron Aviation — — Textron Systems — $ $ $ $ $ For the nine months ended October 1, 2016 Industrial $ $ $ — $ — $ Textron Aviation — — Textron Systems — Bell — — — $ $ $ $ — $
Schedule of restructuring reserve activity	(In millions) Severance Contract Total Balance at December 31, 2016 $ $ $ Provision for Arctic Cat plan Provision for 2016 plan Reversals* Cash paid Balance at September 30, 2017 $ $ $ *Primarily related to favorable contract negotiations in the Textron Systems segment.

Segment Information (Tables)

Segment Information (Tables)	9 Months Ended
	Sep. 30, 2017
Segment Information
Revenues by segment and reconciliation of segment profit to income from continuing operations before income taxes	Three Months Ended Nine Months Ended (In millions) September 30, October 1, September 30, October 1, Revenues Textron Aviation $ $ $ $ Bell Textron Systems Industrial Finance Total revenues $ $ $ $ Segment Profit Textron Aviation $ $ $ $ Bell Textron Systems Industrial Finance Segment profit Corporate expenses and other, net Interest expense, net for Manufacturing group Special charges Income from continuing operations before income taxes $ $ $ $

Basis of Presentation - Number

Basis of Presentation - Number of borrowing groups (Details)	9 Months Ended
	Sep. 30, 2017item
Basis of Presentation
Number of borrowing groups	2

Basis of Presentation - Contrac

Basis of Presentation - Contracts accounted for under percentage of completion method (Details) - Contracts accounted for under percentage of completion method - USD ($) $ / shares in Units, $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Oct. 01, 2016	Sep. 30, 2017	Oct. 01, 2016
Use of Estimates
Change in Accounting Estimate Financial Effect Increase in Income from Continuing Operations before Income Taxes	$ 5	$ 18	$ 2	$ 57
Change in Accounting Estimate Financial Effect Increase in Income from Continuing Operations after Income Taxes	$ 3	$ 11	$ 1	$ 36
Change in Accounting Estimate Financial Effect Increase in Earnings Per Share Diluted	$ 0.01	$ 0.04	$ 0	$ 0.13
Gross Favorable Program Profit Adjustments	$ 20	$ 21	$ 63	$ 74
Gross Unfavorable Program Profit Adjustments	$ 15	$ 3	$ 61	$ 17

Basis of Presentation - Percent

Basis of Presentation - Percentage of revenue from U.S. government contracts (Details)	12 Months Ended
	Dec. 31, 2016
New Accounting Pronouncements
Revenues from contracts with U.S. Government (as a percent)	25.00%

Business Acquisitions (Details)

Business Acquisitions (Details) - Arctic Cat Inc $ / shares in Units, $ in Millions	Mar. 06, 2017USD ($)$ / shares
Business Acquisitions
Price per share (in dollars per share) | $ / shares	$ 18.50
Aggregate cash payment	$ 316
Tax-deductible goodwill	5
Preliminary allocation of the purchase price
Goodwill	221
Intangible assets	75
Trade names
Preliminary allocation of the purchase price
Indefinite-lived assets	$ 18
Customer/dealer relationships and technology | Minimum
Business Acquisitions
Finite-Lived Intangible Asset, Useful Life	8 years
Customer/dealer relationships and technology | Maximum
Business Acquisitions
Finite-Lived Intangible Asset, Useful Life	20 years

Retirement Plans (Details)

Retirement Plans (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Oct. 01, 2016	Sep. 30, 2017	Oct. 01, 2016
Pension Benefits
Net periodic benefit cost (credit)
Service cost	$ 25	$ 25	$ 75	$ 74
Interest cost	81	84	242	254
Expected return on plan assets	(127)	(123)	(380)	(368)
Amortization of net actuarial loss	34	26	102	78
Amortization of prior service cost (credit)	4	4	12	11
Net periodic benefit cost (credit)	17	16	51	49
Employer contributions	300		300
Postretirement Benefits Other Than Pensions
Net periodic benefit cost (credit)
Service cost	1	1	2	2
Interest cost	3	4	9	12
Amortization of prior service cost (credit)	(2)	(6)	(6)	(17)
Net periodic benefit cost (credit)	$ 2	$ (1)	$ 5	$ (3)

Earnings Per Share (Details)

Earnings Per Share (Details) - shares shares in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Oct. 01, 2016	Sep. 30, 2017	Oct. 01, 2016
Weighted-average shares outstanding for basic and diluted EPS
Basic weighted-average shares outstanding	264,624	270,560	267,409	270,703
Dilutive effect of stock options	2,365	1,539	2,325	1,348
Diluted weighted-average shares outstanding	266,989	272,099	269,734	272,051
Anti-dilutive effect of weighted average shares	1,500	3,500	1,200	3,600

Accounts Receivable and Finan37

Accounts Receivable and Finance Receivables - Accounts receivable (Details) - USD ($) $ in Millions	Sep. 30, 2017	Dec. 31, 2016
Accounts Receivable
Unbillable receivables within accounts receivable	$ 201	$ 178
Manufacturing group
Accounts Receivable
Accounts Receivable, Gross	1,371	1,091
Allowance for doubtful accounts	(27)	(27)
Total	1,344	1,064
Commercial | Manufacturing group
Accounts Receivable
Accounts Receivable, Gross	1,061	797
U. S. Government Contracts | Manufacturing group
Accounts Receivable
Accounts Receivable, Gross	$ 310	$ 294

Accounts Receivable and Finan38

Accounts Receivable and Finance Receivables - Finance receivables (Details) - USD ($) $ in Millions	Sep. 30, 2017	Dec. 31, 2016
Finance Receivables
Finance receivables, gross	$ 858	$ 976
Allowance for losses	(34)	(41)
Total finance receivables, net	824	935
Finance receivables held for sale	$ 30	$ 30

Accounts Receivable and Finan39

Accounts Receivable and Finance Receivables - Finance receivables categorized based on credit quality indicators (Details) $ in Millions	9 Months Ended
	Sep. 30, 2017USD ($)item	Dec. 31, 2016USD ($)
Finance receivables categorized based on the internally assigned credit quality
Number of loan categories based on key credit quality indicators for individual loan | item	3
Performing
Finance receivables categorized based on the internally assigned credit quality
Total finance receivables	$ 699	$ 758
Watchlist
Finance receivables categorized based on the internally assigned credit quality
Total finance receivables	59	101
Nonaccrual
Finance receivables categorized based on the internally assigned credit quality
Total finance receivables	$ 70	$ 87
Nonaccrual as a percentage of finance receivables	8.45%	9.20%
Minimum | Nonaccrual
Finance receivables categorized based on the internally assigned credit quality
Number of months of contractual delinquency to classify accounts as nonaccrual unless such collection is not doubtful	3 months

Accounts Receivable and Finan40

Accounts Receivable and Finance Receivables - Finance receivables by delinquency aging category (Details) - USD ($) $ in Millions	Sep. 30, 2017	Dec. 31, 2016
Finance receivables held for investment by delinquency aging
60 + days contractual delinquency as a percentage of finance receivables	6.04%	4.23%
Less than 31 days past due
Finance receivables held for investment by delinquency aging
Financing receivable held for investment	$ 740	$ 857
31-60 days past due
Finance receivables held for investment by delinquency aging
Financing receivable held for investment	38	49
61- 90 days past due
Finance receivables held for investment by delinquency aging
Financing receivable held for investment	20	18
Over 90 days past due
Finance receivables held for investment by delinquency aging
Financing receivable held for investment	$ 30	$ 22

Accounts Receivable and Finan41

Accounts Receivable and Finance Receivables - Summary of impaired finance receivables, excluding leveraged leases, and the average recorded investment (Details) - USD ($) $ in Millions	9 Months Ended	12 Months Ended
	Sep. 30, 2017	Dec. 31, 2016
Summary of impaired finance receivables, excluding leveraged leases, and the average recorded investment
Recorded investment, impaired loans with related allowance for losses	$ 33	$ 55
Recorded investment, impaired loans with no related allowance for losses	41	65
Recorded investment, Total	74	120
Unpaid principal balance	80	125
Allowance for losses on impaired loans	7	11
Average recorded investment	$ 92	$ 101

Accounts Receivable and Finan42

Accounts Receivable and Finance Receivables - Allowance for losses on finance receivables on an individual and on a collective basis (Details) - USD ($) $ in Millions	Sep. 30, 2017	Dec. 31, 2016
Finance receivables
Allowance based on collective evaluation	$ 27	$ 30
Allowance based on individual evaluation	7	11
Finance receivables evaluated collectively	657	727
Finance receivables evaluated individually	$ 74	$ 120

Inventories (Details)

Inventories (Details) - USD ($) $ in Millions	Sep. 30, 2017	Dec. 31, 2016
Inventories
Finished goods	$ 1,875	$ 1,947
Work in process	2,697	2,742
Raw materials and components	813	724
Inventories, Gross	5,385	5,413
Progress/milestone payments	(867)	(949)
Total	$ 4,518	$ 4,464

Warranty Liability (Details)

Warranty Liability (Details) - USD ($) $ in Millions	9 Months Ended
	Sep. 30, 2017	Oct. 01, 2016
Changes in warranty liability
Beginning of period	$ 138	$ 143
Provision	54	58
Settlements	(55)	(59)
Acquisitions	32	2
Adjustments	(2)	(12)
End of period	$ 167	$ 132

Debt (Details)

Debt (Details) - USD ($) $ in Millions	Sep. 13, 2017	Mar. 06, 2017
3.375% due 2028
Debt
Face amount	$ 300
Interest rate (as a percent)	3.375%
Net proceeds from issuance	$ 298
3.65% due 2027
Debt
Face amount		$ 350
Interest rate (as a percent)		3.65%
Net proceeds from issuance		$ 347

Derivative Instruments and Fa46

Derivative Instruments and Fair Value Measurements - Assets and liabilities recorded at fair value on a recurring basis (Details) - Manufacturing group - USD ($) $ in Millions	9 Months Ended
	Sep. 30, 2017	Dec. 31, 2016
Fair value of derivative instruments
Forward exchange contracts maximum maturity period	3 years
Foreign currency exchange contracts
Fair value of derivative instruments
Notional amounts	$ 569	$ 665
Level 2 | Foreign currency exchange contracts
Fair value of derivative instruments
Derivative Asset, Fair Value	19	7
Derivative Liability, Fair Value	$ 9	$ 17

Derivative Instruments and Fa47

Derivative Instruments and Fair Value Measurements - Assets recorded at fair value on a nonrecurring basis (Details) - USD ($) $ in Millions	Sep. 30, 2017	Dec. 31, 2016
Fair Value Measurements, Nonrecurring | Finance group | Unobservable Inputs Level 3
Assets measured at fair value on a nonrecurring basis
Impaired finance receivables, Balance	$ 26	$ 44

Derivative Instruments and Fa48

Derivative Instruments and Fair Value Measurements - Assets and liabilities not recorded at fair value (Details) - USD ($) $ in Millions	Sep. 30, 2017	Dec. 31, 2016
Manufacturing group | Carrying Value
Financial instruments not reflected at fair value
Debt, excluding leases	$ (3,358)	$ (2,690)
Manufacturing group | Estimated Fair Value
Financial instruments not reflected at fair value
Debt, excluding leases	(3,504)	(2,809)
Finance group
Financial instruments not reflected at fair value
Debt	(841)	(903)
Finance group | Carrying Value
Financial instruments not reflected at fair value
Finance receivables, excluding leases	617	729
Debt	(841)	(903)
Finance group | Estimated Fair Value
Financial instruments not reflected at fair value
Finance receivables, excluding leases	656	758
Debt	$ (810)	$ (831)

Accumulated Other Comprehensi49

Accumulated Other Comprehensive Loss and Other Comprehensive Income - Components of accumulated other comprehensive loss (Details) - USD ($) $ in Millions	9 Months Ended
	Sep. 30, 2017	Oct. 01, 2016
Components of Accumulated Other Comprehensive Loss
Beginning of period	$ (1,605)	$ (1,398)
Other comprehensive income before reclassifications	108	24
Reclassified from Accumulated other comprehensive loss	78	59
Other comprehensive income	186	83
End of period	(1,419)	(1,315)
Pension and Postretirement Benefits Adjustments
Components of Accumulated Other Comprehensive Loss
Beginning of period	(1,505)	(1,327)
Other comprehensive income before reclassifications		5
Reclassified from Accumulated other comprehensive loss	70	47
Other comprehensive income	70	52
End of period	(1,435)	(1,275)
Foreign Currency Translation Adjustments
Components of Accumulated Other Comprehensive Loss
Beginning of period	(96)	(47)
Other comprehensive income before reclassifications	98	8
Other comprehensive income	98	8
End of period	2	(39)
Deferred Gains (Losses) on Hedge Contracts
Components of Accumulated Other Comprehensive Loss
Beginning of period	(4)	(24)
Other comprehensive income before reclassifications	10	11
Reclassified from Accumulated other comprehensive loss	8	12
Other comprehensive income	18	23
End of period	$ 14	$ (1)

Accumulated Other Comprehensi50

Accumulated Other Comprehensive Loss and Other Comprehensive Income - Before and after-tax components of other comprehensive income (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Oct. 01, 2016	Sep. 30, 2017	Oct. 01, 2016
Pension and postretirement benefits adjustments, pre-tax:
Amortization of net actuarial loss, pre-tax	$ 34	$ 26	$ 102	$ 78
Amortization of prior service cost (credit), pre-tax	2	(2)	6	(6)
Unrealized gains, pre-tax				7
Pension and postretirement benefits adjustments, net, pre-tax	36	24	108	79
Deferred gains (losses) on hedge contracts, pre-tax:
Current deferrals, pre-tax	9	(3)	14	17
Reclassification adjustments, pre-tax	3	1	9	16
Deferred gains (losses) on hedge contracts, net, pre-tax	12	(2)	23	33
Foreign currency translation adjustments, pre-tax	31	13	91	24
Other comprehensive income, pre-tax	79	35	222	136
Pension and postretirement benefits adjustments, tax:
Amortization of net actuarial loss, tax	(12)	(9)	(36)	(28)
Amortization of prior service cost (credit), tax	(1)	1	(2)	3
Unrealized gains, tax				(2)
Pension and postretirement benefits adjustments, net, tax	(13)	(8)	(38)	(27)
Deferred gains (losses) on hedge contracts, tax:
Current deferrals, tax	(2)		(4)	(6)
Reclassification adjustments, tax			(1)	(4)
Deferred gains (losses) on hedge contracts, net, tax	(2)		(5)	(10)
Foreign currency translation adjustments, tax	3	(9)	7	(16)
Other comprehensive income, tax	(12)	(17)	(36)	(53)
Pension and postretirement benefits adjustments, after-tax:
Amortization of net actuarial loss, after-tax	22	17	66	50
Amortization of prior service cost (credit), after-tax	1	(1)	4	(3)
Unrealized gains, after-tax				5
Pension and postretirement benefits adjustments, net, after-tax	23	16	70	52
Deferred gains (losses) on hedge contracts, after-tax:
Current deferrals, after-tax	7	(3)	10	11
Reclassification adjustments, after-tax	3	1	8	12
Deferred gains (losses) on hedge contracts, net, after-tax	10	(2)	18	23
Foreign currency translation adjustments, after-tax	34	4	98	8
Other comprehensive income	$ 67	$ 18	$ 186	$ 83

Special Charges - Restructuring

Special Charges - Restructuring plans and special charges (Details) $ in Millions	3 Months Ended		9 Months Ended		15 Months Ended
	Sep. 30, 2017USD ($)	Oct. 01, 2016USD ($)	Sep. 30, 2017USD ($)item	Oct. 01, 2016USD ($)	Sep. 30, 2017USD ($)
Special Charges
Special charges	$ 25	$ 115	$ 75	$ 115
Severance Costs
Special Charges
Special charges	8	66	33	66
Contract Terminations and Other
Special Charges
Special charges	11	13	11	13
Textron Systems
Special Charges
Special charges	6	59	5	59
Textron Systems | Severance Costs
Special Charges
Special charges	1	13	2	13
Textron Systems | Contract Terminations and Other
Special Charges
Special charges	2	13	(4)	13
Textron Aviation
Special Charges
Special charges	6	35	28	35
Textron Aviation | Severance Costs
Special Charges
Special charges	6	34	11	34
Industrial
Special Charges
Special charges	13	13	42	13
Industrial | Severance Costs
Special Charges
Special charges	1	11	20	11
Industrial | Contract Terminations and Other
Special Charges
Special charges	9		15
Bell
Special Charges
Special charges		8		8
Bell | Severance Costs
Special Charges
Special charges		8		8
2016 Restructuring Plan and Arctic Cat Plan
Special Charges
Total pre-tax special charges expected to be incurred			10
2016 Restructuring Plan
Special Charges
Special charges	15	115	$ 42	115
Expected number of positions eliminated | item			2,000
Expected number of positions eliminated, as a percentage of total workforce			5.00%
2016 Restructuring Plan | Severance Costs
Special Charges
Special charges					$ 84
2016 Restructuring Plan | Contract Terminations and Other
Special Charges
Special charges					18
2016 Restructuring Plan | Textron Systems
Special Charges
Special charges					67
2016 Restructuring Plan | Textron Aviation
Special Charges
Special charges					63
2016 Restructuring Plan | Industrial
Special Charges
Special charges					29
2016 Restructuring Plan | Bell and Corporate
Special Charges
Special charges					6
Arctic Cat Acquisition and Restructuring Costs | Industrial
Special Charges
Special charges	8		$ 27
Arctic Cat Acquisition and Restructuring Costs | Industrial | Severance Costs
Special Charges
Special charges			19
Arctic Cat Acquisition and Restructuring Costs | Industrial | Contract Terminations and Other
Special Charges
Special charges			8
Asset Impairments
Special Charges
Special charges	4	36	25	36
Asset Impairments | Textron Systems
Special Charges
Special charges	3	33	7	33
Asset Impairments | Textron Aviation
Special Charges
Special charges		1	17	1
Asset Impairments | Industrial
Special Charges
Special charges	1	$ 2	1	$ 2
Asset Impairments | 2016 Restructuring Plan
Special Charges
Special charges					$ 63
Acquisition Integration/Transaction Costs
Special Charges
Special charges	2		6
Acquisition Integration/Transaction Costs | Industrial
Special Charges
Special charges	2		6
Acquisition Integration/Transaction Costs | Arctic Cat Acquisition and Restructuring Costs | Industrial
Special Charges
Special charges	$ 2		$ 6

Special Charges - Restructuri52

Special Charges - Restructuring reserve activity and total expected cash outlay (Details) $ in Millions	9 Months Ended
	Sep. 30, 2017USD ($)
Special Charges
Remaining expected cash payments for restructuring activities	$ 30
Restructuring reserve activity
Balance at beginning of period	63
Reversals	(9)
Cash paid	(75)
Balance at end of period	32
Severance Costs
Restructuring reserve activity
Balance at beginning of period	50
Reversals	(1)
Cash paid	(64)
Balance at end of period	19
Contract Terminations and Other
Restructuring reserve activity
Balance at beginning of period	13
Reversals	(8)
Cash paid	(11)
Balance at end of period	13
Arctic Cat Acquisition and Restructuring Costs
Restructuring reserve activity
Provision	27
Arctic Cat Acquisition and Restructuring Costs | Severance Costs
Restructuring reserve activity
Provision	19
Arctic Cat Acquisition and Restructuring Costs | Contract Terminations and Other
Restructuring reserve activity
Provision	8
2016 Restructuring Plan
Restructuring reserve activity
Provision	26
2016 Restructuring Plan | Severance Costs
Restructuring reserve activity
Provision	15
2016 Restructuring Plan | Contract Terminations and Other
Restructuring reserve activity
Provision	$ 11

Income Taxes (Details)

Income Taxes (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Oct. 01, 2016	Sep. 30, 2017	Oct. 01, 2016
Income Taxes
Effective income tax rate (as a percent)	21.70%		23.60%
Discrete tax benefit	$ 15
Income tax benefit (expense)	$ (44)	$ 192	$ (127)	$ 46
Effective tax rate, favorable impact from research and development		9
Effective tax rate, favorable impact from foreign tax rate differentials		7
Internal Revenue Service (IRS) | Approval of 1998 To 2008 tax years final settlement | Continuing Operations
Income Taxes
Income tax benefit on continuing operations		206		206
Internal Revenue Service (IRS) | Approval of 1998 To 2008 tax years final settlement | Discontinued Operations
Income Taxes
Income tax benefit on discontinued operations		$ 113		$ 113

Segment Information - Operating

Segment Information - Operating and reportable segments (Details)	9 Months Ended
	Sep. 30, 2017segment
Operating and reportable business segments
Number of business operating segments	5
Number of reportable business segments	5

Segment Information - Reconcili

Segment Information - Reconciliation of segment profit to income from continuing operations before income taxes (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Oct. 01, 2016	Sep. 30, 2017	Oct. 01, 2016
Revenues
Manufacturing revenues	$ 3,466	$ 3,231	$ 10,127	$ 9,903
Finance revenues	18	20	54	60
Total revenues	3,484	3,251	10,181	9,963
Reconciliation of Operating Profit (Loss) from Segments to Consolidated
Special charges	(25)	(115)	(75)	(115)
Income from continuing operations before income taxes	203	107	539	582
Operating Segment
Segment Profit
Segment Profit	295	310	809	918
Corporate
Reconciliation of Operating Profit (Loss) from Segments to Consolidated
Corporate expenses and other, net	(30)	(53)	(88)	(116)
Manufacturing group | Reconciling Items
Reconciliation of Operating Profit (Loss) from Segments to Consolidated
Interest expense, net for Manufacturing group	(37)	(35)	(107)	(105)
Textron Aviation
Reconciliation of Operating Profit (Loss) from Segments to Consolidated
Special charges	(6)	(35)	(28)	(35)
Textron Aviation | Manufacturing group
Revenues
Manufacturing revenues	1,154	1,198	3,295	3,485
Textron Aviation | Manufacturing group | Operating Segment
Segment Profit
Segment Profit	93	100	183	254
Bell
Reconciliation of Operating Profit (Loss) from Segments to Consolidated
Special charges		(8)		(8)
Bell | Manufacturing group
Revenues
Manufacturing revenues	812	734	2,334	2,352
Bell | Manufacturing group | Operating Segment
Segment Profit
Segment Profit	106	97	301	260
Textron Systems
Reconciliation of Operating Profit (Loss) from Segments to Consolidated
Special charges	(6)	(59)	(5)	(59)
Textron Systems | Manufacturing group
Revenues
Manufacturing revenues	458	413	1,351	1,224
Textron Systems | Manufacturing group | Operating Segment
Segment Profit
Segment Profit	40	44	102	133
Industrial
Reconciliation of Operating Profit (Loss) from Segments to Consolidated
Special charges	(13)	(13)	(42)	(13)
Industrial | Manufacturing group
Revenues
Manufacturing revenues	1,042	886	3,147	2,842
Industrial | Manufacturing group | Operating Segment
Segment Profit
Segment Profit	49	66	207	256
Finance
Revenues
Finance revenues	18	20	54	60
Finance | Operating Segment
Segment Profit
Segment Profit	$ 7	$ 3	$ 16	$ 15