Textron (TXT) 10-Q 25 Apr 18 2018 Q1 Quarterly report Financial data

Document and Entity Information

Document and Entity Information - shares	3 Months Ended
	Mar. 31, 2018	Apr. 13, 2018
Document and Entity Information
Entity Registrant Name	TEXTRON INC
Entity Central Index Key	217,346
Document Type	10-Q
Document Period End Date	Mar. 31, 2018
Amendment Flag	false
Current Fiscal Year End Date	--12-29
Entity Current Reporting Status	Yes
Entity Filer Category	Large Accelerated Filer
Entity Common Stock, Shares Outstanding		256,038,330
Document Fiscal Year Focus	2,018
Document Fiscal Period Focus	Q1

Consolidated Statements of Oper

Consolidated Statements of Operations - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2018	Apr. 01, 2017
Revenues
Total revenues	$ 3,296	$ 3,093
Costs, expenses and other
Cost of sales	2,729	2,592
Selling and administrative expense	327	309
Interest expense	41	42
Special charges	0	37
Other components of net periodic benefit cost (credit)	(19)	(8)
Total costs, expenses and other	3,078	2,972
Income from continuing operations before income taxes	218	121
Income tax expense	29	21
Income from continuing operations	189	100
Income from discontinued operations, net of income taxes		1
Net income	$ 189	$ 101
Basic earnings per share
Continuing operations (in dollars per share)	$ 0.73	$ 0.37
Basic earnings per share (in dollars per share)	0.73	0.37
Diluted earnings per share
Continuing operations (in dollars per share)	0.72	0.37
Diluted earnings per share (in dollars per share)	0.72	0.37
Dividends per share
Common stock (in dollars per share)	$ 0.02	$ 0.02
Manufacturing
Revenues
Total revenues	$ 3,280	$ 3,075
Finance.
Revenues
Finance Revenue	$ 16	$ 18

Consolidated Statements of Comp

Consolidated Statements of Comprehensive Income - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2018	Apr. 01, 2017
Consolidated Statements of Comprehensive Income
Net income	$ 189	$ 101
Other comprehensive income, net of tax:
Pension and postretirement benefits adjustments, net of reclassifications	31	24
Foreign currency translation adjustments	42	22
Deferred gains on hedge contracts, net of reclassifications	1	4
Other comprehensive income	74	50
Comprehensive income	$ 263	$ 151

Consolidated Balance Sheets

Consolidated Balance Sheets - USD ($) shares in Thousands, $ in Millions	Mar. 31, 2018	Dec. 30, 2017
Assets
Cash and equivalents	$ 836	$ 1,262
Accounts receivable, net	1,110
Inventories	4,090	4,150
Other current assets	933
Property, plant and equipment, less accumulated depreciation and amortization of $4,210 and $4,120, respectively	2,711
Other assets	1,953
Finance receivables, net	781	819
Total assets	14,968	15,340
Liabilities
Other current liabilities	2,104
Total liabilities	9,276	9,693
Shareholders' equity
Common stock	33	33
Capital surplus	1,710	1,669
Treasury stock	(392)	(48)
Retained earnings	5,642	5,368
Accumulated other comprehensive loss	(1,301)	(1,375)
Total shareholders' equity	5,692	5,647
Total liabilities and shareholders' equity	$ 14,968	$ 15,340
Common shares outstanding	256,375	261,471
Manufacturing group
Assets
Cash and equivalents	$ 688	$ 1,079
Accounts receivable, net	1,110	1,363
Inventories	4,090	4,150
Other current assets	933	435
Total current assets	6,821	7,027
Property, plant and equipment, less accumulated depreciation and amortization of $4,210 and $4,120, respectively	2,711	2,721
Goodwill	2,368	2,364
Other assets	1,953	2,059
Total assets	13,853	14,171
Liabilities
Short-term debt and current portion of long-term debt	16	14
Accounts payable	1,229	1,205
Other current liabilities	2,104	2,441
Total current liabilities	3,349	3,660
Other liabilities	1,908	2,006
Long-term debt	3,083	3,074
Total liabilities	8,340	8,740
Finance group
Assets
Cash and equivalents	148	183
Finance receivables, net	781	819
Other assets	186	167
Total assets	1,115	1,169
Liabilities
Other liabilities	117	129
Debt	819	824
Total liabilities	$ 936	$ 953

Consolidated Balance Sheets (Pa

Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Millions	Mar. 31, 2018	Dec. 30, 2017
Consolidated Balance Sheets
Accumulated depreciation and amortization	$ 4,210	$ 4,120

Consolidated Statements of Cash

Consolidated Statements of Cash Flows - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2018	Apr. 01, 2017
Cash flows from operating activities
Net income	$ 189	$ 101
Less: Income from discontinued operations		1
Income from continuing operations	189	100
Non-cash items:
Depreciation and amortization	105	106
Asset impairments		11
Deferred income taxes	2	13
Other, net	32	28
Changes in assets and liabilities:
Accounts receivable, net	63	(103)
Inventories	(128)	(122)
Other assets	(119)	(30)
Accounts payable	15	(102)
Other liabilities	(263)	(158)
Income taxes, net	9	38
Pension, net	(2)	8
Captive finance receivables, net	15	25
Other operating activities, net	(3)	(5)
Net cash provided by (used in) operating activities of continuing operations	(85)	(191)
Net cash used in operating activities of discontinued operations		(25)
Net cash provided by (used in) operating activities	(85)	(216)
Cash flows from investing activities
Capital expenditures	(77)	(76)
Net proceeds from corporate-owned life insurance policies	58	22
Net cash used in acquisitions		(318)
Finance receivables repaid	16	15
Other investing activities, net	9	13
Net cash provided by (used in) investing activities	6	(344)
Cash flows from financing activities
Increase in short-term debt	2	100
Principal payments on long-term debt and nonrecourse debt	(19)	(38)
Proceeds from long-term debt		362
Purchases of Textron common stock	(344)	(186)
Dividends paid	(5)	(6)
Other financing activities, net	8	19
Net cash provided by (used in) financing activities	(358)	251
Effect of exchange rate changes on cash and equivalents	11	8
Net decrease in cash and equivalents	(426)	(301)
Cash and equivalents at beginning of period	1,262	1,298
Cash and equivalents at end of period	836	997
Manufacturing group
Cash flows from operating activities
Net income	179	95
Less: Income from discontinued operations		1
Income from continuing operations	179	94
Non-cash items:
Depreciation and amortization	103	103
Asset impairments		11
Deferred income taxes	2	13
Other, net	32	28
Changes in assets and liabilities:
Accounts receivable, net	63	(103)
Inventories	(128)	(122)
Other assets	(118)	(29)
Accounts payable	15	(102)
Other liabilities	(259)	(151)
Income taxes, net	13	90
Pension, net	(2)	8
Dividends received from Finance group	50
Other operating activities, net	(3)	(5)
Net cash provided by (used in) operating activities of continuing operations	(53)	(165)
Net cash used in operating activities of discontinued operations		(25)
Net cash provided by (used in) operating activities	(53)	(190)
Cash flows from investing activities
Capital expenditures	(77)	(76)
Net proceeds from corporate-owned life insurance policies	58	22
Net cash used in acquisitions		(318)
Other investing activities, net	9	1
Net cash provided by (used in) investing activities	(10)	(371)
Cash flows from financing activities
Increase in short-term debt	2	100
Proceeds from long-term debt		347
Purchases of Textron common stock	(344)	(186)
Dividends paid	(5)	(6)
Other financing activities, net	8	19
Net cash provided by (used in) financing activities	(339)	274
Effect of exchange rate changes on cash and equivalents	11	8
Net decrease in cash and equivalents	(391)	(279)
Cash and equivalents at beginning of period	1,079	1,137
Cash and equivalents at end of period	688	858
Finance group
Cash flows from operating activities
Net income	10	6
Income from continuing operations	10	6
Non-cash items:
Depreciation and amortization	2	3
Changes in assets and liabilities:
Other assets	(1)	(1)
Other liabilities	(4)	(7)
Income taxes, net	(4)	(52)
Net cash provided by (used in) operating activities of continuing operations	3	(51)
Net cash provided by (used in) operating activities	3	(51)
Cash flows from investing activities
Finance receivables repaid	65	76
Finance receivables originated	(34)	(36)
Other investing activities, net		12
Net cash provided by (used in) investing activities	31	52
Cash flows from financing activities
Principal payments on long-term debt and nonrecourse debt	(19)	(38)
Proceeds from long-term debt		15
Dividends paid	(50)
Net cash provided by (used in) financing activities	(69)	(23)
Net decrease in cash and equivalents	(35)	(22)
Cash and equivalents at beginning of period	183	161
Cash and equivalents at end of period	$ 148	$ 139

Basis of Presentation

Basis of Presentation	3 Months Ended
	Mar. 31, 2018
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 30, 2017. In the opinion of management, the interim financial statements reflect all adjustments (consisting only of normal recurring adjustments) that are necessary for the fair presentation of our consolidated financial position, results of operations and cash flows for the interim periods presented. The results of operations for the interim periods are not necessarily indicative of the results to be expected for the full year. In the first quarter of 2018, we adopted Accounting Standards Update (ASU) No. 2016-15, Statement of Cash Flows - Classification of Certain Cash Receipts and Cash Payments. This standard provides guidance on the classification of certain cash flows and requires companies to classify cash proceeds received from the settlement of corporate-owned life insurance as cash inflows from investing activities. The standard is required to be adopted on a retrospective basis. Prior to adoption of this standard, we classified these proceeds as operating activities in the Consolidated Statements of Cash Flows. Upon adoption, we reclassified $22 million of net cash proceeds for the first quarter of 2017 from operating activities to investing activities. 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.

Summary of Significant Accounti

Summary of Significant Accounting Policies Update	3 Months Ended
	Mar. 31, 2018
Summary of Significant Accounting Policies Update
Summary of Significant Accounting Policies Update	Note 2. Summary of Significant Accounting Policies Update Our significant accounting policies are included in Note 1 of our Annual Report on Form 10-K for the year ended December 30, 2017. On December 31, 2017, we adopted ASU No. 2014-09, Revenue from Contracts with Customers (ASC 606). Significant changes to our policies resulting from the adoption are provided below. We adopted ASC 606 using the modified retrospective transition method applied to contracts that were not substantially complete at the end of 2017. We recorded a $90 million adjustment to increase retained earnings to reflect the cumulative impact of adopting this standard at the beginning of 2018, primarily related to certain long-term contracts our Bell segment has with the U.S. Government that converted to the cost-to-cost method for revenue recognition. The comparative information has not been restated and is reported under the accounting standards in effect for those periods. A reconciliation of the financial statement line items impacted for the three months ended March 31, 2018 under ASC 606 to the prior accounting standards is provided in Note 16. Revenue Recognition Revenue is recognized when control of the goods or services promised under the contract is transferred to the customer either at a point in time (e.g., upon delivery) or over time (e.g., as we perform under the contract). We account for a contract when it has approval and commitment from both parties, the rights and payment terms of the parties are identified, the contract has commercial substance and collectability of consideration is probable. Contracts are reviewed to determine whether there is one or multiple performance obligations. A performance obligation is a promise to transfer a distinct good or service to a customer and represents the unit of accounting for revenue recognition. For contracts with multiple performance obligations, the expected consideration, or the transaction price, is allocated to each performance obligation identified in the contract based on the relative standalone selling price of each performance obligation. Revenue is then recognized for the transaction price allocated to the performance obligation when control of the promised goods or services underlying the performance obligation is transferred. Contract consideration is not adjusted for the effects of a significant financing component when, at contract inception, the period between when control transfers and when the customer will pay for that good or service is one year or less. Commercial Contracts The majority of our contracts with commercial customers have a single performance obligation as there is only one good or service promised or the promise to transfer the goods or services is not distinct or separately identifiable from other promises in the contract. Revenue is primarily recognized at a point in time, which is generally when the customer obtains control of the asset upon delivery and customer acceptance. Contract modifications that provide for additional distinct goods or services at the standalone selling price are treated as separate contracts. For commercial aircraft, we contract with our customers to sell fully outfitted fixed-wing aircraft, which may include configuration options. The aircraft typically represents a single performance obligation and revenue is recognized upon customer acceptance and delivery. For commercial helicopters, our customers generally contract with us for fully functional basic configuration aircraft and control is transferred upon customer acceptance and delivery. At times, customers may separately contract with us for the installation of accessories and customization to the basic aircraft. If these contracts are entered into at or near the same time of the basic aircraft contract, we assess whether the contracts meet the criteria to be combined. For contracts that are combined, the basic aircraft and the accessories and customization are typically considered to be distinct, and therefore, are separate performance obligations. For these contracts, revenue is recognized on the basic aircraft upon customer acceptance and transfer of title and risk of loss and on the accessories and customization upon delivery and customer acceptance. We utilize observable prices to determine the standalone selling prices when allocating the transaction price to these performance obligations. The transaction price for our commercial contracts reflects our estimate of returns, rebates and discounts, which are based on historical, current and forecasted information. Amounts billed to customers for shipping and handling are included in the transaction price and generally are not treated as separate performance obligations as these costs fulfill a promise to transfer the product to the customer. Taxes collected from customers and remitted to government authorities are recorded on a net basis. We primarily provide standard warranty programs for products in our commercial businesses for periods that typically range from one to five years. These assurance-type programs typically cannot be purchased separately and do not meet the criteria to be considered a performance obligation. U.S. Government Contracts Our contracts with the U.S. Government generally include the design, development, manufacture or modification of aerospace and defense products as well as related services. These contracts, which also include those under the U.S. Government-sponsored foreign military sales program, accounted for approximately 24% of total revenues in 2017. The customer typically contracts with us to provide a significant service of integrating a complex set of tasks and components into a single project or capability, which often results in the delivery of multiple units. Accordingly, the entire contract is accounted for as one performance obligation. In certain circumstances, a contract may include both production and support services, such as logistics and parts plans, which are considered to be distinct in the context of the contract and represent separate performance obligations. When a contract is separated into more than one performance obligation, we generally utilize the expected cost plus a margin approach to determine the standalone selling prices when allocating the transaction price. Our contracts are frequently modified for changes in contract specifications and requirements. Most of our contract modifications with the U.S. Government are for goods and services that are not distinct from the existing contract due to the significant integration service provided in the context of the contract and are accounted for as part of that existing contract. The effect of these contract modifications on our estimates is recognized using the cumulative catch-up method of accounting. Contracts with the U.S. Government generally contain clauses that provide lien rights to work-in-process along with clauses that allow the customer to unilaterally terminate the contract for convenience, pay us for costs incurred plus a reasonable profit and take control of any work-in-process. Due to the continuous transfer of control to the U.S. Government, we recognize revenue over the time that we perform under the contract. Selecting the method to measure progress towards completion requires judgment and is based on the nature of the products or service to be provided. We generally use the cost-to-cost method to measure progress for our contracts because it best depicts the transfer of control to the customer that occurs as we incur costs on our contracts. Under this measure, the extent of progress towards completion is measured based on the ratio of costs incurred to date to the estimated costs at completion of the performance obligation, and revenue is recorded proportionally as costs are incurred. The transaction price for our contracts represents our best estimate of the consideration we will receive and includes assumptions regarding variable consideration as applicable. Certain of our long-term contracts contain incentive fees or other provisions that can either increase or decrease the transaction price. These variable amounts generally are awarded upon achievement of certain performance metrics, program milestones or cost targets and can be based upon customer discretion. We include estimated amounts in the transaction price to the extent it is probable that a significant reversal of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is resolved. Our estimates of variable consideration and determination of whether to include estimated amounts in the transaction price are based largely on an assessment of our anticipated performance and all other information that is reasonably available to us. Total contract cost is estimated utilizing current contract specifications and expected engineering requirements. Contract c osts typically are incurred over a period of several years, and the estimation of these costs requires substantial judgment. Our cost estimation process is based on the professional knowledge and experience of engineers and program managers along with finance professionals. We review and update our projections of costs quarterly or more frequently when circumstances significantly change. Approximately 80% of our 2017 revenues with the U.S. Government were under fixed-price and fixed-price incentive contracts. Under the typical payment terms of these contracts, the customer pays us either performance-based or progress payments. Performance-based payments represent interim payments of up to 90% of the contract price based on quantifiable measures of performance or on the achievement of specified events or milestones. Progress payments are interim payments of up to 80% of costs incurred as the work progresses. Because the customer retains a small portion of the contract price until completion of the contract, these contracts generally result in revenue recognized in excess of billings, which we present as contract assets in the Consolidated Balance Sheets. Amounts billed and due from our customers are classified in Accounts receivable, net. The portion of the payments retained by the customer until final contract settlement is not considered a significant financing component because the intent is to protect the customer. For cost-type contracts, we are generally paid for our actual costs incurred within a short period of time. For contracts where revenue is recognized over time, we generally recognize changes in estimated contract revenues, costs and profits using the cumulative catch-up method of accounting. This method recognizes the cumulative effect of changes on current and prior periods with the impact of the change from inception-to-date recorded in the current period. Anticipated losses on contracts are recognized in full in the period in which the losses become probable and estimable. The impact of cumulative catch-up adjustments on both revenues and segment profit recognized in prior periods totaled $40 million and $(12) million in the first quarter of 2018 and 2017, respectively. The resulting impact increased income from continuing operations before income taxes by $40 million ($30 million after tax or $0.12 per diluted share) in the first quarter of 2018 and decreased income from continuing operations before income taxes by $12 million ($8 million after tax or $0.03 per diluted share) in the first quarter of 2017. For the first quarter of 2018 and 2017, the gross favorable adjustments totaled $56 million and $20 million, respectively, and the gross unfavorable adjustments totaled $16 million and $32 million, respectively. In the first quarter of 2017, the gross unfavorable adjustments included a $24 million loss related to the Tactical Armoured Patrol Vehicle (TAPV) program due to inefficiencies resulting from production issues. Contract Assets and Liabilities Contract assets arise from contracts when revenue is recognized over time and the amount of revenue recognized exceeds the amount billed to the customer. These amounts are included in contract assets until the right to payment is no longer conditional on events other than the passage of time. Contract assets are included in Other current assets in the Consolidated Balance Sheet. Contract liabilities, which are primarily included in Other current liabilities, include deposits, largely from our commercial aviation customers, and billings in excess of revenue recognized. The incremental costs of obtaining a contract with a customer that is expected to be recovered is expensed as incurred when the period to be benefitted is one year or less. Accounts Receivable, Net Accounts receivable, net includes amounts billed to customers where the right to payment is unconditional. We maintain an allowance for doubtful accounts to provide for the estimated amount of accounts receivable that will not be collected, which is based on an assessment of customer creditworthiness, historical payment experience, the age of outstanding receivable and collateral value, if any. Accounting Pronouncements Not Yet Adopted In February 2016, the Financial Accounting Standards Board (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. 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.

Business Acquisitions

Business Acquisitions	3 Months Ended
	Mar. 31, 2018
Business Acquisitions
Business Acquisitions	Note 3. 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. 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 to the assets acquired and liabilities assumed based on their fair values, and recorded $230 million in goodwill, related to expected synergies and the value of the assembled workforce, and $75 million in intangible assets, which included $18 million of indefinite-lived assets related to tradenames.

Retirement Plans

Retirement Plans	3 Months Ended
	Mar. 31, 2018
Retirement Plans
Retirement Plans	Note 4. Retirement Plans In the first quarter of 2018, we adopted 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 cost in operating income in the same line as other compensation costs arising from services rendered by the pertinent employees during the period. The other components of net periodic benefit cost must be presented separately from service cost and excluded from operating income. In addition, only the service cost component is eligible for capitalization into inventory. The change in the amount capitalized into inventory was applied prospectively. The reclassification of the other components of net periodic benefit cost (credit) to a separate line was applied retrospectively using a practical expedient that permits the usage of amounts previously disclosed in the pension and other postretirement benefit plan note for prior periods. As a result, we reclassified $(8) million of other components of net periodic benefit cost (credit) for the first quarter of 2017 from Cost of sales to a separate line item in the Consolidated Statements of Operations. We provide defined benefit pension plans and other postretirement benefits to eligible employees. The components of net periodic benefit cost for these plans are as follows: Pension Benefits Postretirement Benefits (In millions) March 31, 2018 April 1, 2017 March 31, 2018 April 1, 2017 Three Months Ended Service cost $ $ $ $ Interest cost Expected return on plan assets — — Amortization of prior service cost (credit) Amortization of net actuarial loss — — Net periodic benefit cost $ $ $ $

Share-Based Compensation

Share-Based Compensation	3 Months Ended
	Mar. 31, 2018
Share-Based Compensation
Share-Based Compensation	Note 5. Share-Based Compensation Our share-based compensation plans provide stock options, restricted stock, restricted stock units, stock appreciation rights, performance stock, performance share units and other awards. Compensation expense included in net income for these plans is as follows: Three Months Ended (In millions) March 31, 2018 April 1, 2017 Compensation expense $ $ Income tax benefit Total net compensation expense included in net income $ $ Stock Options Options to purchase our shares have a maximum term of ten years and generally vest ratably over a three-year period. The stock option compensation cost calculated under the fair value approach is recognized over the vesting period of the stock options. We estimate the fair value of options granted on the date of grant using the Black-Scholes option-pricing model. Expected volatilities are based on implied volatilities from traded options on our common stock, historical volatilities and other factors. The expected term is based on historical option exercise data, which is adjusted to reflect any anticipated changes in expected behavior. The weighted-average fair value of options granted and the assumptions used in our option-pricing model for such grants are as follows: Three Months Ended March 31, 2018 April 1, 2017 Fair value of options at grant date $ $ Dividend yield Expected volatility Risk-free interest rate Expected term (in years) The stock option activity during the first quarter of 2018 is provided below: (Options in thousands) Number of Weighted- Price Outstanding at beginning of period $ Granted Exercised Forfeited or expired Outstanding at end of period $ Exercisable at end of period $ At March 31, 2018 , our outstanding options had an aggregate intrinsic value of $195 million and a weighted-average remaining contractual life of six years. Our exercisable options had an aggregate intrinsic value of $169 million and a weighted-average remaining contractual life of five years at March 31, 2018 . The total intrinsic value of options exercised was $8 million and $17 million during the first quarter of 2018 and 2017, respectively. Restricted Stock Units The activity for restricted stock units payable in both stock and cash during the first quarter of 2018 is provided below: Units Payable in Stock Units Payable in Cash (Shares/Units in thousands) Number of Weighted- Date Fair Value Number of Weighted- Outstanding at beginning of period, nonvested $ $ Granted Vested Forfeited — — Outstanding at end of period, nonvested $ $ The fair value of the restricted stock unit awards that vested and/or amounts paid under these awards is as follows: Three Months Ended (In millions) March 31, 2018 April 1, 2017 Fair value of awards vested $ $ Cash paid Performance Share Units The activity for our performance share units during the first quarter of 2018 is provided below: (Units in thousands) Number of Weighted- Average Grant Date Fair Value Outstanding at beginning of period, nonvested $ Granted Outstanding at end of period, nonvested $ Cash paid under these awards totaled $11 million and $14 million during the first quarter of 2018 and 2017, respectively.

Earnings Per Share

Earnings Per Share	3 Months Ended
	Mar. 31, 2018
Earnings Per Share
Earnings Per Share	Note 6. 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 (In thousands) March 31, 2018 April 1, 2017 Basic weighted-average shares outstanding Dilutive effect of stock options Diluted weighted-average shares outstanding Stock options to purchase 1.3 million and 1.5 million shares of common stock are excluded from the calculation of diluted weighted-average shares outstanding for the first quarter of 2018 and 2017, respectively, as their effect would have been anti-dilutive.

Accounts Receivable and Finance

Accounts Receivable and Finance Receivables	3 Months Ended
	Mar. 31, 2018
Accounts Receivable and Finance Receivables
Accounts Receivable and Finance Receivables	Note 7. Accounts Receivable and Finance Receivables Accounts Receivable Accounts receivable is composed of the following: (In millions) March 31, 2018 December 30, Commercial $ $ U.S. Government contracts, including foreign military sales Allowance for doubtful accounts Total $ $ Upon adoption of ASC 606, unbilled receivables, primarily related to U.S. Government contracts, totaling $203 million were reclassified from accounts receivable to contract assets or liabilities, depending on the net position of the contract, as disclosed in Note 16. Finance Receivables Finance receivables are presented in the following table: (In millions) March 31, 2018 December 30, 2017 Finance receivables $ $ Allowance for losses Total finance receivables, net $ $ 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) March 31, 2018 December 30, 2017 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 quarter of 2018 or 2017. A summary of impaired finance receivables, excluding leveraged leases, and the average recorded investment is provided below: (In millions) March 31, 2018 December 30, 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) March 31, 2018 December 30, Allowance based on collective evaluation $ $ Allowance based on individual evaluation Finance receivables evaluated collectively Finance receivables evaluated individually

Inventories

Inventories	3 Months Ended
	Mar. 31, 2018
Inventories
Inventories	Note 8. Inventories Inventories are composed of the following: (In millions) March 31, 2018 December 30, Finished goods $ $ Work in process Raw materials and components Progress/milestone payments — Total $ $ Upon adoption of ASC 606, $199 million of inventories, net of progress/milestone payments, primarily related to our U.S. Government contracts, were reclassified from inventories to contract assets or liabilities depending on the net position of the contract, as disclosed in Note 16.

Warranty Liability

Warranty Liability	3 Months Ended
	Mar. 31, 2018
Warranty Liability
Warranty Liability	Note 9. Warranty Liability Changes in our warranty liability are as follows: Three Months Ended (In millions) March 31, 2018 April 1, 2017 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 Fair

Derivative Instruments and Fair Value Measurements	3 Months Ended
	Mar. 31, 2018
Derivative Instruments and Fair Value Measurements
Derivative Instruments and Fair Value Measurements	Note 10. 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 March 31, 2018 and December 30, 2017, we had foreign currency exchange contracts with notional amounts upon which the contracts were based of $484 million and $426 million, respectively. At March 31, 2018, the fair value amounts of our foreign currency exchange contracts were a $11 million asset and a $2 million liability. At December 30, 2017, the fair value amounts of our foreign currency exchange contracts were a $13 million asset and a $7 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 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: March 31, 2018 December 30, 2017 (In millions) Carrying Estimated Fair Value Carrying Estimated Fair Value 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	3 Months Ended
	Mar. 31, 2018
Accumulated Other Comprehensive Loss and Other Comprehensive Income
Accumulated Other Comprehensive Loss and Other Comprehensive Income	Note 11. 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) Accumulated Other Comprehensive Loss For the three months ended March 31, 2018 Beginning of period $ $ $ $ Other comprehensive income before reclassifications — Reclassified from Accumulated other comprehensive loss — — Other comprehensive income End of period $ $ $ $ For the three months ended April 1, 2017 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: March 31, 2018 April 1, 2017 (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* — — 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 2017 Annual Report on Form 10-K for additional information.

Special Charges

Special Charges	3 Months Ended
	Mar. 31, 2018
Special Charges
Special Charges	Note 12. Special Charges In the first quarter of 2017, special charges were related to a 2016 restructuring plan and the Arctic Cat acquisition, which included both restructuring and transaction costs. There were no special charges recorded in the first quarter of 2018. Special charges recorded in the first quarter of 2017 are as follows: (In millions) Severance Asset Contract Acquisition Total Industrial $ $ — $ $ $ Textron Aviation — — Textron Systems — — — $ $ $ $ $ Our restructuring reserve activity for the first quarter of 2018 is summarized below: (In millions) Severance Contract Total Balance at December 30, 2017 $ $ $ Cash paid Provision for 2016 Plan — Balance at March 31, 2018 $ $ $ Both plans are substantially completed with the majority of the remaining cash outlays of $31 million expected to be paid in the remainder of 2018. 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	3 Months Ended
	Mar. 31, 2018
Income Taxes
Income Taxes	Note 13. Income Taxes Our effective tax rate for the first quarter of 2018 and 2017 was 13.3% and 17.4%, respectively. In the first quarter of 2018, the effective tax rate was lower than the U.S. federal statutory tax rate of 21%, primarily due to benefits recognized from audit settlements. The effective tax rate for the first quarter of 2017 was lower than the U.S. federal statutory rate of 35%, primarily reflecting benefits recognized from audit settlements and the recognition of excess tax benefits related to share-based compensation. U.S. Tax Reform The Tax Cuts and Jobs Act (the “Act”) was enacted on December 22, 2017. Among other things, the Act reduces the U.S. federal corporate tax rate from 35% to 21% and requires companies to pay a one-time transition tax on earnings of certain foreign subsidiaries that were previously tax deferred. We have reasonably estimated the effects of the Act and recorded provisional amounts in the fourth quarter of 2017 to remeasure our U.S. federal deferred tax assets and liabilities based on the rates at which they are expected to reverse in the future, which is generally 21%, and for the one-time transition tax. The U.S. Government and state tax authorities are expected to continue to issue guidance regarding the Act, which may result in adjustments to our provisional estimates. We are continuing to analyze certain aspects of the Act and may refine our estimates, which could potentially affect the measurement of our net deferred tax assets or give rise to new deferred tax amounts. For the first quarter of 2018, we have not recorded any measurement period adjustments to the provisional estimates recorded at the end of 2017. The final determination of the remeasurement of our net deferred tax assets and the transition tax will be completed as additional information becomes available, but no later than one year from the enactment date. Any subsequent adjustments to the provisional amounts will be recorded to current or deferred tax expense in the quarter of 2018 when the analysis is complete.

Commitments and Contingencies

Commitments and Contingencies	3 Months Ended
	Mar. 31, 2018
Commitments and Contingencies
Commitments and Contingencies	Note 14. 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	3 Months Ended
	Mar. 31, 2018
Segment Information
Segment Information	Note 15. 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 included in the table below: Three Months Ended (In millions) March 31, April 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 $ $

Revenues

Revenues	3 Months Ended
	Mar. 31, 2018
Revenues
Revenues	Note 16. Revenues Disaggregation of Revenues Our revenues disaggregated by major product type for the three months ended March 31, 2018 are presented below: (In millions) Aircraft $ Aftermarket parts and services Textron Aviation Military aircraft and support programs Commercial helicopters, parts and services Bell Unmanned systems Marine and land systems Simulation, training and other Textron Systems Fuel systems and functional components Specialized vehicles Tools and test equipment Industrial Finance Total revenues $ Our revenues by customer type and geographic location for the three months ended March 31, 2018 are presented below: (In millions) Textron Bell Textron Industrial Finance Total Customer type: Commercial $ $ $ $ $ $ U.S. Government — Total revenues $ $ $ $ $ $ Geographic location: United States $ $ $ $ $ $ International Total revenues $ $ $ $ $ $ Remaining Performance Obligations Our remaining performance obligations, which is the equivalent of our backlog, represent the expected transaction price allocated to our contracts that we expect to recognize as revenue in future periods when we perform under the contracts. These remaining obligations include amounts that have been formally appropriated under contracts with the U.S. Government, and exclude unexercised contract options and potential orders under ordering-type contracts such as Indefinite Delivery, Indefinite Quantity contracts. At March 31, 2018, we had $6.5 billion in remaining performance obligations of which we expect to recognize revenues of approximately 90% through 2019, 7% through 2020, and the balance thereafter. Contract assets and liabilities Assets and liabilities related to our contracts with customers are reported on a contract-by-contract basis at the end of each reporting period. At March 31, 2018, contract assets and liabilities totaled $500 million and $1.1 billion, respectively. Upon adoption of ASC 606 on December 31, 2017, contract assets and liabilities related to our contracts with customers were $429 million and $1.0 billion, respectively. During the first quarter of 2018, we recognized $322 million in revenues that were included in the contract liability balance at the adoption date. Reconciliation of ASC 606 to Prior Accounting Standards The amount by which each financial statement line item is affected in 2018 as a result of applying the new accounting standard as discussed in Note 2 is presented below: March 31, 2018 (In millions) As Reported Effect of the Under Prior Consolidated Balance Sheets Accounts receivable, net $ $ $ Inventories Other current assets Property, plant and equipment, net Other assets Total Manufacturing group assets Total assets Other current liabilities Total Manufacturing group liabilities Total liabilities Retained earnings Total shareholders’ equity Three Months Ended (In millions, except per share amounts) As Reported Effect of the Under Prior Consolidated Statements of Operations Manufacturing revenues $ $ $ Total revenues Cost of sales Income from continuing operations before income taxes Income tax expense Income from continuing operations Net income Basic earnings per share - continuing operations $ $ $ Diluted earnings per share - continuing operations Consolidated Statements of Comprehensive Income Other comprehensive income $ $ $ Comprehensive income Consolidated Statements of Cash flows Net income $ $ $ Income from continuing operations Adjustments to reconcile income from continuing operations Deferred income taxes Accounts receivable, net Inventories Other assets Other liabilities Net cash used in operating activities of continuing operations —

Subsequent Event

Subsequent Event	3 Months Ended
	Mar. 31, 2018
Subsequent Event
Subsequent Event	Note 17. Subsequent Event On April 18, 2018, we entered into a definitive agreement to sell the businesses that manufacture and sell the products in our Tools and Test Equipment product line within our Industrial segment to Emerson Electric Co. for approximately $810 million in cash. We expect to close in the third quarter of 2018, subject to regulatory approvals and other customary closing conditions. The net proceeds from the sale are expected to be used to fund additional share repurchases.

Summary of Significant Accoun24

Summary of Significant Accounting Policies Update (Policies)	3 Months Ended
	Mar. 31, 2018
Summary of Significant Accounting Policies Update
Revenue Recognition	Revenue Recognition Revenue is recognized when control of the goods or services promised under the contract is transferred to the customer either at a point in time (e.g., upon delivery) or over time (e.g., as we perform under the contract). We account for a contract when it has approval and commitment from both parties, the rights and payment terms of the parties are identified, the contract has commercial substance and collectability of consideration is probable. Contracts are reviewed to determine whether there is one or multiple performance obligations. A performance obligation is a promise to transfer a distinct good or service to a customer and represents the unit of accounting for revenue recognition. For contracts with multiple performance obligations, the expected consideration, or the transaction price, is allocated to each performance obligation identified in the contract based on the relative standalone selling price of each performance obligation. Revenue is then recognized for the transaction price allocated to the performance obligation when control of the promised goods or services underlying the performance obligation is transferred. Contract consideration is not adjusted for the effects of a significant financing component when, at contract inception, the period between when control transfers and when the customer will pay for that good or service is one year or less. Commercial Contracts The majority of our contracts with commercial customers have a single performance obligation as there is only one good or service promised or the promise to transfer the goods or services is not distinct or separately identifiable from other promises in the contract. Revenue is primarily recognized at a point in time, which is generally when the customer obtains control of the asset upon delivery and customer acceptance. Contract modifications that provide for additional distinct goods or services at the standalone selling price are treated as separate contracts. For commercial aircraft, we contract with our customers to sell fully outfitted fixed-wing aircraft, which may include configuration options. The aircraft typically represents a single performance obligation and revenue is recognized upon customer acceptance and delivery. For commercial helicopters, our customers generally contract with us for fully functional basic configuration aircraft and control is transferred upon customer acceptance and delivery. At times, customers may separately contract with us for the installation of accessories and customization to the basic aircraft. If these contracts are entered into at or near the same time of the basic aircraft contract, we assess whether the contracts meet the criteria to be combined. For contracts that are combined, the basic aircraft and the accessories and customization are typically considered to be distinct, and therefore, are separate performance obligations. For these contracts, revenue is recognized on the basic aircraft upon customer acceptance and transfer of title and risk of loss and on the accessories and customization upon delivery and customer acceptance. We utilize observable prices to determine the standalone selling prices when allocating the transaction price to these performance obligations. The transaction price for our commercial contracts reflects our estimate of returns, rebates and discounts, which are based on historical, current and forecasted information. Amounts billed to customers for shipping and handling are included in the transaction price and generally are not treated as separate performance obligations as these costs fulfill a promise to transfer the product to the customer. Taxes collected from customers and remitted to government authorities are recorded on a net basis. We primarily provide standard warranty programs for products in our commercial businesses for periods that typically range from one to five years. These assurance-type programs typically cannot be purchased separately and do not meet the criteria to be considered a performance obligation. U.S. Government Contracts Our contracts with the U.S. Government generally include the design, development, manufacture or modification of aerospace and defense products as well as related services. These contracts, which also include those under the U.S. Government-sponsored foreign military sales program, accounted for approximately 24% of total revenues in 2017. The customer typically contracts with us to provide a significant service of integrating a complex set of tasks and components into a single project or capability, which often results in the delivery of multiple units. Accordingly, the entire contract is accounted for as one performance obligation. In certain circumstances, a contract may include both production and support services, such as logistics and parts plans, which are considered to be distinct in the context of the contract and represent separate performance obligations. When a contract is separated into more than one performance obligation, we generally utilize the expected cost plus a margin approach to determine the standalone selling prices when allocating the transaction price. Our contracts are frequently modified for changes in contract specifications and requirements. Most of our contract modifications with the U.S. Government are for goods and services that are not distinct from the existing contract due to the significant integration service provided in the context of the contract and are accounted for as part of that existing contract. The effect of these contract modifications on our estimates is recognized using the cumulative catch-up method of accounting. Contracts with the U.S. Government generally contain clauses that provide lien rights to work-in-process along with clauses that allow the customer to unilaterally terminate the contract for convenience, pay us for costs incurred plus a reasonable profit and take control of any work-in-process. Due to the continuous transfer of control to the U.S. Government, we recognize revenue over the time that we perform under the contract. Selecting the method to measure progress towards completion requires judgment and is based on the nature of the products or service to be provided. We generally use the cost-to-cost method to measure progress for our contracts because it best depicts the transfer of control to the customer that occurs as we incur costs on our contracts. Under this measure, the extent of progress towards completion is measured based on the ratio of costs incurred to date to the estimated costs at completion of the performance obligation, and revenue is recorded proportionally as costs are incurred. The transaction price for our contracts represents our best estimate of the consideration we will receive and includes assumptions regarding variable consideration as applicable. Certain of our long-term contracts contain incentive fees or other provisions that can either increase or decrease the transaction price. These variable amounts generally are awarded upon achievement of certain performance metrics, program milestones or cost targets and can be based upon customer discretion. We include estimated amounts in the transaction price to the extent it is probable that a significant reversal of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is resolved. Our estimates of variable consideration and determination of whether to include estimated amounts in the transaction price are based largely on an assessment of our anticipated performance and all other information that is reasonably available to us. Total contract cost is estimated utilizing current contract specifications and expected engineering requirements. Contract c osts typically are incurred over a period of several years, and the estimation of these costs requires substantial judgment. Our cost estimation process is based on the professional knowledge and experience of engineers and program managers along with finance professionals. We review and update our projections of costs quarterly or more frequently when circumstances significantly change. Approximately 80% of our 2017 revenues with the U.S. Government were under fixed-price and fixed-price incentive contracts. Under the typical payment terms of these contracts, the customer pays us either performance-based or progress payments. Performance-based payments represent interim payments of up to 90% of the contract price based on quantifiable measures of performance or on the achievement of specified events or milestones. Progress payments are interim payments of up to 80% of costs incurred as the work progresses. Because the customer retains a small portion of the contract price until completion of the contract, these contracts generally result in revenue recognized in excess of billings, which we present as contract assets in the Consolidated Balance Sheets. Amounts billed and due from our customers are classified in Accounts receivable, net. The portion of the payments retained by the customer until final contract settlement is not considered a significant financing component because the intent is to protect the customer. For cost-type contracts, we are generally paid for our actual costs incurred within a short period of time. For contracts where revenue is recognized over time, we generally recognize changes in estimated contract revenues, costs and profits using the cumulative catch-up method of accounting. This method recognizes the cumulative effect of changes on current and prior periods with the impact of the change from inception-to-date recorded in the current period. Anticipated losses on contracts are recognized in full in the period in which the losses become probable and estimable. The impact of cumulative catch-up adjustments on both revenues and segment profit recognized in prior periods totaled $40 million and $(12) million in the first quarter of 2018 and 2017, respectively. The resulting impact increased income from continuing operations before income taxes by $40 million ($30 million after tax or $0.12 per diluted share) in the first quarter of 2018 and decreased income from continuing operations before income taxes by $12 million ($8 million after tax or $0.03 per diluted share) in the first quarter of 2017. For the first quarter of 2018 and 2017, the gross favorable adjustments totaled $56 million and $20 million, respectively, and the gross unfavorable adjustments totaled $16 million and $32 million, respectively. In the first quarter of 2017, the gross unfavorable adjustments included a $24 million loss related to the Tactical Armoured Patrol Vehicle (TAPV) program due to inefficiencies resulting from production issues.
Contract Assets and Liabilities	Contract Assets and Liabilities Contract assets arise from contracts when revenue is recognized over time and the amount of revenue recognized exceeds the amount billed to the customer. These amounts are included in contract assets until the right to payment is no longer conditional on events other than the passage of time. Contract assets are included in Other current assets in the Consolidated Balance Sheet. Contract liabilities, which are primarily included in Other current liabilities, include deposits, largely from our commercial aviation customers, and billings in excess of revenue recognized. The incremental costs of obtaining a contract with a customer that is expected to be recovered is expensed as incurred when the period to be benefitted is one year or less.
Accounts Receivable, Net	Accounts Receivable, Net Accounts receivable, net includes amounts billed to customers where the right to payment is unconditional. We maintain an allowance for doubtful accounts to provide for the estimated amount of accounts receivable that will not be collected, which is based on an assessment of customer creditworthiness, historical payment experience, the age of outstanding receivable and collateral value, if any.
Accounting Pronouncements Not Yet Adopted	Accounting Pronouncements Not Yet Adopted In February 2016, the Financial Accounting Standards Board (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. 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.

Retirement Plans (Tables)

Retirement Plans (Tables)	3 Months Ended
	Mar. 31, 2018
Retirement Plans
Components of net periodic benefit cost	Pension Benefits Postretirement Benefits (In millions) March 31, 2018 April 1, 2017 March 31, 2018 April 1, 2017 Three Months Ended Service cost $ $ $ $ Interest cost Expected return on plan assets — — Amortization of prior service cost (credit) Amortization of net actuarial loss — — Net periodic benefit cost $ $ $ $

Share-Based Compensation (Table

Share-Based Compensation (Tables)	3 Months Ended
	Mar. 31, 2018
Share-Based Compensation
Compensation expense included in net income	Three Months Ended (In millions) March 31, 2018 April 1, 2017 Compensation expense $ $ Income tax benefit Total net compensation expense included in net income $ $
Weighted-average fair value of stock options and assumptions used in option-pricing model	Three Months Ended March 31, 2018 April 1, 2017 Fair value of options at grant date $ $ Dividend yield Expected volatility Risk-free interest rate Expected term (in years)
Stock option activity	(Options in thousands) Number of Weighted- Price Outstanding at beginning of period $ Granted Exercised Forfeited or expired Outstanding at end of period $ Exercisable at end of period $
Restricted Stock Units
Share-Based Compensation
Unit period activity, Nonvested, Weighted average grant date fair value	Units Payable in Stock Units Payable in Cash (Shares/Units in thousands) Number of Weighted- Date Fair Value Number of Weighted- Outstanding at beginning of period, nonvested $ $ Granted Vested Forfeited — — Outstanding at end of period, nonvested $ $
Fair value of awards vested and cash paid during respective periods	Three Months Ended (In millions) March 31, 2018 April 1, 2017 Fair value of awards vested $ $ Cash paid
Performance Share Units
Share-Based Compensation
Unit period activity, Nonvested, Weighted average grant date fair value	(Units in thousands) Number of Weighted- Average Grant Date Fair Value Outstanding at beginning of period, nonvested $ Granted Outstanding at end of period, nonvested $

Earnings Per Share (Tables)

Earnings Per Share (Tables)	3 Months Ended
	Mar. 31, 2018
Earnings Per Share
Weighted-average shares outstanding for basic and diluted EPS	Three Months Ended (In thousands) March 31, 2018 April 1, 2017 Basic weighted-average shares outstanding Dilutive effect of stock options Diluted weighted-average shares outstanding

Accounts Receivable and Finan28

Accounts Receivable and Finance Receivables (Tables)	3 Months Ended
	Mar. 31, 2018
Accounts Receivable and Finance Receivables
Accounts receivable	(In millions) March 31, 2018 December 30, Commercial $ $ U.S. Government contracts, including foreign military sales Allowance for doubtful accounts Total $ $
Finance receivables	(In millions) March 31, 2018 December 30, 2017 Finance receivables $ $ Allowance for losses Total finance receivables, net $ $
Finance receivables by credit quality indicator and by delinquency aging category	(Dollars in millions) March 31, 2018 December 30, 2017 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) March 31, 2018 December 30, 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) March 31, 2018 December 30, Allowance based on collective evaluation $ $ Allowance based on individual evaluation Finance receivables evaluated collectively Finance receivables evaluated individually

Inventories (Tables)

Inventories (Tables)	3 Months Ended
	Mar. 31, 2018
Inventories
Inventories	(In millions) March 31, 2018 December 30, Finished goods $ $ Work in process Raw materials and components Progress/milestone payments — Total $ $

Warranty Liability (Tables)

Warranty Liability (Tables)	3 Months Ended
	Mar. 31, 2018
Warranty Liability
Changes in warranty liability	Three Months Ended (In millions) March 31, 2018 April 1, 2017 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 Fa31

Derivative Instruments and Fair Value Measurements (Tables)	3 Months Ended
	Mar. 31, 2018
Derivative Instruments and Fair Value Measurements
Carrying value and estimated fair value of financial instruments	March 31, 2018 December 30, 2017 (In millions) Carrying Estimated Fair Value Carrying Estimated Fair Value Manufacturing group Debt, excluding leases $ $ $ $ Finance group Finance receivables, excluding leases Debt

Accumulated Other Comprehensi32

Accumulated Other Comprehensive Loss and Other Comprehensive Income (Tables)	3 Months Ended
	Mar. 31, 2018
Accumulated Other Comprehensive Loss and Other Comprehensive Income
Schedule of components of Accumulated Other Comprehensive Loss	(In millions) Pension and Foreign Deferred Gains (Losses) Accumulated Other Comprehensive Loss For the three months ended March 31, 2018 Beginning of period $ $ $ $ Other comprehensive income before reclassifications — Reclassified from Accumulated other comprehensive loss — — Other comprehensive income End of period $ $ $ $ For the three months ended April 1, 2017 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	March 31, 2018 April 1, 2017 (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* — — 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 2017 Annual Report on Form 10-K for additional information.

Special Charges (Tables)

Special Charges (Tables)	3 Months Ended
	Mar. 31, 2018
Special Charges
Schedule of special charges	(In millions) Severance Asset Contract Acquisition Total Industrial $ $ — $ $ $ Textron Aviation — — Textron Systems — — — $ $ $ $ $
Schedule of restructuring reserve activity	(In millions) Severance Contract Total Balance at December 30, 2017 $ $ $ Cash paid Provision for 2016 Plan — Balance at March 31, 2018 $ $ $

Segment Information (Tables)

Segment Information (Tables)	3 Months Ended
	Mar. 31, 2018
Segment Information
Revenues by segment and reconciliation of segment profit to income from continuing operations before income taxes	Three Months Ended (In millions) March 31, April 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 $ $

Revenues (Tables)

Revenues (Tables)	3 Months Ended
	Mar. 31, 2018
Revenues
Schedule of revenue by major product type, customer type and geographic	Our revenues disaggregated by major product type for the three months ended March 31, 2018 are presented below: (In millions) Aircraft $ Aftermarket parts and services Textron Aviation Military aircraft and support programs Commercial helicopters, parts and services Bell Unmanned systems Marine and land systems Simulation, training and other Textron Systems Fuel systems and functional components Specialized vehicles Tools and test equipment Industrial Finance Total revenues $ Our revenues by customer type and geographic location for the three months ended March 31, 2018 are presented below: (In millions) Textron Bell Textron Industrial Finance Total Customer type: Commercial $ $ $ $ $ $ U.S. Government — Total revenues $ $ $ $ $ $ Geographic location: United States $ $ $ $ $ $ International Total revenues $ $ $ $ $ $
ASC 606
Revenues
Schedule of impacts of adopting ASU 606	March 31, 2018 (In millions) As Reported Effect of the Under Prior Consolidated Balance Sheets Accounts receivable, net $ $ $ Inventories Other current assets Property, plant and equipment, net Other assets Total Manufacturing group assets Total assets Other current liabilities Total Manufacturing group liabilities Total liabilities Retained earnings Total shareholders’ equity Three Months Ended (In millions, except per share amounts) As Reported Effect of the Under Prior Consolidated Statements of Operations Manufacturing revenues $ $ $ Total revenues Cost of sales Income from continuing operations before income taxes Income tax expense Income from continuing operations Net income Basic earnings per share - continuing operations $ $ $ Diluted earnings per share - continuing operations Consolidated Statements of Comprehensive Income Other comprehensive income $ $ $ Comprehensive income Consolidated Statements of Cash flows Net income $ $ $ Income from continuing operations Adjustments to reconcile income from continuing operations Deferred income taxes Accounts receivable, net Inventories Other assets Other liabilities Net cash used in operating activities of continuing operations —

Basis of Presentation (Details)

Basis of Presentation (Details) $ in Millions	3 Months Ended
	Mar. 31, 2018USD ($)item	Apr. 01, 2017USD ($)
Net proceeds from corporate-owned life insurance policies	$ 58	$ 22
Number of borrowing groups | item	2
ASU 2016-15
Net proceeds from corporate-owned life insurance policies		22
Net proceeds from corporate-owned life insurance policies reclassified from operating activities		$ (22)

Summary of Significant Accoun37

Summary of Significant Accounting Policies Update - ASU 2014-09 (Details) - USD ($) $ in Millions	Mar. 31, 2018	Dec. 31, 2017	Dec. 30, 2017
New Accounting Standards
Retained earnings	$ 5,642		$ 5,368
ASC 606 | Effect of adoption of ASC 606
New Accounting Standards
Retained earnings	$ (107)	$ 90

Summary of Significant Accoun38

Summary of Significant Accounting Policies Update - Information regarding significant accounting policies (Details)	3 Months Ended	12 Months Ended
	Mar. 31, 2018	Dec. 30, 2017
U. S. Government
Revenue Recognition
Revenues From Contracts With U. S. Government, Percentage		24.00%
U. S. Government | Maximum
Revenue Recognition
Percentage of contract price received for performance based payments on US Government Contracts	90.00%
Percentage of costs incurred representing progress payments on US Government Contracts	80.00%
U. S. Government | Fixed-price and fixed-price incentive contracts
Revenue Recognition
Percentage of revenue under fixed-price and fixed-price incentive contracts		80.00%
Commercial Contract | Minimum
Revenue Recognition
Period of warranty programs	1 year
Commercial Contract | Maximum
Revenue Recognition
Period of warranty programs	5 years

Summary of Significant Accoun39

Summary of Significant Accounting Policies Update - Contracts accounted for under cumulative catch-up method (Details) - Cumulative catch-up method - USD ($) $ / shares in Units, $ in Millions	3 Months Ended
	Mar. 31, 2018	Apr. 01, 2017
Use of Estimates
Cumulative Catch-Up Adjustments	$ 40	$ (12)
Change in Accounting Estimate Financial Effect Increase (Decrease) In Income From Continuing Operations Before Income Taxes	40	(12)
Change in Accounting Estimate Financial Effect Increase (Decrease) In Income From Continuing Operations After Income Taxes	$ 30	$ (8)
Change In Accounting Estimate Financial Effect Increase (Decrease) In Earnings Per Share Diluted	$ 0.12	$ (0.03)
Gross favorable adjustments	$ 56	$ 20
Gross unfavorable adjustments	$ 16	32
Gross unfavorable loss adjustments related to Tactical Armoured Patrol Vehicle Program		$ 24

Business Acquisitions (Details)

Business Acquisitions (Details) - Arctic Cat Inc - USD ($) $ / shares in Units, $ in Millions	Mar. 06, 2017	Mar. 31, 2018
Business Acquisitions
Price per share (in dollars per share)	$ 18.50
Aggregate cash payment	$ 316
Allocation of the purchase price
Goodwill		$ 230
Intangible assets		75
Trade names
Allocation of the purchase price
Indefinite-lived assets		$ 18

Retirement Plans - Net periodic

Retirement Plans - Net periodic benefit cost (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2018	Apr. 01, 2017
Net periodic benefit cost
Other components of net periodic benefit cost (credit)	$ (19)	$ (8)
Cost of sales	2,729	2,592
Pension Benefits
Net periodic benefit cost
Service cost	26	25
Interest cost	77	80
Expected return on plan assets	(138)	(126)
Amortization of prior service cost (credit)	4	4
Amortization of net actuarial loss	38	34
Net periodic benefit cost	7	17
Postretirement Benefits Other Than Pensions
Net periodic benefit cost
Service cost	1	1
Interest cost	2	3
Amortization of prior service cost (credit)	(2)	(2)
Net periodic benefit cost	$ 1	2
Accounting Standards Update 2017-07
Net periodic benefit cost
Other components of net periodic benefit cost (credit)		(8)
Cost of sales		$ 8

Share-Based Compensation - Comp

Share-Based Compensation - Compensation expense and stock options (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Millions	3 Months Ended
	Mar. 31, 2018	Apr. 01, 2017
Compensation expense included in net income
Compensation expense	$ 33	$ 20
Income tax benefit	(7)	(7)
Total net compensation expense included in net income	$ 26	$ 13
Stock Options
Share-Based Compensation
Maximum term of options	10 years
Vesting period	3 years
Weighted-average assumptions used in Black-Scholes option-pricing model
Fair value of options at grant date	$ 15.83	$ 13.80
Dividend yield (as a percent)	0.10%	0.20%
Expected volatility (as a percent)	26.60%	29.20%
Risk-free interest rate (as a percent)	2.60%	1.90%
Expected term (in years)	4 years 8 months 12 days	4 years 8 months 12 days
Number of Options
Outstanding at beginning of period (in shares)	9,238
Granted	1,336
Exercised	(355)
Forfeited or expired	(33)
Outstanding at end of period (in shares)	10,186
Exercisable at end of period (in shares)	6,957
Weighted-Average Exercise Price
Outstanding at beginning of period (in dollars per share)	$ 37.02
Granted	58.24
Exercised	(36.57)
Forfeited or expired	(46.63)
Outstanding at end of period (in dollars per share)	39.79
Exercisable at end of period (in dollars per share)	$ 34.61
Additional information
Aggregate intrinsic value of outstanding options	$ 195
Weighted-average remaining contractual life of outstanding stock options	6 years
Aggregate intrinsic value of exercisable options	$ 169
Weighted-average remaining contractual life of exercisable options	5 years
Aggregate intrinsic value of options exercised	$ 8	$ 17

Share-Based Compensation - Rest

Share-Based Compensation - Restricted stock units payable in stock and cash (Details) shares in Thousands	3 Months Ended
	Mar. 31, 2018$ / sharesshares
Restricted Stock Units Payable in Stock
Number of Shares/Units
Outstanding at beginning of period, nonvested (in shares) | shares	668
Granted | shares	126
Vested | shares	(174)
Outstanding at end of period, nonvested (in shares) | shares	620
Weighted-Average Grant Date Fair Value
Outstanding at beginning of period, nonvested (in dollars per share) | $ / shares	$ 40.55
Granted | $ / shares	58.24
Vested | $ / shares	(36.99)
Outstanding at end of period, nonvested (in dollars per share) | $ / shares	$ 45.15
Restricted Stock Units Payable in Cash
Number of Shares/Units
Outstanding at beginning of period, nonvested (in shares) | shares	1,263
Granted | shares	270
Vested | shares	(303)
Forfeited | shares	(13)
Outstanding at end of period, nonvested (in shares) | shares	1,217
Weighted-Average Grant Date Fair Value
Outstanding at beginning of period, nonvested (in dollars per share) | $ / shares	$ 40.75
Granted | $ / shares	58.24
Vested | $ / shares	(37.50)
Forfeited | $ / shares	(42.33)
Outstanding at end of period, nonvested (in dollars per share) | $ / shares	$ 45.42

Share-Based Compensation - Fair

Share-Based Compensation - Fair value of restricted stock awards vested and cash paid for restricted stock awards and performance share units (Details) - Restricted Stock Units - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2018	Apr. 01, 2017
Share-Based Compensation
Fair value of awards vested	$ 24	$ 24
Cash paid	$ 18	$ 17

Share-Based Compensation - Perf

Share-Based Compensation - Performance share units (Details) - Performance Share Units - USD ($) $ / shares in Units, shares in Thousands, $ in Millions	3 Months Ended
	Mar. 31, 2018	Apr. 01, 2017
Share-Based Compensation
Cash paid	$ 11	$ 14
Number of Units
Outstanding at beginning of period, nonvested (in shares)	485
Granted	201
Outstanding at end of period, nonvested (in shares)	686
Weighted-Average Grant Date Fair Value
Outstanding at beginning of period, nonvested (in dollars per share)	$ 41.34
Granted	58.24
Outstanding at end of period, nonvested (in dollars per share)	$ 46.22

Earnings Per Share (Details)

Earnings Per Share (Details) - shares shares in Thousands	3 Months Ended
	Mar. 31, 2018	Apr. 01, 2017
Weighted-average shares outstanding for basic and diluted EPS
Basic weighted-average shares outstanding	260,497	270,489
Dilutive effect of stock options	3,175	2,341
Diluted weighted-average shares outstanding	263,672	272,830
Anti-dilutive effect of weighted average shares	1,300	1,500

Accounts Receivable and Finan47

Accounts Receivable and Finance Receivables - Accounts receivable (Details) - USD ($) $ in Millions	Mar. 31, 2018	Dec. 31, 2017	Dec. 30, 2017
Accounts Receivable
Total	$ 1,110
Manufacturing group
Accounts Receivable
Accounts Receivable, Gross	1,138		$ 1,390
Allowance for doubtful accounts	(28)		(27)
Total	1,110		1,363
Manufacturing group | Commercial
Accounts Receivable
Accounts Receivable, Gross	1,001		1,007
Manufacturing group | U. S. Government Contracts, including foreign military sales
Accounts Receivable
Accounts Receivable, Gross	137		$ 383
Effect of adoption of ASC 606 | ASC 606
Accounts Receivable
Total	$ 212	$ (203)

Accounts Receivable and Finan48

Accounts Receivable and Finance Receivables - Finance receivables (Details) - USD ($) $ in Millions	Mar. 31, 2018	Dec. 30, 2017
Finance Receivables
Finance receivables, gross	$ 810	$ 850
Allowance for losses	(29)	(31)
Total finance receivables, net	$ 781	$ 819

Accounts Receivable and Finan49

Accounts Receivable and Finance Receivables - Finance receivables categorized based on credit quality indicators (Details) $ in Millions	3 Months Ended
	Mar. 31, 2018USD ($)item	Dec. 30, 2017USD ($)
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	$ 713	$ 733
Watchlist
Finance receivables categorized based on the internally assigned credit quality
Total finance receivables	41	56
Nonaccrual
Finance receivables categorized based on the internally assigned credit quality
Total finance receivables	$ 56	$ 61
Nonaccrual as a percentage of finance receivables	6.91%	7.18%
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 Finan50

Accounts Receivable and Finance Receivables - Finance receivables by delinquency aging category (Details) - USD ($) $ in Millions	Mar. 31, 2018	Dec. 30, 2017
Finance receivables held for investment by delinquency aging
60 + days contractual delinquency as a percentage of finance receivables	3.83%	4.00%
Less than 31 days past due
Finance receivables held for investment by delinquency aging
Financing receivable held for investment	$ 751	$ 791
31-60 days past due
Finance receivables held for investment by delinquency aging
Financing receivable held for investment	28	25
61- 90 days past due
Finance receivables held for investment by delinquency aging
Financing receivable held for investment	22	14
Over 90 days past due
Finance receivables held for investment by delinquency aging
Financing receivable held for investment	$ 9	$ 20

Accounts Receivable and Finan51

Accounts Receivable and Finance Receivables - Summary of impaired finance receivables, excluding leveraged leases, and the average recorded investment (Details) - USD ($) $ in Millions	3 Months Ended	12 Months Ended
	Mar. 31, 2018	Dec. 30, 2017
Summary of impaired finance receivables, excluding leveraged leases, and the average recorded investment
Recorded investment, impaired loans with related allowance for losses	$ 18	$ 24
Recorded investment, impaired loans with no related allowance for losses	38	70
Recorded investment, Total	56	94
Unpaid principal balance	65	106
Allowance for losses on impaired loans	5	6
Average recorded investment	$ 75	$ 92

Accounts Receivable and Finan52

Accounts Receivable and Finance Receivables - Allowance for losses on finance receivables on an individual and on a collective basis (Details) - USD ($) $ in Millions	Mar. 31, 2018	Dec. 30, 2017
Finance receivables
Allowance based on collective evaluation	$ 24	$ 25
Allowance based on individual evaluation	5	6
Finance receivables evaluated collectively	656	658
Finance receivables evaluated individually	$ 56	$ 94

Inventories (Details)

Inventories (Details) - USD ($) $ in Millions	Mar. 31, 2018	Dec. 31, 2017	Dec. 30, 2017
Inventories
Finished goods	$ 1,823		$ 1,790
Work in process	1,512		2,238
Raw materials and components	755		804
Inventories, Gross	4,090		4,832
Progress/milestone payments			(682)
Total	4,090		$ 4,150
Effect of adoption of ASC 606 | ASC 606
Inventories
Total	$ 290	$ (199)

Warranty Liability (Details)

Warranty Liability (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2018	Apr. 01, 2017
Changes in warranty liability
Balance at beginning of period	$ 164	$ 138
Provision	16	20
Settlements	(22)	(21)
Acquisitions	1	28
Adjustments	9	(2)
Balance at end of period	$ 168	$ 163

Derivative Instruments and Fa55

Derivative Instruments and Fair Value Measurements - Assets and liabilities recorded at fair value on a recurring basis (Details) - Manufacturing group - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2018	Dec. 30, 2017
Fair value of derivative instruments
Forward exchange contracts maximum maturity period	3 years
Foreign currency exchange contracts
Fair value of derivative instruments
Notional amounts	$ 484	$ 426
Level 2 | Foreign currency exchange contracts
Fair value of derivative instruments
Derivative Asset, Fair Value	11	13
Derivative Liability, Fair Value	$ 2	$ 7

Derivative Instruments and Fa56

Derivative Instruments and Fair Value Measurements - Assets and liabilities not recorded at fair value (Details) - USD ($) $ in Millions	Mar. 31, 2018	Dec. 30, 2017
Manufacturing group | Carrying Value
Financial instruments not reflected at fair value
Debt, excluding leases	$ (3,017)	$ (3,007)
Manufacturing group | Estimated Fair Value
Financial instruments not reflected at fair value
Debt, excluding leases	(3,073)	(3,136)
Finance group
Financial instruments not reflected at fair value
Debt	(819)	(824)
Finance group | Carrying Value
Financial instruments not reflected at fair value
Finance receivables, excluding leases	608	643
Debt	(819)	(824)
Finance group | Estimated Fair Value
Financial instruments not reflected at fair value
Finance receivables, excluding leases	628	675
Debt	$ (800)	$ (799)

Accumulated Other Comprehensi57

Accumulated Other Comprehensive Loss and Other Comprehensive Income - Components of accumulated other comprehensive loss (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2018	Apr. 01, 2017
Components of Accumulated Other Comprehensive Loss
Beginning of period	$ (1,375)	$ (1,605)
Other comprehensive income before reclassifications	43	24
Reclassified from Accumulated other comprehensive loss	31	26
Other comprehensive income	74	50
End of period	(1,301)	(1,555)
Pension and Postretirement Benefits Adjustments
Components of Accumulated Other Comprehensive Loss
Beginning of period	(1,396)	(1,505)
Reclassified from Accumulated other comprehensive loss	31	24
Other comprehensive income	31	24
End of period	(1,365)	(1,481)
Foreign Currency Translation Adjustments
Components of Accumulated Other Comprehensive Loss
Beginning of period	11	(96)
Other comprehensive income before reclassifications	42	22
Other comprehensive income	42	22
End of period	53	(74)
Deferred Gains (Losses) on Hedge Contracts
Components of Accumulated Other Comprehensive Loss
Beginning of period	10	(4)
Other comprehensive income before reclassifications	1	2
Reclassified from Accumulated other comprehensive loss		2
Other comprehensive income	1	$ 4
End of period	$ 11

Accumulated Other Comprehensi58

Accumulated Other Comprehensive Loss and Other Comprehensive Income - Before and after-tax components of other comprehensive income (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2018	Apr. 01, 2017
Pension and postretirement benefits adjustments, pre-tax:
Amortization of net actuarial loss, pre-tax	$ 38	$ 34
Amortization of prior service cost, pre-tax	2	2
Pension and postretirement benefits adjustments, net, pre-tax	40	36
Deferred gains on hedge contracts, pre-tax:
Current deferrals, pre-tax	2	3
Reclassification adjustments, pre-tax		2
Deferred gains on hedge contracts, net, pre-tax	2	5
Foreign currency translation adjustments, pre-tax	40	21
Other comprehensive income (loss), pre-tax	82	62
Pension and postretirement benefits adjustments, tax:
Amortization of net actuarial loss, tax	(9)	(12)
Pension and postretirement benefits adjustments, net, tax	(9)	(12)
Deferred gains on hedge contracts, tax:
Current deferrals, tax	(1)	(1)
Deferred gains on hedge contracts, net, tax	(1)	(1)
Foreign currency translation adjustments, tax	2	1
Other comprehensive income (loss), tax	(8)	(12)
Pension and postretirement benefits adjustments, after-tax:
Amortization of net actuarial loss, after-tax	29	22
Amortization of prior service cost, after-tax	2	2
Pension and postretirement benefits adjustments, net, after-tax	31	24
Deferred gains on hedge contracts, after-tax:
Current deferrals, after-tax	1	2
Reclassification adjustments, after-tax		2
Deferred gains on hedge contracts, net, after-tax	1	4
Foreign currency translation adjustments, after-tax	42	22
Other comprehensive income	$ 74	$ 50

Special Charges - Restructuring

Special Charges - Restructuring plans and special charges (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2018	Apr. 01, 2017
Special Charges
Special charges	$ 0	$ 37
Severance Costs
Special Charges
Special charges		20
Contract Terminations and Other
Special Charges
Special charges		4
Textron Systems
Special Charges
Special charges		1
Textron Systems | Contract Terminations and Other
Special Charges
Special charges		1
Textron Aviation
Special Charges
Special charges		11
Textron Aviation | Severance Costs
Special Charges
Special charges		1
Industrial
Special Charges
Special charges		25
Industrial | Severance Costs
Special Charges
Special charges		19
Industrial | Contract Terminations and Other
Special Charges
Special charges		3
Asset Impairments
Special Charges
Special charges		10
Asset Impairments | Textron Aviation
Special Charges
Special charges		10
Acquisition Transaction Costs
Special Charges
Special charges		3
Acquisition Transaction Costs | Industrial
Special Charges
Special charges		$ 3

Special Charges - Restructuri60

Special Charges - Restructuring reserve activity and total expected cash outlay (Details) $ in Millions	3 Months Ended
	Mar. 31, 2018USD ($)
Special Charges
Remaining expected cash payments for restructuring activities	$ 31
Restructuring reserve activity
Balance at beginning of period	44
Cash paid	(14)
Provision for 2016 Plan	1
Balance at end of period	31
Severance Costs
Restructuring reserve activity
Balance at beginning of period	24
Cash paid	(10)
Balance at end of period	14
Contract Terminations and Other
Restructuring reserve activity
Balance at beginning of period	20
Cash paid	(4)
Provision for 2016 Plan	1
Balance at end of period	$ 17

Income Taxes (Details)

Income Taxes (Details)	3 Months Ended
	Mar. 31, 2018	Apr. 01, 2017
Income Taxes
Effective income tax rate (as a percent)	13.30%	17.40%
U.S. federal statutory income tax rate (as a percent)	21.00%	35.00%

Segment Information - Operating

Segment Information - Operating and reportable segments (Details)	3 Months Ended
	Mar. 31, 2018segment
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
	Mar. 31, 2018	Apr. 01, 2017
Revenues
Total revenues	$ 3,296	$ 3,093
Reconciliation of Operating Profit (Loss) from Segments to Consolidated
Special charges	0	(37)
Income from continuing operations before income taxes	218	121
Operating Segment
Segment Profit
Segment Profit	279	219
Corporate
Reconciliation of Operating Profit (Loss) from Segments to Consolidated
Corporate expenses and other, net	(27)	(27)
Textron Aviation
Reconciliation of Operating Profit (Loss) from Segments to Consolidated
Special charges		(11)
Textron Systems
Reconciliation of Operating Profit (Loss) from Segments to Consolidated
Special charges		(1)
Industrial
Reconciliation of Operating Profit (Loss) from Segments to Consolidated
Special charges		(25)
Finance
Revenues
Financial Services Revenues	16
Finance | Operating Segment
Segment Profit
Segment Profit	6	4
Manufacturing group | Reconciling Items
Reconciliation of Operating Profit (Loss) from Segments to Consolidated
Interest expense, net for Manufacturing group	(34)	(34)
Manufacturing group | Textron Aviation
Revenues
Total revenues	1,010	970
Manufacturing group | Textron Aviation | Operating Segment
Segment Profit
Segment Profit	72	36
Manufacturing group | Bell
Revenues
Total revenues	752	697
Manufacturing group | Bell | Operating Segment
Segment Profit
Segment Profit	87	83
Manufacturing group | Textron Systems
Revenues
Total revenues	387	416
Manufacturing group | Textron Systems | Operating Segment
Segment Profit
Segment Profit	50	20
Manufacturing group | Industrial
Revenues
Total revenues	1,131	992
Manufacturing group | Industrial | Operating Segment
Segment Profit
Segment Profit	64	76
Finance group | Finance
Revenues
Financial Services Revenues	$ 16	$ 18

Revenues (Details)

Revenues (Details) $ in Millions	3 Months Ended
	Mar. 31, 2018USD ($)
Revenues
Total revenues	$ 3,296
United States
Revenues
Total revenues	1,964
International
Revenues
Total revenues	1,332
Commercial
Revenues
Total revenues	2,492
U.S. Government
Revenues
Total revenues	804
Textron Aviation
Revenues
Total revenues	1,010
Textron Aviation | United States
Revenues
Total revenues	665
Textron Aviation | International
Revenues
Total revenues	345
Textron Aviation | Commercial
Revenues
Total revenues	973
Textron Aviation | U.S. Government
Revenues
Total revenues	37
Textron Aviation | Aircraft
Revenues
Total revenues	634
Textron Aviation | Aftermarket parts and services
Revenues
Total revenues	376
Bell
Revenues
Total revenues	752
Bell | United States
Revenues
Total revenues	509
Bell | International
Revenues
Total revenues	243
Bell | Commercial
Revenues
Total revenues	252
Bell | U.S. Government
Revenues
Total revenues	500
Bell | Military aircraft and support programs
Revenues
Total revenues	487
Bell | Commercial helicopters, parts and services
Revenues
Total revenues	265
Textron Systems
Revenues
Total revenues	387
Textron Systems | United States
Revenues
Total revenues	287
Textron Systems | International
Revenues
Total revenues	100
Textron Systems | Commercial
Revenues
Total revenues	127
Textron Systems | U.S. Government
Revenues
Total revenues	260
Textron Systems | Unmanned systems
Revenues
Total revenues	170
Textron Systems | Marine and land systems
Revenues
Total revenues	92
Textron Systems | Simulation, training and other
Revenues
Total revenues	125
Industrial
Revenues
Total revenues	1,131
Industrial | United States
Revenues
Total revenues	496
Industrial | International
Revenues
Total revenues	635
Industrial | Commercial
Revenues
Total revenues	1,124
Industrial | U.S. Government
Revenues
Total revenues	7
Industrial | Fuel systems and functional components
Revenues
Total revenues	655
Industrial | Specialized vehicles
Revenues
Total revenues	348
Industrial | Tools and test equipment
Revenues
Total revenues	128
Finance
Revenues
Finance Revenue	16
Finance | United States
Revenues
Finance Revenue	7
Finance | International
Revenues
Finance Revenue	9
Finance | Commercial
Revenues
Finance Revenue	$ 16

Revenues - Remaining Performanc

Revenues - Remaining Performance Obligations (Details) $ in Billions	Mar. 31, 2018USD ($)
Revenues
Remaining performance obligations	$ 6.5

Revenues - Remaining Performa66

Revenues - Remaining Performance Obligations & Revenue Expected to be recognized (Details)	Mar. 31, 2018
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2018-04-01
Remaining Performance Obligation, Expected Timing of Satisfaction
Percentage of remaining performance obligation expected to be recognized in period	90.00%
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2020-01-05
Remaining Performance Obligation, Expected Timing of Satisfaction
Percentage of remaining performance obligation expected to be recognized in period	7.00%

Revenues - Contract assets and

Revenues - Contract assets and liabilities (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2018	Dec. 31, 2017
Contract assets and liabilities
Contract assets	$ 500
Contract liabilities	1,100
Revenue recognized included in contract liabilities	$ 322
Effect of adoption of ASC 606 | ASC 606
Contract assets and liabilities
Contract assets		$ 429
Contract liabilities		$ 1,000

Revenues - Reconciliation of AS

Revenues - Reconciliation of ASC 606 to Prior Accounting Standards (Details) - USD ($) $ / shares in Units, $ in Millions	3 Months Ended
	Mar. 31, 2018	Apr. 01, 2017	Dec. 31, 2017	Dec. 30, 2017
Consolidated Balance Sheets
Accounts receivable, net	$ 1,110
Inventories	4,090			$ 4,150
Other current assets	933
Property, plant and equipment, net	2,711
Other assets	1,953
Total assets	14,968			15,340
Other current liabilities	2,104
Total liabilities	9,276			9,693
Retained earnings	5,642			5,368
Total shareholders' equity	5,692			5,647
Consolidated Statements of Operations
Total revenues	3,296
Cost of sales	2,729
Income from continuing operations before income taxes	218	$ 121
Income tax expense	29	21
Income from continuing operations	189	100
Net income	$ 189	$ 101
Basic earnings per share - continuing operations	$ 0.73	$ 0.37
Diluted earnings per share - continuing operations	$ 0.72	$ 0.37
Consolidated Statements of Comprehensive Income
Other comprehensive income	$ 74	$ 50
Comprehensive income	263	151
Consolidated Statements of Cash flows
Net income	189	101
Income from continuing operations	189
Adjustments to reconcile income from continuing operations to net cash used in operating activities:
Deferred income taxes	2	13
Accounts receivable, net	63	(103)
Inventories	(128)	(122)
Other assets	(119)	(30)
Other liabilities	(263)	(158)
Net cash provided by (used in) operating activities of continuing operations	(85)	(191)
Under Prior Accounting
Consolidated Balance Sheets
Accounts receivable, net	1,322
Inventories	4,380
Other current assets	421
Property, plant and equipment, net	2,717
Other assets	1,984
Total assets	14,995
Other current liabilities	2,238
Total liabilities	9,410
Retained earnings	5,535
Total shareholders' equity	5,585
Consolidated Statements of Operations
Total revenues	3,075
Cost of sales	2,531
Income from continuing operations before income taxes	195
Income tax expense	23
Income from continuing operations	172
Net income	$ 172
Basic earnings per share - continuing operations	$ 0.66
Diluted earnings per share - continuing operations	$ 0.65
Consolidated Statements of Comprehensive Income
Other comprehensive income	$ 57
Comprehensive income	246
Consolidated Statements of Cash flows
Net income	172
Income from continuing operations	172
Adjustments to reconcile income from continuing operations to net cash used in operating activities:
Deferred income taxes	(4)
Accounts receivable, net	54
Inventories	(219)
Other assets	(44)
Other liabilities	(215)
Net cash provided by (used in) operating activities of continuing operations	(85)
ASC 606 | Effect of adoption of ASC 606
Consolidated Balance Sheets
Accounts receivable, net	212		$ (203)
Inventories	290		(199)
Other current assets	(512)
Property, plant and equipment, net	6
Other assets	31
Total assets	27
Other current liabilities	134
Total liabilities	134
Retained earnings	(107)		$ 90
Total shareholders' equity	(107)
Consolidated Statements of Operations
Total revenues	(221)
Cost of sales	(198)
Income from continuing operations before income taxes	(23)
Income tax expense	(6)
Income from continuing operations	(17)
Net income	$ (17)
Basic earnings per share - continuing operations	$ (0.07)
Diluted earnings per share - continuing operations	$ (0.07)
Consolidated Statements of Comprehensive Income
Other comprehensive income	$ (17)
Comprehensive income	(17)
Consolidated Statements of Cash flows
Net income	(17)
Income from continuing operations	(17)
Adjustments to reconcile income from continuing operations to net cash used in operating activities:
Deferred income taxes	(6)
Accounts receivable, net	(9)
Inventories	(91)
Other assets	75
Other liabilities	48
Manufacturing group
Consolidated Balance Sheets
Accounts receivable, net	1,110			1,363
Inventories	4,090			4,150
Other current assets	933			435
Property, plant and equipment, net	2,711			2,721
Other assets	1,953			2,059
Total assets	13,853			14,171
Other current liabilities	2,104			2,441
Total liabilities	8,340			$ 8,740
Consolidated Statements of Operations
Income from continuing operations	179	94
Adjustments to reconcile income from continuing operations to net cash used in operating activities:
Deferred income taxes	2	13
Accounts receivable, net	63	(103)
Inventories	(128)	(122)
Other assets	(118)	(29)
Other liabilities	(259)	(151)
Net cash provided by (used in) operating activities of continuing operations	(53)	$ (165)
Manufacturing group | Under Prior Accounting
Consolidated Balance Sheets
Total assets	13,880
Total liabilities	8,474
Manufacturing group | ASC 606 | Effect of adoption of ASC 606
Consolidated Balance Sheets
Total assets	27
Total liabilities	134
Manufacturing
Consolidated Statements of Operations
Total revenues	3,280
Manufacturing | Under Prior Accounting
Consolidated Statements of Operations
Total revenues	3,059
Manufacturing | ASC 606 | Effect of adoption of ASC 606
Consolidated Statements of Operations
Total revenues	$ (221)

Subsequent Event (Details)

Subsequent Event (Details) $ in Millions	Apr. 18, 2018USD ($)
Subsequent Event | Tools and Test Equipment product line
Subsequent Event
Cash consideration to be received	$ 810