Textron (TXT) 10-Q31 Jul 202020 Q2 Quarterly reportFinancial data

Company Profile

Document and Entity Information

Document and Entity Information - shares	6 Months Ended
Document and Entity Information - shares	Jul. 04, 2020	Jul. 17, 2020
Document and Entity Information
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Jul. 4, 2020
Document Transition Report	false
Entity File Number	1-5480
Entity Registrant Name	Textron Inc
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	05-0315468
Entity Address, Address Line One	40 Westminster Street
Entity Address, City or Town	Providence
Entity Address, State or Province	RI
Entity Address, Postal Zip Code	02903
City Area Code	401
Local Phone Number	421-2800
Title of 12(b) Security	Common stock, $0.125 par value
Trading Symbol	TXT
Security Exchange Name	NYSE
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Large Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		228,035,460
Entity Central Index Key	0000217346
Current Fiscal Year End Date	--01-02
Document Fiscal Year Focus	2020
Document Fiscal Period Focus	Q2
Amendment Flag	false

Consolidated Statements of Oper

Consolidated Statements of Operations - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jul. 04, 2020	Jun. 29, 2019	Jul. 04, 2020	Jun. 29, 2019
Revenues
Total revenues	$ 2,472	$ 3,227	$ 5,249	$ 6,336
Costs, expenses and other
Cost of sales	2,251	2,641	4,638	5,218
Selling and administrative expense	239	292	502	599
Interest expense	42	43	82	85
Special charges	78		117
Non-service components of pension and post-retirement income, net	(20)	(28)	(41)	(57)
Total costs, expenses and other	2,590	2,948	5,298	5,845
Income (loss) before income taxes	(118)	279	(49)	491
Income tax expense (benefit)	(26)	62	(7)	95
Net income (loss)	$ (92)	$ 217	$ (42)	$ 396
Earnings per share
Basic (in dollars per share)	$ (0.40)	$ 0.94	$ (0.18)	$ 1.70
Diluted (in dollars per share)	$ (0.40)	$ 0.93	$ (0.18)	$ 1.69
Manufacturing
Revenues
Total revenues	$ 2,457	$ 3,211	$ 5,220	$ 6,303
Finance
Revenues
Finance revenues	$ 15	$ 16	$ 29	$ 33

Consolidated Statements of Comp

Consolidated Statements of Comprehensive Income (Loss) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jul. 04, 2020	Jun. 29, 2019	Jul. 04, 2020	Jun. 29, 2019
Consolidated Statements of Comprehensive Income (Loss)
Net income (loss)	$ (92)	$ 217	$ (42)	$ 396
Other comprehensive income, net of tax:
Pension and postretirement benefits adjustments, net of reclassifications	36	20	73	41
Foreign currency translation adjustments	30	1	(10)	4
Deferred gains (losses) on hedge contracts, net of reclassifications	2		(7)	2
Other comprehensive income	68	21	56	47
Comprehensive income (loss)	$ (24)	$ 238	$ 14	$ 443

Consolidated Balance Sheets

Consolidated Balance Sheets - USD ($) shares in Thousands, $ in Millions	Jul. 04, 2020	Jan. 04, 2020
Assets
Inventories	$ 4,262	$ 4,069
Finance receivables, net	691	682
Total assets	15,471	15,018
Liabilities
Total liabilities	9,944	9,500
Shareholders' equity
Common stock	29	29
Capital surplus	1,732	1,674
Treasury stock	(74)	(20)
Retained earnings	5,631	5,682
Accumulated other comprehensive loss	(1,791)	(1,847)
Total shareholders' equity	5,527	5,518
Total liabilities and shareholders' equity	$ 15,471	$ 15,018
Common shares outstanding	227,953	227,956
Manufacturing group
Assets
Cash and equivalents	$ 2,176	$ 1,181
Accounts receivable, net	764	921
Inventories	4,262	4,069
Other current assets	863	894
Total current assets	8,065	7,065
Property, plant and equipment, less accumulated depreciation and amortization of $4,538 and $4,405, respectively	2,446	2,527
Goodwill	2,153	2,150
Other assets	1,857	2,312
Total assets	14,521	14,054
Liabilities
Short-term debt and current portion of long-term debt	1,107	561
Accounts payable	982	1,378
Other current liabilities	1,983	1,907
Total current liabilities	4,072	3,846
Other liabilities	2,128	2,288
Long-term debt	2,955	2,563
Total liabilities	9,155	8,697
Finance group
Assets
Cash and equivalents	170	176
Finance receivables, net	691	682
Other assets	89	106
Total assets	950	964
Liabilities
Other liabilities	119	117
Debt	670	686
Total liabilities	$ 789	$ 803

Consolidated Balance Sheets (Pa

Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Millions	Jul. 04, 2020	Jan. 04, 2020
Consolidated Balance Sheets
Accumulated depreciation and amortization	$ 4,538	$ 4,405

Consolidated Statements of Cash

Consolidated Statements of Cash Flows - USD ($) $ in Millions	6 Months Ended
	Jul. 04, 2020	Jun. 29, 2019
Cash flows from operating activities
Net income (loss)	$ (42)	$ 396
Non-cash items:
Depreciation and amortization	188	202
Deferred income taxes	(41)	32
Asset impairments and TRU inventory charge	110
Other, net	58	40
Changes in assets and liabilities:
Accounts receivable, net	157	36
Inventories	(244)	(505)
Other assets	51	(19)
Accounts payable	(400)	132
Other liabilities	17	(338)
Income taxes, net	3	14
Pension, net	(8)	(29)
Captive finance receivables, net	(14)	(19)
Other operating activities, net	13	(2)
Net cash provided by (used in) operating activities of continuing operations	(152)	(60)
Net cash used in operating activities of discontinued operations		(1)
Net cash provided by (used in) operating activities	(152)	(61)
Cash flows from investing activities
Capital expenditures	(96)	(135)
Net proceeds from corporate-owned life insurance policies	17	4
Net cash used in acquisitions	(11)
Finance receivables repaid	20	20
Other investing activities, net	6	7
Net cash provided by (used in) investing activities	(64)	(104)
Cash flows from financing activities
Increase in short-term debt	499
Proceeds from long-term debt	642	297
Proceeds from borrowings against corporate-owned life insurance policies	377
Payment on borrowings against corporate-owned life insurance policies	(15)
Principal payments on long-term debt and nonrecourse debt	(229)	(35)
Purchases of Textron common stock	(54)	(361)
Dividends paid	(9)	(9)
Other financing activities, net	4	19
Net cash provided by (used in) financing activities	1,215	(89)
Effect of exchange rate changes on cash and equivalents	(10)	4
Net increase (decrease) in cash and equivalents	989	(250)
Cash and equivalents at beginning of period	1,357	1,107
Cash and equivalents at end of period	2,346	857
Manufacturing group
Cash flows from operating activities
Net income (loss)	(47)	387
Non-cash items:
Depreciation and amortization	186	199
Deferred income taxes	(39)	33
Asset impairments and TRU inventory charge	110
Other, net	54	39
Changes in assets and liabilities:
Accounts receivable, net	157	36
Inventories	(244)	(532)
Other assets	50	(17)
Accounts payable	(400)	132
Other liabilities	21	(339)
Income taxes, net	(1)	10
Pension, net	(8)	(29)
Dividends received from Finance group		50
Other operating activities, net	13	(2)
Net cash provided by (used in) operating activities of continuing operations	(148)	(33)
Net cash used in operating activities of discontinued operations		(1)
Net cash provided by (used in) operating activities	(148)	(34)
Cash flows from investing activities
Capital expenditures	(96)	(135)
Net proceeds from corporate-owned life insurance policies	17	4
Net cash used in acquisitions	(11)
Other investing activities, net	5	4
Net cash provided by (used in) investing activities	(85)	(127)
Cash flows from financing activities
Increase in short-term debt	499
Proceeds from long-term debt	642	297
Proceeds from borrowings against corporate-owned life insurance policies	377
Payment on borrowings against corporate-owned life insurance policies	(15)
Principal payments on long-term debt and nonrecourse debt	(194)	(1)
Purchases of Textron common stock	(54)	(361)
Dividends paid	(9)	(9)
Other financing activities, net	(8)	19
Net cash provided by (used in) financing activities	1,238	(55)
Effect of exchange rate changes on cash and equivalents	(10)	4
Net increase (decrease) in cash and equivalents	995	(212)
Cash and equivalents at beginning of period	1,181	987
Cash and equivalents at end of period	2,176	775
Finance group
Cash flows from operating activities
Net income (loss)	5	9
Non-cash items:
Depreciation and amortization	2	3
Deferred income taxes	(2)	(1)
Other, net	4	1
Changes in assets and liabilities:
Other assets	1	(2)
Other liabilities	(4)	1
Income taxes, net	4	4
Net cash provided by (used in) operating activities of continuing operations	10	15
Net cash provided by (used in) operating activities	10	15
Cash flows from investing activities
Finance receivables repaid	65	91
Finance receivables originated	(59)	(90)
Other investing activities, net	1	30
Net cash provided by (used in) investing activities	7	31
Cash flows from financing activities
Principal payments on long-term debt and nonrecourse debt	(35)	(34)
Dividends paid		(50)
Other financing activities, net	12
Net cash provided by (used in) financing activities	(23)	(84)
Net increase (decrease) in cash and equivalents	(6)	(38)
Cash and equivalents at beginning of period	176	120
Cash and equivalents at end of period	$ 170	$ 82

Basis of Presentation

Basis of Presentation	6 Months Ended
Basis of Presentation	Jul. 04, 2020
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 January 4, 2020. In the opinion of management, the interim financial statements reflect all adjustments (consisting only of normal recurring adjustments) that are necessary for the fair presentation of our consolidated financial position, results of operations and cash flows for the interim periods presented. The results of operations for the interim periods are not necessarily indicative of the results to be expected for the full year. Our financings are conducted through two separate borrowing groups. The Manufacturing group consists of Textron consolidated with its majority-owned subsidiaries that operate in the Textron Aviation, Bell, Textron Systems and Industrial segments. The Finance group, which also is the Finance segment, consists of Textron Financial Corporation and its consolidated subsidiaries. We designed this framework to enhance our borrowing power by separating the Finance group. Our Manufacturing group operations include the development, production and delivery of tangible goods and services, while our Finance group provides financial services. Due to the fundamental differences between each borrowing group’s activities, investors, rating agencies and analysts use different measures to evaluate each group’s performance. To support those evaluations, we present balance sheet and cash flow information for each borrowing group within the Consolidated Financial Statements. All significant intercompany transactions are eliminated from the Consolidated Financial Statements, including retail financing activities for inventory sold by our Manufacturing group and financed by our Finance group. Use of Estimates We prepare our financial statements in conformity with generally accepted accounting principles, which require us to make estimates and assumptions that affect the amounts reported in the financial statements. Actual results could differ from those estimates. Our estimates and assumptions are reviewed periodically, and the effects of changes, if any, are reflected in the Consolidated Statements of Operations in the period that they are determined. Contract Estimates For contracts where revenue is recognized over time, we recognize changes in estimated contract revenues, costs and profits using the cumulative catch-up method of accounting. This method recognizes the cumulative effect of changes on current and prior periods with the impact of the change from inception-to-date recorded in the current period. Anticipated losses on contracts are recognized in full in the period in which the losses become probable and estimable. In the second quarter of 2020 and 2019, our cumulative catch-up adjustments increased revenues and segment profit by $17 million and $27 million, respectively. These adjustments decreased the net loss in the second quarter of 2020 by $13 million ($0.06 per share) and increased net income in the second quarter of 2019 by $21 million ($0.09 per diluted share). In the second quarter of 2020 and 2019, gross favorable adjustments totaled $46 million and $46 million, respectively, and the gross unfavorable adjustments totaled $29 million and $19 million, respectively. In the first half of 2020 and 2019, our cumulative catch-up adjustments increased revenue and segment profit by $19 million and $58 million, respectively. These adjustments decreased the net loss in the first half of 2020 by $14 million ($0.06 per share) and increased net income in the first half of 2019 by $44 million ($0.19 per diluted share). In the first half of 2020 and 2019, gross favorable adjustments totaled $73 million and $99 million, respectively, and the gross unfavorable adjustments totaled $54 million and $41 million, respectively.

Summary of Significant Accounti

Summary of Significant Accounting Policies Update	6 Months Ended
Summary of Significant Accounting Policies Update	Jul. 04, 2020
Summary of Significant Accounting Policies Update
Summary of Significant Accounting Policies Update	Note 2. Summary of Significant Accounting Policies Update At the beginning of 2020, we adopted Accounting Standards Update (ASU) No. 2016-13, Financial Instruments - Credit Losses Our significant accounting policies are included in Note 1 of our Annual Report on Form 10-K for the year ended January 4, 2020. Significant changes to our policies resulting from the adoption of ASC 326 are provided below. Accounts Receivable, Net Accounts receivable, net includes amounts billed to customers where the right to payment is unconditional. We maintain an allowance for credit losses for our commercial accounts receivable to provide for the estimated amount that will not be collected, even when the risk of loss is remote. The allowance is measured on a collective pool basis when similar risk characteristics exists and is established as a percentage of accounts receivable. We have identified pools with similar risk characteristics, based on customer and industry type and geographic location. The percentage is based on all available and relevant information including age of outstanding receivables and collateral value, if any, historical payment experience and loss history, current economic conditions, and, when reasonable and supportable factors exist, management’s expectation of future economic conditions. For amounts due from the U.S. Government, we have not established an allowance for credit losses as we have zero loss expectation based on a long history of no credit losses and the explicit guarantee of a sovereign entity. Finance Receivables, Net We establish an allowance for credit losses to cover probable but specifically unknown losses existing in the portfolio. This allowance is established as a percentage of finance receivables categorized by pools with similar risk characteristics, such as collateral or customer type and geographic location. The percentage is based on a combination of factors, including historical loss experience, current delinquency and default trends, collateral values, current economic conditions, and, when reasonable and supportable factors exist, management’s expectation of future economic conditions. For those finance receivables that do not have similar risk characteristics, including larger balance accounts specifically identified as impaired, a reserve is established based on comparing the expected future cash flows, discounted at the finance receivable's effective interest rate, or the fair value of the underlying collateral if the finance receivable is collateral dependent, to its carrying amount. The expected future cash flows consider collateral value; financial performance and liquidity of our borrower; existence and financial strength of guarantors; estimated recovery costs, including legal expenses; and costs associated with the repossession and eventual disposal of collateral. When there is a range of potential outcomes, we perform multiple discounted cash flow analyses and weight the potential outcomes based on their relative likelihood of occurrence. The evaluation of our portfolio is inherently subjective, as it requires estimates, including the amount and timing of future cash flows expected to be received on impaired finance receivables and the estimated fair value of the underlying collateral, which may differ from actual results. While our analysis is specific to each individual account, critical factors included in this analysis include industry valuation guides, age and physical condition of the collateral, payment history, existence and financial strength of guarantors.

Accounts Receivable and Finance

Accounts Receivable and Finance Receivables	6 Months Ended
Accounts Receivable and Finance Receivables	Jul. 04, 2020
Accounts Receivable and Finance Receivables
Accounts Receivable and Finance Receivables	Note 3. Accounts Receivable and Finance Receivables Accounts Receivable Accounts receivable is composed of the following: July 4, January 4, (In millions) 2020 2020 Commercial $ 650 $ 835 U.S. Government contracts 156 115 806 950 Allowance for credit losses (42) (29) Total accounts receivable, net $ 764 $ 921 Finance Receivables Finance receivables are presented in the following table: July 4, January 4, (In millions) 2020 2020 Finance receivables $ 719 $ 707 Allowance for credit losses (28) (25) Total finance receivables, net $ 691 $ 682 Finance Receivable Portfolio Quality We internally assess the quality of our finance receivables based on a number of key credit quality indicators and statistics such as delinquency, loan balance to estimated collateral value and the financial strength of individual borrowers and guarantors. Because many of these indicators are difficult to apply across an entire class of receivables, we evaluate individual loans on a quarterly basis and classify these loans into three categories based on the key credit quality indicators for the individual loan. These three categories are performing, watchlist and nonaccrual. We classify finance receivables as nonaccrual if credit quality indicators suggest full collection of principal and interest is doubtful. In addition, we automatically classify accounts as nonaccrual once they are contractually delinquent by more than three months unless collection of principal and interest is not doubtful. Accounts are classified as watchlist when credit quality indicators have deteriorated as compared with typical underwriting criteria, and we believe collection of full principal and interest is probable but not certain. All other finance receivables that do not meet the watchlist or nonaccrual categories are classified as performing. We measure delinquency based on the contractual payment terms of our finance receivables. In determining the delinquency aging category of an account, any/all principal and interest received is applied to the most past-due principal and/or interest amounts due. If a significant portion of the contractually due payment is delinquent, the entire finance receivable balance is reported in accordance with the most past-due delinquency aging category. In March 2020, due to the economic impact of the COVID-19 pandemic and at the request of certain of our customers, we began working with them to provide temporary payment relief through loan modifications. The types of temporary payment relief we offered to these customers included delays in the timing of required principal payments, deferrals of interest payments and/or interest-only payments. For loan modifications that cover payment-relief periods in excess of six months, even if the loan was previously current, the loan is deemed a troubled debt restructuring and considered impaired. These impaired loans are classified as either nonaccrual or watchlist based on a review of the credit quality indicators as discussed above. During the first half of 2020, we modified finance receivable contracts for 75 customers with an outstanding balance totaling $251 million at July 4, 2020. We are continuing to work with other customers on modifications to accounts with an outstanding balance totaling approximately $60 million. Of the modifications occurring during the first half of 2020, contracts for 22 customers or $103 million of finance receivables were categorized as troubled debt restructurings. Due to the nature of these restructurings, the financial effects were not significant. We had one customer default related to finance receivables previously modified as a troubled debt restructuring that had an insignificant outstanding balance. We believe our allowance for credit losses adequately covers our exposure on these loans as our estimated collateral values largely exceed the outstanding loan amounts. Finance receivables categorized based on the credit quality indicators and by the delinquency aging category are summarized as follows: July 4, January 4, (Dollars in millions) 2020 2020 Performing $ 555 $ 664 Watchlist 111 4 Nonaccrual 53 39 Nonaccrual as a percentage of finance receivables 7.37 % 5.52 % Current and less than 31 days past due $ 618 $ 637 31-60 days past due 41 53 61-90 days past due 17 7 Over 90 days past due 43 10 60+ days contractual delinquency as a percentage of finance receivables 8.34 % 2.40 % At July 4, 2020, 33% of our performing finance receivables were originated since the beginning of 2019 and 32% were originated from 2016 to 2018. For finance receivables categorized as watchlist, 17% were originated since the beginning of 2019 and 42% from 2016 to 2018. For accounts modified in the first half of 2020, the origination date prior to the modification was maintained based on the types of temporary payment relief provided. On a quarterly basis, we evaluate individual larger balance accounts for impairment. A finance receivable is considered impaired when it is probable that we will be unable to collect all amounts due according to the contractual terms of the loan agreement based on our review of the credit quality indicators described above. Impaired finance receivables include both nonaccrual accounts and accounts for which full collection of principal and interest remains probable, but the account’s original terms have been, or are expected to be, significantly modified. If the modification specifies an interest rate equal to or greater than a market rate for a finance receivable with comparable risk, the account is not considered impaired in years subsequent to the modification. A summary of finance receivables and the allowance for credit losses, based on the results of our impairment evaluation, is provided below. The finance receivables included in this table specifically exclude leveraged leases in accordance with U.S. generally accepted accounting principles. July 4, January 4, (In millions) 2020 2020 Finance receivables evaluated collectively $ 458 $ 564 Finance receivables evaluated individually 156 39 Allowance for credit losses based on collective evaluation 24 22 Allowance for credit losses based on individual evaluation 4 3 Impaired finance receivables with no related allowance for credit losses $ 135 $ 22 Impaired finance receivables with related allowance for credit losses 21 17 Unpaid principal balance of impaired finance receivables 167 50 Allowance for credit losses on impaired loans 4 3 Average recorded investment of impaired finance receivables 103 40

Inventories

Inventories	6 Months Ended
Inventories	Jul. 04, 2020
Inventories
Inventories	Note 4. Inventories Inventories are composed of the following: July 4, January 4, (In millions) 2020 2020 Finished goods $ 1,593 $ 1,557 Work in process 1,659 1,616 Raw materials and components 1,010 896 Total inventories $ 4,262 $ 4,069

Other Assets

Other Assets	6 Months Ended
Other Assets	Jul. 04, 2020
Other Assets
Other Assets	Note 5. Other Assets Other assets includes the cash surrender value of corporate-owned life insurance policies, net of any borrowings against these policies. During the first quarter of 2020, we borrowed $377 million against the policies as we strengthened our cash position in light of disruptions in the capital markets caused by the COVID-19 pandemic. At July 4, 2020, there was $362 million of outstanding borrowings against the policies. Proceeds from these borrowings and subsequent payments have been classified as financing activities in the consolidated statement of cash flows. Interest expense incurred on borrowings against corporate-owned life insurance policies is recorded as an offset with policy income.

Warranty Liability

Warranty Liability	6 Months Ended
Warranty Liability	Jul. 04, 2020
Warranty Liability
Warranty Liability	Note 6. Warranty Liabilit y Changes in our warranty liability are as follows: Six Months Ended July 4, June 29, (In millions) 2020 2019 Beginning of period $ 141 $ 149 Provision 22 30 Settlements (29) (38) Adjustments* (12) (5) End of period $ 122 $ 136 * Adjustments include changes to prior year estimates, new issues on prior year sales and currency translation adjustments.

Leases

Leases	6 Months Ended
Leases	Jul. 04, 2020
Leases
Leases	Note 7. Leases We primarily lease certain manufacturing plants, offices, warehouses, training and service centers at various locations worldwide that are classified as either operating or finance leases. Our finance leases at July 4, 2020 were not significant. Our operating leases have remaining lease terms up to 29 years, which include options to extend the lease term for periods up to 25 years when it is reasonably certain the option will be exercised. Operating lease cost totaled $15 million and $16 million in the second quarter of 2020 and 2019, respectively, and $30 million and $32 million in the first half of 2020 and 2019, respectively. Cash paid for operating leases totaled $30 million and $32 million in the first half of 2020 and 2019, respectively, which is classified in cash flows from operating activities. Variable and short-term lease costs were not significant. Balance sheet and other information related to our operating leases is as follows: July 4, January 4, (Dollars in millions) 2020 2020 Other assets $ 255 $ 277 Other current liabilities 47 48 Other liabilities 214 233 Weighted-average remaining lease term (in years) 10.0 10.2 Weighted-average discount rate 4.43 % 4.42 % At July 4, 2020, maturities of our operating lease liabilities on an undiscounted basis totaled $32 million for 2020, $49 million for 2021, $41 million for 2022, $32 million for 2023, $25 million for 2024 and $150 million thereafter.

Debt

Debt	6 Months Ended
Debt	Jul. 04, 2020
Debt
Debt	Note 8. Debt On April 1, 2020, we entered into a 364-Day Term Loan Credit Agreement in an aggregate principal amount of $500 million and borrowed the full principal amount available under the agreement. At our current credit ratings, the borrowings accrue interest at a rate equal to the London interbank offered rate, subject to a floor of 0.75%, plus 2.0%, which is an annual interest rate of 2.75% at July 4, 2020. We can pre-pay any amount of the principal balance during the term of the loan; however, we cannot borrow additional principal amounts. The Term Loan Credit Agreement restricts us from incurring additional indebtedness, subject to various exceptions, one of which allows us to borrow under our $1.0 billion revolving credit facility. While this loan is outstanding, we have agreed not to repurchase any of our common stock. The principal amount outstanding, plus accrued and unpaid interest and fees, is due on March 31, 2021. Under our shelf registration statement, on March 17, 2020, we issued $650 million of fixed-rate notes due June 1, 2030 with an annual interest rate of 3.00%. The net proceeds of the issuance totaled $642 million, after deducting underwriting discounts, commissions and offering expenses.

Derivative Instruments and Fair

Derivative Instruments and Fair Value Measurements	6 Months Ended
Derivative Instruments and Fair Value Measurements	Jul. 04, 2020
Derivative Instruments and Fair Value Measurements
Derivative Instruments and Fair Value Measurements	Note 9. Derivative Instruments and Fair Value Measurements We measure fair value at the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. We prioritize the assumptions that market participants would use in pricing the asset or liability into a three-tier fair value hierarchy. This fair value hierarchy gives the highest priority (Level 1) to quoted prices in active markets for identical assets or liabilities and the lowest priority (Level 3) to unobservable inputs in which little or no market data exist, requiring companies to develop their own assumptions. Observable inputs that do not meet the criteria of Level 1, which include quoted prices for similar assets or liabilities in active markets or quoted prices for identical assets and liabilities in markets that are not active, are categorized as Level 2. Level 3 inputs are those that reflect our estimates about the assumptions market participants would use in pricing the asset or liability based on the best information available in the circumstances. Valuation techniques for assets and liabilities measured using Level 3 inputs may include methodologies such as the market approach, the income approach or the cost approach and may use unobservable inputs such as projections, estimates and management’s interpretation of current market data. These unobservable inputs are utilized only to the extent that observable inputs are not available or cost effective to obtain. Assets and Liabilities Recorded at Fair Value on a Recurring Basis We manufacture and sell our products in a number of countries throughout the world, and, therefore, we are exposed to movements in foreign currency exchange rates. We primarily utilize foreign currency exchange contracts with maturities of no more than three years to manage this volatility. These contracts qualify as cash flow hedges and are intended to offset the effect of exchange rate fluctuations on forecasted sales, inventory purchases and overhead expenses. Net gains and losses recognized in earnings and Accumulated other comprehensive loss on cash flow hedges, including gains and losses related to hedge ineffectiveness, were not significant in the periods presented. Our foreign currency exchange contracts are measured at fair value using the market method valuation technique. The inputs to this technique utilize current foreign currency exchange forward market rates published by third-party leading financial news and data providers. These are observable data that represent the rates that the financial institution uses for contracts entered into at that date; however, they are not based on actual transactions, so they are classified as Level 2. At July 4, 2020 and January 4, 2020, we had foreign currency exchange contracts with notional amounts upon which the contracts were based of $364 million and $342 million, respectively. At July 4, 2020, the fair value amounts of our foreign currency exchange contracts were a $6 million asset and a $8 million liability. At January 4, 2020, the fair value amounts of our foreign currency exchange contracts were a $2 million asset and a $2 million liability. We hedge our net investment position in certain major currencies and generate foreign currency interest payments that offset other transactional exposures in these currencies. To accomplish this, we borrow directly in the foreign currency and designate a portion of the debt as a hedge of the net investment. We record changes in the fair value of these contracts in other comprehensive income (loss) 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: July 4, 2020 January 4, 2020 Carrying Estimated Carrying Estimated (In millions) Value Fair Value Value Fair Value Manufacturing group Debt, excluding leases $ (4,044) $ (4,203) $ (3,097) $ (3,249) Finance group Finance receivables, excluding leases 499 503 493 527 Debt (670) (566) (686) (634) Fair value for the Manufacturing group debt is determined using market observable data for similar transactions (Level 2). The fair value for the Finance group debt was determined primarily based on discounted cash flow analyses using observable market inputs from debt with similar duration, subordination and credit default expectations (Level 2). Fair value estimates for finance receivables were determined based on internally developed discounted cash flow models primarily utilizing significant unobservable inputs (Level 3), which include estimates of the rate of return, financing cost, capital structure and/or discount rate expectations of current market participants combined with estimated loan cash flows based on credit losses, payment rates and expectations of borrowers’ ability to make payments on a timely basis.

Shareholders' Equity

Shareholders' Equity	6 Months Ended
Shareholders' Equity	Jul. 04, 2020
Shareholders' Equity
Shareholders' Equity	Note 10. Shareholders’ Equity A reconciliation of Shareholders’ equity is presented below: Accumulated Other Total Common Capital Treasury Retained Comprehensive Shareholders’ (In millions) Stock Surplus Stock Earnings Loss Equity Three months ended July 4, 2020 Beginning of period $ 29 $ 1,711 $ (74) $ 5,727 $ (1,859) $ 5,534 Net loss — — — (92) — (92) Other comprehensive income — — — — 68 68 Share-based compensation activity — 21 — — — 21 Dividends declared — — — (4) — (4) End of period $ 29 $ 1,732 $ (74) $ 5,631 $ (1,791) $ 5,527 Three months ended June 29, 2019 Beginning of period $ 30 $ 1,689 $ (331) $ 5,581 $ (1,736) $ 5,233 Net income — — — 217 — 217 Other comprehensive income — — — — 21 21 Share-based compensation activity — 28 — — — 28 Dividends declared — — — (4) — (4) Purchases of common stock — — (159) — — (159) End of period $ 30 $ 1,717 $ (490) $ 5,794 $ (1,715) $ 5,336 Six months ended July 4, 2020 Beginning of period $ 29 $ 1,674 $ (20) $ 5,682 $ (1,847) $ 5,518 Net loss — — — (42) — (42) Other comprehensive income — — — — 56 56 Share-based compensation activity — 58 — — — 58 Dividends declared — — — (9) — (9) Purchases of common stock — — (54) — — (54) End of period $ 29 $ 1,732 $ (74) $ 5,631 $ (1,791) $ 5,527 Six months ended June 29, 2019 Beginning of period $ 30 $ 1,646 $ (129) $ 5,407 $ (1,762) $ 5,192 Net income — — — 396 — 396 Other comprehensive income — — — — 47 47 Share-based compensation activity — 71 — — — 71 Dividends declared — — — (9) — (9) Purchases of common stock — — (361) — — (361) End of period $ 30 $ 1,717 $ (490) $ 5,794 $ (1,715) $ 5,336 Dividends per share of common stock were $0.02 for both the second quarter of 2020 and 2019 and $0.04 for both the first half of 2020 and 2019. Earnings Per Share We calculate basic and diluted earnings per share (EPS) based on net income (loss), which approximates income (loss) available to common shareholders for each period. Basic EPS is calculated using the two-class method, which includes the weighted-average number of common shares outstanding during the period and restricted stock units to be paid in stock that are deemed participating securities as they provide nonforfeitable rights to dividends. Diluted EPS considers the dilutive effect of all potential future common stock, including stock options. The weighted-average shares outstanding for basic and diluted EPS are as follows: Three Months Ended Six Months Ended July 4, June 29, July 4, June 29, (In thousands) 2020 2019 2020 2019 Basic weighted-average shares outstanding 228,247 232,013 228,279 233,426 Dilutive effect of stock options — 1,532 — 1,567 Diluted weighted-average shares outstanding 228,247 233,545 228,279 234,993 As a result of incurring a net loss for the second quarter and first half of 2020, potential common shares of 0.1 million and 0.3 million, respectively, were excluded from diluted loss per share because the effect would have been anti-dilutive. In addition, stock options to purchase 8.9 million and 8.2 million shares of common stock were excluded from the calculation of diluted weighted-average shares outstanding for the second quarter and first half of 2020, respectively, as their effect would have been anti-dilutive. Stock options to purchase 3.1 million shares of common stock were excluded from the calculation of diluted weighted-average shares outstanding for both the second quarter and first half of 2019, as their effect would have been anti-dilutive. Accumulated Other Comprehensive Loss and Other Comprehensive Income The components of Accumulated other comprehensive loss are presented below: Pension and Foreign Deferred Accumulated Postretirement Currency Gains (Losses) Other Benefits Translation on Hedge Comprehensive (In millions) Adjustments Adjustments Contracts Loss Balance at January 4, 2020 $ (1,811) $ (36) $ — $ (1,847) Other comprehensive loss before reclassifications — (10) (5) (15) Reclassified from Accumulated other comprehensive loss 73 — (2) 71 Balance at July 4, 2020 $ (1,738) $ (46) $ (7) $ (1,791) Balance at December 29, 2018 $ (1,727) $ (32) $ (3) $ (1,762) Other comprehensive income before reclassifications — 4 4 8 Reclassified from Accumulated other comprehensive loss 41 — (2) 39 Balance at June 29, 2019 $ (1,686) $ (28) $ (1) $ (1,715) The before and after-tax components of Other comprehensive income are presented below: July 4, 2020 June 29, 2019 Tax Tax Pre-Tax (Expense) After-Tax Pre-Tax (Expense) After-Tax (In millions) Amount Benefit Amount Amount Benefit Amount Three Months Ended Pension and postretirement benefits adjustments: Amortization of net actuarial loss* $ 46 $ (11) $ 35 $ 24 $ (6) $ 18 Amortization of prior service cost* 1 — 1 3 (1) 2 Pension and postretirement benefits adjustments, net 47 (11) 36 27 (7) 20 Deferred gains (losses) on hedge contracts: Current deferrals 4 (1) 3 2 (1) 1 Reclassification adjustments (2) 1 (1) (1) — (1) Deferred gains (losses) on hedge contracts, net 2 — 2 1 (1) — Foreign currency translation adjustments 30 — 30 3 (2) 1 Total $ 79 $ (11) $ 68 $ 31 $ (10) $ 21 Six Months Ended Pension and postretirement benefits adjustments: Amortization of net actuarial loss* $ 92 $ (21) $ 71 $ 49 $ (11) $ 38 Amortization of prior service cost* 3 (1) 2 4 (1) 3 Pension and postretirement benefits adjustments, net 95 (22) 73 53 (12) 41 Deferred gains (losses) on hedge contracts: Current deferrals (5) — (5) 6 (2) 4 Reclassification adjustments (3) 1 (2) (2) — (2) Deferred gains (losses) on hedge contracts, net (8) 1 (7) 4 (2) 2 Foreign currency translation adjustments (7) (3) (10) 4 — 4 Total $ 80 $ (24) $ 56 $ 61 $ (14) $ 47 *These components of other comprehensive income are included in the computation of net periodic pension cost (credit). See Note 16 of our 2019 Annual Report on Form 10-K for additional information.

Segment Information

Segment Information	6 Months Ended
Segment Information	Jul. 04, 2020
Segment Information
Segment Information	Note 11. Segment Information We operate in, and report financial information for, the following five business Our revenues by segment, along with a reconciliation of segment profit to income (loss) before income taxes, are included in the table below: Three Months Ended Six Months Ended July 4, June 29, July 4, June 29, (In millions) 2020 2019 2020 2019 Revenues Textron Aviation $ 747 $ 1,123 $ 1,619 $ 2,257 Bell 822 771 1,645 1,510 Textron Systems 326 308 654 615 Industrial 562 1,009 1,302 1,921 Finance 15 16 29 33 Total revenues $ 2,472 $ 3,227 $ 5,249 $ 6,336 Segment Profit Textron Aviation $ (66) $ 105 $ (63) $ 211 Bell 118 103 233 207 Textron Systems 37 49 63 77 Industrial (11) 76 (2) 126 Finance 4 6 7 12 Segment profit 82 339 238 633 Corporate expenses and other, net (30) (24) (44) (71) Interest expense, net for Manufacturing group (37) (36) (71) (71) Special charges (78) — (117) — Inventory charge* (55) — (55) — Income (loss) before income taxes $ (118) $ 279 $ (49) $ 491 * In connection with the restructuring plan initiated in the second quarter of 2020, we ceased manufacturing at the Montreal facility of the TRU Simulation + Training business, resulting in the production suspension of our commercial air transport simulators. As a result of this action and current market conditions, we recorded a $55 million charge to write-down the related inventory to its net realizable value.

Revenues

Revenues	6 Months Ended
Revenues	Jul. 04, 2020
Revenues
Revenues	Note 12. Revenues Disaggregation of Revenues Our revenues disaggregated by major product type are presented below: Three Months Ended Six Months Ended July 4, June 29, July 4, June 29, (In millions) 2020 2019 2020 2019 Aircraft $ 478 $ 733 $ 993 $ 1,499 Aftermarket parts and services 269 390 626 758 Textron Aviation 747 1,123 1,619 2,257 Military aircraft and support programs 602 482 1,222 990 Commercial helicopters, parts and services 220 289 423 520 Bell 822 771 1,645 1,510 Unmanned systems 169 135 317 269 Marine and land systems 43 60 91 108 Simulation, training and other 114 113 246 238 Textron Systems 326 308 654 615 Fuel systems and functional components 271 592 736 1,186 Specialized vehicles 291 417 566 735 Industrial 562 1,009 1,302 1,921 Finance 15 16 29 33 Total revenues $ 2,472 $ 3,227 $ 5,249 $ 6,336 Our revenues for our segments by customer type and geographic location are presented below: (In millions) Textron Bell Textron Industrial Finance Total Three months ended July 4, 2020 Customer type: Commercial $ 716 $ 216 $ 57 $ 559 $ 15 $ 1,563 U.S. Government 31 606 269 3 — 909 Total revenues $ 747 $ 822 $ 326 $ 562 $ 15 $ 2,472 Geographic location: United States $ 518 $ 681 $ 276 $ 287 $ 8 $ 1,770 Europe 70 21 11 127 — 229 Asia and Australia 50 66 15 76 — 207 Other international 109 54 24 72 7 266 Total revenues $ 747 $ 822 $ 326 $ 562 $ 15 $ 2,472 Three months ended June 29, 2019 Customer type: Commercial $ 1,077 $ 279 $ 83 $ 1,004 $ 16 $ 2,459 U.S. Government 46 492 225 5 — 768 Total revenues $ 1,123 $ 771 $ 308 $ 1,009 $ 16 $ 3,227 Geographic location: United States $ 736 $ 571 $ 249 $ 466 $ 7 $ 2,029 Europe 164 47 17 291 — 519 Asia and Australia 65 79 13 84 2 243 Other international 158 74 29 168 7 436 Total revenues $ 1,123 $ 771 $ 308 $ 1,009 $ 16 $ 3,227 Six months ended July 4, 2020 Customer type: Commercial $ 1,564 $ 414 $ 128 $ 1,298 $ 29 $ 3,433 U.S. Government 55 1,231 526 4 — 1,816 Total revenues $ 1,619 $ 1,645 $ 654 $ 1,302 $ 29 $ 5,249 Geographic location: United States $ 1,115 $ 1,371 $ 562 $ 616 $ 14 $ 3,678 Europe 154 45 23 355 1 578 Asia and Australia 173 116 35 129 1 454 Other international 177 113 34 202 13 539 Total revenues $ 1,619 $ 1,645 $ 654 $ 1,302 $ 29 $ 5,249 Six months ended June 29, 2019 Customer type: Commercial $ 2,169 $ 509 $ 157 $ 1,909 $ 33 $ 4,777 U.S. Government 88 1,001 458 12 — 1,559 Total revenues $ 2,257 $ 1,510 $ 615 $ 1,921 $ 33 $ 6,336 Geographic location: United States $ 1,525 $ 1,149 $ 506 $ 855 $ 15 $ 4,050 Europe 347 67 40 602 1 1,057 Asia and Australia 88 161 29 161 3 442 Other international 297 133 40 303 14 787 Total revenues $ 2,257 $ 1,510 $ 615 $ 1,921 $ 33 $ 6,336 Remaining Performance Obligations Our remaining performance obligations, which is the equivalent of our backlog, represent the expected transaction price allocated to our contracts that we expect to recognize as revenues in future periods when we perform under the contracts. These remaining obligations exclude unexercised contract options and potential orders under ordering-type contracts such as Indefinite Delivery, Indefinite Quantity contracts. At July 4, 2020, we had $9.1 billion in remaining performance obligations of which we expect to recognize revenues of approximately 68% through 2021 2023 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 July 4, 2020 and January 4, 2020, contract assets totaled $542 million and $567 million, respectively, and contract liabilities totaled $927 million and $830 million, respectively, reflecting timing differences between revenue recognized, billings and payments from customers. During the second quarter and first half of 2020, we recognized revenues of $121 million and $352 million, respectively, that were included in the contract liability balance at January 4, 2020. We recognized revenues of $146 million and $457 million in the second quarter and first half of 2019, respectively, that were included in the contract liability balance at December 29, 2018.

Retirement Plans

Retirement Plans	6 Months Ended
Retirement Plans	Jul. 04, 2020
Retirement Plans
Retirement Plans	Note 13. Retirement Plans We provide defined benefit pension plans and other postretirement benefits to eligible employees. The components of net periodic benefit cost (credit) for these plans are as follows: Three Months Ended Six Months Ended July 4, June 29, July 4, June 29, (In millions) 2020 2019 2020 2019 Pension Benefits Service cost $ 26 $ 22 $ 52 $ 45 Interest cost 74 81 147 163 Expected return on plan assets (143) (139) (287) (278) Amortization of net actuarial loss 46 25 92 50 Amortization of prior service cost 3 4 6 7 Net periodic benefit cost (credit) $ 6 $ (7) $ 10 $ (13) Postretirement Benefits Other Than Pensions Service cost $ 1 $ — $ 2 $ 1 Interest cost 2 3 4 5 Amortization of net actuarial loss — (1) — (1) Amortization of prior service credit (2) (1) (3) (3) Net periodic benefit cost $ 1 $ 1 $ 3 $ 2

Special Charges

Special Charges	6 Months Ended
Special Charges	Jul. 04, 2020
Special Charges
Special Charges	Note 14. Special Charges Special Charges Special charges recorded in the second quarter and first half of 2020 by segment and type of cost are presented in the table below. There were no special charges recorded in the first half of 2019. Contract Severance Terminations Asset (In millions) Costs and Other Impairments Total Three months ended July 4, 2020 Textron Systems $ 14 $ 12 $ 14 $ 40 Textron Aviation 27 — 1 28 Industrial 8 — — 8 Corporate 2 — — 2 Total special charges $ 51 $ 12 $ 15 $ 78 Six months ended July 4, 2020 Textron Systems $ 14 $ 12 $ 14 $ 40 Textron Aviation 27 — 33 60 Industrial 8 — 7 15 Corporate 2 — — 2 Total special charges $ 51 $ 12 $ 54 $ 117 2020 COVID-19 Restructuring Plan In the second quarter of 2020, we initiated a restructuring plan to reduce operating expenses through headcount reductions, facility consolidations and other actions in response to the economic challenges and uncertainty resulting from the COVID-19 pandemic. The total pre-tax cost of this plan is expected to be in the range of $110 million to $130 million, of which $78 million was recorded in the second quarter of 2020. We anticipate that this plan will be substantially completed by the end of 2020. The plan primarily impacts the TRU Simulation + Training (TRU) business within the Textron Systems segment, the Textron Aviation segment and the TSV business within the Industrial segment, and will result in the elimination of up to approximately 1,950 positions, representing 6% of our workforce. At TRU, there has been a substantial decline in demand and order cancellations for flight simulators in light of the expected long-term impact of the pandemic on the commercial air transportation business. Accordingly, we will cease manufacturing at TRU’s facility in Montreal, Canada, resulting in a production suspension of its commercial air transport simulators, along with workforce reductions, contract terminations, facility closures and asset impairments. As a result of current market conditions and the cessation of manufacturing at this facility, we incurred an inventory valuation charge of $55 million, which was recorded in Cost of Sales, to write-down TRU’s inventory to its net realizable value. First Quarter 2020 Asset Impairment Charges In the first quarter of 2020, we recognized special charges of $39 million of intangible asset impairment charges at the Textron Aviation and Industrial segments. Due to the impact of the COVID-19 pandemic, we experienced decreased demand for our products and services as our customers delayed or ceased orders due to the environment of economic uncertainty. In light of these conditions, Textron Aviation had temporarily shut down most aircraft production, including the King Air turboprop and Beechcraft piston product lines, and had instituted employee furloughs. Based on these events, we performed an interim impairment test of the indefinite-lived Beechcraft and King Air trade name intangible assets at April 4, 2020. Fair value of these assets was determined utilizing the relief of royalty method assuming an increase in the discount rate based on current market data to 9.7% and revised expectations of future revenues for the products and services associated with the tradenames. This analysis resulted in an impairment charge of $32 million. At July 4, 2020, these intangible assets totaled $169 million. In the Industrial segment, we fully impaired the Arctic Cat trade name intangible asset within the Specialized Vehicles product line and recorded a $7 million impairment charge. Restructuring Reserve Restructuring reserve activity related to our 2020 and prior restructuring plans is summarized below: Contract Severance Terminations (In millions) Costs and Other Total Balance at January 4, 2020 $ 46 $ 19 $ 65 Provision for 2020 COVID-19 restructuring plan 51 12 63 Cash paid (31) (5) (36) Balance at July 4, 2020 $ 66 $ 26 $ 92 The majority of the remaining cash outlays of $92 million is expected to be paid in the second half of 2020. 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	6 Months Ended
Income Taxes	Jul. 04, 2020
Income Taxes
Income Taxes	Note 15. Income Taxes Our effective tax rate for the second quarter and first half of 2020 was (22.0)% and (14.3)%, respectively, compared to the statutory rate of (21)%. In the second quarter and first half of 2020, we incurred special charges and an inventory charge in a non-U.S. jurisdiction where tax benefits cannot be realized, which were partially offset by a $14 million benefit recognized upon the release of a valuation allowance in a non-U.S. jurisdiction. In the first half of 2020, these items had a more significant impact on the effective tax rate due to the lower loss before income taxes for the period. Our effective tax rate for the second quarter and first half of 2019 was 22.2% and 19.3%, respectively. In the first half of 2019, the effective tax rate was lower than the U.S. federal statutory tax rate of 21%, primarily due to a $12 million benefit recognized for additional research credits related to prior years.

Commitments and Contingencies

Commitments and Contingencies	6 Months Ended
Commitments and Contingencies	Jul. 04, 2020
Commitments and Contingencies
Commitments and Contingencies	Note 16. Commitments and Contingencies We are subject to legal proceedings and other claims arising out of the conduct of our business, including proceedings and claims relating to commercial and financial transactions; government contracts; 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.

Summary of Significant Accoun_2

Summary of Significant Accounting Policies Update (Policies)	6 Months Ended
	Jul. 04, 2020
Summary of Significant Accounting Policies Update
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 credit losses for our commercial accounts receivable to provide for the estimated amount that will not be collected, even when the risk of loss is remote. The allowance is measured on a collective pool basis when similar risk characteristics exists and is established as a percentage of accounts receivable. We have identified pools with similar risk characteristics, based on customer and industry type and geographic location. The percentage is based on all available and relevant information including age of outstanding receivables and collateral value, if any, historical payment experience and loss history, current economic conditions, and, when reasonable and supportable factors exist, management’s expectation of future economic conditions. For amounts due from the U.S. Government, we have not established an allowance for credit losses as we have zero loss expectation based on a long history of no credit losses and the explicit guarantee of a sovereign entity. Finance Receivables, Net We establish an allowance for credit losses to cover probable but specifically unknown losses existing in the portfolio. This allowance is established as a percentage of finance receivables categorized by pools with similar risk characteristics, such as collateral or customer type and geographic location. The percentage is based on a combination of factors, including historical loss experience, current delinquency and default trends, collateral values, current economic conditions, and, when reasonable and supportable factors exist, management’s expectation of future economic conditions. For those finance receivables that do not have similar risk characteristics, including larger balance accounts specifically identified as impaired, a reserve is established based on comparing the expected future cash flows, discounted at the finance receivable's effective interest rate, or the fair value of the underlying collateral if the finance receivable is collateral dependent, to its carrying amount. The expected future cash flows consider collateral value; financial performance and liquidity of our borrower; existence and financial strength of guarantors; estimated recovery costs, including legal expenses; and costs associated with the repossession and eventual disposal of collateral. When there is a range of potential outcomes, we perform multiple discounted cash flow analyses and weight the potential outcomes based on their relative likelihood of occurrence. The evaluation of our portfolio is inherently subjective, as it requires estimates, including the amount and timing of future cash flows expected to be received on impaired finance receivables and the estimated fair value of the underlying collateral, which may differ from actual results. While our analysis is specific to each individual account, critical factors included in this analysis include industry valuation guides, age and physical condition of the collateral, payment history, existence and financial strength of guarantors.

Accounts Receivable and Finan_2

Accounts Receivable and Finance Receivables (Tables)	6 Months Ended
Accounts Receivable and Finance Receivables (Tables)	Jul. 04, 2020
Accounts Receivable and Finance Receivables
Accounts receivable	July 4, January 4, (In millions) 2020 2020 Commercial $ 650 $ 835 U.S. Government contracts 156 115 806 950 Allowance for credit losses (42) (29) Total accounts receivable, net $ 764 $ 921
Finance receivables	July 4, January 4, (In millions) 2020 2020 Finance receivables $ 719 $ 707 Allowance for credit losses (28) (25) Total finance receivables, net $ 691 $ 682
Finance receivables by credit quality indicator and by delinquency aging category	July 4, January 4, (Dollars in millions) 2020 2020 Performing $ 555 $ 664 Watchlist 111 4 Nonaccrual 53 39 Nonaccrual as a percentage of finance receivables 7.37 % 5.52 % Current and less than 31 days past due $ 618 $ 637 31-60 days past due 41 53 61-90 days past due 17 7 Over 90 days past due 43 10 60+ days contractual delinquency as a percentage of finance receivables 8.34 % 2.40 %
Summary of finance receivables and allowance for loan losses based on impairment evaluation, excluding leveraged leases	July 4, January 4, (In millions) 2020 2020 Finance receivables evaluated collectively $ 458 $ 564 Finance receivables evaluated individually 156 39 Allowance for credit losses based on collective evaluation 24 22 Allowance for credit losses based on individual evaluation 4 3 Impaired finance receivables with no related allowance for credit losses $ 135 $ 22 Impaired finance receivables with related allowance for credit losses 21 17 Unpaid principal balance of impaired finance receivables 167 50 Allowance for credit losses on impaired loans 4 3 Average recorded investment of impaired finance receivables 103 40

Inventories (Tables)

Inventories (Tables)	6 Months Ended
Inventories (Tables)	Jul. 04, 2020
Inventories
Inventories	July 4, January 4, (In millions) 2020 2020 Finished goods $ 1,593 $ 1,557 Work in process 1,659 1,616 Raw materials and components 1,010 896 Total inventories $ 4,262 $ 4,069

Warranty Liability (Tables)

Warranty Liability (Tables)	6 Months Ended
Warranty Liability (Tables)	Jul. 04, 2020
Warranty Liability
Changes in warranty liability	Six Months Ended July 4, June 29, (In millions) 2020 2019 Beginning of period $ 141 $ 149 Provision 22 30 Settlements (29) (38) Adjustments* (12) (5) End of period $ 122 $ 136 * Adjustments include changes to prior year estimates, new issues on prior year sales and currency translation adjustments.

Leases (Tables)

Leases (Tables)	6 Months Ended
Leases (Tables)	Jul. 04, 2020
Leases
Schedule of balance sheet and other information	July 4, January 4, (Dollars in millions) 2020 2020 Other assets $ 255 $ 277 Other current liabilities 47 48 Other liabilities 214 233 Weighted-average remaining lease term (in years) 10.0 10.2 Weighted-average discount rate 4.43 % 4.42 %

Derivative Instruments and Fa_2

Derivative Instruments and Fair Value Measurements (Tables)	6 Months Ended
Derivative Instruments and Fair Value Measurements (Tables)	Jul. 04, 2020
Derivative Instruments and Fair Value Measurements
Carrying value and estimated fair value of financial instruments	July 4, 2020 January 4, 2020 Carrying Estimated Carrying Estimated (In millions) Value Fair Value Value Fair Value Manufacturing group Debt, excluding leases $ (4,044) $ (4,203) $ (3,097) $ (3,249) Finance group Finance receivables, excluding leases 499 503 493 527 Debt (670) (566) (686) (634)

Shareholders' Equity (Tables)

Shareholders' Equity (Tables)	6 Months Ended
Shareholders' Equity (Tables)	Jul. 04, 2020
Shareholders' Equity
Schedule of Shareholder's equity	Accumulated Other Total Common Capital Treasury Retained Comprehensive Shareholders’ (In millions) Stock Surplus Stock Earnings Loss Equity Three months ended July 4, 2020 Beginning of period $ 29 $ 1,711 $ (74) $ 5,727 $ (1,859) $ 5,534 Net loss — — — (92) — (92) Other comprehensive income — — — — 68 68 Share-based compensation activity — 21 — — — 21 Dividends declared — — — (4) — (4) End of period $ 29 $ 1,732 $ (74) $ 5,631 $ (1,791) $ 5,527 Three months ended June 29, 2019 Beginning of period $ 30 $ 1,689 $ (331) $ 5,581 $ (1,736) $ 5,233 Net income — — — 217 — 217 Other comprehensive income — — — — 21 21 Share-based compensation activity — 28 — — — 28 Dividends declared — — — (4) — (4) Purchases of common stock — — (159) — — (159) End of period $ 30 $ 1,717 $ (490) $ 5,794 $ (1,715) $ 5,336 Six months ended July 4, 2020 Beginning of period $ 29 $ 1,674 $ (20) $ 5,682 $ (1,847) $ 5,518 Net loss — — — (42) — (42) Other comprehensive income — — — — 56 56 Share-based compensation activity — 58 — — — 58 Dividends declared — — — (9) — (9) Purchases of common stock — — (54) — — (54) End of period $ 29 $ 1,732 $ (74) $ 5,631 $ (1,791) $ 5,527 Six months ended June 29, 2019 Beginning of period $ 30 $ 1,646 $ (129) $ 5,407 $ (1,762) $ 5,192 Net income — — — 396 — 396 Other comprehensive income — — — — 47 47 Share-based compensation activity — 71 — — — 71 Dividends declared — — — (9) — (9) Purchases of common stock — — (361) — — (361) End of period $ 30 $ 1,717 $ (490) $ 5,794 $ (1,715) $ 5,336
Schedule of weighted-average shares outstanding for basic and diluted EPS	Three Months Ended Six Months Ended July 4, June 29, July 4, June 29, (In thousands) 2020 2019 2020 2019 Basic weighted-average shares outstanding 228,247 232,013 228,279 233,426 Dilutive effect of stock options — 1,532 — 1,567 Diluted weighted-average shares outstanding 228,247 233,545 228,279 234,993
Schedule of components of Accumulated Other Comprehensive Loss	Pension and Foreign Deferred Accumulated Postretirement Currency Gains (Losses) Other Benefits Translation on Hedge Comprehensive (In millions) Adjustments Adjustments Contracts Loss Balance at January 4, 2020 $ (1,811) $ (36) $ — $ (1,847) Other comprehensive loss before reclassifications — (10) (5) (15) Reclassified from Accumulated other comprehensive loss 73 — (2) 71 Balance at July 4, 2020 $ (1,738) $ (46) $ (7) $ (1,791) Balance at December 29, 2018 $ (1,727) $ (32) $ (3) $ (1,762) Other comprehensive income before reclassifications — 4 4 8 Reclassified from Accumulated other comprehensive loss 41 — (2) 39 Balance at June 29, 2019 $ (1,686) $ (28) $ (1) $ (1,715)
Schedule of before and after-tax components of other comprehensive income (loss)	July 4, 2020 June 29, 2019 Tax Tax Pre-Tax (Expense) After-Tax Pre-Tax (Expense) After-Tax (In millions) Amount Benefit Amount Amount Benefit Amount Three Months Ended Pension and postretirement benefits adjustments: Amortization of net actuarial loss* $ 46 $ (11) $ 35 $ 24 $ (6) $ 18 Amortization of prior service cost* 1 — 1 3 (1) 2 Pension and postretirement benefits adjustments, net 47 (11) 36 27 (7) 20 Deferred gains (losses) on hedge contracts: Current deferrals 4 (1) 3 2 (1) 1 Reclassification adjustments (2) 1 (1) (1) — (1) Deferred gains (losses) on hedge contracts, net 2 — 2 1 (1) — Foreign currency translation adjustments 30 — 30 3 (2) 1 Total $ 79 $ (11) $ 68 $ 31 $ (10) $ 21 Six Months Ended Pension and postretirement benefits adjustments: Amortization of net actuarial loss* $ 92 $ (21) $ 71 $ 49 $ (11) $ 38 Amortization of prior service cost* 3 (1) 2 4 (1) 3 Pension and postretirement benefits adjustments, net 95 (22) 73 53 (12) 41 Deferred gains (losses) on hedge contracts: Current deferrals (5) — (5) 6 (2) 4 Reclassification adjustments (3) 1 (2) (2) — (2) Deferred gains (losses) on hedge contracts, net (8) 1 (7) 4 (2) 2 Foreign currency translation adjustments (7) (3) (10) 4 — 4 Total $ 80 $ (24) $ 56 $ 61 $ (14) $ 47 *These components of other comprehensive income are included in the computation of net periodic pension cost (credit). See Note 16 of our 2019 Annual Report on Form 10-K for additional information.

Segment Information (Tables)

Segment Information (Tables)	6 Months Ended
Segment Information (Tables)	Jul. 04, 2020
Segment Information
Revenues by segment and reconciliation of segment profit to income (loss) before income taxes	Three Months Ended Six Months Ended July 4, June 29, July 4, June 29, (In millions) 2020 2019 2020 2019 Revenues Textron Aviation $ 747 $ 1,123 $ 1,619 $ 2,257 Bell 822 771 1,645 1,510 Textron Systems 326 308 654 615 Industrial 562 1,009 1,302 1,921 Finance 15 16 29 33 Total revenues $ 2,472 $ 3,227 $ 5,249 $ 6,336 Segment Profit Textron Aviation $ (66) $ 105 $ (63) $ 211 Bell 118 103 233 207 Textron Systems 37 49 63 77 Industrial (11) 76 (2) 126 Finance 4 6 7 12 Segment profit 82 339 238 633 Corporate expenses and other, net (30) (24) (44) (71) Interest expense, net for Manufacturing group (37) (36) (71) (71) Special charges (78) — (117) — Inventory charge* (55) — (55) — Income (loss) before income taxes $ (118) $ 279 $ (49) $ 491 * In connection with the restructuring plan initiated in the second quarter of 2020, we ceased manufacturing at the Montreal facility of the TRU Simulation + Training business, resulting in the production suspension of our commercial air transport simulators. As a result of this action and current market conditions, we recorded a $55 million charge to write-down the related inventory to its net realizable value.

Revenues (Tables)

Revenues (Tables)	6 Months Ended
Revenues (Tables)	Jul. 04, 2020
Revenues
Schedule of revenue by major product type, customer type and geographic location	Our revenues disaggregated by major product type are presented below: Three Months Ended Six Months Ended July 4, June 29, July 4, June 29, (In millions) 2020 2019 2020 2019 Aircraft $ 478 $ 733 $ 993 $ 1,499 Aftermarket parts and services 269 390 626 758 Textron Aviation 747 1,123 1,619 2,257 Military aircraft and support programs 602 482 1,222 990 Commercial helicopters, parts and services 220 289 423 520 Bell 822 771 1,645 1,510 Unmanned systems 169 135 317 269 Marine and land systems 43 60 91 108 Simulation, training and other 114 113 246 238 Textron Systems 326 308 654 615 Fuel systems and functional components 271 592 736 1,186 Specialized vehicles 291 417 566 735 Industrial 562 1,009 1,302 1,921 Finance 15 16 29 33 Total revenues $ 2,472 $ 3,227 $ 5,249 $ 6,336 Our revenues for our segments by customer type and geographic location are presented below: (In millions) Textron Bell Textron Industrial Finance Total Three months ended July 4, 2020 Customer type: Commercial $ 716 $ 216 $ 57 $ 559 $ 15 $ 1,563 U.S. Government 31 606 269 3 — 909 Total revenues $ 747 $ 822 $ 326 $ 562 $ 15 $ 2,472 Geographic location: United States $ 518 $ 681 $ 276 $ 287 $ 8 $ 1,770 Europe 70 21 11 127 — 229 Asia and Australia 50 66 15 76 — 207 Other international 109 54 24 72 7 266 Total revenues $ 747 $ 822 $ 326 $ 562 $ 15 $ 2,472 Three months ended June 29, 2019 Customer type: Commercial $ 1,077 $ 279 $ 83 $ 1,004 $ 16 $ 2,459 U.S. Government 46 492 225 5 — 768 Total revenues $ 1,123 $ 771 $ 308 $ 1,009 $ 16 $ 3,227 Geographic location: United States $ 736 $ 571 $ 249 $ 466 $ 7 $ 2,029 Europe 164 47 17 291 — 519 Asia and Australia 65 79 13 84 2 243 Other international 158 74 29 168 7 436 Total revenues $ 1,123 $ 771 $ 308 $ 1,009 $ 16 $ 3,227 Six months ended July 4, 2020 Customer type: Commercial $ 1,564 $ 414 $ 128 $ 1,298 $ 29 $ 3,433 U.S. Government 55 1,231 526 4 — 1,816 Total revenues $ 1,619 $ 1,645 $ 654 $ 1,302 $ 29 $ 5,249 Geographic location: United States $ 1,115 $ 1,371 $ 562 $ 616 $ 14 $ 3,678 Europe 154 45 23 355 1 578 Asia and Australia 173 116 35 129 1 454 Other international 177 113 34 202 13 539 Total revenues $ 1,619 $ 1,645 $ 654 $ 1,302 $ 29 $ 5,249 Six months ended June 29, 2019 Customer type: Commercial $ 2,169 $ 509 $ 157 $ 1,909 $ 33 $ 4,777 U.S. Government 88 1,001 458 12 — 1,559 Total revenues $ 2,257 $ 1,510 $ 615 $ 1,921 $ 33 $ 6,336 Geographic location: United States $ 1,525 $ 1,149 $ 506 $ 855 $ 15 $ 4,050 Europe 347 67 40 602 1 1,057 Asia and Australia 88 161 29 161 3 442 Other international 297 133 40 303 14 787 Total revenues $ 2,257 $ 1,510 $ 615 $ 1,921 $ 33 $ 6,336

Retirement Plans (Tables)

Retirement Plans (Tables)	6 Months Ended
Retirement Plans (Tables)	Jul. 04, 2020
Retirement Plans
Schedule of components of net periodic benefit cost (credit)	Three Months Ended Six Months Ended July 4, June 29, July 4, June 29, (In millions) 2020 2019 2020 2019 Pension Benefits Service cost $ 26 $ 22 $ 52 $ 45 Interest cost 74 81 147 163 Expected return on plan assets (143) (139) (287) (278) Amortization of net actuarial loss 46 25 92 50 Amortization of prior service cost 3 4 6 7 Net periodic benefit cost (credit) $ 6 $ (7) $ 10 $ (13) Postretirement Benefits Other Than Pensions Service cost $ 1 $ — $ 2 $ 1 Interest cost 2 3 4 5 Amortization of net actuarial loss — (1) — (1) Amortization of prior service credit (2) (1) (3) (3) Net periodic benefit cost $ 1 $ 1 $ 3 $ 2

Special Charges (Tables)

Special Charges (Tables)	6 Months Ended
Special Charges (Tables)	Jul. 04, 2020
Special Charges
Schedule of special charges	Contract Severance Terminations Asset (In millions) Costs and Other Impairments Total Three months ended July 4, 2020 Textron Systems $ 14 $ 12 $ 14 $ 40 Textron Aviation 27 — 1 28 Industrial 8 — — 8 Corporate 2 — — 2 Total special charges $ 51 $ 12 $ 15 $ 78 Six months ended July 4, 2020 Textron Systems $ 14 $ 12 $ 14 $ 40 Textron Aviation 27 — 33 60 Industrial 8 — 7 15 Corporate 2 — — 2 Total special charges $ 51 $ 12 $ 54 $ 117
Schedule of restructuring reserve activity	Contract Severance Terminations (In millions) Costs and Other Total Balance at January 4, 2020 $ 46 $ 19 $ 65 Provision for 2020 COVID-19 restructuring plan 51 12 63 Cash paid (31) (5) (36) Balance at July 4, 2020 $ 66 $ 26 $ 92

Basis of Presentation (Details)

Basis of Presentation (Details) $ / shares in Units, $ in Millions	3 Months Ended		6 Months Ended
	Jul. 04, 2020USD ($)$ / shares	Jun. 29, 2019USD ($)$ / shares	Jul. 04, 2020USD ($)item$ / shares	Jun. 29, 2019USD ($)$ / shares
Number of borrowing groups \| item			2
Cumulative catch-up method
Cumulative catch-up adjustments	$ 17	$ 27	$ 19	$ 58
Change in accounting estimate financial effect, increase in net income or decrease in net loss	$ 13	$ 21	$ 14	$ 44
Change in accounting estimate financial effect increase in earnings per share diluted or decrease in earnings per share diluted \| $ / shares	$ 0.06	$ 0.09	$ 0.06	$ 0.19
Gross favorable adjustments	$ 46	$ 46	$ 73	$ 99
Gross unfavorable adjustments	$ 29	$ 19	$ 54	$ 41

Accounts Receivable and Finan_3

Accounts Receivable and Finance Receivables - Accounts receivable (Details) - Manufacturing group - USD ($) $ in Millions	Jul. 04, 2020	Jan. 04, 2020
Accounts Receivable
Accounts Receivable, Gross	$ 806	$ 950
Allowance for credit losses	(42)	(29)
Total accounts receivable, net	764	921
Commercial
Accounts Receivable
Accounts Receivable, Gross	650	835
U.S. Government contracts
Accounts Receivable
Accounts Receivable, Gross	$ 156	$ 115

Accounts Receivable and Finan_4

Accounts Receivable and Finance Receivables - Finance receivables (Details) $ in Millions	6 Months Ended
	Jul. 04, 2020USD ($)customer	Jan. 04, 2020USD ($)
Finance Receivables
Finance receivables	$ 719	$ 707
Allowance for credit losses	(28)	(25)
Total finance receivables, net	$ 691	$ 682
Number of customers finance receivable contracts modified \| customer	75
Modified finance receivable outstanding balance	$ 251
Outstanding balance in the process of modification	$ 60
Number of customers categorized as troubled debt restructurings \| customer	22
Finance receivables categorized as troubled debt restructurings	$ 103
Customer default related to finance receivables previously modified as a troubled debt restructuring that had an insignificant outstanding balance \| customer	1

Accounts Receivable and Finan_5

Accounts Receivable and Finance Receivables - Finance receivables by delinquency aging category (Details) - USD ($) $ in Millions	6 Months Ended
	Jul. 04, 2020	Jan. 04, 2020
Finance receivables categorized based on the internally assigned credit quality
60 + days contractual delinquency as a percentage of finance receivables	8.34%	2.40%
Current and less than 31 days past due
Finance receivables categorized based on the internally assigned credit quality
Total finance receivables	$ 618	$ 637
31-60 days past due
Finance receivables categorized based on the internally assigned credit quality
Total finance receivables	41	53
61- 90 days past due
Finance receivables categorized based on the internally assigned credit quality
Total finance receivables	17	7
Over 90 days past due
Finance receivables categorized based on the internally assigned credit quality
Total finance receivables	43	10
Performing
Finance receivables categorized based on the internally assigned credit quality
Total finance receivables	$ 555	664
Financing receivable originating since the beginning 2019	33.00%
Financing receivable originating from 2016 to 2018	32.00%
Watchlist
Finance receivables categorized based on the internally assigned credit quality
Total finance receivables	$ 111	4
Financing receivable originating since the beginning 2019	17.00%
Nonaccrual
Finance receivables categorized based on the internally assigned credit quality
Payment relief period over which loan is considered impaired	6 months
Total finance receivables	$ 53	$ 39
Nonaccrual as a percentage of finance receivables	7.37%	5.52%
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 Finan_6

Accounts Receivable and Finance Receivables - Finance receivables and allowance for losses based on the results of impairment evaluation (Details) - USD ($) $ in Millions	6 Months Ended	12 Months Ended
	Jul. 04, 2020	Jan. 04, 2020
Finance receivables
Finance receivables evaluated collectively	$ 458	$ 564
Finance receivables evaluated individually	156	39
Allowance for credit losses based on collective evaluation	24	22
Allowance for credit losses based on individual evaluation	4	3
Impaired finance receivables with no related allowance for credit losses	135	22
Impaired finance receivables with related allowance for credit losses	21	17
Unpaid principal balance of impaired finance receivables	167	50
Allowance for credit losses on impaired loans	4	3
Average recorded investment of impaired finance receivables	$ 103	$ 40

Inventories (Details)

Inventories (Details) - USD ($) $ in Millions	Jul. 04, 2020	Jan. 04, 2020
Inventories
Finished goods	$ 1,593	$ 1,557
Work in process	1,659	1,616
Raw materials and components	1,010	896
Total inventories	$ 4,262	$ 4,069

Other Assets (Details)

Other Assets (Details) - USD ($) $ in Millions	3 Months Ended	6 Months Ended
Other Assets (Details) - USD ($) $ in Millions	Apr. 04, 2020	Jul. 04, 2020
Other Assets
Proceeds from borrowings against corporate-owned life insurance policies	$ 377	$ 377
Borrowings against corporate-owned life insurance policies		$ 362

Warranty Liability (Details)

Warranty Liability (Details) - USD ($) $ in Millions	6 Months Ended
Warranty Liability (Details) - USD ($) $ in Millions	Jul. 04, 2020	Jun. 29, 2019
Changes in warranty liability
Balance at beginning of period	$ 141	$ 149
Provision	22	30
Settlements	(29)	(38)
Adjustments	(12)	(5)
Balance at end of period	$ 122	$ 136

Leases (Details)

Leases (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
Leases (Details) - USD ($) $ in Millions	Jul. 04, 2020	Jun. 29, 2019	Jul. 04, 2020	Jun. 29, 2019
Leases
Operating lease - Option to extend			true
Operating lease cost	$ 15	$ 16	$ 30	$ 32
Cash paid for operating lease liabilities			$ 30	$ 32
Maximum
Leases
Operating lease and finance lease - Remaining lease term			29 years
Operating lease - Option to extend the lease, term	25 years		25 years

Leases - Balance sheet and othe

Leases - Balance sheet and other information (Details) - USD ($) $ in Millions	Jul. 04, 2020	Jan. 04, 2020
Operating leases:
Other assets	$ 255	$ 277
Other current liabilities	47	48
Other liabilities	$ 214	$ 233
Weighted-average remaining lease term (in years)
Operating leases	10 years	10 years 2 months 12 days
Weighted-average discount rate
Operating leases	4.43%	4.42%

Leases - Maturity of lease liab

Leases - Maturity of lease liabilities (Details) $ in Millions	Jul. 04, 2020USD ($)
Operating Leases
2020	$ 32
2021	49
2022	41
2023	32
2024	25
Thereafter	$ 150

Debt (Details)

Debt (Details) - USD ($) $ in Millions	Apr. 01, 2020	Mar. 17, 2020	Jul. 04, 2020
Revolving credit facility
Debt
Maximum borrowing capacity	$ 1,000
364-Day Term Loan Credit Agreement
Debt
Debt instrument term	364 days
Issuance of debt	$ 500
Interest rate (as a percent)			2.75%
364-Day Term Loan Credit Agreement \| London interbank offered rate
Debt
Floor rate (as a percent)	0.75%
Interest rate spread (as a percent)	2.00%
Fixed rate notes due 2030
Debt
Issuance of debt		$ 650
Interest rate (as a percent)		3.00%
Net proceeds from issuance		$ 642

Derivative Instruments and Fa_3

Derivative Instruments and Fair Value Measurements - Assets and liabilities recorded at fair value on a recurring basis (Details) - Manufacturing group - USD ($) $ in Millions	6 Months Ended
	Jul. 04, 2020	Jan. 04, 2020
Fair value of derivative instruments
Forward exchange contracts maximum maturity period	3 years
Foreign currency exchange contracts
Fair value of derivative instruments
Notional amounts	$ 364	$ 342
Level 2 \| Foreign currency exchange contracts
Fair value of derivative instruments
Derivative Asset, Fair Value	6	2
Derivative Liability, Fair Value	$ 8	$ 2

Derivative Instruments and Fa_4

Derivative Instruments and Fair Value Measurements - Assets and liabilities not recorded at fair value (Details) - USD ($) $ in Millions	Jul. 04, 2020	Jan. 04, 2020
Manufacturing group \| Carrying Value
Financial instruments not reflected at fair value
Debt, excluding leases	$ (4,044)	$ (3,097)
Manufacturing group \| Estimated Fair Value
Financial instruments not reflected at fair value
Debt, excluding leases	(4,203)	(3,249)
Finance group
Financial instruments not reflected at fair value
Debt	(670)	(686)
Finance group \| Carrying Value
Financial instruments not reflected at fair value
Finance receivables, excluding leases	499	493
Debt	(670)	(686)
Finance group \| Estimated Fair Value
Financial instruments not reflected at fair value
Finance receivables, excluding leases	503	527
Debt	$ (566)	$ (634)

Shareholders' Equity (Details)

Shareholders' Equity (Details) - USD ($) $ / shares in Units, $ in Millions	3 Months Ended		6 Months Ended
	Jul. 04, 2020	Jun. 29, 2019	Jul. 04, 2020	Jun. 29, 2019
Increase (Decrease) in Stockholders' Equity
Balance at beginning of period	$ 5,534	$ 5,233	$ 5,518	$ 5,192
Net income (loss)	(92)	217	(42)	396
Other comprehensive income	68	21	56	47
Share-based compensation activity	21	28	58	71
Dividends declared	(4)	(4)	(9)	(9)
Purchases of common stock		(159)	(54)	(361)
Balance at end of period	$ 5,527	$ 5,336	$ 5,527	$ 5,336
Dividends per share of common stock	$ 0.02	$ 0.02	$ 0.04	$ 0.04
Common Stock
Increase (Decrease) in Stockholders' Equity
Balance at beginning of period	$ 29	$ 30	$ 29	$ 30
Balance at end of period	29	30	29	30
Capital Surplus
Increase (Decrease) in Stockholders' Equity
Balance at beginning of period	1,711	1,689	1,674	1,646
Share-based compensation activity	21	28	58	71
Balance at end of period	1,732	1,717	1,732	1,717
Treasury Stock
Increase (Decrease) in Stockholders' Equity
Balance at beginning of period	(74)	(331)	(20)	(129)
Purchases of common stock		(159)	(54)	(361)
Balance at end of period	(74)	(490)	(74)	(490)
Retained Earnings
Increase (Decrease) in Stockholders' Equity
Balance at beginning of period	5,727	5,581	5,682	5,407
Net income (loss)	(92)	217	(42)	396
Dividends declared	(4)	(4)	(9)	(9)
Balance at end of period	5,631	5,794	5,631	5,794
Accumulated Other Comprehensive Loss
Increase (Decrease) in Stockholders' Equity
Balance at beginning of period	(1,859)	(1,736)	(1,847)	(1,762)
Other comprehensive income	68	21	56	47
Balance at end of period	$ (1,791)	$ (1,715)	$ (1,791)	$ (1,715)

Shareholders' Equity - Earnings

Shareholders' Equity - Earnings Per Share (Details) - shares shares in Thousands	3 Months Ended		6 Months Ended
	Jul. 04, 2020	Jun. 29, 2019	Jul. 04, 2020	Jun. 29, 2019
Weighted-average shares outstanding for basic and diluted EPS
Basic weighted-average shares outstanding	228,247	232,013	228,279	233,426
Dilutive effect of stock options		1,532		1,567
Diluted weighted-average shares outstanding	228,247	233,545	228,279	234,993
Potential Common Shares
Weighted-average shares outstanding for basic and diluted EPS
Anti-dilutive effect of weighted average shares	100		300
Stock options
Weighted-average shares outstanding for basic and diluted EPS
Anti-dilutive effect of weighted average shares	8,900	3,100	8,200	3,100

Shareholders' Equity - Componen

Shareholders' Equity - Components of accumulated other comprehensive income (loss) (Details) - USD ($) $ in Millions	6 Months Ended
	Jul. 04, 2020	Jun. 29, 2019
Components of Accumulated Other Comprehensive Loss
Beginning of period	$ (1,847)
End of period	(1,791)
Accumulated Other Comprehensive Loss
Components of Accumulated Other Comprehensive Loss
Beginning of period	(1,847)	$ (1,762)
Other comprehensive loss before reclassifications	(15)	8
Reclassified from Accumulated other comprehensive loss	71	39
End of period	(1,791)	(1,715)
Pension and postretirement benefits adjustments
Components of Accumulated Other Comprehensive Loss
Beginning of period	(1,811)	(1,727)
Other comprehensive loss before reclassifications	0
Reclassified from Accumulated other comprehensive loss	73	41
End of period	(1,738)	(1,686)
Foreign currency translation adjustments
Components of Accumulated Other Comprehensive Loss
Beginning of period	(36)	(32)
Other comprehensive loss before reclassifications	(10)	4
End of period	(46)	(28)
Deferred Gains (Losses) on Hedge Contracts
Components of Accumulated Other Comprehensive Loss
Beginning of period		(3)
Other comprehensive loss before reclassifications	(5)	4
Reclassified from Accumulated other comprehensive loss	(2)	(2)
End of period	$ (7)	$ (1)

Shareholders' Equity - Before a

Shareholders' Equity - Before and after-tax components of other comprehensive income (loss) (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jul. 04, 2020	Jun. 29, 2019	Jul. 04, 2020	Jun. 29, 2019
Pension and postretirement benefits adjustments, pre-tax:
Amortization of net actuarial loss, pre-tax	$ 46	$ 24	$ 92	$ 49
Amortization of prior service cost, pre-tax	1	3	3	4
Pension and postretirement benefits adjustments, net, pre-tax	47	27	95	53
Deferred gains (losses) on hedge contracts, pre-tax:
Current deferrals, pre-tax	4	2	(5)	6
Reclassification adjustments, pre-tax	(2)	(1)	(3)	(2)
Deferred gains (losses) on hedge contracts, net, pre-tax	2	1	(8)	4
Foreign currency translation adjustments, pre-tax	30	3	(7)	4
Other comprehensive income (loss), pre-tax	79	31	80	61
Pension and postretirement benefits adjustments, tax:
Amortization of net actuarial loss, tax	(11)	(6)	(21)	(11)
Amortization of prior service cost, tax		(1)	(1)	(1)
Pension and postretirement benefits adjustments, net, tax	(11)	(7)	(22)	(12)
Deferred gains (losses) on hedge contracts, tax:
Current deferrals, tax	(1)	(1)		(2)
Reclassification adjustments, tax	1		1
Deferred gains (losses) on hedge contracts, net, tax		(1)	1	(2)
Foreign currency translation adjustments, tax		(2)	(3)
Other comprehensive income (loss), tax	(11)	(10)	(24)	(14)
Pension and postretirement benefits adjustments, after-tax:
Amortization of net actuarial loss, after-tax	35	18	71	38
Amortization of prior service cost, after-tax	1	2	2	3
Pension and postretirement benefits adjustments, net, after-tax	36	20	73	41
Deferred gains (losses) on hedge contracts, after-tax:
Current deferrals, after-tax	3	1	(5)	4
Reclassification adjustments, after-tax	(1)	(1)	(2)	(2)
Deferred gains (losses) on hedge contracts, net, after-tax	2		(7)	2
Foreign currency translation adjustments, after-tax	30	1	(10)	4
Other comprehensive income	$ 68	$ 21	$ 56	$ 47

Segment Information - Operating

Segment Information - Operating and reportable segments (Details)	6 Months Ended
	Jul. 04, 2020segment
Operating and reportable business segments
Number of business operating segments	5
Number of reportable business segments	5

Segment Information - Revenue b

Segment Information - Revenue by segment and reconciliation of segment profit to income before income taxes (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jul. 04, 2020	Jun. 29, 2019	Jul. 04, 2020	Jun. 29, 2019
Revenues
Total revenues	$ 2,472	$ 3,227	$ 5,249	$ 6,336
Reconciliation of segment profit to income from continuing operations before income taxes
Special charges	(78)		(117)
TRU inventory charge	(55)		(55)
Income (loss) before income taxes	(118)	279	(49)	491
Operating Segment
Segment Profit
Segment Profit	82	339	238	633
Corporate
Reconciliation of segment profit to income from continuing operations before income taxes
Corporate expenses and other, net	(30)	(24)	(44)	(71)
Special charges	(2)		(2)
Textron Aviation
Reconciliation of segment profit to income from continuing operations before income taxes
Special charges	(28)		(60)
Textron Systems
Reconciliation of segment profit to income from continuing operations before income taxes
Special charges	(40)		(40)
Industrial
Reconciliation of segment profit to income from continuing operations before income taxes
Special charges	(8)		(15)
Finance
Revenues
Finance revenues	15	16	29	33
Finance \| Operating Segment
Segment Profit
Segment Profit	4	6	7	12
Manufacturing group \| Reconciling Items
Reconciliation of segment profit to income from continuing operations before income taxes
Interest expense, net for Manufacturing group	(37)	(36)	(71)	(71)
Manufacturing group \| Textron Aviation
Revenues
Total revenues	747	1,123	1,619	2,257
Manufacturing group \| Textron Aviation \| Operating Segment
Segment Profit
Segment Profit	(66)	105	(63)	211
Manufacturing group \| Bell
Revenues
Total revenues	822	771	1,645	1,510
Manufacturing group \| Bell \| Operating Segment
Segment Profit
Segment Profit	118	103	233	207
Manufacturing group \| Textron Systems
Revenues
Total revenues	326	308	654	615
Manufacturing group \| Textron Systems \| Operating Segment
Segment Profit
Segment Profit	37	49	63	77
Manufacturing group \| Industrial
Revenues
Total revenues	562	1,009	1,302	1,921
Manufacturing group \| Industrial \| Operating Segment
Segment Profit
Segment Profit	(11)	76	(2)	126
Finance group \| Finance
Revenues
Finance revenues	$ 15	$ 16	$ 29	$ 33

Revenues (Details)

Revenues (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
Revenues (Details) - USD ($) $ in Millions	Jul. 04, 2020	Jun. 29, 2019	Jul. 04, 2020	Jun. 29, 2019
Revenues
Total revenues	$ 2,472	$ 3,227	$ 5,249	$ 6,336
United States
Revenues
Total revenues	1,770	2,029	3,678	4,050
Europe
Revenues
Total revenues	229	519	578	1,057
Asia and Australia
Revenues
Total revenues	207	243	454	442
Other international
Revenues
Total revenues	266	436	539	787
Commercial
Revenues
Total revenues	1,563	2,459	3,433	4,777
U.S. Government
Revenues
Total revenues	909	768	1,816	1,559
Textron Aviation
Revenues
Total revenues	747	1,123	1,619	2,257
Textron Aviation \| United States
Revenues
Total revenues	518	736	1,115	1,525
Textron Aviation \| Europe
Revenues
Total revenues	70	164	154	347
Textron Aviation \| Asia and Australia
Revenues
Total revenues	50	65	173	88
Textron Aviation \| Other international
Revenues
Total revenues	109	158	177	297
Textron Aviation \| Commercial
Revenues
Total revenues	716	1,077	1,564	2,169
Textron Aviation \| U.S. Government
Revenues
Total revenues	31	46	55	88
Textron Aviation \| Aircraft
Revenues
Total revenues	478	733	993	1,499
Textron Aviation \| Aftermarket parts and services
Revenues
Total revenues	269	390	626	758
Bell
Revenues
Total revenues	822	771	1,645	1,510
Bell \| United States
Revenues
Total revenues	681	571	1,371	1,149
Bell \| Europe
Revenues
Total revenues	21	47	45	67
Bell \| Asia and Australia
Revenues
Total revenues	66	79	116	161
Bell \| Other international
Revenues
Total revenues	54	74	113	133
Bell \| Commercial
Revenues
Total revenues	216	279	414	509
Bell \| U.S. Government
Revenues
Total revenues	606	492	1,231	1,001
Bell \| Military aircraft and support programs
Revenues
Total revenues	602	482	1,222	990
Bell \| Commercial helicopters, parts and services
Revenues
Total revenues	220	289	423	520
Textron Systems
Revenues
Total revenues	326	308	654	615
Textron Systems \| United States
Revenues
Total revenues	276	249	562	506
Textron Systems \| Europe
Revenues
Total revenues	11	17	23	40
Textron Systems \| Asia and Australia
Revenues
Total revenues	15	13	35	29
Textron Systems \| Other international
Revenues
Total revenues	24	29	34	40
Textron Systems \| Commercial
Revenues
Total revenues	57	83	128	157
Textron Systems \| U.S. Government
Revenues
Total revenues	269	225	526	458
Textron Systems \| Unmanned systems
Revenues
Total revenues	169	135	317	269
Textron Systems \| Marine and land systems
Revenues
Total revenues	43	60	91	108
Textron Systems \| Simulation, training and other
Revenues
Total revenues	114	113	246	238
Industrial
Revenues
Total revenues	562	1,009	1,302	1,921
Industrial \| United States
Revenues
Total revenues	287	466	616	855
Industrial \| Europe
Revenues
Total revenues	127	291	355	602
Industrial \| Asia and Australia
Revenues
Total revenues	76	84	129	161
Industrial \| Other international
Revenues
Total revenues	72	168	202	303
Industrial \| Commercial
Revenues
Total revenues	559	1,004	1,298	1,909
Industrial \| U.S. Government
Revenues
Total revenues	3	5	4	12
Industrial \| Fuel systems and functional components
Revenues
Total revenues	271	592	736	1,186
Industrial \| Specialized vehicles
Revenues
Total revenues	291	417	566	735
Finance
Revenues
Finance revenues	15	16	29	33
Finance \| United States
Revenues
Finance revenues	8	7	14	15
Finance \| Europe
Revenues
Finance revenues			1	1
Finance \| Asia and Australia
Revenues
Finance revenues		2	1	3
Finance \| Other international
Revenues
Finance revenues	7	7	13	14
Finance \| Commercial
Revenues
Finance revenues	$ 15	$ 16	$ 29	$ 33

Revenues - Remaining Performanc

Revenues - Remaining Performance Obligations (Details) $ in Billions	Jul. 04, 2020USD ($)
Remaining Performance Obligation, Expected Timing of Satisfaction
Remaining performance obligations	$ 9.1
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2020-07-05
Remaining Performance Obligation, Expected Timing of Satisfaction
Percentage of remaining performance obligation expected to be recognized in period	68.00%
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Period	18 months
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2022-01-02
Remaining Performance Obligation, Expected Timing of Satisfaction
Percentage of remaining performance obligation expected to be recognized in period	24.00%
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Period	24 months

Revenues - Contract Assets and

Revenues - Contract Assets and Liabilities (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jul. 04, 2020	Jun. 29, 2019	Jul. 04, 2020	Jun. 29, 2019	Jan. 04, 2020
Contract Assets and Liabilities
Contract assets	$ 542		$ 542		$ 567
Contract liabilities	927		927		$ 830
Revenue recognized included in contract liabilities	$ 121	$ 146	$ 352	$ 457

Retirement Plans (Details)

Retirement Plans (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
Retirement Plans (Details) - USD ($) $ in Millions	Jul. 04, 2020	Jun. 29, 2019	Jul. 04, 2020	Jun. 29, 2019
Pension Benefits
Net periodic benefit cost (credit)
Service cost	$ 26	$ 22	$ 52	$ 45
Interest cost	74	81	147	163
Expected return on plan assets	(143)	(139)	(287)	(278)
Amortization of net actuarial loss	46	25	92	50
Amortization of prior service cost	3	4	6	7
Net periodic benefit cost (credit)	6	(7)	10	(13)
Postretirement Benefits Other Than Pensions
Net periodic benefit cost (credit)
Service cost	1		2	1
Interest cost	2	3	4	5
Amortization of net actuarial loss		(1)		(1)
Amortization of prior service cost	(2)	(1)	(3)	(3)
Net periodic benefit cost (credit)	$ 1	$ 1	$ 3	$ 2

Special Charges - Special charg

Special Charges - Special charges by segment (Details) - USD ($) $ in Millions	3 Months Ended	6 Months Ended
	Jul. 04, 2020	Jul. 04, 2020
Special Charges
Asset impairments	$ 15	$ 54
Contract Terminations and Other	12	12
Severance Costs	51	51
Total	78	117
Corporate
Special Charges
Severance Costs	2	2
Total	2	2
Textron Systems
Special Charges
Asset impairments	14	14
Contract Terminations and Other	12	12
Severance Costs	14	14
Total	40	40
Textron Aviation
Special Charges
Asset impairments	1	33
Severance Costs	27	27
Total	28	60
Industrial
Special Charges
Asset impairments		7
Severance Costs	8	8
Total	$ 8	$ 15

Special Charges - 2020 Covid 19

Special Charges - 2020 Covid 19 Restructuring Plan (Details) $ in Millions	3 Months Ended	6 Months Ended
	Jul. 04, 2020USD ($)position	Jul. 04, 2020USD ($)
2020 Restructuring Plan
TRU inventory valuation charge	$ 55	$ 55
2020 COVID-19 Restructuring Plan
2020 Restructuring Plan
Restructuring and Related Cost, Cost Incurred to Date	$ 78	78
Number of positions eliminated \| position	1,950
Percentage of workforce reduction	6.00%
TRU inventory valuation charge	$ 55
Minimum \| 2020 COVID-19 Restructuring Plan
2020 Restructuring Plan
Restructuring and Related Cost, Expected Cost	110	110
Maximum \| 2020 COVID-19 Restructuring Plan
2020 Restructuring Plan
Restructuring and Related Cost, Expected Cost	$ 130	$ 130

Special Charges Asset Impairmen

Special Charges Asset Impairment Charges (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jul. 04, 2020	Apr. 04, 2020	Jul. 04, 2020
Special Charges
Asset impairments	$ 15		$ 54
Beechcraft and King Air trade name intangible assets
Special Charges
Discount rate to determine fair value (as a percent)		9.70%
Impairment charge		$ 32
Intangible assets	$ 169		$ 169
Arctic Cat trade name intangible asset
Special Charges
Impairment charge		7
Textron Aviation and Industrial segments
Special Charges
Asset impairments		$ 39

Special Charges - Restructuring

Special Charges - Restructuring reserve (Details) $ in Millions	6 Months Ended
	Jul. 04, 2020USD ($)
Restructuring Reserve [Roll Forward]
Balance at January 4, 2020	$ 65
Provision for 2020 COVID-19 plan	63
Cash paid	(36)
Balance at July 4, 2020	92
Remaining cash outlays expected to be paid	92
Severance Costs
Restructuring Reserve [Roll Forward]
Balance at January 4, 2020	46
Provision for 2020 COVID-19 plan	51
Cash paid	(31)
Balance at July 4, 2020	66
Contract Terminations and Other
Restructuring Reserve [Roll Forward]
Balance at January 4, 2020	19
Provision for 2020 COVID-19 plan	12
Cash paid	(5)
Balance at July 4, 2020	$ 26

Income Taxes (Details)

Income Taxes (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
Income Taxes (Details) - USD ($) $ in Millions	Jul. 04, 2020	Jun. 29, 2019	Jul. 04, 2020	Jun. 29, 2019
Income Taxes
Effective income tax rate (as a percent)	(22.00%)	22.20%	(14.30%)	19.30%
U.S. federal statutory income tax rate (as a percent)			21.00%	21.00%
Tax benefit recognized upon the release of a valuation allowance			$ 14
Discrete tax benefit				$ 12