10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended April 1, 2023

OR

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ______ to ______.

Commission File Number 1-5480

Textron Inc.

(Exact name of registrant as specified in its charter)

Delaware	05-0315468
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
40 Westminster Street, Providence, RI	02903
(Address of principal executive offices)	(Zip code)

(401) 421-2800

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol (s)	Name of each exchange on which registered
Common stock, $0.125 par value	TXT	New York Stock Exchange (NYSE)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No ¨

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes þ No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act (Check one):

Large accelerated filer	þ	Accelerated filer	☐	Non-accelerated filer	☐
Smaller reporting company	☐			Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No þ

As of April 14, 2023, there were 201,679,524 shares of common stock outstanding.

TEXTRON INC.

Index to Form 10-Q

For the Quarterly Period Ended April 1, 2023

		Page
PART I.	FINANCIAL INFORMATION
Item 1.	Financial Statements
	Consolidated Statements of Operations (Unaudited)	3
	Consolidated Statements of Comprehensive Income (Unaudited)	4
	Consolidated Balance Sheets (Unaudited)	5
	Consolidated Statements of Cash Flows (Unaudited)	6
	Notes to the Consolidated Financial Statements (Unaudited)	8
	Note 1.     Basis of Presentation	8
	Note 2.     Accounts Receivable and Finance Receivables	8
	Note 3.     Inventories	10
	Note 4.     Warranty Liability	10
	Note 5.     Leases	10
	Note 6.     Derivative Instruments and Fair Value Measurements	11
	Note 7.    Shareholders’ Equity	12
	Note 8.    Segment Information	14
	Note 9.    Revenues	15
	Note 10.   Share-Based Compensation	16
	Note 11.   Retirement Plans	18
	Note 12.   Income Taxes	18
	Note 13.   Commitments and Contingencies	18
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	19
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	28
Item 4.	Controls and Procedures	28
PART II.	OTHER INFORMATION
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	28
Item 5.	Other Information	29
Item 6.	Exhibits	30
	Signatures	31

2

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

TEXTRON INC.

Consolidated Statements of Operations (Unaudited)

	Three Months Ended
(In millions, except per share amounts)	April 1, 2023		April 2, 2022
Revenues
Manufacturing product revenues	$	2,550	$	2,448
Manufacturing service revenues	462		537
Finance revenues	12		16
Total revenues	3,024		3,001
Costs, expenses and other
Cost of products sold	2,176		2,069
Cost of services sold	355		423
Selling and administrative expense	305		305
Interest expense, net	20		32
Non-service components of pension and postretirement income, net	(59)		(60)
Total costs, expenses and other	2,797		2,769
Income before income taxes	227		232
Income tax expense	36		39
Net income	$	191	$	193
Earnings per share
Basic	$	0.93	$	0.89
Diluted	$	0.92	$	0.88

See Notes to the Consolidated Financial Statements.

3

TEXTRON INC.

Consolidated Statements of Comprehensive Income (Unaudited)

	Three Months Ended
(In millions)	April 1, 2023		April 2, 2022
Net income	$	191	$	193
Other comprehensive income, net of tax
Pension and postretirement benefits adjustments, net of reclassifications	—		17
Foreign currency translation adjustments	28		(14)
Deferred gains (losses) on hedge contracts, net of reclassifications	(2)		7
Other comprehensive income	26		10
Comprehensive income	$	217	$	203

See Notes to the Consolidated Financial Statements.

4

TEXTRON INC.

Consolidated Balance Sheets (Unaudited)

(Dollars in millions)	April 1, 2023		December 31, 2022
Assets
Manufacturing group
Cash and equivalents	$	1,719	$	1,963
Accounts receivable, net	928		855
Inventories	3,934		3,550
Other current assets	949		1,033
Total current assets	7,530		7,401
Property, plant and equipment, less accumulated depreciation    and amortization of $5,168 and $5,084, respectively	2,505		2,523
Goodwill	2,289		2,283
Other assets	3,416		3,422
Total Manufacturing group assets	15,740		15,629
Finance group
Cash and equivalents	80		72
Finance receivables, net	555		563
Other assets	18		29
Total Finance group assets	653		664
Total assets	$	16,393	$	16,293
Liabilities and shareholders’ equity
Liabilities
Manufacturing group
Current portion of long-term debt	$	357	$	7
Accounts payable	1,281		1,018
Other current liabilities	2,651		2,645
Total current liabilities	4,289		3,670
Other liabilities	1,829		1,879
Long-term debt	2,826		3,175
Total Manufacturing group liabilities	8,944		8,724
Finance group
Other liabilities	74		81
Debt	367		375
Total Finance group liabilities	441		456
Total liabilities	9,385		9,180
Shareholders’ equity
Common stock	26		26
Capital surplus	1,942		1,880
Treasury stock	(464)		(84)
Retained earnings	6,090		5,903
Accumulated other comprehensive loss	(586)		(612)
Total shareholders’ equity	7,008		7,113
Total liabilities and shareholders’ equity	$	16,393	$	16,293
Common shares outstanding (in thousands)	201,980		206,161

See Notes to the Consolidated Financial Statements.

5

TEXTRON INC.

Consolidated Statements of Cash Flows (Unaudited)

For the Three Months Ended April 1, 2023 and April 2, 2022, respectively

	Consolidated
(In millions)	2023		2022
Cash flows from operating activities
Net income	$	191	$	193
Adjustments to reconcile net income to net cash provided by operating activities:
Non-cash items:
Depreciation and amortization	92		93
Deferred income taxes	(32)		(52)
Other, net	39		36
Changes in assets and liabilities:
Accounts receivable, net	(69)		37
Inventories	(380)		(176)
Other assets	128		(4)
Accounts payable	261		38
Other liabilities	(74)		26
Income taxes, net	50		71
Pension, net	(51)		(41)
Captive finance receivables, net	6		18
Other operating activities, net	2		2
Net cash provided by operating activities	163		241
Cash flows from investing activities
Capital expenditures	(62)		(48)
Net proceeds from corporate-owned life insurance policies	20		2
Proceeds from sale of property, plant and equipment	—		18
Finance receivables repaid	12		13
Other investing activities, net	1		43
Net cash provided by (used in) investing activities	(29)		28
Cash flows from financing activities
Principal payments on long-term debt and nonrecourse debt	(17)		(121)
Purchases of Textron common stock	(377)		(157)
Dividends paid	(4)		(5)
Proceeds from options exercised	27		28
Other financing activities, net	(5)		(3)
Net cash used in financing activities	(376)		(258)
Effect of exchange rate changes on cash and equivalents	6		(2)
Net increase (decrease) in cash and equivalents	(236)		9
Cash and equivalents at beginning of period	2,035		2,117
Cash and equivalents at end of period	$	1,799	$	2,126

See Notes to the Consolidated Financial Statements.

6

TEXTRON INC.

Consolidated Statements of Cash Flows (Unaudited) (Continued)

For the Three Months Ended April 1, 2023 and April 2, 2022, respectively

	Manufacturing Group				Finance Group
(In millions)	2023		2022		2023		2022
Cash flows from operating activities
Net income	$	185	$	185	$	6	$	8
Adjustments to reconcile net income to net cash    provided by (used in) operating activities:
Non-cash items:
Depreciation and amortization	92		93		—		—
Deferred income taxes	(32)		(45)		—		(7)
Other, net	41		37		(2)		(1)
Changes in assets and liabilities:
Accounts receivable, net	(69)		37		—		—
Inventories	(380)		(176)		—		—
Other assets	121		(4)		7		—
Accounts payable	261		38		—		—
Other liabilities	(65)		37		(9)		(11)
Income taxes, net	48		62		2		9
Pension, net	(51)		(41)		—		—
Other operating activities, net	2		2		—		—
Net cash provided by (used in) operating activities	153		225		4		(2)
Cash flows from investing activities
Capital expenditures	(62)		(48)		—		—
Net proceeds from corporate-owned life insurance policies	20		2		—		—
Proceeds from sale of property, plant and equipment	—		18		—		—
Finance receivables repaid	—		—		35		40
Finance receivables originated	—		—		(17)		(9)
Other investing activities, net	—		—		1		43
Net cash provided by (used in) investing activities	(42)		(28)		19		74
Cash flows from financing activities
Principal payments on long-term debt and nonrecourse debt	(2)		(2)		(15)		(119)
Purchases of Textron common stock	(377)		(157)		—		—
Dividends paid	(4)		(5)		—		—
Proceeds from options exercised	27		28		—		—
Other financing activities, net	(5)		(3)		—		—
Net cash used in financing activities	(361)		(139)		(15)		(119)
Effect of exchange rate changes on cash and equivalents	6		(2)		—		—
Net increase (decrease) in cash and equivalents	(244)		56		8		(47)
Cash and equivalents at beginning of period	1,963		1,922		72		195
Cash and equivalents at end of period	$	1,719	$	1,978	$	80	$	148

See Notes to the Consolidated Financial Statements.

7

TEXTRON INC.

Notes to the Consolidated Financial Statements (Unaudited)

Note 1. Basis of Presentation

Our Consolidated Financial Statements include the accounts of Textron Inc. (Textron) and its majority-owned subsidiaries.  We have prepared these unaudited consolidated financial statements in accordance with accounting principles generally accepted in the U.S. for interim financial information.  Accordingly, these interim financial statements do not include all of the information and footnotes required by accounting principles generally accepted in the U.S. for complete financial statements.  The consolidated interim financial statements included in this quarterly report should be read in conjunction with the consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2022.  In the opinion of management, the interim financial statements reflect all adjustments (consisting only of normal recurring adjustments) that are necessary for the fair presentation of our consolidated financial position, results of operations and cash flows for the interim periods presented. The results of operations for the interim periods are not necessarily indicative of the results to be expected for the full year.

Our financings are conducted through two separate borrowing groups.  The Manufacturing group consists of Textron consolidated with its majority-owned subsidiaries that operate in the Textron Aviation, Bell, Textron Systems, Industrial and Textron eAviation 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 first quarter of 2023, our cumulative catch-up adjustments increased segment profit by $8 million and net income by $6 million, $0.03 per diluted share. In the first quarter of 2022, our cumulative catch-up adjustments decreased segment profit by $17 million and net income by $13 million, $0.06 per diluted share.

Note 2. Accounts Receivable and Finance Receivables

Accounts Receivable

Accounts receivable is composed of the following:

(In millions)	April 1, 2023		December 31, 2022
Commercial	$	824	$	755
U.S. Government contracts	126		124
	950		879
Allowance for credit losses	(22)		(24)
Total accounts receivable, net	$	928	$	855

8

Finance Receivables

Finance receivables are presented in the following table:

(In millions)	April 1, 2023		December 31, 2022
Finance receivables	$	577	$	587
Allowance for credit losses	(22)		(24)
Total finance receivables, net	$	555	$	563

Finance Receivable Portfolio Quality

We internally assess the quality of our finance receivables based on a number of key credit quality indicators and statistics such as delinquency, loan balance to estimated collateral value and the financial strength of individual borrowers and guarantors.  Because many of these indicators are difficult to apply across an entire class of receivables, we evaluate individual loans on a quarterly basis and classify these loans into three categories based on the key credit quality indicators for the individual loan. These three categories are performing, watchlist and nonaccrual.

We classify finance receivables as nonaccrual if credit quality indicators suggest full collection of principal and interest is doubtful. In addition, we automatically classify accounts as nonaccrual once they are contractually delinquent by more than three months unless collection of principal and interest is not doubtful. Accounts are classified as watchlist when credit quality indicators have deteriorated as compared with typical underwriting criteria, and we believe collection of full principal and interest is probable but not certain. All other finance receivables that do not meet the watchlist or nonaccrual categories are classified as performing.

We measure delinquency based on the contractual payment terms of our finance receivables.  In determining the delinquency aging category of an account, any/all principal and interest received is applied to the most past-due principal and/or interest amounts due. If a significant portion of the contractually due payment is delinquent, the entire finance receivable balance is reported in accordance with the most past-due delinquency aging category.

Finance receivables categorized based on the credit quality indicators and by the delinquency aging category are summarized as follows:

(Dollars in millions)	April 1, 2023		December 31, 2022
Performing	$	512	$	515
Watchlist	26		26
Nonaccrual	39		46
Nonaccrual as a percentage of finance receivables	6.76%		7.84%
Current and less than 31 days past due	$	570	$	579
31-60 days past due	5		7
61-90 days past due	2		—
Over 90 days past due	—		1
60+ days contractual delinquency as a percentage of finance receivables	0.35%		0.17%

At April 1, 2023, 33% of our performing finance receivables were originated since the beginning of 2021 and 30% were originated from 2018 to 2020. For finance receivables categorized as watchlist 94% were originated since the beginning of 2020 and for nonaccrual, 65% were originated from 2018 to 2020.

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.

9

A summary of finance receivables and the allowance for credit losses, based on the results of our impairment evaluation, is provided below. The finance receivables included in this table specifically exclude leveraged leases in accordance with U.S. generally accepted accounting principles.

(In millions)	April 1, 2023		December 31, 2022
Finance receivables evaluated collectively	$	451	$	450
Finance receivables evaluated individually	39		46
Allowance for credit losses based on collective evaluation	19		21
Allowance for credit losses based on individual evaluation	3		3
Impaired finance receivables with specific allowance for credit losses	$	12	$	15
Impaired finance receivables with no specific allowance for credit losses	27		31
Unpaid principal balance of impaired finance receivables	53		60
Allowance for credit losses on impaired finance receivables	3		3
Average recorded investment of impaired finance receivables	43		67

Note 3. Inventories

Inventories are composed of the following:

(In millions)	April 1, 2023		December 31, 2022
Finished goods	$	1,059	$	991
Work in process	1,753		1,540
Raw materials and components	1,122		1,019
Total inventories	$	3,934	$	3,550

Note 4. Warranty Liability

Changes in our warranty liability are as follows:

	Three Months Ended
(In millions)	April 1, 2023		April 2, 2022
Beginning of period	$	149	$	127
Provision	15		16
Settlements	(18)		(19)
Adjustments*	3		6
End of period	$	149	$	130

* Adjustments include changes to prior year estimates, new issues on prior year sales and currency translation adjustments.

Note 5. Leases

We primarily lease certain manufacturing plants, offices, warehouses, training and service centers at various locations worldwide through operating leases. Our operating leases have remaining lease terms up to 26 years, which include options to extend the lease term for periods up to 25 years when it is reasonably certain the option will be exercised. Operating lease cost totaled $17 million in both the first quarter of 2023 and 2022. Variable and short-term lease costs were not significant. Cash paid for operating leases totaled $17 million in both the first quarter of 2023 and 2022, and is classified in cash flows from operating activities. Noncash transactions totaled $15 million and $7 million in the first quarter of 2023 and 2022, respectively, reflecting the recognition of operating lease assets and liabilities for new or extended leases.

Balance sheet and other information related to our operating leases is as follows:

(Dollars in millions)	April 1, 2023		December 31, 2022
Other assets	$	375	$	372
Other current liabilities	55		54
Other liabilities	328		326
Weighted-average remaining lease term (in years)	10.4		10.4
Weighted-average discount rate	4.29%		4.14%

10

At April 1, 2023, maturities of our operating lease liabilities on an undiscounted basis totaled $53 million for the remainder of 2023, $63 million for 2024, $55 million for 2025, $42 million for 2026, $37 million for 2027 and $237 million thereafter.

Note 6. 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 April 1, 2023 and December 31, 2022, we had foreign currency exchange contracts with notional amounts upon which the contracts were based of $623 million and $354 million, respectively. At April 1, 2023, the fair value amounts of our foreign currency exchange contracts were a $2 million asset and a $11 million liability. At December 31, 2022, the fair value amount of our foreign currency exchange contracts was an $11 million liability.

Our Finance group enters into interest rate swap agreements to mitigate certain exposures to fluctuations in interest rates. By using these contracts, we are able to convert floating-rate cash flows to fixed-rate cash flows. These agreements are designated as cash flow hedges. At April 1, 2023 and December 31, 2022, we had a swap agreement for a notional amount of $272 million that matures in August 2023, and a swap agreement for a notional amount of $25 million that matures in June 2025. The fair value of these swap agreements was a $5 million asset at April 1, 2023 and an $8 million asset at December 31, 2022. The fair value of these swap agreements is determined using values published by third-party leading financial news and data providers. These values are observable data that represent the value that financial institutions use for contracts entered into at that date, but are not based on actual transactions, so they are classified as Level 2.

Assets and Liabilities Not Recorded at Fair Value

The carrying value and estimated fair value of our financial instruments that are not reflected in the financial statements at fair value are as follows:

	April 1, 2023				December 31, 2022
	Carrying		Estimated		Carrying		Estimated
(In millions)	Value		Fair Value		Value		Fair Value
Manufacturing group
Debt, excluding leases	$	(3,175)	$	(2,960)	$	(3,175)	$	(2,872)
Finance group
Finance receivables, excluding leases	388		381		390		369
Debt	(367)		(298)		(375)		(294)

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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.

Note 7. Shareholders’ Equity

A reconciliation of Shareholders’ equity is presented below:

(In millions)	Common Stock		Capital Surplus		Treasury Stock		Retained Earnings		Accumulated Other Comprehensive Loss		Total Shareholders' Equity
Three months ended April 1, 2023
Beginning of period	$	26	$	1,880	$	(84)	$	5,903	$	(612)	$	7,113
Net income	—		—		—		191		—		191
Other comprehensive income	—		—		—		—		26		26
Share-based compensation activity	—		62		—		—		—		62
Dividends declared	—		—		—		(4)		—		(4)
Purchases of common stock, including excise tax*	—		—		(380)		—		—		(380)
End of period	$	26	$	1,942	$	(464)	$	6,090	$	(586)	$	7,008
Three months ended April 2, 2022
Beginning of period	$	28	$	1,863	$	(157)	$	5,870	$	(789)	$	6,815
Net income	—		—		—		193		—		193
Other comprehensive income	—		—		—		—		10		10
Share-based compensation activity	—		61		—		—		—		61
Dividends declared	—		—		—		(5)		—		(5)
Purchases of common stock	—		—		(157)		—		—		(157)
End of period	$	28	$	1,924	$	(314)	$	6,058	$	(779)	$	6,917

*Includes $3 million accrued for the excise tax imposed on common share repurchases beginning on January 1, 2023 as part of the Inflation Reduction Act.

Dividends per share of common stock were $0.02 for both the first quarter of 2023 and 2022.

Earnings Per Share

We calculate basic and diluted earnings per share (EPS) based on net income, which approximates income available to common shareholders for each period.  Basic EPS is calculated using the two-class method, which includes the weighted-average number of common shares outstanding during the period and restricted stock units to be paid in stock that are deemed participating securities as they provide nonforfeitable rights to dividends. Diluted EPS considers the dilutive effect of all potential future common stock, including stock options.  

The weighted-average shares outstanding for basic and diluted EPS are as follows:

	Three Months Ended
(In thousands)	April 1, 2023	April 2, 2022
Basic weighted-average shares outstanding	204,835	217,010
Dilutive effect of stock options	2,176	2,597
Diluted weighted-average shares outstanding	207,011	219,607

Stock options to purchase 2.0 million and 1.0 million shares of common stock were excluded from the calculation of diluted weighted-average shares outstanding for the first quarter of 2023 and 2022, respectively, as their effect would have been anti-dilutive.

12

Accumulated Other Comprehensive Loss and Other Comprehensive Income

The components of Accumulated other comprehensive loss are presented below:

(In millions)	Pension and Postretirement Benefits Adjustments		Foreign Currency Translation Adjustments		Deferred Gains (Losses) on Hedge Contracts		Accumulated Other Comprehensive Loss
Balance at December 31, 2022	$	(516)	$	(94)	$	(2)	$	(612)
Other comprehensive income before reclassifications	—		28		(3)		25
Reclassified from Accumulated other comprehensive loss	—		—		1		1
Balance at April 1, 2023	$	(516)	$	(66)	$	(4)	$	(586)
Balance at January 1, 2022	$	(799)	$	9	$	1	$	(789)
Other comprehensive loss before reclassifications	—		(14)		7		(7)
Reclassified from Accumulated other comprehensive loss	17		—		—		17
Balance at April 2, 2022	$	(782)	$	(5)	$	8	$	(779)

The before and after-tax components of Other comprehensive income are presented below:

	April 1, 2023						April 2, 2022
(In millions)	Pre-Tax Amount		Tax (Expense) Benefit		After-tax Amount		Pre-Tax Amount		Tax (Expense) Benefit		After-tax Amount
Three Months Ended
Pension and postretirement benefits adjustments:
Amortization of net actuarial (gain) loss*	$	(2)	$	1	$	(1)	$	21	$	(5)	$	16
Amortization of prior service cost*	2		(1)		1		2		(1)		1
Pension and postretirement benefits adjustments, net	—		—		—		23		(6)		17
Foreign currency translation adjustments	28		—		28		(14)		—		(14)
Deferred gains (losses) on hedge contracts:
Current deferrals	(4)		1		(3)		10		(3)		7
Reclassification adjustments	2		(1)		1		—		—		—
Deferred gains (losses) on hedge contracts, net	(2)		—		(2)		10		(3)		7
Total	$	26	$	—	$	26	$	19	$	(9)	$	10

*These components of other comprehensive income are included in the computation of net periodic pension cost (income). See Note 15 of our 2022 Annual Report on Form 10-K for additional information.

13

Note 8. Segment Information

We operate in, and reported financial information for, the following six business segments: Textron Aviation, Bell, Textron Systems, Industrial, Textron eAviation and Finance. Segment profit is an important measure used for evaluating performance and for decision-making purposes. Beginning in 2023, we changed how we measure our manufacturing segment operating results to exclude the non-service components of pension and postretirement income, net; LIFO inventory provision; and intangible asset amortization. This measure also continues to exclude interest expense, net for Manufacturing group; certain corporate expenses; gains/losses on major business dispositions; and special charges. The prior period has been recast to conform to this presentation. The measurement for the Finance segment includes interest income and expense along with intercompany interest income and expense.

Our revenues by segment, along with a reconciliation of segment profit to income before income taxes, are included in the table below:

	Three Months Ended
(In millions)	April 1, 2023		April 2, 2022
Revenues
Textron Aviation	$	1,149	$	1,040
Bell	621		834
Textron Systems	306		273
Industrial	932		838
Textron eAviation	4		—
Finance	12		16
Total revenues	$	3,024	$	3,001
Segment Profit
Textron Aviation	$	125	$	110
Bell	60		91
Textron Systems	34		28
Industrial	41		39
Textron eAviation	(9)		—
Finance	8		9
Segment profit	259		277
Corporate expenses and other, net	(39)		(52)
Interest expense, net for Manufacturing group	(17)		(28)
LIFO inventory provision	(25)		(12)
Intangible asset amortization	(10)		(13)
Non-service components of pension and postretirement income, net	59		60
Income before income taxes	$	227	$	232

14

Note 9. Revenues

Disaggregation of Revenues

Our revenues disaggregated by major product type are presented below:

	Three Months Ended
(In millions)	April 1, 2023		April 2, 2022
Aircraft	$	718	$	646
Aftermarket parts and services	431		394
Textron Aviation	1,149		1,040
Military aircraft and support programs	385		597
Commercial helicopters, parts and services	236		237
Bell	621		834
Textron Systems	306		273
Fuel systems and functional components	488		464
Specialized vehicles	444		374
Industrial	932		838
Textron eAviation	4		—
Finance	12		16
Total revenues	$	3,024	$	3,001

Our revenues for our segments by customer type and geographic location are presented below:

(In millions)	Textron Aviation		Bell		Textron Systems		Industrial		Textron eAviation		Finance		Total
Three months ended April 1, 2023
Customer type:
Commercial	$	1,107	$	232	$	74	$	927	$	4	$	12	$	2,356
U.S. Government	42		389		232		5		—		—		668
Total revenues	$	1,149	$	621	$	306	$	932	$	4	$	12	$	3,024
Geographic location:
United States	$	836	$	460	$	275	$	494	$	1	$	4	$	2,070
Europe	66		19		14		204		2		—		305
Other international	247		142		17		234		1		8		649
Total revenues	$	1,149	$	621	$	306	$	932	$	4	$	12	$	3,024
Three months ended April 2, 2022
Customer type:
Commercial	$	1,021	$	234	$	65	$	835	$	—	$	16	$	2,171
U.S. Government	19		600		208		3		—		—		830
Total revenues	$	1,040	$	834	$	273	$	838	$	—	$	16	$	3,001
Geographic location:
United States	$	732	$	670	$	246	$	426	$	—	$	5	$	2,079
Europe	119		28		8		190		—		1		346
Other international	189		136		19		222		—		10		576
Total revenues	$	1,040	$	834	$	273	$	838	$	—	$	16	$	3,001

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 April 1, 2023, we had $13.1 billion in remaining performance obligations of which we expect to recognize revenues of approximately 85% through 2024, an additional 12% through 2026, and the balance thereafter.  

15

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 April 1, 2023 and December 31, 2022, contract assets totaled $621 million and $680 million, respectively, and contract liabilities totaled $1.7 billion and $1.5 billion, respectively, reflecting timing differences between revenues recognized, billings and payments from customers. We recognized revenues of $316 million and $206 million in the first quarter of 2023 and 2022, respectively, that were included in the contract liability balance at the beginning of each year.

Note 10. Share-Based Compensation

Under our share-based compensation plan, we have authorization to provide awards to selected employees and non-employee directors in the form of stock options, restricted stock, restricted stock units, stock appreciation rights, performance stock, performance share units and other awards.  Compensation expense included in net income for our share-based compensation plan is as follows:

	Three Months Ended
(In millions)	April 1, 2023		April 2, 2022
Compensation expense	$	45	$	34
Income tax benefit	(11)		(8)
Total compensation expense included in net income	$	34	$	26

Compensation expense included stock option expense of $14 million and $12 million in the first quarter of 2023 and 2022, respectively. We typically grant stock appreciation rights to selected non-U.S. employees. At April 1, 2023, outstanding stock appreciation rights totaled 617,074 with a weighted-average exercise price of $54.62 and a weighted-average remaining contractual life of 6.4 years; these units had an intrinsic value of $10 million, compared to $14 million at April 2, 2022.

Stock Options

Options to purchase our shares have a maximum term of ten years and generally vest ratably over a three-year period. Stock option compensation cost is calculated under the fair value approach using the Black-Scholes option-pricing model to determine the fair value of options granted on the date of grant. The expected volatility used in this model is based on historical volatilities and implied volatilities from traded options on our common stock.  The expected term is based on historical option exercise data, which is adjusted to reflect any anticipated changes in expected behavior.

We grant options annually on the first day of March. The assumptions used in our option-pricing model for these grants and the weighted-average fair value for these options are as follows:

	March 1, 2023		March 1, 2022
Fair value of options at grant date	$	23.83	$	19.95
Dividend yield	0.1%		0.1%
Expected volatility	29.4%		29.2%
Risk-free interest rate	4.2%		1.9%
Expected term (in years)	4.8		4.8

The stock option activity during the first quarter of 2023 is provided below:

(Options in thousands)	Number of Options	Weighted- Average Exercise Price
Outstanding at December 31, 2022	8,310	$	50.25
Granted	1,026	73.19
Exercised	(630)	(42.84)
Forfeited or expired	(60)	(58.90)
Outstanding at April 1, 2023	8,646	$	53.45
Exercisable at April 1, 2023	6,263	$	48.56

At April 1, 2023, our outstanding options had an aggregate intrinsic value of $152 million and a weighted-average remaining contractual life of 6.2 years. Our exercisable options had an aggregate intrinsic value of $138 million and a weighted-average remaining contractual life of 5.1 years at April 1, 2023.  The total intrinsic value of options exercised during the first quarter of 2023 and 2022 was $19 million and $23 million, respectively.

16

Restricted Stock Units

We issue restricted stock units that include the right to receive dividend equivalents and are settled in both cash and stock. Beginning in 2020, new grants of restricted stock units will vest in full on the third anniversary of the grant date. Restricted stock units granted prior to 2020 vest one-third each in the third, fourth and fifth year following the year of the grant. Compensation cost is determined using the fair value of these units based on the trading price of our common stock. For units payable in stock, we use the trading price on the grant date, while units payable in cash are remeasured using the price at each reporting period date.

The activity for restricted stock units payable in both stock and cash during the first quarter of 2023 is provided below:

	Units Payable in Stock			Units Payable in Cash
(Shares/Units in thousands)	Number of Shares	Weighted- Average Grant Date Fair Value		Number of Units	Weighted- Average Grant Date Fair Value
Outstanding at December 31, 2022, nonvested	525	$	52.99	1,086	$	53.26
Granted	103	73.17		245	73.18
Vested	(218)	(46.66)		(463)	(45.92)
Forfeited	—	—		(32)	(56.94)
Outstanding at April 1, 2023, nonvested	410	$	61.41	836	$	63.02

The fair value of the restricted stock unit awards that vested and/or amounts paid under these awards is as follows:

	Three Months Ended
(In millions)	April 1, 2023		April 2, 2022
Fair value of awards vested	$	44	$	24
Cash paid	34		17

Performance Share Units

The activity for our performance share units during the first quarter of 2023 is as follows:

(Units in thousands)	Number of Units	Weighted- Average Grant Date Fair Value
Outstanding at December 31, 2022, nonvested	427	$	59.51
Granted	209	73.19
Outstanding at April 1, 2023, nonvested	636	$	64.01

Cash paid under these awards totaled $27 million and $15 million in the first quarter of 2023 and 2022, respectively.

17

Note 11. Retirement Plans

We provide defined benefit pension plans and other postretirement benefits to eligible employees.  The components of net periodic benefit income for these plans are as follows:

	Three Months Ended
(In millions)	April 1, 2023		April 2, 2022
Pension Benefits
Service cost	$	17	$	26
Interest cost	91		69
Expected return on plan assets	(152)		(153)
Amortization of net actuarial loss	—		22
Amortization of prior service cost	3		3
Net periodic benefit income*	$	(41)	$	(33)
Postretirement Benefits Other Than Pensions
Service cost	$	—	$	1
Interest cost	2		1
Amortization of net actuarial gain	(2)		(1)
Amortization of prior service credit	(1)		(1)
Net periodic benefit income	$	(1)	$	—

* Excludes the cost associated with the defined contribution component, included in certain of our U.S.-based defined benefit pension plans, that totaled $4 million for the first quarter of 2023 and 2022, respectively.

Note 12. Income Taxes

Our effective tax rate for the first quarter of 2023 and 2022 was 15.9% and 16.8%, respectively. In the first quarter of 2023, the effective tax rate was lower than the U.S. federal statutory rate of 21%, largely due to the favorable impact of research and development credits and tax deductions for foreign-derived intangible income. In the first quarter of 2022, the effective tax rate was lower than the U.S. federal statutory rate of 21%, largely due to the favorable impact of research and development credits.

Note 13. Commitments and Contingencies

We are subject to actual and threatened 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; disputes with suppliers, production partners or other third parties; product liability; patent and trademark infringement; employment disputes; and environmental, health and safety 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.

18

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Consolidated Results of Operations

	Three Months Ended
(Dollars in millions)	April 1, 2023		April 2, 2022		% Change
Revenues	$	3,024	$	3,001	1%
Cost of sales	2,531		2,492		2%
Gross margin as a % of Manufacturing revenues	16.0%		16.5%
Selling and administrative expense	305		305		—%

An analysis of our consolidated operating results is set forth below. A more detailed analysis of our segments’ operating results is provided in the Segment Analysis section on pages 20 to 24.

Revenues

Revenues increased $23 million, 1%, in the first quarter of 2023, compared with the first quarter of 2022. The revenue increase primarily included the following factors:

•Higher Textron Aviation revenues of $109 million, reflecting higher pricing of $58 million and higher volume and mix of $51 million, which includes higher defense and aftermarket volume.

•Higher Industrial revenues of $94 million, largely due to higher volume and mix of $88 million at both product lines.

•Higher Textron Systems revenues of $33 million, largely reflecting higher volume.

•Lower Bell revenues of $213 million, reflecting lower military spares and support and V-22 and H-1 production volume.

Cost of Sales

Cost of sales increased $39 million, 2%, in the first quarter of 2023, compared with the first quarter of 2022, largely due to $77 million of inflation and LIFO inventory provision, partially offset by the impact of lower net volume and mix.

Income Taxes

Our effective tax rate for the first quarter of 2023 and 2022 was 15.9% and 16.8%, respectively. In the first quarter of 2023, the effective tax rate was lower than the U.S. federal statutory rate of 21%, largely due to the favorable impact of research and development credits and tax deductions for foreign-derived intangible income. In the first quarter of 2022, the effective tax rate was lower than the U.S. federal statutory rate of 21%, largely due to the favorable impact of research and development credits.

Backlog

Our backlog is summarized below:

(In millions)	April 1, 2023		December 31, 2022
Textron Aviation	$	6,523	$	6,387
Bell	4,586		4,781
Textron Systems	2,030		2,098
Total backlog	$	13,139	$	13,266

19

Segment Analysis

We operate in, and report financial information for, the following six business segments: Textron Aviation, Bell, Textron Systems, Industrial, Textron eAviation and Finance. Segment profit is an important measure used for evaluating performance and for decision-making purposes. Beginning in 2023, we changed how we measure our manufacturing segment operating results to exclude the non-service components of pension and postretirement income, net; LIFO inventory provision; and intangible asset amortization. This measure also continues to exclude interest expense, net for Manufacturing group; certain corporate expenses; gains/losses on major business dispositions; and special charges. The prior period has been recast to conform to this presentation. The measurement for the Finance segment includes interest income and expense along with intercompany interest income and expense. Operating expenses for the Manufacturing segments include cost of sales and selling and administrative expense, while excluding certain corporate expenses, LIFO inventory provision, intangible asset amortization and special charges.

In our discussion of comparative results for the Manufacturing group, changes in revenues and segment profit for our commercial businesses typically are expressed in terms of volume and mix, pricing, foreign exchange, acquisitions and dispositions, inflation and performance. For revenues, volume and mix represents changes in revenues from increases or decreases in the number of units delivered or services provided and the composition of products and/or services sold. For segment profit, volume and mix represents a change due to the number of units delivered or services provided and the composition of products and/or services sold at different profit margins. Pricing represents changes in unit pricing. Foreign exchange is the change resulting from translating foreign-denominated amounts into U.S. dollars at exchange rates that are different from the prior period. Revenues generated by acquired businesses are reflected in Acquisitions for a twelve-month period, while reductions in revenues and segment profit from the sale of businesses are reflected as Dispositions. Inflation represents higher material, wages, benefits, pension service cost or other costs. Performance reflects an increase or decrease in research and development, depreciation, selling and administrative costs, warranty, product liability, quality/scrap, labor efficiency, overhead, product line profitability, start-up, ramp up and cost-reduction initiatives or other manufacturing inputs.

Approximately 22% of our 2022 revenues were derived from contracts with the U.S. Government, including those under the U.S. Government-sponsored foreign military sales program.  For our segments that contract with the U.S. Government, changes in revenues related to these contracts are expressed in terms of volume.  Changes in segment profit for these contracts are typically expressed in terms of volume and mix and performance; these include cumulative catch-up adjustments associated with a) revisions to the transaction price that may reflect contract modifications or changes in assumptions related to award fees and other variable consideration or b) changes in the total estimated costs at completion due to improved or deteriorated operating performance.

Textron Aviation

	Three Months Ended
(Dollars in millions)	April 1, 2023		April 2, 2022		% Change
Revenues:
Aircraft	$	718	$	646	11%
Aftermarket parts and services	431		394		9%
Total revenues	1,149		1,040		10%
Operating expenses	1,024		930		10%
Segment profit	$	125	$	110	14%
Profit margin	10.9%		10.6%

Textron Aviation Revenues and Operating Expenses

The following factors contributed to the change in Textron Aviation’s revenues from the prior year quarter:

(In millions)	Q1 2023 versus Q1 2022
Pricing	$	58
Volume and mix	51
Total change	$	109

Textron Aviation’s revenues increased $109 million, 10%, in the first quarter of 2023, compared with the first quarter of 2022, reflecting higher pricing of $58 million and higher volume and mix of $51 million, which includes higher defense and aftermarket volume. We delivered 35 Citation jets and 34 commercial turboprops in the first quarter of 2023, compared with 39 Citation jets and 31 commercial turboprops in the first quarter of 2022.

20

Textron Aviation’s operating expenses increased $94 million, 10%, in the first quarter of 2023, compared with the first quarter of 2022, largely due to inflation of $41 million and higher volume and mix described above.

Textron Aviation Segment Profit

The following factors contributed to the change in Textron Aviation’s segment profit from the prior year quarter:

(In millions)	Q1 2023 versus Q1 2022
Pricing, net of inflation	$	17
Volume and mix	15
Performance	(17)
Total change	$	15

Segment profit at Textron Aviation increased $15 million, 14%, in the first quarter of 2023, compared with the first quarter of 2022, due to favorable pricing, net of inflation of $17 million, and the impact from higher volume and mix described above, partially offset by an unfavorable impact from performance of $17 million.

Bell

	Three Months Ended
(Dollars in millions)	April 1, 2023		April 2, 2022		% Change
Revenues:
Military aircraft and support programs	$	385	$	597	(36)%
Commercial helicopters, parts and services	236		237		—%
Total revenues	621		834		(26)%
Operating expenses	561		743		(24)%
Segment profit	$	60	$	91	(34)%
Profit margin	9.7%		10.9%

A significant portion of Bell’s military aircraft and support program revenues is from the U.S. Government for the V-22 tiltrotor aircraft and the H-1 helicopter platforms, which are transitioning from production to the support stage over the next few years. Under the current contracts, production is expected to end in 2023 for the H-1 helicopter and 2025 for the V-22 tiltrotor. In December 2022, Bell was awarded the development contract for the U.S. Army's Future Long Range Assault Aircraft program. The award was protested by a competitor, but, on April 6, 2023, the Government Accountability Office denied the protest. The U.S. Army has cancelled the stop-work order, and work on the contract is proceeding.

Bell Revenues and Operating Expenses

The following factors contributed to the change in Bell’s revenues from the prior year quarter:

(In millions)	Q1 2023 versus Q1 2022
Volume and mix	$	(225)
Pricing	12
Total change	$	(213)

Bell’s revenues decreased $213 million, 26%, in the first quarter of 2023, compared with the first quarter of 2022, reflecting lower military spares and support and V-22 and H-1 production volume. We delivered 22 commercial helicopters in the first quarter of 2023, compared with 25 commercial helicopters in the first quarter of 2022. 

Bell’s operating expenses decreased $182 million, 24% in the first quarter of 2023, compared with the first quarter of 2022, primarily due to lower volume and mix described above.

21

Bell Segment Profit

The following factors contributed to the change in Bell’s segment profit from the prior year quarter:

(In millions)	Q1 2023 versus Q1 2022
Volume and mix	$	(61)
Performance	29
Pricing, net of inflation	1
Total change	$	(31)

Bell’s segment profit decreased $31 million, 34%, in the first quarter of 2023, compared with the first quarter of 2022, largely due to lower volume and mix described above, partially offset by a favorable impact from performance of $29 million, which includes $18 million of lower research and development costs.

Textron Systems

	Three Months Ended
(Dollars in millions)	April 1, 2023		April 2, 2022		% Change
Revenues	$	306	$	273	12%
Operating expenses	272		245		11%
Segment profit	$	34	$	28	21%
Profit margin	11.1%		10.3%

Textron Systems Revenues and Operating Expenses

The following factors contributed to the change in Textron Systems’ revenues from the prior year quarter:

(In millions)	Q1 2023 versus Q1 2022
Volume	$	28
Pricing	5
Total change	$	33

Textron Systems' revenues increased $33 million, 12%, in the first quarter of 2023, compared with the first quarter of 2022, largely reflecting higher volume.

Textron Systems’ operating expenses increased $27 million, 11%, in the first quarter of 2023, compared with the first quarter of 2022, largely related to higher volume described above.

Textron Systems Segment Profit

The following factors contributed to the change in Textron Systems’ segment profit from the prior year quarter:

(In millions)	Q1 2023 versus Q1 2022
Performance	$	6
Pricing, net of inflation	2
Volume and mix	(2)
Total change	$	6

Textron Systems’ segment profit increased $6 million, 21%, in the first quarter of 2023, compared with the first quarter of 2022, largely due to a favorable impact from performance of $6 million.

22

Industrial

	Three Months Ended
(Dollars in millions)	April 1, 2023		April 2, 2022		% Change
Revenues:
Fuel systems and functional components	$	488	$	464	5%
Specialized vehicles	444		374		19%
Total revenues	932		838		11%
Operating expenses	891		799		12%
Segment profit	$	41	$	39	5%
Profit margin	4.4%		4.7%

Industrial Revenues and Operating Expenses

The following factors contributed to the change in Industrial’s revenues from the prior year quarter:

(In millions)	Q1 2023 versus Q1 2022
Volume and mix	$	88
Pricing	24
Foreign exchange	(18)
Total change	$	94

Industrial segment revenues increased $94 million, 11%, in the first quarter of 2023, compared with the first quarter of 2022, largely due to higher volume and mix of $88 million at both product lines.

Industrial's operating expenses increased $92 million, 12%, in the first quarter of 2023, compared with the first quarter of 2022, principally reflecting the impact of higher volume and mix described above .

Industrial Segment Profit

The following factors contributed to the change in Industrial’s segment profit from the prior year quarter:

(In millions)	Q1 2023 versus Q1 2022
Volume and mix	$	8
Pricing, net of inflation	8
Performance	(12)
Foreign exchange	(2)
Total change	$	2

Segment profit for the Industrial segment increased $2 million, 5%, in the first quarter of 2023, compared with the first quarter of 2022, largely due to higher volume and mix of $8 million as described above and an $8 million favorable impact from pricing, net of inflation, principally in the Specialized Vehicles product line, partially offset by an unfavorable impact of $12 million from performance.

Textron eAviation

In the first quarter of 2023, Textron eAviation segment revenues totaled $4 million and segment loss totaled $9 million, which was primarily related to research and development costs.

23

Finance

	Three Months Ended
(In millions)	April 1, 2023		April 2, 2022
Revenues	$	12	$	16
Segment profit	8		9

Finance segment revenues decreased $4 million in the first quarter of 2023, compared with the first quarter of 2022, and segment profit decreased $1 million. The following table reflects information about the Finance segment’s credit performance related to finance receivables.

(Dollars in millions)	April 1, 2023		December 31, 2022
Finance receivables	$	577	$	587
Allowance for credit losses	22		24
Ratio of allowance for credit losses to finance receivables	3.81%		4.09%
Nonaccrual finance receivables	39		46
Ratio of nonaccrual finance receivables to finance receivables	6.76%		7.84%
60+ days contractual delinquency	2		1
60+ days contractual delinquency as a percentage of finance receivables	0.35%		0.17%

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. Key portfolio quality indicators are discussed in Note 2 to the Consolidated Financial Statements.

Liquidity and Capital Resources

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, Industrial and Textron eAviation 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.

Key information that is utilized in assessing our liquidity is summarized below:

(Dollars in millions)	April 1, 2023		December 31, 2022
Manufacturing group
Cash and equivalents	$	1,719	$	1,963
Debt	3,183		3,182
Shareholders’ equity	7,008		7,113
Capital (debt plus shareholders’ equity)	10,191		10,295
Net debt (net of cash and equivalents) to capital	17%		15%
Debt to capital	31%		31%
Finance group
Cash and equivalents	$	80	$	72
Debt	367		375

We believe that our calculations of debt to capital and net debt to capital are useful measures as they provide a summary indication of the level of debt financing (i.e., leverage) that is in place to support our capital structure, as well as to provide an indication of the capacity to add further leverage. We expect to have sufficient cash to meet our needs based on our existing cash balances, the cash we expect to generate from our manufacturing operations and the availability of our existing credit facility.

24

Credit Facilities and Other Sources of Capital

Textron has a senior unsecured revolving credit facility for an aggregate principal amount of $1.0 billion, of which $100 million is available for the issuance of letters of credit. We may elect to increase the aggregate amount of commitments under the facility to up to $1.3 billion by designating an additional lender or by an existing lender agreeing to increase its commitment. The facility expires in October 2027 and provides for two one-year extensions at our option with the consent of lenders representing a majority of the commitments under the facility. At April 1, 2023 and December 31, 2022, there were no amounts borrowed against the facility and there were $9 million of outstanding letters of credit issued under the facility.

We also maintain an effective shelf registration statement filed with the Securities and Exchange Commission that allows us to issue an unlimited amount of public debt and other securities.

Manufacturing Group Cash Flows

Cash flows for the Manufacturing group as presented in our Consolidated Statements of Cash Flows are summarized below:

	Three Months Ended
(In millions)	April 1, 2023		April 2, 2022
Operating activities	$	153	$	225
Investing activities	(42)		(28)
Financing activities	(361)		(139)

In the first quarter of 2023, cash flows from operating activities decreased $72 million to $153 million, compared with $225 million in the first quarter of 2022, largely due to changes in working capital.

Cash flows used in investing activities in the first quarter of 2023 included $62 million of capital expenditures, partially offset by $20 million of net proceeds from corporate-owned life insurance policies. Investing activities in the first quarter of 2022 included $48 million of capital expenditures, partially offset by $18 million of proceeds from the sale of property, plant and equipment.

Cash flows used in financing activities in the first quarter of 2023 included $377 million of cash paid to repurchase an aggregate of 5.2 million shares of our common stock. In the first quarter of 2022, cash flows used in financing activities included $157 million of cash paid to repurchase an aggregate of 2.2 million shares of our common stock.

Finance Group Cash Flows

Cash flows for the Finance group as presented in our Consolidated Statements of Cash Flows are summarized below:

	Three Months Ended
(In millions)	April 1, 2023		April 2, 2022
Operating activities	$	4	$	(2)
Investing activities	19		74
Financing activities	(15)		(119)

The Finance group’s cash flows from investing activities included collections on finance receivables totaling $35 million and $40 million in the first quarter of 2023 and 2022, respectively, partially offset by finance receivable originations of $17 million and $9 million, respectively. Cash flows provided by investing activities in the first quarter of 2022 also included $43 million of other investing activities, largely related to proceeds from the sale of operating lease assets.  In the first quarter of 2023 and 2022, financing activities included payments on long-term and nonrecourse debt of $15 million and $119 million, respectively.  

Consolidated Cash Flows

The consolidated cash flows after elimination of activity between the borrowing groups, are summarized below:

	Three Months Ended
(In millions)	April 1, 2023		April 2, 2022
Operating activities	$	163	$	241
Investing activities	(29)		28
Financing activities	(376)		(258)

In the first quarter of 2023, cash flows from operating activities decreased $78 million to $163 million, compared with $241 million in the first quarter of 2022, largely due to changes in working capital.

25

Cash flows used in investing activities in the first quarter of 2023 included $62 million of capital expenditures, partially offset by $20 million of net proceeds from corporate-owned life insurance policies. Investing activities in the first quarter of 2022 included $43 million of other investing activities, largely related to proceeds from the sale of operating lease assets, and $18 million of proceeds from the sale of property, plant and equipment, partially offset by $48 million of capital expenditures.

Cash flows used in financing activities in the first quarter of 2023 included $377 million of cash paid to repurchase shares of our outstanding common stock. In the first quarter of 2022, cash flows used in financing activities included $157 million of cash paid to repurchase shares of our outstanding common stock and $121 million of payments on long-term debt.

Captive Financing and Other Intercompany Transactions

The Finance group provides financing primarily to purchasers of new and pre-owned Textron Aviation aircraft and Bell helicopters manufactured by our Manufacturing group, otherwise known as captive financing. In the Consolidated Statements of Cash Flows, cash received from customers is reflected as operating activities when received from third parties. However, in the cash flow information provided for the separate borrowing groups, cash flows related to captive financing activities are reflected based on the operations of each group. For example, when product is sold by our Manufacturing group to a customer and is financed by the Finance group, the origination of the finance receivable is recorded within investing activities as a cash outflow in the Finance group’s statement of cash flows. Meanwhile, in the Manufacturing group’s statement of cash flows, the cash received from the Finance group on the customer’s behalf is recorded within operating cash flows as a cash inflow. Although cash is transferred between the two borrowing groups, there is no cash transaction reported in the consolidated cash flows at the time of the original financing. These captive financing activities, along with all significant intercompany transactions, are reclassified or eliminated from the Consolidated Statements of Cash Flows.

Reclassification adjustments included in the Consolidated Statements of Cash Flows are summarized below:

	Three Months Ended
(In millions)	April 1, 2023		April 2, 2022
Reclassification adjustments from investing activities to operating activities:
Cash received from customers	$	23	$	27
Finance receivable originations for Manufacturing group inventory sales	(17)		(9)
Total reclassification adjustments from investing activities to operating activities	$	6	$	18

Critical Accounting Estimates Update

Our Consolidated Financial Statements are prepared in conformity with U.S. generally accepted accounting principles, which require us to make estimates and assumptions that affect the amounts reported in the financial statements. The accounting estimates that we believe are most critical to the portrayal of our financial condition and results of operations are reported in Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2022. The following section provides an update of the year-end disclosure.

Revenue Recognition

A substantial portion of our revenues is related to long-term contracts with the U.S. Government, including those under the U.S. Government-sponsored foreign military sales program, for the design, development, manufacture or modification of aerospace and defense products as well as related services. We generally use the cost-to-cost method to measure progress for these contracts because it best depicts the transfer of control to the customer that occurs as we incur costs on our contracts.  Under this measure, the extent of progress towards completion is measured based on the ratio of costs incurred to date to the estimated costs at completion of the performance obligation, and revenue is recorded proportionally as costs are incurred.

Changes in our estimate of the total expected cost or in the transaction price for a contract typically impact our profit booking rate. We utilize the cumulative catch-up method of accounting to recognize the impact of these changes on our profit booking rate for a contract. Under this method, the inception-to-date impact of a profit adjustment on a contract is recognized in the period the adjustment is identified. The impact of our cumulative catch-up adjustments on segment profit recognized in prior periods is presented below:

	Three Months Ended
(In millions)	April 1, 2023		April 2, 2022
Gross favorable	$	25	$	16
Gross unfavorable	(17)		(33)
Net adjustments	$	8	$	(17)

26

Forward-Looking Information

Certain statements in this Quarterly Report on Form 10-Q and other oral and written statements made by us from time to time are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements, which may describe strategies, goals, outlook or other non-historical matters, or project revenues, income, returns or other financial measures, often include words such as “believe,” “expect,” “anticipate,” “intend,” “plan,” “estimate,” “guidance,” “project,” “target,” “potential,” “will,” “should,” “could,” “likely” or “may” and similar expressions intended to identify forward-looking statements. These statements are only predictions and involve known and unknown risks, uncertainties, and other factors that may cause our actual results to differ materially from those expressed or implied by such forward-looking statements. Given these uncertainties, you should not place undue reliance on these forward-looking statements. Forward-looking statements speak only as of the date on which they are made, and we undertake no obligation to update or revise any forward-looking statements.  In addition to those factors described in our 2022 Annual Report on Form 10-K under “Risk Factors,” among the factors that could cause actual results to differ materially from past and projected future results are the following:

•Interruptions in the U.S. Government’s ability to fund its activities and/or pay its obligations;

•Changing priorities or reductions in the U.S. Government defense budget, including those related to military operations in foreign countries;

•Our ability to perform as anticipated and to control costs under contracts with the U.S. Government;

•The U.S. Government’s ability to unilaterally modify or terminate its contracts with us for the U.S. Government’s convenience or for our failure to perform, to change applicable procurement and accounting policies, or, under certain circumstances, to withhold payment or suspend or debar us as a contractor eligible to receive future contract awards;

•Changes in foreign military funding priorities or budget constraints and determinations, or changes in government regulations or policies on the export and import of military and commercial products;

•Volatility in the global economy or changes in worldwide political conditions that adversely impact demand for our products;

•Volatility in interest rates or foreign exchange rates and inflationary pressures;

•Risks related to our international business, including establishing and maintaining facilities in locations around the world and relying on joint venture partners, subcontractors, suppliers, representatives, consultants and other business partners in connection with international business, including in emerging market countries;

•Our Finance segment’s ability to maintain portfolio credit quality or to realize full value of receivables;

•Performance issues with key suppliers or subcontractors;

•Legislative or regulatory actions, both domestic and foreign, impacting our operations or demand for our products;

•Our ability to control costs and successfully implement various cost-reduction activities;

•The efficacy of research and development investments to develop new products or unanticipated expenses in connection with the launching of significant new products or programs;

•The timing of our new product launches or certifications of our new aircraft products;

•Our ability to keep pace with our competitors in the introduction of new products and upgrades with features and technologies desired by our customers;

•Pension plan assumptions and future contributions;

•Demand softness or volatility in the markets in which we do business;

•Cybersecurity threats, including the potential misappropriation of assets or sensitive information, corruption of data or operational disruption;

•Difficulty or unanticipated expenses in connection with integrating acquired businesses;

•The risk that acquisitions do not perform as planned, including, for example, the risk that acquired businesses will not achieve revenues and profit projections;

•The impact of changes in tax legislation;

•Risks and uncertainties related to the ongoing impact of the COVID-19 pandemic and the war between Russia and Ukraine on our business and operations; and

•The ability of our businesses to hire and retain the highly skilled personnel necessary for our businesses to succeed.

27

Item 3. Quantitative and Qualitative Disclosures About Market Risk

There has been no significant change in our exposure to market risk during the fiscal quarter ended April 1, 2023. For discussion of our exposure to market risk, refer to Item 7A. Quantitative and Qualitative Disclosures about Market Risk contained in Textron’s 2022 Annual Report on Form 10-K.

Item 4. Controls and Procedures

We performed an evaluation of the effectiveness of our disclosure controls and procedures as of April 1, 2023. The evaluation was performed with the participation of senior management of each business segment and key Corporate functions, under the supervision of our Chairman, President and Chief Executive Officer (CEO) and our Executive Vice President and Chief Financial Officer (CFO). Based on this evaluation, the CEO and CFO concluded that our disclosure controls and procedures were operating and effective as of April 1, 2023.

There were no changes in our internal control over financial reporting during the fiscal quarter ended April 1, 2023 that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II. OTHER INFORMATION

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

The following provides information about our first quarter of 2023 repurchases of equity securities that are registered pursuant to Section 12 of the Securities Exchange Act of 1934, as amended:

Period (shares in thousands)	Total Number of Shares Purchased *	Average Price Paid per Share (excluding commissions)		Total Number of Shares Purchased as part of Publicly Announced Plan *	Maximum Number of Shares that may yet be Purchased under the Plan
January 1, 2023 – February 4, 2023	1,225	$	71.88	1,225	10,700
February 5, 2023 – March 4, 2023	2,390	74.20		2,390	8,310
March 5, 2023 – April 1, 2023	1,615	69.25		1,615	6,695
Total	5,230	$	72.13	5,230

* On January 25, 2022, our Board of Directors authorized the repurchase of up to 25 million shares of our common stock. This new plan has no expiration date and replaced the existing plan adopted in 2020.

28

Item 5. Other Information

Because this Quarterly Report on Form 10-Q is being filed within four business days from the date of the reportable event, we have elected to make the following disclosure in this Quarterly Report on Form 10-Q instead of in a Current Report on Form 8-K under Item 5.07.

Item 5.07

a.The 2023 Annual Meeting of Shareholders of Textron was held on April 26, 2023.

b.The results of the voting on the matters submitted to our shareholders are as follows:

1.The following persons were elected to serve as directors until the next annual shareholders’ meeting and received the following votes:

	For	Against	Abstain	Broker Non-Vote
Scott C. Donnelly	170,203,230	5,402,155	782,661	10,509,196
Richard F. Ambrose	172,863,817	2,583,789	940,440	10,509,196
Kathleen M. Bader	169,609,009	5,899,256	879,781	10,509,196
R. Kerry Clark	168,124,131	7,232,685	1,031,230	10,509,196
Deborah Lee James	171,356,525	4,095,813	935,708	10,509,196
Thomas A. Kennedy	172,906,906	2,489,521	991,619	10,509,196
Lionel L. Nowell III	171,348,086	4,014,132	1,025,828	10,509,196
James L. Ziemer	168,465,523	6,893,648	1,028,875	10,509,196
Maria T. Zuber	170,486,969	4,984,241	916,836	10,509,196

2.The advisory (non-binding) resolution to approve the compensation of our named executive officers, as disclosed in our proxy statement, was approved by the following vote:

For	Against	Abstain	Broker Non-Vote
166,367,179	8,966,312	1,054,555	10,509,196

3.The advisory vote on the frequency of future advisory votes to approve the compensation of our named executive officers received the following votes:

1 Year	2 Years	3 Years	Abstain	Broker Non-Vote
170,243,524	930,467	4,542,787	671,268	10,509,196

4.The appointment of Ernst & Young LLP by the Audit Committee as Textron's independent registered public accounting firm for 2023 was ratified by the following vote:

For	Against	Abstain
180,175,462	5,964,823	756,957

29

Item 6.    Exhibits

31.1	Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2	Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1	Certification of Chief Executive Officer Pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2	Certification of Chief Financial Officer Pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101	The following materials from Textron Inc.’s Quarterly Report on Form 10-Q for the quarterly period ended April 1, 2023, formatted in XBRL (eXtensible Business Reporting Language): (i) the Consolidated Statements of Operations, (ii) the Consolidated Statements of Comprehensive Income, (iii) the Consolidated Balance Sheets, (iv) the Consolidated Statements of Cash Flows and (v) the Notes to the Consolidated Financial Statements.
104	Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).

30

Signatures

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.     

		TEXTRON INC.
Date:	April 27, 2023	/s/ Mark S. Bamford
		Mark S. Bamford Vice President and Corporate Controller (principal accounting officer)

31

EX-31.1

Exhibit 31.1

Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, Scott C. Donnelly, Chairman, President and Chief Executive Officer of Textron Inc. certify that:

1.I have reviewed this quarterly report on Form 10-Q of Textron Inc.;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a)designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b)designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c)evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d)disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

a)all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b)any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date:	April 27, 2023	/s/ Scott C. Donnelly
		Scott C. Donnelly Chairman, President and Chief Executive Officer

EX-31.2

Exhibit 31.2

Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, Frank T. Connor, Executive Vice President and Chief Financial Officer of Textron Inc. certify that:

1.I have reviewed this quarterly report on Form 10-Q of Textron Inc.;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a)designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b)designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c)evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d)disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

a)all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b)any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date:	April 27, 2023	/s/ Frank T. Connor
		Frank T. Connor Executive Vice President and Chief Financial Officer

EX-32.1

Exhibit 32.1

TEXTRON INC.

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Textron Inc. (the "Company") on Form 10-Q for the period ended April 1, 2023 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Scott C. Donnelly, Chairman, President and Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:

(1)The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2)The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date:	April 27, 2023	/s/ Scott C. Donnelly
		Scott C. Donnelly Chairman, President and Chief Executive Officer

EX-32.2

Exhibit 32.2

TEXTRON INC.

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Textron Inc. (the "Company") on Form 10-Q for the period ended April 1, 2023 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Frank T. Connor, Executive Vice President and Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:

(1)The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2)The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date:	April 27, 2023	/s/ Frank T. Connor
		Frank T. Connor Executive Vice President and Chief Financial Officer

XML

Cover - shares	3 Months Ended
	Apr. 01, 2023	Apr. 14, 2023
Cover [Abstract]
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Apr. 01, 2023
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		201,679,524
Entity Central Index Key	0000217346
Current Fiscal Year End Date	--12-30
Document Fiscal Year Focus	2023
Document Fiscal Period Focus	Q1
Amendment Flag	false

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Consolidated Statements of Operations (Unaudited) - USD ($) $ in Millions	3 Months Ended
	Apr. 01, 2023	Apr. 02, 2022
Revenues
Total revenues	$ 3,024	$ 3,001
Costs, expenses and other
Selling and administrative expense	305	305
Interest expense, net	20	32
Non-service components of pension and postretirement income, net	(59)	(60)
Total costs, expenses and other	2,797	2,769
Income before income taxes	227	232
Income tax expense	36	39
Net income	$ 191	$ 193
Earnings per share
Basic (in dollars per share)	$ 0.93	$ 0.89
Diluted (in dollars per share)	$ 0.92	$ 0.88
Manufacturing group
Costs, expenses and other
Net income	$ 185	$ 185
Finance group
Revenues
Total revenues	12	16
Costs, expenses and other
Net income	6	8
Product
Costs, expenses and other
Cost of products/services sold	2,176	2,069
Product | Manufacturing group
Revenues
Total revenues	2,550	2,448
Service
Costs, expenses and other
Cost of products/services sold	355	423
Service | Manufacturing group
Revenues
Total revenues	$ 462	$ 537

XML

Consolidated Statements of Comprehensive Income (Unaudited) - USD ($) $ in Millions	3 Months Ended
	Apr. 01, 2023	Apr. 02, 2022
Statement of Comprehensive Income [Abstract]
Net income	$ 191	$ 193
Other comprehensive income, net of tax
Pension and postretirement benefits adjustments, net of reclassifications	0	17
Foreign currency translation adjustments	28	(14)
Deferred gains (losses) on hedge contracts, net of reclassifications	(2)	7
Other comprehensive income	26	10
Comprehensive income	$ 217	$ 203

XML

Consolidated Balance Sheets (Unaudited) - USD ($) shares in Thousands, $ in Millions	Apr. 01, 2023	Dec. 31, 2022
Assets
Inventories	$ 3,934	$ 3,550
Finance receivables, net	555	563
Total assets	16,393	16,293
Liabilities
Total liabilities	9,385	9,180
Shareholders’ equity
Common stock	26	26
Capital surplus	1,942	1,880
Treasury stock	(464)	(84)
Retained earnings	6,090	5,903
Accumulated other comprehensive loss	(586)	(612)
Total shareholders’ equity	7,008	7,113
Total liabilities and shareholders’ equity	$ 16,393	$ 16,293
Common shares outstanding (in shares)	201,980	206,161
Manufacturing group
Assets
Cash and equivalents	$ 1,719	$ 1,963
Accounts receivable, net	928	855
Inventories	3,934	3,550
Other current assets	949	1,033
Total current assets	7,530	7,401
Property, plant and equipment, less accumulated depreciation and amortization of $5,168 and $5,084, respectively	2,505	2,523
Goodwill	2,289	2,283
Other assets	3,416	3,422
Total assets	15,740	15,629
Liabilities
Current portion of long-term debt	357	7
Accounts payable	1,281	1,018
Other current liabilities	2,651	2,645
Total current liabilities	4,289	3,670
Other liabilities	1,829	1,879
Long-term debt	2,826	3,175
Total liabilities	8,944	8,724
Finance group
Assets
Cash and equivalents	80	72
Finance receivables, net	555	563
Other assets	18	29
Total assets	653	664
Liabilities
Other liabilities	74	81
Debt	367	375
Total liabilities	$ 441	$ 456

XML

Consolidated Balance Sheets (Unaudited) (Parenthetical) - USD ($) $ in Millions	Apr. 01, 2023	Dec. 31, 2022
Statement of Financial Position [Abstract]
Accumulated depreciation and amortization	$ 5,168	$ 5,084

XML

Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Millions	3 Months Ended
	Apr. 01, 2023	Apr. 02, 2022
Cash flows from operating activities
Net income	$ 191	$ 193
Non-cash items:
Depreciation and amortization	92	93
Deferred income taxes	(32)	(52)
Other, net	39	36
Changes in assets and liabilities:
Accounts receivable, net	(69)	37
Inventories	(380)	(176)
Other assets	128	(4)
Accounts payable	261	38
Other liabilities	(74)	26
Income taxes, net	50	71
Pension, net	(51)	(41)
Captive finance receivables, net	6	18
Other operating activities, net	2	2
Net cash provided by (used in) operating activities	163	241
Cash flows from investing activities
Capital expenditures	(62)	(48)
Net proceeds from corporate-owned life insurance policies	20	2
Proceeds from sale of property, plant and equipment	0	18
Finance receivables repaid	12	13
Other investing activities, net	1	43
Net cash provided by (used in) investing activities	(29)	28
Cash flows from financing activities
Principal payments on long-term debt and nonrecourse debt	(17)	(121)
Purchases of Textron common stock	(377)	(157)
Dividends paid	(4)	(5)
Proceeds from options exercised	27	28
Other financing activities, net	(5)	(3)
Net cash used in financing activities	(376)	(258)
Effect of exchange rate changes on cash and equivalents	6	(2)
Net increase (decrease) in cash and equivalents	(236)	9
Cash and equivalents at beginning of period	2,035	2,117
Cash and equivalents at end of period	$ 1,799	$ 2,126

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Consolidated Statements of Cash Flows (Unaudited) - Manufacturing Group and Finance Group - USD ($) $ in Millions	3 Months Ended
	Apr. 01, 2023	Apr. 02, 2022
Cash flows from operating activities
Net income	$ 191	$ 193
Non-cash items:
Depreciation and amortization	92	93
Deferred income taxes	(32)	(52)
Other, net	39	36
Changes in assets and liabilities:
Accounts receivable, net	(69)	37
Inventories	(380)	(176)
Other assets	128	(4)
Accounts payable	261	38
Other liabilities	(74)	26
Income taxes, net	50	71
Pension, net	(51)	(41)
Other operating activities, net	2	2
Net cash provided by (used in) operating activities	163	241
Cash flows from investing activities
Capital expenditures	(62)	(48)
Net proceeds from corporate-owned life insurance policies	20	2
Proceeds from sale of property, plant and equipment	0	18
Finance receivables repaid	12	13
Other investing activities, net	1	43
Net cash provided by (used in) investing activities	(29)	28
Cash flows from financing activities
Principal payments on long-term debt and nonrecourse debt	(17)	(121)
Purchases of Textron common stock	(377)	(157)
Dividends paid	(4)	(5)
Proceeds from options exercised	27	28
Other financing activities, net	(5)	(3)
Net cash used in financing activities	(376)	(258)
Effect of exchange rate changes on cash and equivalents	6	(2)
Net increase (decrease) in cash and equivalents	(236)	9
Cash and equivalents at beginning of period	2,035	2,117
Cash and equivalents at end of period	1,799	2,126
Manufacturing group
Cash flows from operating activities
Net income	185	185
Non-cash items:
Depreciation and amortization	92	93
Deferred income taxes	(32)	(45)
Other, net	41	37
Changes in assets and liabilities:
Accounts receivable, net	(69)	37
Inventories	(380)	(176)
Other assets	121	(4)
Accounts payable	261	38
Other liabilities	(65)	37
Income taxes, net	48	62
Pension, net	(51)	(41)
Other operating activities, net	2	2
Net cash provided by (used in) operating activities	153	225
Cash flows from investing activities
Capital expenditures	(62)	(48)
Net proceeds from corporate-owned life insurance policies	20	2
Proceeds from sale of property, plant and equipment	0	18
Finance receivables repaid	0	0
Finance receivables originated	0	0
Other investing activities, net	0	0
Net cash provided by (used in) investing activities	(42)	(28)
Cash flows from financing activities
Principal payments on long-term debt and nonrecourse debt	(2)	(2)
Purchases of Textron common stock	(377)	(157)
Dividends paid	(4)	(5)
Proceeds from options exercised	27	28
Other financing activities, net	(5)	(3)
Net cash used in financing activities	(361)	(139)
Effect of exchange rate changes on cash and equivalents	6	(2)
Net increase (decrease) in cash and equivalents	(244)	56
Cash and equivalents at beginning of period	1,963	1,922
Cash and equivalents at end of period	1,719	1,978
Finance group
Cash flows from operating activities
Net income	6	8
Non-cash items:
Depreciation and amortization	0	0
Deferred income taxes	0	(7)
Other, net	(2)	(1)
Changes in assets and liabilities:
Accounts receivable, net	0	0
Inventories	0	0
Other assets	7	0
Accounts payable	0	0
Other liabilities	(9)	(11)
Income taxes, net	2	9
Pension, net	0	0
Other operating activities, net	0	0
Net cash provided by (used in) operating activities	4	(2)
Cash flows from investing activities
Capital expenditures	0	0
Net proceeds from corporate-owned life insurance policies	0	0
Proceeds from sale of property, plant and equipment	0	0
Finance receivables repaid	35	40
Finance receivables originated	(17)	(9)
Other investing activities, net	1	43
Net cash provided by (used in) investing activities	19	74
Cash flows from financing activities
Principal payments on long-term debt and nonrecourse debt	(15)	(119)
Purchases of Textron common stock	0	0
Dividends paid	0	0
Proceeds from options exercised	0	0
Other financing activities, net	0	0
Net cash used in financing activities	(15)	(119)
Effect of exchange rate changes on cash and equivalents	0	0
Net increase (decrease) in cash and equivalents	8	(47)
Cash and equivalents at beginning of period	72	195
Cash and equivalents at end of period	$ 80	$ 148

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Basis of Presentation

3 Months Ended

Apr. 01, 2023

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Basis of Presentation

Basis of Presentation

Our Consolidated Financial Statements include the accounts of Textron Inc. (Textron) and its majority-owned subsidiaries.  We have prepared these unaudited consolidated financial statements in accordance with accounting principles generally accepted in the U.S. for interim financial information.  Accordingly, these interim financial statements do not include all of the information and footnotes required by accounting principles generally accepted in the U.S. for complete financial statements.  The consolidated interim financial statements included in this quarterly report should be read in conjunction with the consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2022.  In the opinion of management, the interim financial statements reflect all adjustments (consisting only of normal recurring adjustments) that are necessary for the fair presentation of our consolidated financial position, results of operations and cash flows for the interim periods presented. The results of operations for the interim periods are not necessarily indicative of the results to be expected for the full year.

Our financings are conducted through two separate borrowing groups.  The Manufacturing group consists of Textron consolidated with its majority-owned subsidiaries that operate in the Textron Aviation, Bell, Textron Systems, Industrial and Textron eAviation 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 first quarter of 2023, our cumulative catch-up adjustments increased segment profit by $8 million and net income by $6 million, $0.03 per diluted share. In the first quarter of 2022, our cumulative catch-up adjustments decreased segment profit by $17 million and net income by $13 million, $0.06 per diluted share.

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Accounts Receivable and Finance Receivables

3 Months Ended

Apr. 01, 2023

Receivables [Abstract]

Accounts Receivable and Finance Receivables

Accounts Receivable and Finance Receivables

Accounts Receivable

Accounts receivable is composed of the following:

(In millions)	April 1, 2023		December 31, 2022
Commercial	$	824	$	755
U.S. Government contracts	126		124
	950		879
Allowance for credit losses	(22)		(24)
Total accounts receivable, net	$	928	$	855

Finance Receivables

Finance receivables are presented in the following table:

(In millions)	April 1, 2023		December 31, 2022
Finance receivables	$	577	$	587
Allowance for credit losses	(22)		(24)
Total finance receivables, net	$	555	$	563

Finance Receivable Portfolio Quality

We internally assess the quality of our finance receivables based on a number of key credit quality indicators and statistics such as delinquency, loan balance to estimated collateral value and the financial strength of individual borrowers and guarantors.  Because many of these indicators are difficult to apply across an entire class of receivables, we evaluate individual loans on a quarterly basis and classify these loans into three categories based on the key credit quality indicators for the individual loan. These three categories are performing, watchlist and nonaccrual.

We classify finance receivables as nonaccrual if credit quality indicators suggest full collection of principal and interest is doubtful. In addition, we automatically classify accounts as nonaccrual once they are contractually delinquent by more than three months unless collection of principal and interest is not doubtful. Accounts are classified as watchlist when credit quality indicators have deteriorated as compared with typical underwriting criteria, and we believe collection of full principal and interest is probable but not certain. All other finance receivables that do not meet the watchlist or nonaccrual categories are classified as performing.

We measure delinquency based on the contractual payment terms of our finance receivables.  In determining the delinquency aging category of an account, any/all principal and interest received is applied to the most past-due principal and/or interest amounts due. If a significant portion of the contractually due payment is delinquent, the entire finance receivable balance is reported in accordance with the most past-due delinquency aging category.

Finance receivables categorized based on the credit quality indicators and by the delinquency aging category are summarized as follows:

(Dollars in millions)	April 1, 2023		December 31, 2022
Performing	$	512	$	515
Watchlist	26		26
Nonaccrual	39		46
Nonaccrual as a percentage of finance receivables	6.76%		7.84%
Current and less than 31 days past due	$	570	$	579
31-60 days past due	5		7
61-90 days past due	2		—
Over 90 days past due	—		1
60+ days contractual delinquency as a percentage of finance receivables	0.35%		0.17%

At April 1, 2023, 33% of our performing finance receivables were originated since the beginning of 2021 and 30% were originated from 2018 to 2020. For finance receivables categorized as watchlist 94% were originated since the beginning of 2020 and for nonaccrual, 65% were originated from 2018 to 2020.

On a quarterly basis, we evaluate individual larger balance accounts for impairment.  A finance receivable is considered impaired when it is probable that we will be unable to collect all amounts due according to the contractual terms of the loan agreement based on our review of the credit quality indicators described above. Impaired finance receivables include both nonaccrual accounts and accounts for which full collection of principal and interest remains probable, but the account’s original terms have been, or are expected to be, significantly modified.  If the modification specifies an interest rate equal to or greater than a market rate for a finance receivable with comparable risk, the account is not considered impaired in years subsequent to the modification.

A summary of finance receivables and the allowance for credit losses, based on the results of our impairment evaluation, is provided below. The finance receivables included in this table specifically exclude leveraged leases in accordance with U.S. generally accepted accounting principles.

(In millions)	April 1, 2023		December 31, 2022
Finance receivables evaluated collectively	$	451	$	450
Finance receivables evaluated individually	39		46
Allowance for credit losses based on collective evaluation	19		21
Allowance for credit losses based on individual evaluation	3		3
Impaired finance receivables with specific allowance for credit losses	$	12	$	15
Impaired finance receivables with no specific allowance for credit losses	27		31
Unpaid principal balance of impaired finance receivables	53		60
Allowance for credit losses on impaired finance receivables	3		3
Average recorded investment of impaired finance receivables	43		67

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Inventories

3 Months Ended

Apr. 01, 2023

Inventory Disclosure [Abstract]

Inventories

Inventories

Inventories are composed of the following:

(In millions)	April 1, 2023		December 31, 2022
Finished goods	$	1,059	$	991
Work in process	1,753		1,540
Raw materials and components	1,122		1,019
Total inventories	$	3,934	$	3,550

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Warranty Liability

3 Months Ended

Apr. 01, 2023

Payables and Accruals [Abstract]

Warranty Liability

Warranty Liability

Changes in our warranty liability are as follows:

	Three Months Ended
(In millions)	April 1, 2023		April 2, 2022
Beginning of period	$	149	$	127
Provision	15		16
Settlements	(18)		(19)
Adjustments*	3		6
End of period	$	149	$	130

* Adjustments include changes to prior year estimates, new issues on prior year sales and currency translation adjustments.

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Leases

3 Months Ended

Apr. 01, 2023

Leases [Abstract]

Leases

Leases

We primarily lease certain manufacturing plants, offices, warehouses, training and service centers at various locations worldwide through operating leases. Our operating leases have remaining lease terms up to 26 years, which include options to extend the lease term for periods up to 25 years when it is reasonably certain the option will be exercised. Operating lease cost totaled $17 million in both the first quarter of 2023 and 2022. Variable and short-term lease costs were not significant. Cash paid for operating leases totaled $17 million in both the first quarter of 2023 and 2022, and is classified in cash flows from operating activities. Noncash transactions totaled $15 million and $7 million in the first quarter of 2023 and 2022, respectively, reflecting the recognition of operating lease assets and liabilities for new or extended leases.

Balance sheet and other information related to our operating leases is as follows:

(Dollars in millions)	April 1, 2023		December 31, 2022
Other assets	$	375	$	372
Other current liabilities	55		54
Other liabilities	328		326
Weighted-average remaining lease term (in years)	10.4		10.4
Weighted-average discount rate	4.29%		4.14%

At April 1, 2023, maturities of our operating lease liabilities on an undiscounted basis totaled $53 million for the remainder of 2023, $63 million for 2024, $55 million for 2025, $42 million for 2026, $37 million for 2027 and $237 million thereafter.

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Derivative Instruments and Fair Value Measurements

3 Months Ended

Apr. 01, 2023

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivative Instruments and Fair Value Measurements

Derivative Instruments and Fair Value Measurements

We measure fair value at the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.  We prioritize the assumptions that market participants would use in pricing the asset or liability into a three-tier fair value hierarchy. This fair value hierarchy gives the highest priority (Level 1) to quoted prices in active markets for identical assets or liabilities and the lowest priority (Level 3) to unobservable inputs in which little or no market data exist, requiring companies to develop their own assumptions. Observable inputs that do not meet the criteria of Level 1, which include quoted prices for similar assets or liabilities in active markets or quoted prices for identical assets and liabilities in markets that are not active, are categorized as Level 2. Level 3 inputs are those that reflect our estimates about the assumptions market participants would use in pricing the asset or liability based on the best information available in the circumstances. Valuation techniques for assets and liabilities measured using Level 3 inputs may include methodologies such as the market approach, the income approach or the cost approach and may use unobservable inputs such as projections, estimates and management’s interpretation of current market data. These unobservable inputs are utilized only to the extent that observable inputs are not available or cost effective to obtain.

Assets and Liabilities Recorded at Fair Value on a Recurring Basis

We manufacture and sell our products in a number of countries throughout the world, and, therefore, we are exposed to movements in foreign currency exchange rates. We primarily utilize foreign currency exchange contracts with maturities of no more than three years to manage this volatility. These contracts qualify as cash flow hedges and are intended to offset the effect of exchange rate fluctuations on forecasted sales, inventory purchases and overhead expenses. Net gains and losses recognized in earnings and Accumulated other comprehensive loss on cash flow hedges, including gains and losses related to hedge ineffectiveness, were not significant in the periods presented.

Our foreign currency exchange contracts are measured at fair value using the market method valuation technique. The inputs to this technique utilize current foreign currency exchange forward market rates published by third-party leading financial news and data providers. These are observable data that represent the rates that the financial institution uses for contracts entered into at that date; however, they are not based on actual transactions, so they are classified as Level 2.  At April 1, 2023 and December 31, 2022, we had foreign currency exchange contracts with notional amounts upon which the contracts were based of $623 million and $354 million, respectively. At April 1, 2023, the fair value amounts of our foreign currency exchange contracts were a $2 million asset and a $11 million liability. At December 31, 2022, the fair value amount of our foreign currency exchange contracts was an $11 million liability.

Our Finance group enters into interest rate swap agreements to mitigate certain exposures to fluctuations in interest rates. By using these contracts, we are able to convert floating-rate cash flows to fixed-rate cash flows. These agreements are designated as cash flow hedges. At April 1, 2023 and December 31, 2022, we had a swap agreement for a notional amount of $272 million that matures in August 2023, and a swap agreement for a notional amount of $25 million that matures in June 2025. The fair value of these swap agreements was a $5 million asset at April 1, 2023 and an $8 million asset at December 31, 2022. The fair value of these swap agreements is determined using values published by third-party leading financial news and data providers. These values are observable data that represent the value that financial institutions use for contracts entered into at that date, but are not based on actual transactions, so they are classified as Level 2.

Assets and Liabilities Not Recorded at Fair Value

The carrying value and estimated fair value of our financial instruments that are not reflected in the financial statements at fair value are as follows:

	April 1, 2023				December 31, 2022
	Carrying		Estimated		Carrying		Estimated
(In millions)	Value		Fair Value		Value		Fair Value
Manufacturing group
Debt, excluding leases	$	(3,175)	$	(2,960)	$	(3,175)	$	(2,872)
Finance group
Finance receivables, excluding leases	388		381		390		369
Debt	(367)		(298)		(375)		(294)

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.

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Shareholders' Equity

3 Months Ended

Apr. 01, 2023

Equity [Abstract]

Shareholders' Equity

Shareholders’ Equity

A reconciliation of Shareholders’ equity is presented below:

(In millions)	Common Stock		Capital Surplus		Treasury Stock		Retained Earnings		Accumulated Other Comprehensive Loss		Total Shareholders' Equity
Three months ended April 1, 2023
Beginning of period	$	26	$	1,880	$	(84)	$	5,903	$	(612)	$	7,113
Net income	—		—		—		191		—		191
Other comprehensive income	—		—		—		—		26		26
Share-based compensation activity	—		62		—		—		—		62
Dividends declared	—		—		—		(4)		—		(4)
Purchases of common stock, including excise tax*	—		—		(380)		—		—		(380)
End of period	$	26	$	1,942	$	(464)	$	6,090	$	(586)	$	7,008
Three months ended April 2, 2022
Beginning of period	$	28	$	1,863	$	(157)	$	5,870	$	(789)	$	6,815
Net income	—		—		—		193		—		193
Other comprehensive income	—		—		—		—		10		10
Share-based compensation activity	—		61		—		—		—		61
Dividends declared	—		—		—		(5)		—		(5)
Purchases of common stock	—		—		(157)		—		—		(157)
End of period	$	28	$	1,924	$	(314)	$	6,058	$	(779)	$	6,917

*Includes $3 million accrued for the excise tax imposed on common share repurchases beginning on January 1, 2023 as part of the Inflation Reduction Act.

Dividends per share of common stock were $0.02 for both the first quarter of 2023 and 2022.

Earnings Per Share

We calculate basic and diluted earnings per share (EPS) based on net income, which approximates income available to common shareholders for each period.  Basic EPS is calculated using the two-class method, which includes the weighted-average number of common shares outstanding during the period and restricted stock units to be paid in stock that are deemed participating securities as they provide nonforfeitable rights to dividends. Diluted EPS considers the dilutive effect of all potential future common stock, including stock options.  

The weighted-average shares outstanding for basic and diluted EPS are as follows:

	Three Months Ended
(In thousands)	April 1, 2023	April 2, 2022
Basic weighted-average shares outstanding	204,835	217,010
Dilutive effect of stock options	2,176	2,597
Diluted weighted-average shares outstanding	207,011	219,607

Stock options to purchase 2.0 million and 1.0 million shares of common stock were excluded from the calculation of diluted weighted-average shares outstanding for the first quarter of 2023 and 2022, respectively, as their effect would have been anti-dilutive.

Accumulated Other Comprehensive Loss and Other Comprehensive Income

The components of Accumulated other comprehensive loss are presented below:

(In millions)	Pension and Postretirement Benefits Adjustments		Foreign Currency Translation Adjustments		Deferred Gains (Losses) on Hedge Contracts		Accumulated Other Comprehensive Loss
Balance at December 31, 2022	$	(516)	$	(94)	$	(2)	$	(612)
Other comprehensive income before reclassifications	—		28		(3)		25
Reclassified from Accumulated other comprehensive loss	—		—		1		1
Balance at April 1, 2023	$	(516)	$	(66)	$	(4)	$	(586)
Balance at January 1, 2022	$	(799)	$	9	$	1	$	(789)
Other comprehensive loss before reclassifications	—		(14)		7		(7)
Reclassified from Accumulated other comprehensive loss	17		—		—		17
Balance at April 2, 2022	$	(782)	$	(5)	$	8	$	(779)

The before and after-tax components of Other comprehensive income are presented below:

	April 1, 2023						April 2, 2022
(In millions)	Pre-Tax Amount		Tax (Expense) Benefit		After-tax Amount		Pre-Tax Amount		Tax (Expense) Benefit		After-tax Amount
Three Months Ended
Pension and postretirement benefits adjustments:
Amortization of net actuarial (gain) loss*	$	(2)	$	1	$	(1)	$	21	$	(5)	$	16
Amortization of prior service cost*	2		(1)		1		2		(1)		1
Pension and postretirement benefits adjustments, net	—		—		—		23		(6)		17
Foreign currency translation adjustments	28		—		28		(14)		—		(14)
Deferred gains (losses) on hedge contracts:
Current deferrals	(4)		1		(3)		10		(3)		7
Reclassification adjustments	2		(1)		1		—		—		—
Deferred gains (losses) on hedge contracts, net	(2)		—		(2)		10		(3)		7
Total	$	26	$	—	$	26	$	19	$	(9)	$	10

*These components of other comprehensive income are included in the computation of net periodic pension cost (income). See Note 15 of our 2022 Annual Report on Form 10-K for additional information.

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Segment Information

3 Months Ended

Apr. 01, 2023

Segment Reporting [Abstract]

Segment Information

Segment Information

We operate in, and reported financial information for, the following six business segments: Textron Aviation, Bell, Textron Systems, Industrial, Textron eAviation and Finance. Segment profit is an important measure used for evaluating performance and for decision-making purposes. Beginning in 2023, we changed how we measure our manufacturing segment operating results to exclude the non-service components of pension and postretirement income, net; LIFO inventory provision; and intangible asset amortization. This measure also continues to exclude interest expense, net for Manufacturing group; certain corporate expenses; gains/losses on major business dispositions; and special charges. The prior period has been recast to conform to this presentation. The measurement for the Finance segment includes interest income and expense along with intercompany interest income and expense.

Our revenues by segment, along with a reconciliation of segment profit to income before income taxes, are included in the table below:

	Three Months Ended
(In millions)	April 1, 2023		April 2, 2022
Revenues
Textron Aviation	$	1,149	$	1,040
Bell	621		834
Textron Systems	306		273
Industrial	932		838
Textron eAviation	4		—
Finance	12		16
Total revenues	$	3,024	$	3,001
Segment Profit
Textron Aviation	$	125	$	110
Bell	60		91
Textron Systems	34		28
Industrial	41		39
Textron eAviation	(9)		—
Finance	8		9
Segment profit	259		277
Corporate expenses and other, net	(39)		(52)
Interest expense, net for Manufacturing group	(17)		(28)
LIFO inventory provision	(25)		(12)
Intangible asset amortization	(10)		(13)
Non-service components of pension and postretirement income, net	59		60
Income before income taxes	$	227	$	232

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Revenues

3 Months Ended

Apr. 01, 2023

Revenue from Contract with Customer [Abstract]

Revenues

Revenues

Disaggregation of Revenues

Our revenues disaggregated by major product type are presented below:

	Three Months Ended
(In millions)	April 1, 2023		April 2, 2022
Aircraft	$	718	$	646
Aftermarket parts and services	431		394
Textron Aviation	1,149		1,040
Military aircraft and support programs	385		597
Commercial helicopters, parts and services	236		237
Bell	621		834
Textron Systems	306		273
Fuel systems and functional components	488		464
Specialized vehicles	444		374
Industrial	932		838
Textron eAviation	4		—
Finance	12		16
Total revenues	$	3,024	$	3,001

Our revenues for our segments by customer type and geographic location are presented below:

(In millions)	Textron Aviation		Bell		Textron Systems		Industrial		Textron eAviation		Finance		Total
Three months ended April 1, 2023
Customer type:
Commercial	$	1,107	$	232	$	74	$	927	$	4	$	12	$	2,356
U.S. Government	42		389		232		5		—		—		668
Total revenues	$	1,149	$	621	$	306	$	932	$	4	$	12	$	3,024
Geographic location:
United States	$	836	$	460	$	275	$	494	$	1	$	4	$	2,070
Europe	66		19		14		204		2		—		305
Other international	247		142		17		234		1		8		649
Total revenues	$	1,149	$	621	$	306	$	932	$	4	$	12	$	3,024
Three months ended April 2, 2022
Customer type:
Commercial	$	1,021	$	234	$	65	$	835	$	—	$	16	$	2,171
U.S. Government	19		600		208		3		—		—		830
Total revenues	$	1,040	$	834	$	273	$	838	$	—	$	16	$	3,001
Geographic location:
United States	$	732	$	670	$	246	$	426	$	—	$	5	$	2,079
Europe	119		28		8		190		—		1		346
Other international	189		136		19		222		—		10		576
Total revenues	$	1,040	$	834	$	273	$	838	$	—	$	16	$	3,001

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 April 1, 2023, we had $13.1 billion in remaining performance obligations of which we expect to recognize revenues of approximately 85% through 2024, an additional 12% through 2026, and the balance thereafter.  

Contract Assets and Liabilities Assets and liabilities related to our contracts with customers are reported on a contract-by-contract basis at the end of each reporting period. At April 1, 2023 and December 31, 2022, contract assets totaled $621 million and $680 million, respectively, and contract liabilities totaled $1.7 billion and $1.5 billion, respectively, reflecting timing differences between revenues recognized, billings and payments from customers. We recognized revenues of $316 million and $206 million in the first quarter of 2023 and 2022, respectively, that were included in the contract liability balance at the beginning of each year.

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Share-Based Compensation

3 Months Ended

Apr. 01, 2023

Share-Based Payment Arrangement [Abstract]

Share-Based Compensation

Share-Based Compensation

Under our share-based compensation plan, we have authorization to provide awards to selected employees and non-employee directors in the form of stock options, restricted stock, restricted stock units, stock appreciation rights, performance stock, performance share units and other awards.  Compensation expense included in net income for our share-based compensation plan is as follows:

	Three Months Ended
(In millions)	April 1, 2023		April 2, 2022
Compensation expense	$	45	$	34
Income tax benefit	(11)		(8)
Total compensation expense included in net income	$	34	$	26

Compensation expense included stock option expense of $14 million and $12 million in the first quarter of 2023 and 2022, respectively. We typically grant stock appreciation rights to selected non-U.S. employees. At April 1, 2023, outstanding stock appreciation rights totaled 617,074 with a weighted-average exercise price of $54.62 and a weighted-average remaining contractual life of 6.4 years; these units had an intrinsic value of $10 million, compared to $14 million at April 2, 2022.

Stock Options

Options to purchase our shares have a maximum term of ten years and generally vest ratably over a three-year period. Stock option compensation cost is calculated under the fair value approach using the Black-Scholes option-pricing model to determine the fair value of options granted on the date of grant. The expected volatility used in this model is based on historical volatilities and implied volatilities from traded options on our common stock.  The expected term is based on historical option exercise data, which is adjusted to reflect any anticipated changes in expected behavior.

We grant options annually on the first day of March. The assumptions used in our option-pricing model for these grants and the weighted-average fair value for these options are as follows:

	March 1, 2023		March 1, 2022
Fair value of options at grant date	$	23.83	$	19.95
Dividend yield	0.1%		0.1%
Expected volatility	29.4%		29.2%
Risk-free interest rate	4.2%		1.9%
Expected term (in years)	4.8		4.8

The stock option activity during the first quarter of 2023 is provided below:

(Options in thousands)	Number of Options	Weighted- Average Exercise Price
Outstanding at December 31, 2022	8,310	$	50.25
Granted	1,026	73.19
Exercised	(630)	(42.84)
Forfeited or expired	(60)	(58.90)
Outstanding at April 1, 2023	8,646	$	53.45
Exercisable at April 1, 2023	6,263	$	48.56

At April 1, 2023, our outstanding options had an aggregate intrinsic value of $152 million and a weighted-average remaining contractual life of 6.2 years. Our exercisable options had an aggregate intrinsic value of $138 million and a weighted-average remaining contractual life of 5.1 years at April 1, 2023.  The total intrinsic value of options exercised during the first quarter of 2023 and 2022 was $19 million and $23 million, respectively.

Restricted Stock Units

We issue restricted stock units that include the right to receive dividend equivalents and are settled in both cash and stock. Beginning in 2020, new grants of restricted stock units will vest in full on the third anniversary of the grant date. Restricted stock units granted prior to 2020 vest one-third each in the third, fourth and fifth year following the year of the grant. Compensation cost is determined using the fair value of these units based on the trading price of our common stock. For units payable in stock, we use the trading price on the grant date, while units payable in cash are remeasured using the price at each reporting period date.

The activity for restricted stock units payable in both stock and cash during the first quarter of 2023 is provided below:

	Units Payable in Stock			Units Payable in Cash
(Shares/Units in thousands)	Number of Shares	Weighted- Average Grant Date Fair Value		Number of Units	Weighted- Average Grant Date Fair Value
Outstanding at December 31, 2022, nonvested	525	$	52.99	1,086	$	53.26
Granted	103	73.17		245	73.18
Vested	(218)	(46.66)		(463)	(45.92)
Forfeited	—	—		(32)	(56.94)
Outstanding at April 1, 2023, nonvested	410	$	61.41	836	$	63.02

The fair value of the restricted stock unit awards that vested and/or amounts paid under these awards is as follows:

	Three Months Ended
(In millions)	April 1, 2023		April 2, 2022
Fair value of awards vested	$	44	$	24
Cash paid	34		17

Performance Share Units

The activity for our performance share units during the first quarter of 2023 is as follows:

(Units in thousands)	Number of Units	Weighted- Average Grant Date Fair Value
Outstanding at December 31, 2022, nonvested	427	$	59.51
Granted	209	73.19
Outstanding at April 1, 2023, nonvested	636	$	64.01

Cash paid under these awards totaled $27 million and $15 million in the first quarter of 2023 and 2022, respectively.

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Retirement Plans

3 Months Ended

Apr. 01, 2023

Retirement Benefits [Abstract]

Retirement Plans

Retirement PlansWe provide defined benefit pension plans and other postretirement benefits to eligible employees.  The components of net periodic benefit income for these plans are as follows:

	Three Months Ended
(In millions)	April 1, 2023		April 2, 2022
Pension Benefits
Service cost	$	17	$	26
Interest cost	91		69
Expected return on plan assets	(152)		(153)
Amortization of net actuarial loss	—		22
Amortization of prior service cost	3		3
Net periodic benefit income*	$	(41)	$	(33)
Postretirement Benefits Other Than Pensions
Service cost	$	—	$	1
Interest cost	2		1
Amortization of net actuarial gain	(2)		(1)
Amortization of prior service credit	(1)		(1)
Net periodic benefit income	$	(1)	$	—

* Excludes the cost associated with the defined contribution component, included in certain of our U.S.-based defined benefit pension plans, that totaled $4 million for the first quarter of 2023 and 2022, respectively.

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Income Taxes	3 Months Ended
	Apr. 01, 2023
Income Tax Disclosure [Abstract]
Income Taxes	Income TaxesOur effective tax rate for the first quarter of 2023 and 2022 was 15.9% and 16.8%, respectively. In the first quarter of 2023, the effective tax rate was lower than the U.S. federal statutory rate of 21%, largely due to the favorable impact of research and development credits and tax deductions for foreign-derived intangible income. In the first quarter of 2022, the effective tax rate was lower than the U.S. federal statutory rate of 21%, largely due to the favorable impact of research and development credits.

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Commitments and Contingencies	3 Months Ended
	Apr. 01, 2023
Commitments and Contingencies Disclosure [Abstract]
Commitments and Contingencies	Commitments and ContingenciesWe are subject to actual and threatened 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; disputes with suppliers, production partners or other third parties; product liability; patent and trademark infringement; employment disputes; and environmental, health and safety 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.

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Basis of Presentation (Policies)

3 Months Ended

Apr. 01, 2023

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Use of Estimates

Use of Estimates

We prepare our financial statements in conformity with generally accepted accounting principles, which require us to make estimates and assumptions that affect the amounts reported in the financial statements.  Actual results could differ from those estimates. Our estimates and assumptions are reviewed periodically, and the effects of changes, if any, are reflected in the Consolidated Statements of Operations in the period that they are determined.

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Accounts Receivable and Finance Receivables (Tables)

3 Months Ended

Apr. 01, 2023

Receivables [Abstract]

Accounts Receivable

Accounts receivable is composed of the following:

(In millions)	April 1, 2023		December 31, 2022
Commercial	$	824	$	755
U.S. Government contracts	126		124
	950		879
Allowance for credit losses	(22)		(24)
Total accounts receivable, net	$	928	$	855

Finance Receivables

Finance receivables are presented in the following table:

(In millions)	April 1, 2023		December 31, 2022
Finance receivables	$	577	$	587
Allowance for credit losses	(22)		(24)
Total finance receivables, net	$	555	$	563

Finance Receivables Categorized Based On Credit Quality Indicators

Finance receivables categorized based on the credit quality indicators and by the delinquency aging category are summarized as follows:

(Dollars in millions)	April 1, 2023		December 31, 2022
Performing	$	512	$	515
Watchlist	26		26
Nonaccrual	39		46
Nonaccrual as a percentage of finance receivables	6.76%		7.84%
Current and less than 31 days past due	$	570	$	579
31-60 days past due	5		7
61-90 days past due	2		—
Over 90 days past due	—		1
60+ days contractual delinquency as a percentage of finance receivables	0.35%		0.17%

Finance Receivables By Delinquency Aging Category

Finance receivables categorized based on the credit quality indicators and by the delinquency aging category are summarized as follows:

(Dollars in millions)	April 1, 2023		December 31, 2022
Performing	$	512	$	515
Watchlist	26		26
Nonaccrual	39		46
Nonaccrual as a percentage of finance receivables	6.76%		7.84%
Current and less than 31 days past due	$	570	$	579
31-60 days past due	5		7
61-90 days past due	2		—
Over 90 days past due	—		1
60+ days contractual delinquency as a percentage of finance receivables	0.35%		0.17%

Finance Receivables and Allowance For Credit Losses Based on Impairment Evaluation

A summary of finance receivables and the allowance for credit losses, based on the results of our impairment evaluation, is provided below. The finance receivables included in this table specifically exclude leveraged leases in accordance with U.S. generally accepted accounting principles.

(In millions)	April 1, 2023		December 31, 2022
Finance receivables evaluated collectively	$	451	$	450
Finance receivables evaluated individually	39		46
Allowance for credit losses based on collective evaluation	19		21
Allowance for credit losses based on individual evaluation	3		3
Impaired finance receivables with specific allowance for credit losses	$	12	$	15
Impaired finance receivables with no specific allowance for credit losses	27		31
Unpaid principal balance of impaired finance receivables	53		60
Allowance for credit losses on impaired finance receivables	3		3
Average recorded investment of impaired finance receivables	43		67

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Inventories (Tables)

3 Months Ended

Apr. 01, 2023

Inventory Disclosure [Abstract]

Inventories

Inventories are composed of the following:

(In millions)	April 1, 2023		December 31, 2022
Finished goods	$	1,059	$	991
Work in process	1,753		1,540
Raw materials and components	1,122		1,019
Total inventories	$	3,934	$	3,550

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Warranty Liability (Tables)

3 Months Ended

Apr. 01, 2023

Payables and Accruals [Abstract]

Changes in Warranty Liability

Changes in our warranty liability are as follows:

	Three Months Ended
(In millions)	April 1, 2023		April 2, 2022
Beginning of period	$	149	$	127
Provision	15		16
Settlements	(18)		(19)
Adjustments*	3		6
End of period	$	149	$	130

* Adjustments include changes to prior year estimates, new issues on prior year sales and currency translation adjustments.

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Leases (Tables)

3 Months Ended

Apr. 01, 2023

Leases [Abstract]

Schedule of Balance Sheet and Other Information

Balance sheet and other information related to our operating leases is as follows:

(Dollars in millions)	April 1, 2023		December 31, 2022
Other assets	$	375	$	372
Other current liabilities	55		54
Other liabilities	328		326
Weighted-average remaining lease term (in years)	10.4		10.4
Weighted-average discount rate	4.29%		4.14%

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Derivative Instruments and Fair Value Measurements (Tables)

3 Months Ended

Apr. 01, 2023

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Carrying Value and Estimated and Fair Value of Financial Instruments

The carrying value and estimated fair value of our financial instruments that are not reflected in the financial statements at fair value are as follows:

	April 1, 2023				December 31, 2022
	Carrying		Estimated		Carrying		Estimated
(In millions)	Value		Fair Value		Value		Fair Value
Manufacturing group
Debt, excluding leases	$	(3,175)	$	(2,960)	$	(3,175)	$	(2,872)
Finance group
Finance receivables, excluding leases	388		381		390		369
Debt	(367)		(298)		(375)		(294)

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Shareholders' Equity (Tables)

3 Months Ended

Apr. 01, 2023

Equity [Abstract]

Schedule of Shareholder's Equity

A reconciliation of Shareholders’ equity is presented below:

(In millions)	Common Stock		Capital Surplus		Treasury Stock		Retained Earnings		Accumulated Other Comprehensive Loss		Total Shareholders' Equity
Three months ended April 1, 2023
Beginning of period	$	26	$	1,880	$	(84)	$	5,903	$	(612)	$	7,113
Net income	—		—		—		191		—		191
Other comprehensive income	—		—		—		—		26		26
Share-based compensation activity	—		62		—		—		—		62
Dividends declared	—		—		—		(4)		—		(4)
Purchases of common stock, including excise tax*	—		—		(380)		—		—		(380)
End of period	$	26	$	1,942	$	(464)	$	6,090	$	(586)	$	7,008
Three months ended April 2, 2022
Beginning of period	$	28	$	1,863	$	(157)	$	5,870	$	(789)	$	6,815
Net income	—		—		—		193		—		193
Other comprehensive income	—		—		—		—		10		10
Share-based compensation activity	—		61		—		—		—		61
Dividends declared	—		—		—		(5)		—		(5)
Purchases of common stock	—		—		(157)		—		—		(157)
End of period	$	28	$	1,924	$	(314)	$	6,058	$	(779)	$	6,917

*Includes $3 million accrued for the excise tax imposed on common share repurchases beginning on January 1, 2023 as part of the Inflation Reduction Act.

Schedule of Weighted-Average Shares Outstanding for Basic and Diluted EPS

The weighted-average shares outstanding for basic and diluted EPS are as follows:

	Three Months Ended
(In thousands)	April 1, 2023	April 2, 2022
Basic weighted-average shares outstanding	204,835	217,010
Dilutive effect of stock options	2,176	2,597
Diluted weighted-average shares outstanding	207,011	219,607

Schedule of Components of Accumulated Other Comprehensive Income (Loss)

The components of Accumulated other comprehensive loss are presented below:

(In millions)	Pension and Postretirement Benefits Adjustments		Foreign Currency Translation Adjustments		Deferred Gains (Losses) on Hedge Contracts		Accumulated Other Comprehensive Loss
Balance at December 31, 2022	$	(516)	$	(94)	$	(2)	$	(612)
Other comprehensive income before reclassifications	—		28		(3)		25
Reclassified from Accumulated other comprehensive loss	—		—		1		1
Balance at April 1, 2023	$	(516)	$	(66)	$	(4)	$	(586)
Balance at January 1, 2022	$	(799)	$	9	$	1	$	(789)
Other comprehensive loss before reclassifications	—		(14)		7		(7)
Reclassified from Accumulated other comprehensive loss	17		—		—		17
Balance at April 2, 2022	$	(782)	$	(5)	$	8	$	(779)

Schedule of Before and After-Tax Components of Other Comprehensive Income (Loss)

The before and after-tax components of Other comprehensive income are presented below:

	April 1, 2023						April 2, 2022
(In millions)	Pre-Tax Amount		Tax (Expense) Benefit		After-tax Amount		Pre-Tax Amount		Tax (Expense) Benefit		After-tax Amount
Three Months Ended
Pension and postretirement benefits adjustments:
Amortization of net actuarial (gain) loss*	$	(2)	$	1	$	(1)	$	21	$	(5)	$	16
Amortization of prior service cost*	2		(1)		1		2		(1)		1
Pension and postretirement benefits adjustments, net	—		—		—		23		(6)		17
Foreign currency translation adjustments	28		—		28		(14)		—		(14)
Deferred gains (losses) on hedge contracts:
Current deferrals	(4)		1		(3)		10		(3)		7
Reclassification adjustments	2		(1)		1		—		—		—
Deferred gains (losses) on hedge contracts, net	(2)		—		(2)		10		(3)		7
Total	$	26	$	—	$	26	$	19	$	(9)	$	10

*These components of other comprehensive income are included in the computation of net periodic pension cost (income). See Note 15 of our 2022 Annual Report on Form 10-K for additional information.

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Segment Information (Tables)

3 Months Ended

Apr. 01, 2023

Segment Reporting [Abstract]

Revenues by Segment and Reconciliation of Segment Profit Income (Loss) Before Income Taxes

Our revenues by segment, along with a reconciliation of segment profit to income before income taxes, are included in the table below:

	Three Months Ended
(In millions)	April 1, 2023		April 2, 2022
Revenues
Textron Aviation	$	1,149	$	1,040
Bell	621		834
Textron Systems	306		273
Industrial	932		838
Textron eAviation	4		—
Finance	12		16
Total revenues	$	3,024	$	3,001
Segment Profit
Textron Aviation	$	125	$	110
Bell	60		91
Textron Systems	34		28
Industrial	41		39
Textron eAviation	(9)		—
Finance	8		9
Segment profit	259		277
Corporate expenses and other, net	(39)		(52)
Interest expense, net for Manufacturing group	(17)		(28)
LIFO inventory provision	(25)		(12)
Intangible asset amortization	(10)		(13)
Non-service components of pension and postretirement income, net	59		60
Income before income taxes	$	227	$	232

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Revenues (Tables)

3 Months Ended

Apr. 01, 2023

Revenue from Contract with Customer [Abstract]

Disaggregation of Revenue

Our revenues disaggregated by major product type are presented below:

	Three Months Ended
(In millions)	April 1, 2023		April 2, 2022
Aircraft	$	718	$	646
Aftermarket parts and services	431		394
Textron Aviation	1,149		1,040
Military aircraft and support programs	385		597
Commercial helicopters, parts and services	236		237
Bell	621		834
Textron Systems	306		273
Fuel systems and functional components	488		464
Specialized vehicles	444		374
Industrial	932		838
Textron eAviation	4		—
Finance	12		16
Total revenues	$	3,024	$	3,001

Our revenues for our segments by customer type and geographic location are presented below:

(In millions)	Textron Aviation		Bell		Textron Systems		Industrial		Textron eAviation		Finance		Total
Three months ended April 1, 2023
Customer type:
Commercial	$	1,107	$	232	$	74	$	927	$	4	$	12	$	2,356
U.S. Government	42		389		232		5		—		—		668
Total revenues	$	1,149	$	621	$	306	$	932	$	4	$	12	$	3,024
Geographic location:
United States	$	836	$	460	$	275	$	494	$	1	$	4	$	2,070
Europe	66		19		14		204		2		—		305
Other international	247		142		17		234		1		8		649
Total revenues	$	1,149	$	621	$	306	$	932	$	4	$	12	$	3,024
Three months ended April 2, 2022
Customer type:
Commercial	$	1,021	$	234	$	65	$	835	$	—	$	16	$	2,171
U.S. Government	19		600		208		3		—		—		830
Total revenues	$	1,040	$	834	$	273	$	838	$	—	$	16	$	3,001
Geographic location:
United States	$	732	$	670	$	246	$	426	$	—	$	5	$	2,079
Europe	119		28		8		190		—		1		346
Other international	189		136		19		222		—		10		576
Total revenues	$	1,040	$	834	$	273	$	838	$	—	$	16	$	3,001

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Share-Based Compensation (Tables)

3 Months Ended

Apr. 01, 2023

Share-Based Payment Arrangement [Abstract]

Compensation Expense Included in Net Income

Compensation expense included in net income for our share-based compensation plan is as follows:

	Three Months Ended
(In millions)	April 1, 2023		April 2, 2022
Compensation expense	$	45	$	34
Income tax benefit	(11)		(8)
Total compensation expense included in net income	$	34	$	26

Weighted-Average Fair Value of Stock Options and Assumptions Used in Option-Pricing Model

The assumptions used in our option-pricing model for these grants and the weighted-average fair value for these options are as follows:

	March 1, 2023		March 1, 2022
Fair value of options at grant date	$	23.83	$	19.95
Dividend yield	0.1%		0.1%
Expected volatility	29.4%		29.2%
Risk-free interest rate	4.2%		1.9%
Expected term (in years)	4.8		4.8

Stock Option Activity

The stock option activity during the first quarter of 2023 is provided below:

(Options in thousands)	Number of Options	Weighted- Average Exercise Price
Outstanding at December 31, 2022	8,310	$	50.25
Granted	1,026	73.19
Exercised	(630)	(42.84)
Forfeited or expired	(60)	(58.90)
Outstanding at April 1, 2023	8,646	$	53.45
Exercisable at April 1, 2023	6,263	$	48.56

Restricted Stock Units Activity

The activity for restricted stock units payable in both stock and cash during the first quarter of 2023 is provided below:

	Units Payable in Stock			Units Payable in Cash
(Shares/Units in thousands)	Number of Shares	Weighted- Average Grant Date Fair Value		Number of Units	Weighted- Average Grant Date Fair Value
Outstanding at December 31, 2022, nonvested	525	$	52.99	1,086	$	53.26
Granted	103	73.17		245	73.18
Vested	(218)	(46.66)		(463)	(45.92)
Forfeited	—	—		(32)	(56.94)
Outstanding at April 1, 2023, nonvested	410	$	61.41	836	$	63.02

Fair Value of Awards Vested and Cash Paid During Respective Periods

The fair value of the restricted stock unit awards that vested and/or amounts paid under these awards is as follows:

	Three Months Ended
(In millions)	April 1, 2023		April 2, 2022
Fair value of awards vested	$	44	$	24
Cash paid	34		17

Performance Share Units Activity

The activity for our performance share units during the first quarter of 2023 is as follows:

(Units in thousands)	Number of Units	Weighted- Average Grant Date Fair Value
Outstanding at December 31, 2022, nonvested	427	$	59.51
Granted	209	73.19
Outstanding at April 1, 2023, nonvested	636	$	64.01

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Retirement Plans (Tables)

3 Months Ended

Apr. 01, 2023

Retirement Benefits [Abstract]

Schedule of Components of Net Periodic Benefit Income

The components of net periodic benefit income for these plans are as follows:

	Three Months Ended
(In millions)	April 1, 2023		April 2, 2022
Pension Benefits
Service cost	$	17	$	26
Interest cost	91		69
Expected return on plan assets	(152)		(153)
Amortization of net actuarial loss	—		22
Amortization of prior service cost	3		3
Net periodic benefit income*	$	(41)	$	(33)
Postretirement Benefits Other Than Pensions
Service cost	$	—	$	1
Interest cost	2		1
Amortization of net actuarial gain	(2)		(1)
Amortization of prior service credit	(1)		(1)
Net periodic benefit income	$	(1)	$	—

* Excludes the cost associated with the defined contribution component, included in certain of our U.S.-based defined benefit pension plans, that totaled $4 million for the first quarter of 2023 and 2022, respectively.

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Basis of Presentation (Details) $ / shares in Units, $ in Millions	3 Months Ended
	Apr. 01, 2023 USD ($) borrowing_group $ / shares	Apr. 02, 2022 USD ($) $ / shares
Basis of Presentation
Number of borrowing groups | borrowing_group	2
Cumulative catch-up method
Basis of Presentation
Cumulative catch up adjustments, increase (decease) in segment profit	$ 8	$ (17)
Change in accounting estimate financial effect, increase (decrease) in net income	$ 6	$ (13)
Change in accounting estimate financial effect increase (decrease) in earnings per diluted share (in dollars per share) | $ / shares	$ 0.03	$ (0.06)

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Accounts Receivable and Finance Receivables - Accounts Receivable (Details) - Manufacturing group - USD ($) $ in Millions	Apr. 01, 2023	Dec. 31, 2022
Accounts Receivable
Accounts receivable, gross	$ 950	$ 879
Allowance for credit losses	(22)	(24)
Total accounts receivable, net	928	855
Commercial
Accounts Receivable
Accounts receivable, gross	824	755
U.S. Government
Accounts Receivable
Accounts receivable, gross	$ 126	$ 124

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Accounts Receivable and Finance Receivables - Finance Receivables (Details) - USD ($) $ in Millions	Apr. 01, 2023	Dec. 31, 2022
Finance Receivables
Finance receivables	$ 577	$ 587
Allowance for credit losses	(22)	(24)
Total finance receivables, net	$ 555	$ 563

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Accounts Receivable and Finance Receivables - Finance Receivable Portfolio Quality (Details) - USD ($) $ in Millions	3 Months Ended
	Apr. 01, 2023	Dec. 31, 2022
Finance Receivable Portfolio Quality
Finance receivables	$ 577	$ 587
60+ days contractual delinquency as a percentage of finance receivables	0.35%	0.17%
Current and less than 31 days past due
Finance Receivable Portfolio Quality
Finance receivables	$ 570	$ 579
31-60 days past due
Finance Receivable Portfolio Quality
Finance receivables	5	7
61-90 days past due
Finance Receivable Portfolio Quality
Finance receivables	2	0
Over 90 days past due
Finance Receivable Portfolio Quality
Finance receivables	$ 0	$ 1
Performing
Finance Receivable Portfolio Quality
Financing percentage receivable originating since the beginning of 2021	33.00%
Financing receivable percentage originating from 2018 to 2020	30.00%
Nonperforming
Finance Receivable Portfolio Quality
Nonaccrual as a percentage of finance receivables	6.76%	7.84%
Nonperforming | Watchlist
Finance Receivable Portfolio Quality
Finance receivables	$ 26	$ 26
Financing receivable percentage originating since the beginning of 2020	94.00%
Nonperforming | Nonaccrual
Finance Receivable Portfolio Quality
Finance receivables	$ 39	46
Financing receivable percentage originating from 2018 to 2020	65.00%
Nonperforming | Minimum
Finance Receivable Portfolio Quality
Number of months of contractual delinquency to classify accounts as nonaccrual unless such collection is not doubtful	3 months
Performing
Finance Receivable Portfolio Quality
Finance receivables	$ 512	$ 515

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Accounts Receivable and Finance Receivables - Finance Receivables and Allowance for Losses Based on the Results of Impairment Evaluation (Details) - USD ($) $ in Millions	3 Months Ended	12 Months Ended
	Apr. 01, 2023	Dec. 31, 2022
Receivables [Abstract]
Finance receivables evaluated collectively	$ 451	$ 450
Finance receivables evaluated individually	39	46
Allowance for credit losses based on collective evaluation	19	21
Allowance for credit losses based on individual evaluation	3	3
Impaired finance receivables with specific allowance for credit losses	12	15
Impaired finance receivables with no specific allowance for credit losses	27	31
Unpaid principal balance of impaired finance receivables	53	60
Allowance for credit losses on impaired finance receivables	3	3
Average recorded investment of impaired finance receivables	$ 43	$ 67

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Inventories (Details) - USD ($) $ in Millions	Apr. 01, 2023	Dec. 31, 2022
Inventories
Finished goods	$ 1,059	$ 991
Work in process	1,753	1,540
Raw materials and components	1,122	1,019
Total inventories	$ 3,934	$ 3,550

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Warranty Liability (Details) - USD ($) $ in Millions	3 Months Ended
	Apr. 01, 2023	Apr. 02, 2022
Changes in warranty liability
Beginning of period	$ 149	$ 127
Provision	15	16
Settlements	(18)	(19)
Adjustments	3	6
End of period	$ 149	$ 130

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Leases - Narrative (Details) - USD ($) $ in Millions	3 Months Ended
	Apr. 01, 2023	Apr. 02, 2022
Leases [Abstract]
Remaining lease terms	26 years
Operating lease - option to extend	true
Operating lease - option to extend the lease, term	25 years
Operating lease cost	$ 17	$ 17
Cash paid for operating lease liabilities	17	17
Noncash lease transactions	$ 15	$ 7

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Leases - Balance Sheet and Other Information (Details) - USD ($) $ in Millions	Apr. 01, 2023	Dec. 31, 2022
Operating leases:
Operating Lease, Right-of-Use Asset, Statement of Financial Position [Extensible Enumeration]	Other assets	Other assets
Other assets	$ 375	$ 372
Operating Lease, Liability, Current, Statement of Financial Position [Extensible Enumeration]	Other current liabilities	Other current liabilities
Other current liabilities	$ 55	$ 54
Operating Lease, Liability, Noncurrent, Statement of Financial Position [Extensible Enumeration]	Other liabilities	Other liabilities
Other liabilities	$ 328	$ 326
Weighted-average remaining lease term (in years)
Weighted-average remaining lease term (in years)	10 years 4 months 24 days	10 years 4 months 24 days
Weighted-average discount rate
Weighted-average discount rate	4.29%	4.14%

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Leases - Maturity of Lease Liabilities (Details) $ in Millions	Apr. 01, 2023 USD ($)
Operating Leases
Remainder of 2023	$ 53
2024	63
2025	55
2026	42
2027	37
Thereafter	$ 237

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Derivative Instruments and Fair Value Measurements - Assets and Liabilities Recorded at Fair Value on a Recurring Basis (Details) - USD ($) $ in Millions	3 Months Ended
	Apr. 01, 2023	Dec. 31, 2022
Manufacturing group
Assets and Liabilities Recorded at Fair Value on a Recurring Basis
Forward exchange contracts maximum maturity period	3 years
Manufacturing group | Foreign currency exchange contracts | Cash Flow Hedging
Assets and Liabilities Recorded at Fair Value on a Recurring Basis
Notional amounts	$ 623	$ 354
Manufacturing group | Foreign currency exchange contracts | Cash Flow Hedging | Level 2
Assets and Liabilities Recorded at Fair Value on a Recurring Basis
Derivative asset, fair value	2
Derivative liability, fair value	11	11
Finance group | Interest rate swap | Cash Flow Hedging
Assets and Liabilities Recorded at Fair Value on a Recurring Basis
Derivative asset, fair value	5	8
Finance group | Interest rate swap, maturing in August 2023 | Cash Flow Hedging
Assets and Liabilities Recorded at Fair Value on a Recurring Basis
Notional amounts	272	272
Finance group | Interest rate swap, maturing in June 2025 | Cash Flow Hedging
Assets and Liabilities Recorded at Fair Value on a Recurring Basis
Notional amounts	$ 25	$ 25

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Derivative Instruments and Fair Value Measurements - Assets and Liabilities not Recorded at Fair Value (Details) - USD ($) $ in Millions	Apr. 01, 2023	Dec. 31, 2022
Manufacturing group | Carrying Value
Financial instruments not reflected at fair value
Debt	$ (3,175)	$ (3,175)
Manufacturing group | Estimated Fair value
Financial instruments not reflected at fair value
Debt	(2,960)	(2,872)
Finance group | Carrying Value
Financial instruments not reflected at fair value
Debt	(367)	(375)
Finance receivables, excluding leases	388	390
Finance group | Estimated Fair value
Financial instruments not reflected at fair value
Debt	(298)	(294)
Finance receivables, excluding leases	$ 381	$ 369

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Shareholders' Equity - Reconciliation of Shareholders' Equity (Details) - USD ($) $ / shares in Units, $ in Millions	3 Months Ended
	Apr. 01, 2023	Apr. 02, 2022
Increase (Decrease) in Stockholders' Equity
Balance at beginning of period	$ 7,113	$ 6,815
Net income	191	193
Other comprehensive income	26	10
Share-based compensation activity	62	61
Dividends declared	(4)	(5)
Purchases of common stock, including excise tax	(380)	(157)
Balance at end of period	7,008	$ 6,917
Excise taxes on common share repurchases	$ 3
Dividends per share of common stock (in dollars per share)	$ 0.02	$ 0.02
Common Stock
Increase (Decrease) in Stockholders' Equity
Balance at beginning of period	$ 26	$ 28
Balance at end of period	26	28
Capital Surplus
Increase (Decrease) in Stockholders' Equity
Balance at beginning of period	1,880	1,863
Share-based compensation activity	62	61
Balance at end of period	1,942	1,924
Treasury Stock
Increase (Decrease) in Stockholders' Equity
Balance at beginning of period	(84)	(157)
Purchases of common stock, including excise tax	(380)	(157)
Balance at end of period	(464)	(314)
Retained Earnings
Increase (Decrease) in Stockholders' Equity
Balance at beginning of period	5,903	5,870
Net income	191	193
Dividends declared	(4)	(5)
Balance at end of period	6,090	6,058
Accumulated Other Comprehensive Loss
Increase (Decrease) in Stockholders' Equity
Balance at beginning of period	(612)	(789)
Other comprehensive income	26	10
Balance at end of period	$ (586)	$ (779)

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Shareholders' Equity - Earnings Per Share (Details) - shares shares in Thousands	3 Months Ended
	Apr. 01, 2023	Apr. 02, 2022
Weighted-average shares outstanding for basic and diluted EPS
Basic weighted-average shares outstanding (in shares)	204,835	217,010
Dilutive effect of stock options (in shares)	2,176	2,597
Diluted weighted-average shares outstanding (in shares)	207,011	219,607
Stock options
Weighted-average shares outstanding for basic and diluted EPS
Anti-dilutive effect of weighted average shares (in shares)	2,000	1,000

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Shareholders' Equity - Accumulated Other Comprehensive Income (Loss) (Details) - USD ($) $ in Millions	3 Months Ended
	Apr. 01, 2023	Apr. 02, 2022
AOCI Attributable to Parent, Net of Tax [Roll Forward]
Balance at beginning of period	$ 7,113	$ 6,815
Other comprehensive income (loss) before reclassifications	25	(7)
Reclassified from Accumulated other comprehensive loss	1	17
Balance at end of period	7,008	6,917
Accumulated Other Comprehensive Loss
AOCI Attributable to Parent, Net of Tax [Roll Forward]
Balance at beginning of period	(612)	(789)
Balance at end of period	(586)	(779)
Pension and Postretirement Benefits Adjustments
AOCI Attributable to Parent, Net of Tax [Roll Forward]
Balance at beginning of period	(516)	(799)
Other comprehensive income (loss) before reclassifications	0	0
Reclassified from Accumulated other comprehensive loss	0	17
Balance at end of period	(516)	(782)
Foreign Currency Translation Adjustments
AOCI Attributable to Parent, Net of Tax [Roll Forward]
Balance at beginning of period	(94)	9
Other comprehensive income (loss) before reclassifications	28	(14)
Reclassified from Accumulated other comprehensive loss	0	0
Balance at end of period	(66)	(5)
Deferred Gains (Losses) on Hedge Contracts
AOCI Attributable to Parent, Net of Tax [Roll Forward]
Balance at beginning of period	(2)	1
Other comprehensive income (loss) before reclassifications	(3)	7
Reclassified from Accumulated other comprehensive loss	1	0
Balance at end of period	$ (4)	$ 8

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Shareholders' Equity - Before and After Tax Components of Other Comprehensive Income (Loss) (Details) - USD ($) $ in Millions	3 Months Ended
	Apr. 01, 2023	Apr. 02, 2022
Pension and postretirement benefits adjustments, pre-tax:
Amortization of net actuarial (gain) loss, pre-tax	$ (2)	$ 21
Amortization of prior service cost, pre-tax	2	2
Pension and postretirement benefits adjustments, net, pre-tax	0	23
Pension and postretirement benefits adjustments, tax:
Amortization of net actuarial (gain) loss, tax (expense) benefit	1	(5)
Amortization of prior service cost, tax (expense) benefit	(1)	(1)
Pension and postretirement benefits adjustments, net, tax (expense) benefit	0	(6)
Pension and postretirement benefits adjustments, after-tax:
Amortization of net actuarial (gain) loss, after-tax	(1)	16
Amortization of prior period service cost, after-tax	1	1
Pension and postretirement benefits adjustments, net, after-tax	0	17
Foreign currency translation adjustments, pre-tax:
Foreign currency translation adjustments	28	(14)
Foreign currency translation adjustments, tax:
Foreign currency translation adjustments	0	0
Foreign currency translation adjustments, after-tax:
Foreign currency translation adjustments	28	(14)
Deferred gains (losses) on hedge contracts, pre-tax:
Current deferrals, pre-tax	(4)	10
Reclassification adjustments, pre-tax	2	0
Deferred gains (losses) on hedge contracts, net, pre-tax	(2)	10
Deferred gains (losses) on hedge contracts, tax:
Current deferrals, tax (expense) benefit	1	(3)
Reclassification adjustments, tax (expense) benefit	(1)	0
Deferred gains (losses) on hedge contracts, net, tax (expense) benefit	0	(3)
Deferred gains (losses) on hedge contracts, after-tax:
Current deferrals, after-tax	(3)	7
Reclassification adjustments, after tax	1	0
Deferred gains (losses) on hedge contracts, net, after-tax	(2)	7
Other comprehensive income (loss), pre-tax	26	19
Other comprehensive income (loss), tax (expense) benefit	0	(9)
Other comprehensive income	$ 26	$ 10

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Segment Information - Narrative (Details)	3 Months Ended
	Apr. 01, 2023 segment
Operating and reportable business segments
Number of operating business segments	6
Number of reportable business segments	6

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Segment Information - Revenue by Segment and Reconciliation of Segment Profit to Income Before Income Taxes (Details) - USD ($) $ in Millions	3 Months Ended
	Apr. 01, 2023	Apr. 02, 2022
Revenues
Total revenues	$ 3,024	$ 3,001
Reconciliation of segment profit to income from continuing operations before income taxes
Interest expense, net for Manufacturing group	(20)	(32)
Non-service components of pension and postretirement income, net	59	60
Income before income taxes	227	232
Operating Segment
Reconciliation of segment profit to income from continuing operations before income taxes
Segment profit	259	277
Reconciling Items
Reconciliation of segment profit to income from continuing operations before income taxes
Corporate expenses and other, net	(39)	(52)
LIFO inventory provision	(25)	(12)
Intangible asset amortization	(10)	(13)
Non-service components of pension and postretirement income, net	59	60
Textron Aviation
Revenues
Total revenues	1,149	1,040
Bell
Revenues
Total revenues	621	834
Textron Systems
Revenues
Total revenues	306	273
Industrial
Revenues
Total revenues	932	838
Textron eAviation
Revenues
Total revenues	4	0
Finance
Revenues
Total revenues	12	16
Manufacturing group | Reconciling Items
Reconciliation of segment profit to income from continuing operations before income taxes
Interest expense, net for Manufacturing group	(17)	(28)
Manufacturing group | Textron Aviation | Operating Segment
Revenues
Total revenues	1,149	1,040
Reconciliation of segment profit to income from continuing operations before income taxes
Segment profit	125	110
Manufacturing group | Bell | Operating Segment
Revenues
Total revenues	621	834
Reconciliation of segment profit to income from continuing operations before income taxes
Segment profit	60	91
Manufacturing group | Textron Systems | Operating Segment
Revenues
Total revenues	306	273
Reconciliation of segment profit to income from continuing operations before income taxes
Segment profit	34	28
Manufacturing group | Industrial | Operating Segment
Revenues
Total revenues	932	838
Reconciliation of segment profit to income from continuing operations before income taxes
Segment profit	41	39
Manufacturing group | Textron eAviation | Operating Segment
Revenues
Total revenues	4	0
Reconciliation of segment profit to income from continuing operations before income taxes
Segment profit	(9)	0
Finance group
Revenues
Total revenues	12	16
Finance group | Finance | Operating Segment
Revenues
Total revenues	12	16
Reconciliation of segment profit to income from continuing operations before income taxes
Segment profit	$ 8	$ 9

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Revenues - Disaggregation of Revenue (Details) - USD ($) $ in Millions	3 Months Ended
	Apr. 01, 2023	Apr. 02, 2022
Disaggregation of Revenue [Line Items]
Revenues	$ 3,024	$ 3,001
United States
Disaggregation of Revenue [Line Items]
Revenues	2,070	2,079
Europe
Disaggregation of Revenue [Line Items]
Revenues	305	346
Other international
Disaggregation of Revenue [Line Items]
Revenues	649	576
Commercial
Disaggregation of Revenue [Line Items]
Revenues	2,356	2,171
U.S. Government
Disaggregation of Revenue [Line Items]
Revenues	668	830
Textron Aviation
Disaggregation of Revenue [Line Items]
Revenues	1,149	1,040
Textron Aviation | United States
Disaggregation of Revenue [Line Items]
Revenues	836	732
Textron Aviation | Europe
Disaggregation of Revenue [Line Items]
Revenues	66	119
Textron Aviation | Other international
Disaggregation of Revenue [Line Items]
Revenues	247	189
Textron Aviation | Commercial
Disaggregation of Revenue [Line Items]
Revenues	1,107	1,021
Textron Aviation | U.S. Government
Disaggregation of Revenue [Line Items]
Revenues	42	19
Textron Aviation | Aircraft
Disaggregation of Revenue [Line Items]
Revenues	718	646
Textron Aviation | Aftermarket parts and services
Disaggregation of Revenue [Line Items]
Revenues	431	394
Bell
Disaggregation of Revenue [Line Items]
Revenues	621	834
Bell | United States
Disaggregation of Revenue [Line Items]
Revenues	460	670
Bell | Europe
Disaggregation of Revenue [Line Items]
Revenues	19	28
Bell | Other international
Disaggregation of Revenue [Line Items]
Revenues	142	136
Bell | Commercial
Disaggregation of Revenue [Line Items]
Revenues	232	234
Bell | U.S. Government
Disaggregation of Revenue [Line Items]
Revenues	389	600
Bell | Military aircraft and support programs
Disaggregation of Revenue [Line Items]
Revenues	385	597
Bell | Commercial helicopters, parts and services
Disaggregation of Revenue [Line Items]
Revenues	236	237
Textron Systems
Disaggregation of Revenue [Line Items]
Revenues	306	273
Textron Systems | United States
Disaggregation of Revenue [Line Items]
Revenues	275	246
Textron Systems | Europe
Disaggregation of Revenue [Line Items]
Revenues	14	8
Textron Systems | Other international
Disaggregation of Revenue [Line Items]
Revenues	17	19
Textron Systems | Commercial
Disaggregation of Revenue [Line Items]
Revenues	74	65
Textron Systems | U.S. Government
Disaggregation of Revenue [Line Items]
Revenues	232	208
Industrial
Disaggregation of Revenue [Line Items]
Revenues	932	838
Industrial | United States
Disaggregation of Revenue [Line Items]
Revenues	494	426
Industrial | Europe
Disaggregation of Revenue [Line Items]
Revenues	204	190
Industrial | Other international
Disaggregation of Revenue [Line Items]
Revenues	234	222
Industrial | Commercial
Disaggregation of Revenue [Line Items]
Revenues	927	835
Industrial | U.S. Government
Disaggregation of Revenue [Line Items]
Revenues	5	3
Industrial | Fuel systems and functional components
Disaggregation of Revenue [Line Items]
Revenues	488	464
Industrial | Specialized vehicles
Disaggregation of Revenue [Line Items]
Revenues	444	374
Textron eAviation
Disaggregation of Revenue [Line Items]
Revenues	4	0
Textron eAviation | United States
Disaggregation of Revenue [Line Items]
Revenues	1	0
Textron eAviation | Europe
Disaggregation of Revenue [Line Items]
Revenues	2	0
Textron eAviation | Other international
Disaggregation of Revenue [Line Items]
Revenues	1	0
Textron eAviation | Commercial
Disaggregation of Revenue [Line Items]
Revenues	4	0
Textron eAviation | U.S. Government
Disaggregation of Revenue [Line Items]
Revenues	0	0
Finance
Disaggregation of Revenue [Line Items]
Revenues	12	16
Finance | United States
Disaggregation of Revenue [Line Items]
Revenues	4	5
Finance | Europe
Disaggregation of Revenue [Line Items]
Revenues	0	1
Finance | Other international
Disaggregation of Revenue [Line Items]
Revenues	8	10
Finance | Commercial
Disaggregation of Revenue [Line Items]
Revenues	12	16
Finance | U.S. Government
Disaggregation of Revenue [Line Items]
Revenues	$ 0	$ 0

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Revenues - Remaining Performance Obligations (Details) $ in Billions	Apr. 01, 2023 USD ($)
Remaining Performance Obligation, Expected Timing of Satisfaction
Remaining performance obligation	$ 13.1
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2023-04-02
Remaining Performance Obligation, Expected Timing of Satisfaction
Remaining performance obligation, percent	85.00%
Remaining performance obligation, expected timing of satisfaction	21 months
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2024-12-29
Remaining Performance Obligation, Expected Timing of Satisfaction
Remaining performance obligation, percent	12.00%
Remaining performance obligation, expected timing of satisfaction	24 months

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Revenues - Contract Assets and Liabilities (Details) - USD ($) $ in Millions	3 Months Ended
	Apr. 01, 2023	Apr. 02, 2022	Dec. 31, 2022
Contract Assets and Liabilities
Contract assets	$ 621		$ 680
Contract liabilities	1,700		$ 1,500
Revenue recognized included in contract liabilities	$ 316	$ 206

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Share-Based Compensation - Compensation Expense (Details) - USD ($) $ in Millions	3 Months Ended
	Apr. 01, 2023	Apr. 02, 2022
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Compensation expense	$ 45	$ 34
Income tax benefit	(11)	(8)
Total compensation expense included in net income	34	26
Stock options
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Compensation expense	$ 14	$ 12

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Share-Based Compensation - Stock Appreciation Rights (Details) - Stock appreciation rights - USD ($) $ / shares in Units, $ in Millions	3 Months Ended
	Apr. 01, 2023	Apr. 02, 2022
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Awards outstanding (in shares)	617,074
Weighted-average exercise price (in dollars per share)	$ 54.62
Weighted-average remaining contractual life	6 years 4 months 24 days
Intrinsic value	$ 10	$ 14

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Share-Based Compensation - Stock Options (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Millions			3 Months Ended
	Mar. 01, 2023	Mar. 01, 2022	Apr. 01, 2023	Apr. 02, 2022
Additional general disclosures
Aggregate intrinsic value of outstanding options			$ 152
Weighted-average remaining contractual life of outstanding stock options			6 years 2 months 12 days
Aggregate intrinsic value of exercisable options			$ 138
Weighted-average remaining contractual life of exercisable options			5 years 1 month 6 days
Total intrinsic value of options exercised			$ 19	$ 23
Stock options
Share-Based Compensation
Maximum term of options			10 years
Performance share units vesting period			3 years
Weighted-average assumptions used in Black-Scholes option-pricing model
Fair value of options at grant date (in dollars per share)	$ 23.83	$ 19.95
Dividend yield	0.10%	0.10%
Expected volatility	29.40%	29.20%
Risk-free interest rate	4.20%	1.90%
Expected term (in years)	4 years 9 months 18 days	4 years 9 months 18 days
Number of Options
Outstanding at beginning of period (in shares)			8,310
Granted (in shares)			1,026
Exercised (in shares)			(630)
Forfeited or expired (in shares)			(60)
Outstanding at end of period (in shares)			8,646
Exercisable at end of period (in shares)			6,263
Weighted-Average Exercise Price
Outstanding at beginning of period (in dollars per share)			$ 50.25
Granted (in dollars per share)			73.19
Exercised (in dollars per share)			(42.84)
Forfeited or expired (in dollars per share)			(58.90)
Outstanding at end of period (in dollars per share)			53.45
Exercisable at end of period (in dollars per share)			$ 48.56

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Share-Based Compensation - Restricted Stock Units (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Millions	3 Months Ended
	Apr. 01, 2023	Apr. 02, 2022
Restricted Stock Units
Fair value
Fair value of awards vested	$ 44	$ 24
Cash paid	$ 34	$ 17
Units Payable in Stock
Number of Units
Outstanding at beginning of period, nonvested (in shares)	525
Granted (in shares)	103
Vested (in shares)	(218)
Forfeited (in shares)	0
Outstanding at end of period, nonvested (in shares)	410
Weighted- Average Grant Date Fair Value
Outstanding at beginning of period, nonvested (in dollars per share)	$ 52.99
Granted (in dollars per share)	73.17
Vested (in dollars per share)	(46.66)
Forfeited (in dollars per share)	0
Outstanding at end of period, nonvested (in dollars per share)	$ 61.41
Units Payable in Cash
Number of Units
Outstanding at beginning of period, nonvested (in shares)	1,086
Granted (in shares)	245
Vested (in shares)	(463)
Forfeited (in shares)	(32)
Outstanding at end of period, nonvested (in shares)	836
Weighted- Average Grant Date Fair Value
Outstanding at beginning of period, nonvested (in dollars per share)	$ 53.26
Granted (in dollars per share)	73.18
Vested (in dollars per share)	(45.92)
Forfeited (in dollars per share)	(56.94)
Outstanding at end of period, nonvested (in dollars per share)	$ 63.02

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Share-Based Compensation - Performance Share Units (Details) - Performance Share Units - USD ($) $ / shares in Units, shares in Thousands, $ in Millions	3 Months Ended
	Apr. 01, 2023	Apr. 02, 2022
Number of Units
Outstanding at beginning of period, nonvested (in shares)	427
Granted (in shares)	209
Outstanding at end of period, nonvested (in shares)	636
Weighted- Average Grant Date Fair Value
Outstanding at beginning of period, nonvested (in dollars per share)	$ 59.51
Granted (in dollars per share)	73.19
Outstanding at end of period, nonvested (in dollars per share)	$ 64.01
Fair value
Cash paid	$ 27	$ 15

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Retirement Plans (Details) - USD ($) $ in Millions	3 Months Ended
	Apr. 01, 2023	Apr. 02, 2022
Pension Benefits
Net periodic benefit income
Service cost	$ 17	$ 26
Interest cost	91	69
Expected return on plan assets	(152)	(153)
Amortization of net actuarial loss	0	22
Amortization of prior service cost	3	3
Net periodic benefit income	(41)	(33)
Pension Benefits | United States
Net periodic benefit income
Cost associated with the defined contribution component	4	4
Postretirement Benefits Other Than Pensions
Net periodic benefit income
Service cost	0	1
Interest cost	2	1
Amortization of net actuarial loss	(2)	(1)
Amortization of prior service cost	(1)	(1)
Net periodic benefit income	$ (1)	$ 0

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Income Taxes (Details)	3 Months Ended
	Apr. 01, 2023	Apr. 02, 2022
Income Tax Disclosure [Abstract]
Effective income tax rate	15.90%	16.80%
U.S. federal statutory income tax rate	21.00%	21.00%