Consolidated Statements of Operations - USD ($) $ in Millions |
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Sep. 29, 2018 |
Sep. 28, 2019 |
Sep. 29, 2018 |
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Revenues | ||||
Total revenues | $ 3,259 | $ 3,200 | $ 9,595 | $ 10,222 |
Costs, expenses and other | ||||
Cost of sales | 2,747 | 2,687 | 7,965 | 8,489 |
Selling and administrative expense | 255 | 307 | 854 | 1,004 |
Interest expense | 44 | 41 | 129 | 124 |
Non-service components of pension and post-retirement income, net | (28) | (19) | (85) | (57) |
Gain on business disposition | (444) | (444) | ||
Total costs, expenses and other | 3,018 | 2,572 | 8,863 | 9,116 |
Income before income taxes | 241 | 628 | 732 | 1,106 |
Income tax expense | 21 | 65 | 116 | 130 |
Net income | $ 220 | $ 563 | $ 616 | $ 976 |
Earnings per share | ||||
Basic (in dollars per share) | $ 0.96 | $ 2.29 | $ 2.65 | $ 3.85 |
Diluted (in dollars per share) | $ 0.95 | $ 2.26 | $ 2.64 | $ 3.80 |
Manufacturing | ||||
Revenues | ||||
Total revenues | $ 3,245 | $ 3,185 | $ 9,548 | $ 10,174 |
Finance | ||||
Revenues | ||||
Finance Revenue | $ 14 | $ 15 | $ 47 | $ 48 |
Consolidated Statements of Comprehensive Income - USD ($) $ in Millions |
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Sep. 29, 2018 |
Sep. 28, 2019 |
Sep. 29, 2018 |
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Consolidated Statements of Comprehensive Income | ||||
Net income | $ 220 | $ 563 | $ 616 | $ 976 |
Other comprehensive income (loss), net of taxes: | ||||
Pension and postretirement benefits adjustments, net of reclassifications | 20 | 38 | 61 | 100 |
Foreign currency translation adjustments, net of reclassifications | (34) | 7 | (30) | (20) |
Deferred gains (losses) on hedge contracts, net of reclassifications | 1 | 2 | (2) | |
Other comprehensive income (loss) | (14) | 46 | 33 | 78 |
Comprehensive income | $ 206 | $ 609 | $ 649 | $ 1,054 |
Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Millions |
Sep. 28, 2019 |
Dec. 29, 2018 |
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Consolidated Balance Sheets | ||
Accumulated depreciation and amortization | $ 4,371 | $ 4,203 |
Basis of Presentation |
9 Months Ended |
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Sep. 28, 2019 | |
Basis of Presentation | |
Basis of Presentation | Note 1. Basis of Presentation Our Consolidated Financial Statements include the accounts of Textron Inc. (Textron) and its majority-owned subsidiaries. We have prepared these unaudited consolidated financial statements in accordance with accounting principles generally accepted in the U.S. for interim financial information. Accordingly, these interim financial statements do not include all of the information and footnotes required by accounting principles generally accepted in the U.S. for complete financial statements. The consolidated interim financial statements included in this quarterly report should be read in conjunction with the consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 29, 2018. In the opinion of management, the interim financial statements reflect all adjustments (consisting only of normal recurring adjustments) that are necessary for the fair presentation of our consolidated financial position, results of operations and cash flows for the interim periods presented. The results of operations for the interim periods are not necessarily indicative of the results to be expected for the full year. Our financings are conducted through two separate borrowing groups. The Manufacturing group consists of Textron consolidated with its majority-owned subsidiaries that operate in the Textron Aviation, Bell, Textron Systems and Industrial segments. The Finance group, which also is the Finance segment, consists of Textron Financial Corporation and its consolidated subsidiaries. We designed this framework to enhance our borrowing power by separating the Finance group. Our Manufacturing group operations include the development, production and delivery of tangible goods and services, while our Finance group provides financial services. Due to the fundamental differences between each borrowing group’s activities, investors, rating agencies and analysts use different measures to evaluate each group’s performance. To support those evaluations, we present balance sheet and cash flow information for each borrowing group within the Consolidated Financial Statements. All significant intercompany transactions are eliminated from the Consolidated Financial Statements, including retail financing activities for inventory sold by our Manufacturing group and financed by our Finance group. Use of Estimates We prepare our financial statements in conformity with generally accepted accounting principles, which require us to make estimates and assumptions that affect the amounts reported in the financial statements. Actual results could differ from those estimates. Our estimates and assumptions are reviewed periodically, and the effects of changes, if any, are reflected in the Consolidated Statements of Operations in the period that they are determined. Contract Estimates For contracts where revenue is recognized over time, we recognize changes in estimated contract revenues, costs and profits using the cumulative catch-up method of accounting. This method recognizes the cumulative effect of changes on current and prior periods with the impact of the change from inception-to-date recorded in the current period. Anticipated losses on contracts are recognized in full in the period in which the losses become probable and estimable. In the third quarter of 2019 and 2018, our cumulative catch-up adjustments increased revenue and segment profit by $21 million and $63 million, respectively, and net income by $16 million and $48 million, respectively ($0.07 and $0.19 per diluted share, respectively). In the third quarter of 2019 and 2018, gross favorable adjustments totaled $41 million and $79 million, respectively, and the gross unfavorable adjustments totaled $20 million and $16 million, respectively. In the first nine months of 2019 and 2018, our cumulative catch-up adjustments increased revenue and segment profit by $79 million and $167 million, respectively, and net income by $60 million and $127 million, respectively ($0.26 and $0.49 per diluted share, respectively). In the first nine months of 2019 and 2018, gross favorable adjustments totaled $140 million and $205 million, respectively, and the gross unfavorable adjustments totaled $61 million and $38 million, respectively.
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Summary of Significant Accounting Policies Update |
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Sep. 28, 2019 | |
Summary of Significant Accounting Policies Update | |
Summary of Significant Accounting Policies Update | Note 2. Summary of Significant Accounting Policies Update At the beginning of 2019, we adopted Accounting Standards Update (ASU) No. 2016-02, Leases (ASC 842), which requires lessees to recognize all leases with a term greater than 12 months on the balance sheet as right-of-use assets and lease liabilities. Upon adoption, the most significant impact was the recognition of $307 million in right-of-use assets and lease liabilities for operating leases, while our accounting for finance leases remained unchanged. We applied the provisions of this standard to our existing leases at the adoption date using a retrospective transition method and have not adjusted comparative periods. The cumulative transition adjustment to retained earnings was not significant and the adoption had no impact on our earnings or cash flows. We elected the practical expedients permitted under the transition guidance, which allowed us to carryforward the historical lease classification and to apply hindsight when evaluating options within a contract, resulting in the extension of the lease term for certain of our existing leases. Our significant accounting policies are included in Note 1 of our Annual Report on Form 10-K for the year ended December 29, 2018. Significant changes to our policies resulting from the adoption of ASC 842 are provided below. Leases We identify leases by evaluating our contracts to determine if the contract conveys the right to use an identified asset for a stated period of time in exchange for consideration. Specifically, we consider whether we can control the underlying asset and have the right to obtain substantially all of the economic benefits or outputs from the asset. For our contracts that contain both lease components (e.g., fixed payments including rent, real estate taxes and insurance costs) and non-lease components (e.g., common-area maintenance costs, other goods/services), we allocate the consideration in the contract to each component based on its standalone price. Leases with terms greater than 12 months are classified as either operating or finance leases at the commencement date. For these leases, we capitalize the lesser of a) the present value of the minimum lease payments over the lease term, or b) the fair value of the asset, as a right-of-use asset with an offsetting lease liability. The discount rate used to calculate the present value of the minimum lease payments is typically our incremental borrowing rate, as the rate implicit in the lease is generally not known or determinable. The lease term includes any noncancelable period for which we have the right to use the asset and may include options to extend or terminate the lease when it is reasonably certain that we will exercise the option. Operating leases are recognized as a single lease cost on a straight-line basis over the lease term, while finance lease cost is recognized separately as amortization and interest expense. Accounting Pronouncements Not Yet Adopted In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments – Credit Losses. For most financial assets, such as trade and other receivables, loans and other instruments, this standard changes the current incurred loss model to a forward-looking expected credit loss model, which generally will result in the earlier recognition of allowances for losses. The new standard is effective for our company at the beginning of 2020. Entities are required to apply the provisions of the standard through a cumulative-effect adjustment to retained earnings as of the effective date. We are continuing to evaluate the impact of the standard on our consolidated financial statements and expect to complete our assessment in the fourth quarter of 2019. We do not expect the standard to have a material impact on our consolidated financial statements.
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Business Disposition |
9 Months Ended |
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Sep. 28, 2019 | |
Business Disposition | |
Business Disposition | Note 3. Business Disposition On July 2, 2018, we completed the sale of the businesses that manufacture and sell the products in our Tools and Test Equipment product line within our Industrial segment to Emerson Electric Co. for net cash proceeds of $807 million. In the third quarter of 2018, we recorded an after-tax gain of $410 million, subject to post-closing adjustments. |
Accounts Receivable and Finance Receivables |
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Accounts Receivable and Finance Receivables | Note 4. Accounts Receivable and Finance Receivables Accounts Receivable Accounts receivable is composed of the following:
Finance Receivables Finance receivables are presented in the following table:
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:
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 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.
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Inventories |
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Inventories | Note 5. Inventories Inventories are composed of the following:
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Other Assets |
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Sep. 28, 2019 | |
Other Assets | |
Other Assets | Note 6. Other Assets On April 1, 2019, TRU Simulation + Training Inc., a business within our Textron Systems segment, contributed assets associated with its training business into FlightSafety Textron Aviation Training LLC, a company formed by FlightSafety International Inc. and TRU to provide training solutions for Textron Aviation’s commercial business and general aviation aircraft. We have a 30% interest in this newly formed company and our investment is accounted for under the equity method of accounting. We contributed assets with a carrying value of $69 million to the company, which primarily included property, plant and equipment. In addition, $71 million of the Textron Systems segment's goodwill was allocated to this transaction. In the second quarter of 2019, based on the fair value of our share of the business, we recorded a pre-tax net gain of $18 million, subject to post-closing adjustments, to cost of sales in our Consolidated Statements of Operations.
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Warranty Liability |
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Warranty Liability | Note 7. Warranty Liability Changes in our warranty liability are as follows:
* Adjustments include changes to prior year estimates, new issues on prior year sales, business dispositions, acquisitions and currency translation adjustments. |
Leases |
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Leases | Note 8. Leases We primarily lease certain manufacturing plants, offices, warehouses, training and service centers at various locations worldwide that are classified as either operating or finance leases. Our leases have remaining lease terms up to 30 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. In the third quarter and first nine months of 2019, our operating lease cost totaled $16 million and $48 million, respectively. Our finance lease cost and our variable and short-term lease costs were not significant. In the first nine months of 2019, cash paid for operating lease liabilities totaled $48 million, which is classified in cash flows from operating activities. Balance sheet and other information related to our leases is as follows:
Maturities of our lease liabilities at September 28, 2019 are as follows:
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Debt |
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Debt | Note 9. Debt Under our shelf registration statement, on May 7, 2019, we issued $300 million of fixed-rate notes due September 17, 2029 with an annual interest rate of 3.90%. The net proceeds of the issuance totaled $297 million, after deducting underwriting discounts, commissions and offering expenses. On June 24, 2019, the Finance Group's $150 million fixed-rate loan due August 16, 2019 was amended. The maturity date of this loan was extended to June 23, 2022 and the annual interest rate was modified from 2.26% to 2.88%.
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Derivative Instruments and Fair Value Measurements |
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Derivative Instruments and Fair Value Measurements | Note 10. Derivative Instruments and Fair Value Measurements We measure fair value at the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. We prioritize the assumptions that market participants would use in pricing the asset or liability into a three-tier fair value hierarchy. This fair value hierarchy gives the highest priority (Level 1) to quoted prices in active markets for identical assets or liabilities and the lowest priority (Level 3) to unobservable inputs in which little or no market data exist, requiring companies to develop their own assumptions. Observable inputs that do not meet the criteria of Level 1, which include quoted prices for similar assets or liabilities in active markets or quoted prices for identical assets and liabilities in markets that are not active, are categorized as Level 2. Level 3 inputs are those that reflect our estimates about the assumptions market participants would use in pricing the asset or liability based on the best information available in the circumstances. Valuation techniques for assets and liabilities measured using Level 3 inputs may include methodologies such as the market approach, the income approach or the cost approach and may use unobservable inputs such as projections, estimates and management’s interpretation of current market data. These unobservable inputs are utilized only to the extent that observable inputs are not available or cost effective to obtain. Assets and Liabilities Recorded at Fair Value on a Recurring Basis We manufacture and sell our products in a number of countries throughout the world, and, therefore, we are exposed to movements in foreign currency exchange rates. We primarily utilize foreign currency exchange contracts with maturities of no more than three years to manage this volatility. These contracts qualify as cash flow hedges and are intended to offset the effect of exchange rate fluctuations on forecasted sales, inventory purchases and overhead expenses. Net gains and losses recognized in earnings and Accumulated other comprehensive loss on cash flow hedges, including gains and losses related to hedge ineffectiveness, were not significant in the periods presented. Our foreign currency exchange contracts are measured at fair value using the market method valuation technique. The inputs to this technique utilize current foreign currency exchange forward market rates published by third-party leading financial news and data providers. These are observable data that represent the rates that the financial institution uses for contracts entered into at that date; however, they are not based on actual transactions so they are classified as Level 2. At September 28, 2019 and December 29, 2018, we had foreign currency exchange contracts with notional amounts upon which the contracts were based of $366 million and $379 million, respectively. At September 28, 2019, the fair value amounts of our foreign currency exchange contracts were a $3 million asset and a $5 million liability. At December 29, 2018, the fair value amounts of our foreign currency exchange contracts were a $2 million asset and a $10 million liability. We hedge our net investment position in certain major currencies and generate foreign currency interest payments that offset other transactional exposures in these currencies. To accomplish this, we borrow directly in the foreign currency and designate a portion of the debt as a hedge of the net investment. We record changes in the fair value of these contracts in other comprehensive income to the extent they are effective as cash flow hedges. Currency effects on the effective portion of these hedges, which are reflected in the foreign currency translation adjustments within Accumulated other comprehensive loss, were not significant in the periods presented. Assets and Liabilities Not Recorded at Fair Value The carrying value and estimated fair value of our financial instruments that are not reflected in the financial statements at fair value are as follows:
Fair value for the Manufacturing group debt is determined using market observable data for similar transactions (Level 2). The fair value for the Finance group debt was determined primarily based on discounted cash flow analyses using observable market inputs from debt with similar duration, subordination and credit default expectations (Level 2). Fair value estimates for finance receivables were determined based on internally developed discounted cash flow models primarily utilizing significant unobservable inputs (Level 3), which include estimates of the rate of return, financing cost, capital structure and/or discount rate expectations of current market participants combined with estimated loan cash flows based on credit losses, payment rates and expectations of borrowers’ ability to make payments on a timely basis. |
Shareholders' Equity |
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Shareholders' Equity | Note 11. Shareholders’ Equity A reconciliation of Shareholder’s equity is presented below:
Dividends per share of common stock were $0.02 for both the third quarter of 2019 and 2018 and $0.06 for both the first nine months of 2019 and 2018. 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:
Stock options to purchase 4.3 million and 3.1 million shares of common stock are excluded from the calculation of diluted weighted-average shares outstanding for the third quarter and first nine months of 2019, respectively, as their effect would have been anti-dilutive. For the three and nine months ended September 29, 2018, there were no stock options excluded from the calculation of diluted weighted-average shares outstanding. Accumulated Other Comprehensive Loss and Other Comprehensive Income (Loss) The components of Accumulated other comprehensive loss are presented below:
The before and after-tax components of Other comprehensive income (loss) are presented below:
*These components of other comprehensive income (loss) are included in the computation of net periodic pension cost. See Note 14 of our 2018 Annual Report on Form 10-K for additional information. |
Segment Information |
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Segment Information | Note 12. Segment Information We operate in, and report financial information for, the following five business segments: Textron Aviation, Bell, Textron Systems, Industrial and Finance. On July 2, 2018, we sold our Tools and Test Equipment businesses that were previously included in the Industrial segment as discussed in Note 3. Segment profit is an important measure used for evaluating performance and for decision-making purposes. Segment profit for the manufacturing segments excludes interest expense, certain corporate expenses, gains/losses on major business dispositions and special charges. The measurement for the Finance segment includes interest income and expense along with intercompany interest income and expense. Our revenues by segment, along with a reconciliation of segment profit to income before income taxes, are included in the table below:
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Revenues |
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Revenues | Note 13. Revenues Disaggregation of Revenues Our revenues disaggregated by major product type are presented below:
Our revenues for our segments by customer type and geographic location are presented below:
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 September 28, 2019, we had $8.8 billion in remaining performance obligations of which we expect to recognize revenues of approximately 64% through 2020, an additional 29% through 2022, 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 September 28, 2019, contract assets and contract liabilities totaled $471 million and $945 million, respectively. At December 29, 2018, contract assets and contract liabilities totaled $461 million and $974 million, respectively. During the third quarter and first nine months of 2019, we recognized revenues of $54 million and $511 million, respectively, that were included in the contract liability balance at December 29, 2018. We recognized revenues of $56 million and $755 million in the third quarter and first nine months of 2018 that were included in the contract liability balance at December 31, 2017. |
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Retirement Plans | Note 14. Retirement Plans We provide defined benefit pension plans and other postretirement benefits to eligible employees. The components of net periodic benefit cost (credit) for these plans are as follows:
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Income Taxes |
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Income Taxes | |
Income Taxes | Note 15. Income Taxes Our effective tax rate for the third quarter and first nine months of 2019 was 8.7% and 15.8%, respectively. In the third quarter and first nine months of 2019, the effective tax rate was lower than the U.S. federal statutory tax rate of 21%, primarily due to $41 million and $53 million, respectively, in benefits recognized for additional research credits related to prior years. For the third quarter and first nine months of 2018, our effective tax rate was 10.4% and 11.8%, respectively. The effective tax rate was lower than the U.S. federal statutory tax rate of 21% for these periods, primarily due to the disposition of the Tools and Test equipment product line which resulted in a gain taxable primarily in a non-U.S. jurisdiction that partially exempts such gains from tax. The effective tax rate for the first nine months of 2018 also reflects a $25 million benefit recognized upon the reassessment of our reserve for uncertain tax positions based on new information, including interactions with the tax authorities and recent audit settlements. Our reserve for unrecognized tax benefits totaled $214 million and $141 million at September 28, 2019 and December 29, 2018, respectively. The increase in this reserve largely reflects the completion of a research and development tax credit analysis for tax credits related to prior years. |
Commitments and Contingencies |
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Commitments and Contingencies | Note 16. Commitments and Contingencies We are subject to legal proceedings and other claims arising out of the conduct of our business, including proceedings and claims relating to commercial and financial transactions; government contracts; alleged lack of compliance with applicable laws and regulations; production partners; product liability; patent and trademark infringement; employment disputes; and environmental, safety and health matters. Some of these legal proceedings and claims seek damages, fines or penalties in substantial amounts or remediation of environmental contamination. As a government contractor, we are subject to audits, reviews and investigations to determine whether our operations are being conducted in accordance with applicable regulatory requirements. Under federal government procurement regulations, certain claims brought by the U.S. Government could result in our suspension or debarment from U.S. Government contracting for a period of time. On the basis of information presently available, we do not believe that existing proceedings and claims will have a material effect on our financial position or results of operations.
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Summary of Significant Accounting Policies Update (Policies) |
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Leases | Leases We identify leases by evaluating our contracts to determine if the contract conveys the right to use an identified asset for a stated period of time in exchange for consideration. Specifically, we consider whether we can control the underlying asset and have the right to obtain substantially all of the economic benefits or outputs from the asset. For our contracts that contain both lease components (e.g., fixed payments including rent, real estate taxes and insurance costs) and non-lease components (e.g., common-area maintenance costs, other goods/services), we allocate the consideration in the contract to each component based on its standalone price. Leases with terms greater than 12 months are classified as either operating or finance leases at the commencement date. For these leases, we capitalize the lesser of a) the present value of the minimum lease payments over the lease term, or b) the fair value of the asset, as a right-of-use asset with an offsetting lease liability. The discount rate used to calculate the present value of the minimum lease payments is typically our incremental borrowing rate, as the rate implicit in the lease is generally not known or determinable. The lease term includes any noncancelable period for which we have the right to use the asset and may include options to extend or terminate the lease when it is reasonably certain that we will exercise the option. Operating leases are recognized as a single lease cost on a straight-line basis over the lease term, while finance lease cost is recognized separately as amortization and interest expense.
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Accounting Pronouncements Not Yet Adopted | Accounting Pronouncements Not Yet Adopted In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments – Credit Losses. For most financial assets, such as trade and other receivables, loans and other instruments, this standard changes the current incurred loss model to a forward-looking expected credit loss model, which generally will result in the earlier recognition of allowances for losses. The new standard is effective for our company at the beginning of 2020. Entities are required to apply the provisions of the standard through a cumulative-effect adjustment to retained earnings as of the effective date. We are continuing to evaluate the impact of the standard on our consolidated financial statements and expect to complete our assessment in the fourth quarter of 2019. We do not expect the standard to have a material impact on our consolidated financial statements. |
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Summary of finance receivables and allowance for loan losses based on impairment evaluation, excluding leveraged leases |
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Inventories (Tables) |
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Warranty Liability (Tables) |
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* Adjustments include changes to prior year estimates, new issues on prior year sales, business dispositions, acquisitions and currency translation adjustments. |
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Summary of maturities of operating lease liabilities |
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Summary of maturities of finance lease liabilities |
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Derivative Instruments and Fair Value Measurements (Tables) |
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Sep. 28, 2019 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative Instruments and Fair Value Measurements | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Carrying value and estimated fair value of financial instruments |
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Shareholders' Equity (Tables) |
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Shareholders' Equity | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Shareholder's equity |
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Schedule of weighted-average shares outstanding for basic and diluted EPS |
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Schedule of components of Accumulated Other Comprehensive Loss |
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Schedule of before and after-tax components of other comprehensive income (loss) |
*These components of other comprehensive income (loss) are included in the computation of net periodic pension cost. See Note 14 of our 2018 Annual Report on Form 10-K for additional information. |
Segment Information (Tables) |
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Segment Information | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenues by segment and reconciliation of segment profit to income before income taxes |
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Revenues (Tables) |
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Revenues | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of revenue by major product type, customer type and geographic location | Our revenues disaggregated by major product type are presented below:
Our revenues for our segments by customer type and geographic location are presented below:
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Retirement Plans (Tables) |
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Components of net periodic benefit cost (credit) |
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Basis of Presentation (Details) $ / shares in Units, $ in Millions |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 28, 2019
USD ($)
$ / shares
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Sep. 29, 2018
USD ($)
$ / shares
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Sep. 28, 2019
USD ($)
item
$ / shares
|
Sep. 29, 2018
USD ($)
$ / shares
|
|
Number of borrowing groups | item | 2 | |||
Cumulative catch-up method | ||||
Cumulative catch-up adjustments | $ 21 | $ 63 | $ 79 | $ 167 |
Change in accounting estimate financial effect increase in net income | $ 16 | $ 48 | $ 60 | $ 127 |
Change in accounting estimate financial effect increase in earnings per share diluted | $ / shares | $ 0.07 | $ 0.19 | $ 0.26 | $ 0.49 |
Gross favorable adjustments | $ 41 | $ 79 | $ 140 | $ 205 |
Gross unfavorable adjustments | $ 20 | $ 16 | $ 61 | $ 38 |
Summary of Significant Accounting Policies Update (Details) - USD ($) $ in Millions |
9 Months Ended | |
---|---|---|
Sep. 28, 2019 |
Jan. 01, 2019 |
|
Summary of Significant Accounting Policies Update | ||
Operating right-of-use assets | $ 282 | |
Operating lease liabilities | $ 285 | |
Lease, Practical Expedient, Use of Hindsight [true false] | true | |
ASU 2016-02 | ||
Summary of Significant Accounting Policies Update | ||
Operating right-of-use assets | $ 307 | |
Operating lease liabilities | $ 307 |
Business Disposition (Details) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | |
---|---|---|---|
Jul. 02, 2018 |
Sep. 29, 2018 |
Sep. 29, 2018 |
|
Business Disposition | |||
Net proceeds from business disposition | $ 807 | ||
Disposition of businesses | Tools and Test Equipment | |||
Business Disposition | |||
Net proceeds from business disposition | $ 807 | ||
After tax gain | $ 410 |
Accounts Receivable and Finance Receivables - Accounts receivable (Details) - Manufacturing group - USD ($) $ in Millions |
Sep. 28, 2019 |
Dec. 29, 2018 |
---|---|---|
Accounts Receivable | ||
Accounts Receivable, Gross | $ 1,045 | $ 1,051 |
Allowance for doubtful accounts | (27) | (27) |
Total accounts receivable, net | 1,018 | 1,024 |
Commercial | ||
Accounts Receivable | ||
Accounts Receivable, Gross | 916 | 885 |
U.S. Government contracts | ||
Accounts Receivable | ||
Accounts Receivable, Gross | $ 129 | $ 166 |
Accounts Receivable and Finance Receivables - Finance receivables (Details) - USD ($) $ in Millions |
Sep. 28, 2019 |
Dec. 29, 2018 |
---|---|---|
Finance Receivables | ||
Finance receivables | $ 755 | $ 789 |
Allowance for losses | (25) | (29) |
Total finance receivables, net | $ 730 | $ 760 |
Accounts Receivable and Finance Receivables - Finance receivables and allowance for losses based on the results of impairment evaluation (Details) - USD ($) $ in Millions |
9 Months Ended | 12 Months Ended |
---|---|---|
Sep. 28, 2019 |
Dec. 29, 2018 |
|
Finance receivables | ||
Finance receivables evaluated collectively | $ 611 | $ 630 |
Finance receivables evaluated individually | 41 | 58 |
Allowance for losses based on collective evaluation | 22 | 24 |
Allowance for losses based on individual evaluation | 3 | 5 |
Impaired finance receivables with no related allowance for losses | 21 | 43 |
Impaired finance receivables with related allowance for losses | 20 | 15 |
Unpaid principal balance of impaired finance receivables | 51 | 67 |
Average recorded investment of impaired finance receivables | $ 40 | $ 61 |
Inventories (Details) - USD ($) $ in Millions |
Sep. 28, 2019 |
Dec. 29, 2018 |
---|---|---|
Inventories | ||
Finished goods | $ 1,738 | $ 1,662 |
Work in process | 1,880 | 1,356 |
Raw materials and components | 818 | 800 |
Total inventories | $ 4,436 | $ 3,818 |
Other Assets (Details) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Apr. 01, 2019 |
Jun. 29, 2019 |
|
Equity method investment | ||
Contributed assets | $ 69 | |
Allocated goodwill | $ 71 | |
Amount of net pre-tax gain subject to post-closing adjustments | $ 18 | |
FlightSafety Textron Aviation Training LLC | ||
Equity method investment | ||
Investment (in percentage) | 30.00% |
Warranty Liability (Details) - USD ($) $ in Millions |
9 Months Ended | |
---|---|---|
Sep. 28, 2019 |
Sep. 29, 2018 |
|
Changes in warranty liability | ||
Balance at beginning of period | $ 149 | $ 164 |
Provision | 45 | 50 |
Settlements | (56) | (60) |
Adjustments | (3) | 1 |
Balance at end of period | $ 135 | $ 155 |
Leases (Details) $ in Millions |
3 Months Ended | 9 Months Ended |
---|---|---|
Sep. 28, 2019
USD ($)
|
Sep. 28, 2019
USD ($)
|
|
Leases | ||
Operating lease - Option to extend | true | |
Operating lease cost | $ 16 | $ 48 |
Cash paid for operating lease liabilities | $ 48 | |
Maximum | ||
Leases | ||
Operating lease and finance lease - Remaining lease term | 30 years | |
Operating lease - Option to extend the lease, term | 25 years | 25 years |
Leases - Maturity of lease liabilities (Details) $ in Millions |
Sep. 28, 2019
USD ($)
|
---|---|
Operating Leases | |
2019 | $ 18 |
2020 | 56 |
2021 | 43 |
2022 | 36 |
2023 | 31 |
Thereafter | 178 |
Total lease payments | 362 |
Less: interest | (77) |
Total lease liabilities | 285 |
Finance Leases | |
2019 | 3 |
2020 | 9 |
2021 | 9 |
2022 | 9 |
2023 | 9 |
Thereafter | 69 |
Total lease payments | 108 |
Less: interest | (27) |
Total lease liabilities | $ 81 |
Debt (Details) - USD ($) $ in Millions |
May 07, 2019 |
Jun. 24, 2019 |
Jun. 23, 2019 |
---|---|---|---|
Fixed rate notes due 2029 | |||
Debt | |||
Issuance of debt | $ 300 | ||
Interest rate (as a percent) | 3.90% | ||
Net proceeds from issuance | $ 297 | ||
Fixed rate notes due 2019 | |||
Debt | |||
Interest rate (as a percent) | 2.88% | 2.26% | |
Loan | $ 150 |
Derivative Instruments and Fair Value Measurements - Assets and liabilities recorded at fair value on a recurring basis (Details) - Manufacturing group - USD ($) $ in Millions |
9 Months Ended | |
---|---|---|
Sep. 28, 2019 |
Dec. 29, 2018 |
|
Fair value of derivative instruments | ||
Forward exchange contracts maximum maturity period | 3 years | |
Foreign currency exchange contracts | ||
Fair value of derivative instruments | ||
Notional amounts | $ 366 | $ 379 |
Level 2 | Foreign currency exchange contracts | ||
Fair value of derivative instruments | ||
Derivative Asset, Fair Value | 3 | 2 |
Derivative Liability, Fair Value | $ 5 | $ 10 |
Derivative Instruments and Fair Value Measurements - Assets and liabilities not recorded at fair value (Details) - USD ($) $ in Millions |
Sep. 28, 2019 |
Dec. 29, 2018 |
---|---|---|
Manufacturing group | Carrying Value | ||
Financial instruments not reflected at fair value | ||
Debt, excluding leases | $ (3,411) | $ (2,996) |
Manufacturing group | Estimated Fair Value | ||
Financial instruments not reflected at fair value | ||
Debt, excluding leases | (3,550) | (2,971) |
Finance group | ||
Financial instruments not reflected at fair value | ||
Debt | (695) | (718) |
Finance group | Carrying Value | ||
Financial instruments not reflected at fair value | ||
Finance receivables, excluding leases | 544 | 582 |
Debt | (695) | (718) |
Finance group | Estimated Fair Value | ||
Financial instruments not reflected at fair value | ||
Finance receivables, excluding leases | 571 | 584 |
Debt | $ (626) | $ (640) |
Shareholders' Equity - Earnings Per Share (Details) - shares shares in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 28, 2019 |
Sep. 29, 2018 |
Sep. 28, 2019 |
Sep. 29, 2018 |
|
Weighted-average shares outstanding for basic and diluted EPS | ||||
Basic weighted-average shares outstanding | 229,755 | 246,136 | 232,202 | 253,512 |
Dilutive effect of stock options | 1,342 | 3,242 | 1,487 | 3,268 |
Diluted weighted-average shares outstanding | 231,097 | 249,378 | 233,689 | 256,780 |
Anti-dilutive effect of weighted average shares | 4,300 | 0 | 3,100 | 0 |
Segment Information - Operating and reportable segments (Details) |
9 Months Ended |
---|---|
Sep. 28, 2019
segment
| |
Operating and reportable business segments | |
Number of business operating segments | 5 |
Number of reportable business segments | 5 |
Revenues - Contract Assets and Liabilities (Details) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | |||
---|---|---|---|---|---|
Sep. 28, 2019 |
Sep. 29, 2018 |
Sep. 28, 2019 |
Sep. 29, 2018 |
Dec. 29, 2018 |
|
Contract Assets and Liabilities | |||||
Contract assets | $ 471 | $ 471 | $ 461 | ||
Contract liabilities | 945 | 945 | $ 974 | ||
Revenue recognized included in contract liabilities | $ 54 | $ 56 | $ 511 | $ 755 |
Retirement Plans - Net periodic benefit cost (Details) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 28, 2019 |
Sep. 29, 2018 |
Sep. 28, 2019 |
Sep. 29, 2018 |
|
Pension Benefits | ||||
Net periodic benefit cost | ||||
Service cost | $ 23 | $ 26 | $ 68 | $ 79 |
Interest cost | 82 | 77 | 245 | 230 |
Expected return on plan assets | (139) | (138) | (417) | (415) |
Amortization of net actuarial loss (gain) | 26 | 38 | 76 | 115 |
Amortization of prior service cost (credit) | 3 | 4 | 10 | 11 |
Net periodic benefit cost (credit) | (5) | 7 | (18) | 20 |
Postretirement Benefits Other Than Pensions | ||||
Net periodic benefit cost | ||||
Service cost | 1 | 1 | 2 | 2 |
Interest cost | 3 | 2 | 8 | 7 |
Amortization of net actuarial loss (gain) | (1) | (2) | ||
Amortization of prior service cost (credit) | (2) | (2) | (5) | (5) |
Net periodic benefit cost (credit) | $ 1 | $ 1 | $ 3 | $ 4 |
Income Taxes (Details) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | |||
---|---|---|---|---|---|
Sep. 28, 2019 |
Sep. 29, 2018 |
Sep. 28, 2019 |
Sep. 29, 2018 |
Dec. 29, 2018 |
|
Income Taxes | |||||
Effective income tax rate (as a percent) | 8.70% | 10.40% | 15.80% | 11.80% | |
U.S. federal statutory income tax rate (as a percent) | 21.00% | 21.00% | 21.00% | 21.00% | |
Discrete tax benefit | $ 41 | $ 53 | $ 25 | ||
Unrecognized tax benefits | $ 214 | $ 214 | $ 141 |