Document and Entity Information - shares	3 Months Ended
Document and Entity Information - shares	Apr. 04, 2020	Apr. 17, 2020
Document and Entity Information
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Apr. 04, 2020
Document Transition Report	false
Entity File Number	1-5480
Entity Registrant Name	Textron Inc
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	05-0315468
Entity Address, Address Line One	40 Westminster Street
Entity Address, City or Town	Providence
Entity Address, State or Province	RI
Entity Address, Postal Zip Code	02903
City Area Code	401
Local Phone Number	421-2800
Title of 12(b) Security	Common stock, $0.125 par value
Trading Symbol	TXT
Security Exchange Name	NYSE
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Large Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		227,472,487
Entity Central Index Key	0000217346
Current Fiscal Year End Date	--01-02
Document Fiscal Year Focus	2020
Document Fiscal Period Focus	Q1
Amendment Flag	false

Consolidated Statements of Operations - USD ($) $ in Millions	3 Months Ended
	Apr. 04, 2020	Mar. 30, 2019
Revenues
Total revenues	$ 2,777	$ 3,109
Costs, expenses and other
Cost of sales	2,387	2,577
Selling and administrative expense	263	307
Interest expense	40	42
Special charges	39
Non-service components of pension and post-retirement income, net	(21)	(29)
Total costs, expenses and other	2,708	2,897
Income before income taxes	69	212
Income tax expense	19	33
Net income	$ 50	$ 179
Earnings per share
Basic (in dollars per share)	$ 0.22	$ 0.76
Diluted (in dollars per share)	$ 0.22	$ 0.76
Manufacturing
Revenues
Total revenues	$ 2,763	$ 3,092
Finance
Revenues
Finance revenues	$ 14	$ 17

Consolidated Statements of Comprehensive Income - USD ($) $ in Millions	3 Months Ended
	Apr. 04, 2020	Mar. 30, 2019
Consolidated Statements of Comprehensive Income
Net income	$ 50	$ 179
Other comprehensive income, net of tax:
Pension and postretirement benefits adjustments, net of reclassifications	37	21
Foreign currency translation adjustments	(40)	3
Deferred gains (losses) on hedge contracts, net of reclassifications	(9)	2
Other comprehensive income (losses)	(12)	26
Comprehensive income	$ 38	$ 205

The portion of profit or loss for the period, net of income taxes, which is attributable to the parent.

+ References + Details

Consolidated Balance Sheets - USD ($) shares in Thousands, $ in Millions	Apr. 04, 2020	Jan. 04, 2020
Assets
Inventories	$ 4,385	$ 4,069
Finance receivables, net	681	682
Total assets	15,946	15,018
Liabilities
Total liabilities	10,412	9,500
Shareholders' equity
Common stock	29	29
Capital surplus	1,711	1,674
Treasury stock	(74)	(20)
Retained earnings	5,727	5,682
Accumulated other comprehensive loss	(1,859)	(1,847)
Total shareholders' equity	5,534	5,518
Total liabilities and shareholders' equity	$ 15,946	$ 15,018
Common shares outstanding	227,379	227,956
Manufacturing group
Assets
Cash and equivalents	$ 2,263	$ 1,181
Accounts receivable, net	870	921
Inventories	4,385	4,069
Other current assets	984	894
Total current assets	8,502	7,065
Property, plant and equipment, less accumulated depreciation and amortization of $4,453 and $4,405, respectively	2,483	2,527
Goodwill	2,150	2,150
Other assets	1,854	2,312
Total assets	14,989	14,054
Liabilities
Short-term debt and current portion of long-term debt	1,396	561
Accounts payable	1,322	1,378
Other current liabilities	1,797	1,907
Total current liabilities	4,515	3,846
Other liabilities	2,143	2,288
Long-term debt	2,956	2,563
Total liabilities	9,614	8,697
Finance group
Assets
Cash and equivalents	183	176
Finance receivables, net	681	682
Other assets	93	106
Total assets	957	964
Liabilities
Other liabilities	116	117
Debt	682	686
Total liabilities	$ 798	$ 803

Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Millions	Apr. 04, 2020	Jan. 04, 2020
Consolidated Balance Sheets
Accumulated depreciation and amortization	$ 4,453	$ 4,405

Consolidated Statements of Cash Flows - USD ($) $ in Millions	3 Months Ended
	Apr. 04, 2020	Mar. 30, 2019
Cash flows from operating activities
Net income	$ 50	$ 179
Non-cash items:
Depreciation and amortization	90	102
Deferred income taxes	(10)	15
Asset impairments	39
Other, net	33	33
Changes in assets and liabilities:
Accounts receivable, net	47	(33)
Inventories	(368)	(215)
Other assets	(41)	(31)
Accounts payable	(49)	47
Other liabilities	(203)	(288)
Income taxes, net	20	(7)
Pension, net	(5)	(14)
Captive finance receivables, net		(1)
Other operating activities, net	3	(3)
Net cash (used in) provided by operating activities of continuing operations	(394)	(216)
Net cash used in operating activities of discontinued operations	(1)
Net cash (used in) provided by operating activities	(395)	(216)
Cash flows from investing activities
Capital expenditures	(50)	(59)
Finance receivables repaid	13	12
Other investing activities, net	(6)	5
Net cash used in investing activities	(43)	(42)
Cash flows from financing activities
Increase in short-term debt	603	100
Proceeds from long-term debt	643
Proceeds from borrowings against corporate-owned life insurance policies	377
Principal payments on long-term debt and nonrecourse debt	(24)	(19)
Purchases of Textron common stock	(54)	(202)
Dividends paid	(5)	(5)
Other financing activities, net	3	10
Net cash provided by (used in) financing activities	1,543	(116)
Effect of exchange rate changes on cash and equivalents	(16)	9
Net increase (decrease) in cash and equivalents	1,089	(365)
Cash and equivalents at beginning of period	1,357	1,107
Cash and equivalents at end of period	2,446	742
Manufacturing group
Cash flows from operating activities
Net income	48	175
Non-cash items:
Depreciation and amortization	89	100
Deferred income taxes	(11)	15
Asset impairments	39
Other, net	33	33
Changes in assets and liabilities:
Accounts receivable, net	47	(33)
Inventories	(368)	(241)
Other assets	(41)	(30)
Accounts payable	(49)	47
Other liabilities	(198)	(286)
Income taxes, net	20	(9)
Pension, net	(5)	(14)
Dividends received from Finance group		50
Other operating activities, net	3	(3)
Net cash (used in) provided by operating activities of continuing operations	(393)	(196)
Net cash used in operating activities of discontinued operations	(1)
Net cash (used in) provided by operating activities	(394)	(196)
Cash flows from investing activities
Capital expenditures	(50)	(59)
Other investing activities, net	(6)	3
Net cash used in investing activities	(56)	(56)
Cash flows from financing activities
Increase in short-term debt	603	100
Proceeds from long-term debt	643
Proceeds from borrowings against corporate-owned life insurance policies	377
Principal payments on long-term debt and nonrecourse debt	(7)
Purchases of Textron common stock	(54)	(202)
Dividends paid	(5)	(5)
Other financing activities, net	(9)	9
Net cash provided by (used in) financing activities	1,548	(98)
Effect of exchange rate changes on cash and equivalents	(16)	9
Net increase (decrease) in cash and equivalents	1,082	(341)
Cash and equivalents at beginning of period	1,181	987
Cash and equivalents at end of period	2,263	646
Finance group
Cash flows from operating activities
Net income	2	4
Non-cash items:
Depreciation and amortization	1	2
Deferred income taxes	1
Changes in assets and liabilities:
Other assets		(1)
Other liabilities	(5)	(2)
Income taxes, net		2
Net cash (used in) provided by operating activities of continuing operations	(1)	5
Net cash (used in) provided by operating activities	(1)	5
Cash flows from investing activities
Finance receivables repaid	46	40
Finance receivables originated	(33)	(29)
Other investing activities, net		28
Net cash used in investing activities	13	39
Cash flows from financing activities
Principal payments on long-term debt and nonrecourse debt	(17)	(18)
Dividends paid		(50)
Other financing activities, net	12
Net cash provided by (used in) financing activities	(5)	(68)
Net increase (decrease) in cash and equivalents	7	(24)
Cash and equivalents at beginning of period	176	120
Cash and equivalents at end of period	$ 183	$ 96

Basis of Presentation

3 Months Ended

Apr. 04, 2020

Basis of Presentation

Basis of Presentation

Note 1. Basis of Presentation

Our Consolidated Financial Statements include the accounts of Textron Inc. (Textron) and its majority-owned subsidiaries. We have prepared these unaudited consolidated financial statements in accordance with accounting principles generally accepted in the U.S. for interim financial information. Accordingly, these interim financial statements do not include all of the information and footnotes required by accounting principles generally accepted in the U.S. for complete financial statements. The consolidated interim financial statements included in this quarterly report should be read in conjunction with the consolidated financial statements included in our Annual Report on Form 10-K for the year ended January 4, 2020. In the opinion of management, the interim financial statements reflect all adjustments (consisting only of normal recurring adjustments) that are necessary for the fair presentation of our consolidated financial position, results of operations and cash flows for the interim periods presented. The results of operations for the interim periods are not necessarily indicative of the results to be expected for the full year.

Our financings are conducted through two separate borrowing groups. The Manufacturing group consists of Textron consolidated with its majority-owned subsidiaries that operate in the Textron Aviation, Bell, Textron Systems and Industrial segments. The Finance group, which also is the Finance segment, consists of Textron Financial Corporation and its consolidated subsidiaries. We designed this framework to enhance our borrowing power by separating the Finance group. Our Manufacturing group operations include the development, production and delivery of tangible goods and services, while our Finance group provides financial services. Due to the fundamental differences between each borrowing group’s activities, investors, rating agencies and analysts use different measures to evaluate each group’s performance. To support those evaluations, we present balance sheet and cash flow information for each borrowing group within the Consolidated Financial Statements. All significant intercompany transactions are eliminated from the Consolidated Financial Statements, including retail financing activities for inventory sold by our Manufacturing group and financed by our Finance group.

Use of Estimates

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

Contract Estimates

For contracts where revenue is recognized over time, we recognize changes in estimated contract revenues, costs and profits using the cumulative catch-up method of accounting. This method recognizes the cumulative effect of changes on current and prior periods with the impact of the change from inception-to-date recorded in the current period. Anticipated losses on contracts are recognized in full in the period in which the losses become probable and estimable.

In the first quarter of 2020 and 2019, our cumulative catch-up adjustments increased revenues and segment profit by $2 million and $31 million, respectively, and net income by $1 million and $23 million, respectively ($0.01 and $0.10 per diluted share, respectively). In the first quarter of 2020 and 2019, gross favorable adjustments totaled $27 million and $53 million, respectively, and the gross unfavorable adjustments totaled $25 million and $22 million, respectively.

Summary of Significant Accounting Policies Update

3 Months Ended

Apr. 04, 2020

Summary of Significant Accounting Policies Update

Summary of Significant Accounting Policies Update

Note 2. Summary of Significant Accounting Policies Update

At the beginning of 2020, we adopted Accounting Standards Update (ASU) No. 2016-13, Financial Instruments - Credit Losses (ASC 326). This standard changed the prior incurred loss model to a forward-looking current expected credit loss model for most financial assets, such as trade and finance receivables, contract assets and other instruments. This standard required a cumulative-effect adjustment to retained earnings upon adoption with no restatement of prior periods. There was no significant impact on our consolidated financial statements upon adoption of the standard.

Our significant accounting policies are included in Note 1 of our Annual Report on Form 10-K for the year ended January 4, 2020. Significant changes to our policies resulting from the adoption of ASC 326 are provided below.

Accounts Receivable, Net

Accounts receivable, net includes amounts billed to customers where the right to payment is unconditional. We maintain an allowance for credit losses for our commercial accounts receivable to provide for the estimated amount that will not be collected, even when the risk of loss is remote. The allowance is measured on a collective pool basis when similar risk characteristics exists and is established as a percentage of accounts receivable. We have identified pools with similar risk characteristics, based on

customer and industry type and geographic location. The percentage is based on all available and relevant information including age of outstanding receivables and collateral value, if any, historical payment experience and loss history, current economic conditions, and, when reasonable and supportable factors exist, management’s expectation of future economic conditions. For amounts due from the U.S. Government, we have not established an allowance for credit losses as we have zero loss expectation based on a long history of no credit losses and the explicit guarantee of a sovereign entity.

Finance Receivables, Net

We establish an allowance for credit losses to cover probable but specifically unknown losses existing in the portfolio. This allowance is established as a percentage of finance receivables categorized by pools with similar risk characteristics, such as collateral or customer type and geographic location. The percentage is based on a combination of factors, including historical loss experience, current delinquency and default trends, collateral values, current economic conditions, and, when reasonable and supportable factors exist, management’s expectation of future economic conditions.

For those finance receivables that do not have similar risk characteristics, including larger balance accounts specifically identified as impaired, a reserve is established based on comparing the expected future cash flows, discounted at the finance receivable's effective interest rate, or the fair value of the underlying collateral if the finance receivable is collateral dependent, to its carrying amount. The expected future cash flows consider collateral value; financial performance and liquidity of our borrower; existence and financial strength of guarantors; estimated recovery costs, including legal expenses; and costs associated with the repossession and eventual disposal of collateral. When there is a range of potential outcomes, we perform multiple discounted cash flow analyses and weight the potential outcomes based on their relative likelihood of occurrence. The evaluation of our portfolio is inherently subjective, as it requires estimates, including the amount and timing of future cash flows expected to be received on impaired finance receivables and the estimated fair value of the underlying collateral, which may differ from actual results. While our analysis is specific to each individual account, critical factors included in this analysis include industry valuation guides, age and physical condition of the collateral, payment history, existence and financial strength of guarantors.

Accounts Receivable and Finance Receivables

3 Months Ended

Apr. 04, 2020

Accounts Receivable and Finance Receivables

Accounts Receivable and Finance Receivables

Note 3. Accounts Receivable and Finance Receivables

Accounts Receivable

Accounts receivable is composed of the following:


	April 4,		January 4,
(In millions)	2020		2020
Commercial	$	720	$	835
U.S. Government contracts		189		115
		909		950
Allowance for credit losses		(39)		(29)
Total accounts receivable, net	$	870	$	921

Finance Receivables

Finance receivables are presented in the following table:


	April 4,		January 4,
(In millions)	2020		2020
Finance receivables	$	706	$	707
Allowance for credit losses		(25)		(25)
Total finance receivables, net	$	681	$	682

Finance Receivable Portfolio Quality

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

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

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

In March 2020, due to the economic impact of the COVID-19 pandemic and at the request of certain of our customers, we began working with them to provide temporary payment relief through loan modifications. For loan modifications that cover payment-relief periods in excess of six months, even if the loan was previously current, the loan is deemed a troubled debt restructuring and considered impaired. These impaired loans are classified as either nonaccrual or watchlist based on a review of the credit quality indicators as discussed above. Loan modifications in the first quarter of 2020 were not significant, however, we are working on modifications for approximately 30% of our total finance receivables. We believe our allowance for credit losses adequately covers our exposure on these loans as our estimated collateral values largely exceed the outstanding loan amounts.

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


	April 4,			January 4,
(Dollars in millions)	2020			2020
Performing	$	554		$	664
Watchlist		115			4
Nonaccrual		37			39
Nonaccrual as a percentage of finance receivables		5.24	%		5.52	%
Current and less than 31 days past due	$	622		$	637
31-60 days past due		29			53
61-90 days past due		35			7
Over 90 days past due		20			10
60+ days contractual delinquency as a percentage of finance receivables		7.79	%		2.40	%

At April 4, 2020, 31% of our performing finance receivables were originated since the beginning of 2019 and 35% were originated from 2016 to 2018. For finance receivables categorized as watchlist, 36% were originated since the beginning of 2019 and 23% from 2016 to 2018.

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.


	April 4,		January 4,
(In millions)	2020		2020
Finance receivables evaluated collectively	$	489	$	564
Finance receivables evaluated individually		113		39
Allowance for credit losses based on collective evaluation		22		22
Allowance for credit losses based on individual evaluation		3		3
Impaired finance receivables with no related allowance for credit losses	$	96	$	22
Impaired finance receivables with related allowance for credit losses		17		17
Unpaid principal balance of impaired finance receivables		124		50
Allowance for credit losses on impaired loans		3		3
Average recorded investment of impaired finance receivables		76		40

Inventories

3 Months Ended

Apr. 04, 2020

Inventories

Inventories

Note 4. Inventories

Inventories are composed of the following:


	April 4,		January 4,
(In millions)	2020		2020
Finished goods	$	1,611	$	1,557
Work in process		1,762		1,616
Raw materials and components		1,012		896
Total inventories	$	4,385	$	4,069

Other Assets

3 Months Ended

Apr. 04, 2020

Other Assets

Other Assets

Note 5. Other Assets

Other assets includes the cash surrender value of corporate-owned life insurance policies, net of any borrowings against these policies. During the first quarter of 2020, we borrowed $377 million against these policies as we strengthened our cash position in light of disruptions in the capital markets caused by the COVID-19 pandemic. These proceeds have been classified as financing activities in the consolidated statement of cash flows.

Other Current Liabilities

3 Months Ended

Apr. 04, 2020

Other Current Liabilities

Warranty Liability

Note 6. Other Current Liabilities

Warranty Liability

Changes in our warranty liability are as follows:


	Three Months Ended
	April 4,		March 30,
(In millions)	2020		2019
Beginning of period	$	141	$	149
Provision		13		14
Settlements		(19)		(22)
Adjustments*		(2)		4
End of period	$	133	$	145

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

Restructuring Reserve

Our restructuring reserve activity related to restructuring plans prior to 2020 is summarized below:


			Contract
	Severance		Terminations
(In millions)	Costs		and Other		Total
Balance at January 4, 2020	$	46	$	19	$	65
Cash paid		(26)		(2)		(28)
Balance at April 4, 2020	$	20	$	17	$	37

The majority of the remaining cash outlays of $37 million is expected to be paid over the remainder of 2020. Severance costs generally are paid on a lump-sum basis and include outplacement costs, which are paid in accordance with normal payment terms.

Leases

3 Months Ended

Apr. 04, 2020

Leases

Leases

Note 7. Leases

We primarily lease certain manufacturing plants, offices, warehouses, training and service centers at various locations worldwide that are classified as either operating or finance leases. Our finance leases at April 4, 2020 were not significant. Our operating leases have remaining lease terms up to 29 years, which include options to extend the lease term for periods up to 25 years when it is reasonably certain the option will be exercised. In the first quarter of 2020 and 2019, both our operating lease cost and cash paid for these leases totaled $15 million and $16 million, respectively. Variable and short-term lease costs were not significant. Balance sheet and other information related to our operating leases is as follows:


	April 4,			January 4,
(Dollars in millions)	2020			2020
Other assets	$	272		$	277
Other current liabilities		49			48
Other liabilities		225			233
Weighted-average remaining lease term (in years)		10.0			10.2
Weighted-average discount rate		4.42	%		4.42	%

At April 4, 2020, maturities of our operating lease liabilities on an undiscounted basis totaled $46 million for 2020, $48 million for 2021, $41 million for 2022, $32 million for 2023, $25 million for 2024 and $153 million thereafter.

Debt

3 Months Ended

Apr. 04, 2020

Debt

Debt and Credit Facilities

Note 8. Debt

On April 1, 2020, we entered into a 364-Day Term Loan Credit Agreement in an aggregate principal amount of $500 million and borrowed the full principal amount available under the agreement. At our current credit ratings, the borrowings accrue interest at a rate equal to the London interbank offered rate plus 2.00%, which is an annual interest rate of 3.00% at April 4, 2020. We can pre-pay any amount of the principal balance during the term of the loan; however, we cannot borrow additional principal amounts. The Term Loan Credit Agreement restricts us from incurring additional indebtedness, subject to various exceptions, one of which allows us to borrow under our $1.0 billion revolving credit facility. While this loan is outstanding, we have agreed not to repurchase any of our common stock. The principal amount outstanding, plus accrued and unpaid interest and fees, will be due on March 31, 2021.

Under our shelf registration statement, on March 17, 2020, we issued $650 million of fixed-rate notes due June 1, 2030 with an annual interest rate of 3.00%. The net proceeds of the issuance totaled $643 million, after deducting underwriting discounts, commissions and offering expenses.

Derivative Instruments and Fair Value Measurements

3 Months Ended

Apr. 04, 2020

Derivative Instruments and Fair Value Measurements

Derivative Instruments and Fair Value Measurements

Note 9. Derivative Instruments and Fair Value Measurements

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

Assets and Liabilities Recorded at Fair Value on a Recurring Basis

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

Our foreign currency exchange contracts are measured at fair value using the market method valuation technique. The inputs to this technique utilize current foreign currency exchange forward market rates published by third-party leading financial news and data providers. These are observable data that represent the rates that the financial institution uses for contracts entered into at that date; however, they are not based on actual transactions so they are classified as Level 2. At April 4, 2020 and January 4, 2020, we had foreign currency exchange contracts with notional amounts upon which the contracts were based of $410 million and $342 million, respectively. At April 4, 2020, the fair value amounts of our foreign currency exchange contracts were a $14 million asset and a $18 million liability. At January 4, 2020, the fair value amounts of our foreign currency exchange contracts were a $2 million asset and a $2 million liability.

We hedge our net investment position in certain major currencies and generate foreign currency interest payments that offset other transactional exposures in these currencies. To accomplish this, we borrow directly in the foreign currency and designate a portion of the debt as a hedge of the net investment. We record changes in the fair value of these contracts in other comprehensive income 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:


	April 4, 2020				January 4, 2020
	Carrying		Estimated		Carrying		Estimated
(In millions)	Value		Fair Value		Value		Fair Value
Manufacturing group
Debt, excluding leases	$	(4,335)	$	(4,272)	$	(3,097)	$	(3,249)
Finance group
Finance receivables, excluding leases		494		460		493		527
Debt		(682)		(545)		(686)		(634)

Fair value for the Manufacturing group debt is determined using market observable data for similar transactions (Level 2). The fair value for the Finance group debt was determined primarily based on discounted cash flow analyses using observable market inputs from debt with similar duration, subordination and credit default expectations (Level 2). Fair value estimates for finance receivables were determined based on internally developed discounted cash flow models primarily utilizing significant unobservable inputs (Level 3), which include estimates of the rate of return, financing cost, capital structure and/or discount rate expectations of current market participants combined with estimated loan cash flows based on credit losses, payment rates and expectations of borrowers’ ability to make payments on a timely basis.

Shareholders' Equity

3 Months Ended

Apr. 04, 2020

Shareholders' Equity

Shareholders' Equity

Note 10. Shareholders’ Equity

A reconciliation of Shareholder’s equity is presented below:


									Accumulated
									Other		Total
	Common		Capital		Treasury		Retained		Comprehensive		Shareholders’
(In millions)	Stock		Surplus		Stock		Earnings		Loss		Equity
Balance at January 4, 2020	$	29	$	1,674	$	(20)	$	5,682	$	(1,847)	$	5,518
Net income		—		—		—		50		—		50
Other comprehensive loss		—		—		—		—		(12)		(12)
Share-based compensation activity		—		37		—		—		—		37
Dividends declared		—		—		—		(5)		—		(5)
Purchases of common stock		—		—		(54)		—		—		(54)
Balance at April 4, 2020	$	29	$	1,711	$	(74)	$	5,727	$	(1,859)	$	5,534
Balance at December 29, 2018	$	30	$	1,646	$	(129)	$	5,407	$	(1,762)	$	5,192
Net income		—		—		—		179		—		179
Other comprehensive income		—		—		—		—		26		26
Share-based compensation activity		—		43		—		—		—		43
Dividends declared		—		—		—		(5)		—		(5)
Purchases of common stock		—		—		(202)		—		—		(202)
Balance at March 30, 2019	$	30	$	1,689	$	(331)	$	5,581	$	(1,736)	$	5,233

Dividends per share of common stock were $0.02 for both the first quarter of 2020 and 2019.

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
	April 4,		March 30,
(In thousands)	2020		2019
Basic weighted-average shares outstanding		228,311		234,839
Dilutive effect of stock options		616		1,598
Diluted weighted-average shares outstanding		228,927		236,437

Stock options to purchase 7.5 million and 3.1 million shares of common stock are excluded from the calculation of diluted weighted-average shares outstanding for the first quarter of 2020 and 2019, respectively, as their effect would have been anti-dilutive.

Accumulated Other Comprehensive Loss and Other Comprehensive Income (Loss)

The components of Accumulated other comprehensive loss are presented below:


	Pension and		Foreign		Deferred		Accumulated
	Postretirement		Currency		Gains (Losses)		Other
	Benefits		Translation		on Hedge		Comprehensive
(In millions)	Adjustments		Adjustments		Contracts		Loss
Balance at January 4, 2020	$	(1,811)	$	(36)	$	—	$	(1,847)
Other comprehensive loss before reclassifications		—		(40)		(8)		(48)
Reclassified from Accumulated other comprehensive loss		37		—		(1)		36
Balance at April 4, 2020	$	(1,774)	$	(76)	$	(9)	$	(1,859)
Balance at December 29, 2018	$	(1,727)	$	(32)	$	(3)	$	(1,762)
Other comprehensive income before reclassifications		—		3		3		6
Reclassified from Accumulated other comprehensive loss		21		—		(1)		20
Balance at March 30, 2019	$	(1,706)	$	(29)	$	(1)	$	(1,736)

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


	April 4, 2020						March 30, 2019
			Tax						Tax
	Pre-Tax		(Expense)		After-Tax		Pre-Tax		(Expense)		After-Tax
(In millions)	Amount		Benefit		Amount		Amount		Benefit		Amount
Three Months Ended
Pension and postretirement benefits adjustments:
Amortization of net actuarial loss*	$	46	$	(10)	$	36	$	25	$	(5)	$	20
Amortization of prior service cost*		2		(1)		1		1		—		1
Pension and postretirement benefits adjustments, net		48		(11)		37		26		(5)		21
Deferred gains (losses) on hedge contracts:
Current deferrals		(9)		1		(8)		4		(1)		3
Reclassification adjustments		(1)		—		(1)		(1)		—		(1)
Deferred gains (losses) on hedge contracts, net		(10)		1		(9)		3		(1)		2
Foreign currency translation adjustments		(37)		(3)		(40)		1		2		3
Total	$	1	$	(13)	$	(12)	$	30	$	(4)	$	26

*These components of other comprehensive income (loss) are included in the computation of net periodic pension cost (credit). See Note 16 of our 2019 Annual Report on Form 10-K for additional information.

Segment Information

3 Months Ended

Apr. 04, 2020

Segment Information

Segment Information

Note 11. Segment Information

We operate in, and report financial information for, the following five business segments: Textron Aviation, Bell, Textron Systems, Industrial and Finance. Segment profit is an important measure used for evaluating performance and for decision-making purposes. Segment profit for the manufacturing segments excludes interest expense, certain corporate expenses, 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:


	Three Months Ended
	April 4,		March 30,
(In millions)	2020		2019
Revenues
Textron Aviation	$	872	$	1,134
Bell		823		739
Textron Systems		328		307
Industrial		740		912
Finance		14		17
Total revenues	$	2,777	$	3,109
Segment Profit
Textron Aviation	$	3	$	106
Bell		115		104
Textron Systems		26		28
Industrial		9		50
Finance		3		6
Segment profit		156		294
Corporate expenses and other, net		(14)		(47)
Interest expense, net for Manufacturing group		(34)		(35)
Special charges		(39)		—
Income before income taxes	$	69	$	212

Revenues

3 Months Ended

Apr. 04, 2020

Revenues

Revenues

Note 12. Revenues

Disaggregation of Revenues

Our revenues disaggregated by major product type are presented below:


	Three Months Ended
	April 4,		March 30,
(In millions)	2020		2019
Aircraft	$	515	$	766
Aftermarket parts and services		357		368
Textron Aviation		872		1,134
Military aircraft and support programs		620		508
Commercial helicopters, parts and services		203		231
Bell		823		739
Unmanned systems		148		134
Marine and land systems		48		48
Simulation, training and other		132		125
Textron Systems		328		307
Fuel systems and functional components		465		594
Specialized vehicles		275		318
Industrial		740		912
Finance		14		17
Total revenues	$	2,777	$	3,109

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


(In millions)	Textron Aviation		Bell		Textron Systems		Industrial		Finance		Total
Three months ended April 4, 2020
Customer type:
Commercial	$	848	$	198	$	71	$	739	$	14	$	1,870
U.S. Government		24		625		257		1		—		907
Total revenues	$	872	$	823	$	328	$	740	$	14	$	2,777
Geographic location:
United States	$	597	$	690	$	286	$	329	$	6	$	1,908
Europe		84		24		12		228		1		349
Asia and Australia		123		50		20		53		1		247
Other international		68		59		10		130		6		273
Total revenues	$	872	$	823	$	328	$	740	$	14	$	2,777
Three months ended March 30, 2019
Customer type:
Commercial	$	1,092	$	230	$	74	$	905	$	17	$	2,318
U.S. Government		42		509		233		7		—		791
Total revenues	$	1,134	$	739	$	307	$	912	$	17	$	3,109
Geographic location:
United States	$	789	$	578	$	257	$	389	$	8	$	2,021
Europe		183		20		23		311		1		538
Asia and Australia		23		82		16		77		1		199
Other international		139		59		11		135		7		351
Total revenues	$	1,134	$	739	$	307	$	912	$	17	$	3,109

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 4, 2020, we had $9.2 billion in remaining performance obligations of which we expect to recognize revenues of approximately 72% through 2021, an additional 21% through 2023, 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 4, 2020 and January 4, 2020, contract assets totaled $565 million and $567 million, respectively, and contract liabilities totaled $930 million and $830 million, respectively, reflecting timing differences between revenue recognized, billings and payments from customers. During the first quarter of 2020 and 2019, we recognized revenues of $231 million and $311 million, respectively, that were included in the contract liability balance at the beginning of each year.

Share-Based Compensation

3 Months Ended

Apr. 04, 2020

Share-Based Compensation

Share-Based Compensation

Note 13. Share-Based Compensation

Under our share-based compensation plans, 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, or income in periods of share price depreciation, for these plans is included in net income as follows:


	Three Months Ended
	April 4,		March 30,
(In millions)	2020		2019
Compensation (income) expense	$	(13)	$	44
Income tax expense (benefit)		3		(11)
Total net compensation (income) expense included in net income	$	(10)	$	33

Compensation (income) expense included stock option expense of $10 million in the first quarter 2020 and $11 million in the first quarter of 2019.

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 implied volatilities from traded options on our common stock, historical volatilities and other factors. The expected term is based on historical option exercise data, which is adjusted to reflect any anticipated changes in expected behavior.

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


	March 1,			March 1,
	2020			2019
Fair value of options at grant date	$	10.66		$	14.62
Dividend yield		0.2	%		0.2	%
Expected volatility		29.3	%		26.6	%
Risk-free interest rate		1.1	%		2.5	%
Expected term (in years)		4.7			4.7

The stock option activity during the first quarter of 2020 is provided below:


			Weighted-
	Number of		Average Exercise
(Options in thousands)	Options		Price
Outstanding at January 4, 2020		8,744	$	44.00
Granted		1,728		40.60
Exercised		(169)		(31.48)
Forfeited or expired		(66)		(51.93)
Outstanding at April 4, 2020		10,237	$	43.58
Exercisable at April 4, 2020		7,018	$	41.83

At April 4, 2020, the aggregate intrinsic value of our outstanding and exercisable options was de minimis and these options had a weighted-average remaining contractual life of 6.2 and 4.9 years, respectively. The total intrinsic value of options exercised in the first quarter of 2020 and 2019 was $3 million and $16 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. The activity for restricted stock units payable in both stock and cash during the first quarter of 2020 is provided below:


	Units Payable in Stock					Units Payable in Cash
			Weighted-				Weighted-
	Number of		Average Grant		Number of		Average Grant
(Shares/Units in thousands)	Shares		Date Fair Value		Units		Date Fair Value
Outstanding at January 4, 2020, nonvested		543	$	49.44		1,104	$	49.61
Granted		134		40.60		358		40.60
Vested		(136)		(42.31)		(272)		(42.33)
Forfeited		—		—		(11)		(50.25)
Outstanding at April 4, 2020, nonvested		541	$	49.05		1,179	$	48.54

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


	Three Months Ended
	April 4,		March 30,
(In millions)	2020		2019
Fair value of awards vested	$	17	$	22
Cash paid		11		16

Performance Share Units

The activity for our performance share units during the first quarter of 2020 is provided below:


			Weighted-
	Number of		Average Grant
(Units in thousands)	Units		Date Fair Value
Outstanding at January 4, 2020, nonvested		411	$	56.03
Granted		276		40.60
Outstanding at April 4, 2020, nonvested		687	$	49.84

Cash paid under these awards totaled $7 million and $10 million in the first quarter of 2020 and 2019, respectively.

Retirement Plans

3 Months Ended

Apr. 04, 2020

Retirement Plans

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:


					Postretirement Benefits
	Pension Benefits				Other Than Pensions
	April 4,		March 30,		April 4,		March 30,
(In millions)	2020		2019		2020		2019
Three Months Ended
Service cost	$	26	$	23	$	1	$	1
Interest cost		73		82		2		2
Expected return on plan assets		(144)		(139)		—		—
Amortization of net actuarial loss		46		25		—		—
Amortization of prior service cost (credit)		3		3		(1)		(2)
Net periodic benefit cost (credit)	$	4	$	(6)	$	2	$	1

Special Charges

3 Months Ended

Apr. 04, 2020

Special Charges

Special Charges

Note 15. Special Charges

In the first quarter of 2020, we recorded $39 million in asset impairment charges in the Textron Aviation and Industrial segments. The aviation industry in which Textron Aviation operates has been significantly impacted by the COVID-19 pandemic. We have experienced decreased demand for our products and services as our customers have delayed or ceased orders due to the current environment of economic uncertainty. In light of these conditions, Textron Aviation has temporarily shut down most aircraft production, including the King Air turboprop and Beechcraft piston product lines, and has instituted employee furloughs. Based on these events, we performed an interim impairment test of the indefinite-lived Beechcraft and King Air trade name intangible assets at April 4, 2020. Fair value of these assets was determined utilizing the relief of royalty method assuming an increase in the discount rate based on current market data to 9.7% and revised expectations of future revenues for the products and services associated with the tradenames. This analysis resulted in an impairment charge of $32 million. At April 4, 2020, these intangible assets totaled $169 million.

In the Industrial segment, the Specialized Vehicles product line has experienced reduced demand for its products as the consumer and commercial markets in which it operates have been significantly impacted by the pandemic. Many of the dealers and retail stores that sell its products are currently closed throughout the U.S. and globally, and there is uncertainty as to when they will reopen. Based on these events, we performed an interim intangible impairment test of the indefinite-lived Arctic Cat trade name intangible asset using the relief of royalty method and recorded an impairment charge of $7 million to fully impair this asset.

Income Taxes

3 Months Ended

Apr. 04, 2020

Income Taxes

Income Taxes

Note 16. Income Taxes

Our effective tax rate for the first quarter of 2020 and 2019 was 27.5% and 15.6%, respectively. In the first quarter of 2020, the effective tax rate was higher than the U.S. federal statutory tax rate of 21%, primarily due to a $10 million tax provision established related to a decision to dividend cash back from select non-U.S. jurisdictions to the U.S. in 2020. In the first quarter of 2019, the effective tax rate was lower than the U.S. federal statutory tax rate, primarily due to a $12 million benefit recognized for additional research credits related to prior years.

Commitments and Contingencies

3 Months Ended

Apr. 04, 2020

Commitments and Contingencies

Commitments and Contingencies

Note 17. Commitments and Contingencies

We are subject to legal proceedings and other claims arising out of the conduct of our business, including proceedings and claims relating to commercial and financial transactions; government contracts; alleged lack of compliance with applicable laws and regulations; production partners; product liability; patent and trademark infringement; employment disputes; and environmental, safety and health matters. Some of these legal proceedings and claims seek damages, fines or penalties in substantial amounts or remediation of environmental contamination. As a government contractor, we are subject to audits, reviews and investigations to determine whether our operations are being conducted in accordance with applicable regulatory requirements. Under federal government procurement regulations, certain claims brought by the U.S. Government could result in our suspension or debarment from U.S. Government contracting for a period of time. On the basis of information presently available, we do not believe that existing proceedings and claims will have a material effect on our financial position or results of operations.

Summary of Significant Accounting Policies Update (Policies)

3 Months Ended

Apr. 04, 2020

Summary of Significant Accounting Policies Update

Accounts Receivable, Net

Accounts Receivable, Net

Accounts receivable, net includes amounts billed to customers where the right to payment is unconditional. We maintain an allowance for credit losses for our commercial accounts receivable to provide for the estimated amount that will not be collected, even when the risk of loss is remote. The allowance is measured on a collective pool basis when similar risk characteristics exists and is established as a percentage of accounts receivable. We have identified pools with similar risk characteristics, based on

customer and industry type and geographic location. The percentage is based on all available and relevant information including age of outstanding receivables and collateral value, if any, historical payment experience and loss history, current economic conditions, and, when reasonable and supportable factors exist, management’s expectation of future economic conditions. For amounts due from the U.S. Government, we have not established an allowance for credit losses as we have zero loss expectation based on a long history of no credit losses and the explicit guarantee of a sovereign entity.

Finance Receivables, Net

We establish an allowance for credit losses to cover probable but specifically unknown losses existing in the portfolio. This allowance is established as a percentage of finance receivables categorized by pools with similar risk characteristics, such as collateral or customer type and geographic location. The percentage is based on a combination of factors, including historical loss experience, current delinquency and default trends, collateral values, current economic conditions, and, when reasonable and supportable factors exist, management’s expectation of future economic conditions.

For those finance receivables that do not have similar risk characteristics, including larger balance accounts specifically identified as impaired, a reserve is established based on comparing the expected future cash flows, discounted at the finance receivable's effective interest rate, or the fair value of the underlying collateral if the finance receivable is collateral dependent, to its carrying amount. The expected future cash flows consider collateral value; financial performance and liquidity of our borrower; existence and financial strength of guarantors; estimated recovery costs, including legal expenses; and costs associated with the repossession and eventual disposal of collateral. When there is a range of potential outcomes, we perform multiple discounted cash flow analyses and weight the potential outcomes based on their relative likelihood of occurrence. The evaluation of our portfolio is inherently subjective, as it requires estimates, including the amount and timing of future cash flows expected to be received on impaired finance receivables and the estimated fair value of the underlying collateral, which may differ from actual results. While our analysis is specific to each individual account, critical factors included in this analysis include industry valuation guides, age and physical condition of the collateral, payment history, existence and financial strength of guarantors.

Accounts Receivable and Finance Receivables (Tables)

3 Months Ended

Apr. 04, 2020

Accounts Receivable and Finance Receivables

Accounts receivable


	April 4,		January 4,
(In millions)	2020		2020
Commercial	$	720	$	835
U.S. Government contracts		189		115
		909		950
Allowance for credit losses		(39)		(29)
Total accounts receivable, net	$	870	$	921

Finance receivables


	April 4,		January 4,
(In millions)	2020		2020
Finance receivables	$	706	$	707
Allowance for credit losses		(25)		(25)
Total finance receivables, net	$	681	$	682

Finance receivables by credit quality indicator and by delinquency aging category


	April 4,			January 4,
(Dollars in millions)	2020			2020
Performing	$	554		$	664
Watchlist		115			4
Nonaccrual		37			39
Nonaccrual as a percentage of finance receivables		5.24	%		5.52	%
Current and less than 31 days past due	$	622		$	637
31-60 days past due		29			53
61-90 days past due		35			7
Over 90 days past due		20			10
60+ days contractual delinquency as a percentage of finance receivables		7.79	%		2.40	%

Summary of finance receivables and allowance for loan losses based on impairment evaluation, excluding leveraged leases


	April 4,		January 4,
(In millions)	2020		2020
Finance receivables evaluated collectively	$	489	$	564
Finance receivables evaluated individually		113		39
Allowance for credit losses based on collective evaluation		22		22
Allowance for credit losses based on individual evaluation		3		3
Impaired finance receivables with no related allowance for credit losses	$	96	$	22
Impaired finance receivables with related allowance for credit losses		17		17
Unpaid principal balance of impaired finance receivables		124		50
Allowance for credit losses on impaired loans		3		3
Average recorded investment of impaired finance receivables		76		40

Inventories (Tables)

3 Months Ended

Apr. 04, 2020

Inventories

Inventories


	April 4,		January 4,
(In millions)	2020		2020
Finished goods	$	1,611	$	1,557
Work in process		1,762		1,616
Raw materials and components		1,012		896
Total inventories	$	4,385	$	4,069

Other Current Liabilities (Tables)

3 Months Ended

Apr. 04, 2020

Other Current Liabilities

Changes in warranty liability


	Three Months Ended
	April 4,		March 30,
(In millions)	2020		2019
Beginning of period	$	141	$	149
Provision		13		14
Settlements		(19)		(22)
Adjustments*		(2)		4
End of period	$	133	$	145

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

Schedule of restructuring reserve activity


			Contract
	Severance		Terminations
(In millions)	Costs		and Other		Total
Balance at January 4, 2020	$	46	$	19	$	65
Cash paid		(26)		(2)		(28)
Balance at April 4, 2020	$	20	$	17	$	37

Leases (Tables)

3 Months Ended

Apr. 04, 2020

Leases

Schedule of balance sheet and other information


	April 4,			January 4,
(Dollars in millions)	2020			2020
Other assets	$	272		$	277
Other current liabilities		49			48
Other liabilities		225			233
Weighted-average remaining lease term (in years)		10.0			10.2
Weighted-average discount rate		4.42	%		4.42	%

Derivative Instruments and Fair Value Measurements (Tables)

3 Months Ended

Apr. 04, 2020

Derivative Instruments and Fair Value Measurements

Carrying value and estimated fair value of financial instruments


	April 4, 2020				January 4, 2020
	Carrying		Estimated		Carrying		Estimated
(In millions)	Value		Fair Value		Value		Fair Value
Manufacturing group
Debt, excluding leases	$	(4,335)	$	(4,272)	$	(3,097)	$	(3,249)
Finance group
Finance receivables, excluding leases		494		460		493		527
Debt		(682)		(545)		(686)		(634)

Shareholders' Equity (Tables)

3 Months Ended

Apr. 04, 2020

Shareholders' Equity

Schedule of Shareholder's equity


									Accumulated
									Other		Total
	Common		Capital		Treasury		Retained		Comprehensive		Shareholders’
(In millions)	Stock		Surplus		Stock		Earnings		Loss		Equity
Balance at January 4, 2020	$	29	$	1,674	$	(20)	$	5,682	$	(1,847)	$	5,518
Net income		—		—		—		50		—		50
Other comprehensive loss		—		—		—		—		(12)		(12)
Share-based compensation activity		—		37		—		—		—		37
Dividends declared		—		—		—		(5)		—		(5)
Purchases of common stock		—		—		(54)		—		—		(54)
Balance at April 4, 2020	$	29	$	1,711	$	(74)	$	5,727	$	(1,859)	$	5,534
Balance at December 29, 2018	$	30	$	1,646	$	(129)	$	5,407	$	(1,762)	$	5,192
Net income		—		—		—		179		—		179
Other comprehensive income		—		—		—		—		26		26
Share-based compensation activity		—		43		—		—		—		43
Dividends declared		—		—		—		(5)		—		(5)
Purchases of common stock		—		—		(202)		—		—		(202)
Balance at March 30, 2019	$	30	$	1,689	$	(331)	$	5,581	$	(1,736)	$	5,233

Schedule of weighted-average shares outstanding for basic and diluted EPS


	Three Months Ended
	April 4,		March 30,
(In thousands)	2020		2019
Basic weighted-average shares outstanding		228,311		234,839
Dilutive effect of stock options		616		1,598
Diluted weighted-average shares outstanding		228,927		236,437

Schedule of components of Accumulated Other Comprehensive Loss


	Pension and		Foreign		Deferred		Accumulated
	Postretirement		Currency		Gains (Losses)		Other
	Benefits		Translation		on Hedge		Comprehensive
(In millions)	Adjustments		Adjustments		Contracts		Loss
Balance at January 4, 2020	$	(1,811)	$	(36)	$	—	$	(1,847)
Other comprehensive loss before reclassifications		—		(40)		(8)		(48)
Reclassified from Accumulated other comprehensive loss		37		—		(1)		36
Balance at April 4, 2020	$	(1,774)	$	(76)	$	(9)	$	(1,859)
Balance at December 29, 2018	$	(1,727)	$	(32)	$	(3)	$	(1,762)
Other comprehensive income before reclassifications		—		3		3		6
Reclassified from Accumulated other comprehensive loss		21		—		(1)		20
Balance at March 30, 2019	$	(1,706)	$	(29)	$	(1)	$	(1,736)

Schedule of before and after-tax components of other comprehensive income (loss)


	April 4, 2020						March 30, 2019
			Tax						Tax
	Pre-Tax		(Expense)		After-Tax		Pre-Tax		(Expense)		After-Tax
(In millions)	Amount		Benefit		Amount		Amount		Benefit		Amount
Three Months Ended
Pension and postretirement benefits adjustments:
Amortization of net actuarial loss*	$	46	$	(10)	$	36	$	25	$	(5)	$	20
Amortization of prior service cost*		2		(1)		1		1		—		1
Pension and postretirement benefits adjustments, net		48		(11)		37		26		(5)		21
Deferred gains (losses) on hedge contracts:
Current deferrals		(9)		1		(8)		4		(1)		3
Reclassification adjustments		(1)		—		(1)		(1)		—		(1)
Deferred gains (losses) on hedge contracts, net		(10)		1		(9)		3		(1)		2
Foreign currency translation adjustments		(37)		(3)		(40)		1		2		3
Total	$	1	$	(13)	$	(12)	$	30	$	(4)	$	26

*These components of other comprehensive income (loss) are included in the computation of net periodic pension cost (credit). See Note 16 of our 2019 Annual Report on Form 10-K for additional information.

Segment Information (Tables)

3 Months Ended

Apr. 04, 2020

Segment Information

Revenues by segment and reconciliation of segment profit to income before income taxes


	Three Months Ended
	April 4,		March 30,
(In millions)	2020		2019
Revenues
Textron Aviation	$	872	$	1,134
Bell		823		739
Textron Systems		328		307
Industrial		740		912
Finance		14		17
Total revenues	$	2,777	$	3,109
Segment Profit
Textron Aviation	$	3	$	106
Bell		115		104
Textron Systems		26		28
Industrial		9		50
Finance		3		6
Segment profit		156		294
Corporate expenses and other, net		(14)		(47)
Interest expense, net for Manufacturing group		(34)		(35)
Special charges		(39)		—
Income before income taxes	$	69	$	212

Revenues (Tables)

3 Months Ended

Apr. 04, 2020

Revenues

Schedule of revenue by major product type, customer type and geographic location

Our revenues disaggregated by major product type are presented below:


	Three Months Ended
	April 4,		March 30,
(In millions)	2020		2019
Aircraft	$	515	$	766
Aftermarket parts and services		357		368
Textron Aviation		872		1,134
Military aircraft and support programs		620		508
Commercial helicopters, parts and services		203		231
Bell		823		739
Unmanned systems		148		134
Marine and land systems		48		48
Simulation, training and other		132		125
Textron Systems		328		307
Fuel systems and functional components		465		594
Specialized vehicles		275		318
Industrial		740		912
Finance		14		17
Total revenues	$	2,777	$	3,109

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


(In millions)	Textron Aviation		Bell		Textron Systems		Industrial		Finance		Total
Three months ended April 4, 2020
Customer type:
Commercial	$	848	$	198	$	71	$	739	$	14	$	1,870
U.S. Government		24		625		257		1		—		907
Total revenues	$	872	$	823	$	328	$	740	$	14	$	2,777
Geographic location:
United States	$	597	$	690	$	286	$	329	$	6	$	1,908
Europe		84		24		12		228		1		349
Asia and Australia		123		50		20		53		1		247
Other international		68		59		10		130		6		273
Total revenues	$	872	$	823	$	328	$	740	$	14	$	2,777
Three months ended March 30, 2019
Customer type:
Commercial	$	1,092	$	230	$	74	$	905	$	17	$	2,318
U.S. Government		42		509		233		7		—		791
Total revenues	$	1,134	$	739	$	307	$	912	$	17	$	3,109
Geographic location:
United States	$	789	$	578	$	257	$	389	$	8	$	2,021
Europe		183		20		23		311		1		538
Asia and Australia		23		82		16		77		1		199
Other international		139		59		11		135		7		351
Total revenues	$	1,134	$	739	$	307	$	912	$	17	$	3,109

Share-Based Compensation (Tables)

3 Months Ended

Apr. 04, 2020

Share-Based Compensation

Compensation expense included in net income


	Three Months Ended
	April 4,		March 30,
(In millions)	2020		2019
Compensation (income) expense	$	(13)	$	44
Income tax expense (benefit)		3		(11)
Total net compensation (income) expense included in net income	$	(10)	$	33

Weighted-average fair value of stock options and assumptions used in option-pricing model


	March 1,			March 1,
	2020			2019
Fair value of options at grant date	$	10.66		$	14.62
Dividend yield		0.2	%		0.2	%
Expected volatility		29.3	%		26.6	%
Risk-free interest rate		1.1	%		2.5	%
Expected term (in years)		4.7			4.7

Stock option activity


			Weighted-
	Number of		Average Exercise
(Options in thousands)	Options		Price
Outstanding at January 4, 2020		8,744	$	44.00
Granted		1,728		40.60
Exercised		(169)		(31.48)
Forfeited or expired		(66)		(51.93)
Outstanding at April 4, 2020		10,237	$	43.58
Exercisable at April 4, 2020		7,018	$	41.83

Restricted Stock Units

Share-Based Compensation

Unit period activity, Nonvested, Weighted average grant date fair value


	Units Payable in Stock					Units Payable in Cash
			Weighted-				Weighted-
	Number of		Average Grant		Number of		Average Grant
(Shares/Units in thousands)	Shares		Date Fair Value		Units		Date Fair Value
Outstanding at January 4, 2020, nonvested		543	$	49.44		1,104	$	49.61
Granted		134		40.60		358		40.60
Vested		(136)		(42.31)		(272)		(42.33)
Forfeited		—		—		(11)		(50.25)
Outstanding at April 4, 2020, nonvested		541	$	49.05		1,179	$	48.54

Fair value of awards vested and cash paid during respective periods


	Three Months Ended
	April 4,		March 30,
(In millions)	2020		2019
Fair value of awards vested	$	17	$	22
Cash paid		11		16

Performance Share Units

Share-Based Compensation

Unit period activity, Nonvested, Weighted average grant date fair value


			Weighted-
	Number of		Average Grant
(Units in thousands)	Units		Date Fair Value
Outstanding at January 4, 2020, nonvested		411	$	56.03
Granted		276		40.60
Outstanding at April 4, 2020, nonvested		687	$	49.84

Retirement Plans (Tables)

3 Months Ended

Apr. 04, 2020

Retirement Plans

Components of net periodic benefit cost (credit)


					Postretirement Benefits
	Pension Benefits				Other Than Pensions
	April 4,		March 30,		April 4,		March 30,
(In millions)	2020		2019		2020		2019
Three Months Ended
Service cost	$	26	$	23	$	1	$	1
Interest cost		73		82		2		2
Expected return on plan assets		(144)		(139)		—		—
Amortization of net actuarial loss		46		25		—		—
Amortization of prior service cost (credit)		3		3		(1)		(2)
Net periodic benefit cost (credit)	$	4	$	(6)	$	2	$	1

Basis of Presentation (Details) $ / shares in Units, $ in Millions	3 Months Ended
	Apr. 04, 2020 USD ($) item $ / shares	Mar. 30, 2019 USD ($) $ / shares
Number of borrowing groups \| item	2
Cumulative catch-up method
Cumulative catch-up adjustments	$ 2	$ 31
Change in accounting estimate financial effect increase in net income	$ 1	$ 23
Change in accounting estimate financial effect increase in earnings per share diluted \| $ / shares	$ 0.01	$ 0.10
Gross favorable adjustments	$ 27	$ 53
Gross unfavorable adjustments	$ 25	$ 22

Accounts Receivable and Finance Receivables - Accounts receivable (Details) - Manufacturing group - USD ($) $ in Millions	Apr. 04, 2020	Jan. 04, 2020
Accounts Receivable
Accounts Receivable, Gross	$ 909	$ 950
Allowance for credit losses	(39)	(29)
Total accounts receivable, net	870	921
Commercial
Accounts Receivable
Accounts Receivable, Gross	720	835
U.S. Government contracts
Accounts Receivable
Accounts Receivable, Gross	$ 189	$ 115

Accounts Receivable and Finance Receivables - Finance receivables (Details) - USD ($) $ in Millions	Apr. 04, 2020	Jan. 04, 2020
Finance Receivables
Finance receivables	$ 706	$ 707
Allowance for losses	(25)	(25)
Total finance receivables, net	$ 681	$ 682

Accounts Receivable and Finance Receivables - Finance receivables by delinquency aging category (Details) $ in Millions	3 Months Ended
	Apr. 04, 2020 USD ($) item	Jan. 04, 2020 USD ($)
Finance receivables categorized based on the internally assigned credit quality
Number of loan categories based on key credit quality indicators for individual loan \| item	3
Finance receivables in the process of modifications (as a percent)	30.00%
60 + days contractual delinquency as a percentage of finance receivables	7.79%	2.40%
Current and less than 31 days past due
Finance receivables categorized based on the internally assigned credit quality
Total finance receivables	$ 622	$ 637
31-60 days past due
Finance receivables categorized based on the internally assigned credit quality
Total finance receivables	29	53
61- 90 days past due
Finance receivables categorized based on the internally assigned credit quality
Total finance receivables	35	7
Over 90 days past due
Finance receivables categorized based on the internally assigned credit quality
Total finance receivables	20	10
Performing
Finance receivables categorized based on the internally assigned credit quality
Total finance receivables	$ 554	664
Financing receivable originating since the beginning 2019	31.00%
Financing receivable originating from 2016 to 2018	35.00%
Watchlist
Finance receivables categorized based on the internally assigned credit quality
Total finance receivables	$ 115	4
Financing receivable originating since the beginning 2019	36.00%
Financing receivable originating from 2016 to 2018	23.00%
Nonaccrual
Finance receivables categorized based on the internally assigned credit quality
Payment relief period over which loan is considered impaired	6 months
Total finance receivables	$ 37	$ 39
Nonaccrual as a percentage of finance receivables	5.24%	5.52%
Minimum \| Nonaccrual
Finance receivables categorized based on the internally assigned credit quality
Number of months of contractual delinquency to classify accounts as nonaccrual unless such collection is not doubtful	3 months

Accounts Receivable and Finance Receivables - Finance receivables and allowance for losses based on the results of impairment evaluation (Details) - USD ($) $ in Millions	3 Months Ended
	Apr. 04, 2020	Jan. 04, 2020
Finance receivables
Finance receivables evaluated collectively	$ 489	$ 564
Finance receivables evaluated individually	113	39
Allowance for credit losses based on collective evaluation	22	22
Allowance for credit losses based on individual evaluation	3	3
Impaired finance receivables with no related allowance for credit losses	96	22
Impaired finance receivables with related allowance for credit losses	17	17
Unpaid principal balance of impaired finance receivables	124	50
Allowance for credit losses on impaired loans	3	3
Average recorded investment of impaired finance receivables	$ 76	$ 40

Inventories (Details) - USD ($) $ in Millions	Apr. 04, 2020	Jan. 04, 2020
Inventories
Finished goods	$ 1,611	$ 1,557
Work in process	1,762	1,616
Raw materials and components	1,012	896
Total inventories	$ 4,385	$ 4,069

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

Other Current Liabilities - Changes in warranty liability (Details) - USD ($) $ in Millions	3 Months Ended
	Apr. 04, 2020	Mar. 30, 2019
Changes in warranty liability
Balance at beginning of period	$ 141	$ 149
Provision	13	14
Settlements	(19)	(22)
Adjustments	(2)	4
Balance at end of period	$ 133	$ 145

Other Current Liabilities - Restructuring reserve activity (Details) $ in Millions	3 Months Ended
	Apr. 04, 2020 USD ($)
Restructuring reserve activity
Balance at beginning of period	$ 65
Cash paid	(28)
Balance at end of period	37
Remaining expected cash payments for restructuring activities	37
Severance Costs
Restructuring reserve activity
Balance at beginning of period	46
Cash paid	(26)
Balance at end of period	20
Contract Terminations and Other
Restructuring reserve activity
Balance at beginning of period	19
Cash paid	(2)
Balance at end of period	$ 17

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

Leases - Balance sheet and other information (Details) - USD ($) $ in Millions	Apr. 04, 2020	Jan. 04, 2020
Operating leases:
Other assets	$ 272	$ 277
Other assets	us-gaap:OtherAssets
Other current liabilities	$ 49	48
Other current liabilities	us-gaap:OtherLiabilitiesCurrent
Other liabilities	$ 225	$ 233
Other liabilities	us-gaap:OtherLiabilities
Weighted-average remaining lease term (in years)
Operating leases	10 years	10 years 2 months 12 days
Weighted-average discount rate
Operating leases	4.42%	4.42%

Leases - Maturity of lease liabilities (Details) $ in Millions	Apr. 04, 2020 USD ($)
Operating Leases
2020	$ 46
2021	48
2022	41
2023	32
2024	25
Thereafter	$ 153

Debt (Details) - USD ($) $ in Millions	Apr. 01, 2020	Mar. 17, 2020
Revolving credit facility
Debt
Maximum borrowing capacity	$ 1,000
364-Day Term Loan Credit Agreement
Debt
Debt instrument term	364 days
Issuance of debt	$ 500
Interest rate (as a percent)	3.00%
364-Day Term Loan Credit Agreement \| London interbank offered rate
Debt
Interest rate spread (as a percent)	2.00%
Fixed rate notes due 2030
Debt
Issuance of debt		$ 650
Interest rate (as a percent)		3.00%
Net proceeds from issuance		$ 643

Derivative Instruments and Fair Value Measurements - Assets and liabilities recorded at fair value on a recurring basis (Details) - Manufacturing group - USD ($) $ in Millions	3 Months Ended
	Apr. 04, 2020	Jan. 04, 2020
Fair value of derivative instruments
Forward exchange contracts maximum maturity period	3 years
Foreign currency exchange contracts
Fair value of derivative instruments
Notional amounts	$ 410	$ 342
Level 2 \| Foreign currency exchange contracts
Fair value of derivative instruments
Derivative Asset, Fair Value	14	2
Derivative Liability, Fair Value	$ 18	$ 2

Derivative Instruments and Fair Value Measurements - Assets and liabilities not recorded at fair value (Details) - USD ($) $ in Millions	Apr. 04, 2020	Jan. 04, 2020
Manufacturing group \| Carrying Value
Financial instruments not reflected at fair value
Debt, excluding leases	$ (4,335)	$ (3,097)
Manufacturing group \| Estimated Fair Value
Financial instruments not reflected at fair value
Debt, excluding leases	(4,272)	(3,249)
Finance group
Financial instruments not reflected at fair value
Debt	(682)	(686)
Finance group \| Carrying Value
Financial instruments not reflected at fair value
Finance receivables, excluding leases	494	493
Debt	(682)	(686)
Finance group \| Estimated Fair Value
Financial instruments not reflected at fair value
Finance receivables, excluding leases	460	527
Debt	$ (545)	$ (634)

Shareholders' Equity (Details) - USD ($) $ / shares in Units, $ in Millions	3 Months Ended
	Apr. 04, 2020	Mar. 30, 2019
Increase (Decrease) in Stockholders' Equity
Balance at beginning of period	$ 5,518	$ 5,192
Net income	50	179
Other comprehensive income (loss)	(12)	26
Share-based compensation activity	37	43
Dividends declared	(5)	(5)
Purchases of common stock	(54)	(202)
Balance at end of period	$ 5,534	$ 5,233
Dividends per share of common stock	$ 0.02	$ 0.02
Common Stock
Increase (Decrease) in Stockholders' Equity
Balance at beginning of period	$ 29	$ 30
Balance at end of period	29	30
Capital Surplus
Increase (Decrease) in Stockholders' Equity
Balance at beginning of period	1,674	1,646
Share-based compensation activity	37	43
Balance at end of period	1,711	1,689
Treasury Stock
Increase (Decrease) in Stockholders' Equity
Balance at beginning of period	(20)	(129)
Purchases of common stock	(54)	(202)
Balance at end of period	(74)	(331)
Retained Earnings
Increase (Decrease) in Stockholders' Equity
Balance at beginning of period	5,682	5,407
Net income	50	179
Dividends declared	(5)	(5)
Balance at end of period	5,727	5,581
Accumulated Other Comprehensive Loss
Increase (Decrease) in Stockholders' Equity
Balance at beginning of period	(1,847)	(1,762)
Other comprehensive income (loss)	(12)	26
Balance at end of period	$ (1,859)	$ (1,736)

Shareholders' Equity - Earnings Per Share (Details) - shares shares in Thousands	3 Months Ended
	Apr. 04, 2020	Mar. 30, 2019
Weighted-average shares outstanding for basic and diluted EPS
Basic weighted-average shares outstanding	228,311	234,839
Dilutive effect of stock options	616	1,598
Diluted weighted-average shares outstanding	228,927	236,437
Anti-dilutive effect of weighted average shares	7,500	3,100

Shareholders' Equity - Components of accumulated other comprehensive loss (Details) - USD ($) $ in Millions	3 Months Ended
	Apr. 04, 2020	Mar. 30, 2019
Components of Accumulated Other Comprehensive Loss
Beginning of period	$ (1,847)
End of period	(1,859)
Accumulated Other Comprehensive Loss
Components of Accumulated Other Comprehensive Loss
Beginning of period	(1,847)	$ (1,762)
Other comprehensive (loss) income before reclassifications	(48)	6
Reclassified from Accumulated other comprehensive loss	36	20
End of period	(1,859)	(1,736)
Pension and Postretirement Benefits Adjustments
Components of Accumulated Other Comprehensive Loss
Beginning of period	(1,811)	(1,727)
Reclassified from Accumulated other comprehensive loss	37	21
End of period	(1,774)	(1,706)
Foreign Currency Translation Adjustments
Components of Accumulated Other Comprehensive Loss
Beginning of period	(36)	(32)
Other comprehensive (loss) income before reclassifications	(40)	3
End of period	(76)	(29)
Deferred Gains (Losses) on Hedge Contracts
Components of Accumulated Other Comprehensive Loss
Beginning of period		(3)
Other comprehensive (loss) income before reclassifications	(8)	3
Reclassified from Accumulated other comprehensive loss	(1)	(1)
End of period	$ (9)	$ (1)

Shareholders' Equity - Before and after-tax components of other comprehensive income (loss) (Details) - USD ($) $ in Millions	3 Months Ended
	Apr. 04, 2020	Mar. 30, 2019
Pension and postretirement benefits adjustments, pre-tax:
Amortization of net actuarial loss, pre-tax	$ 46	$ 25
Amortization of prior service cost, pre-tax	2	1
Pension and postretirement benefits adjustments, net, pre-tax	48	26
Deferred gains (losses) on hedge contracts, pre-tax:
Current deferrals, pre-tax	(9)	4
Reclassification adjustments, pre-tax	(1)	(1)
Deferred gains (losses) on hedge contracts, net, pre-tax	(10)	3
Foreign currency translation adjustments, pre-tax	(37)	1
Other comprehensive income (loss), pre-tax	1	30
Pension and postretirement benefits adjustments, tax:
Amortization of net actuarial loss, tax	(10)	(5)
Amortization of prior service cost, tax	(1)
Pension and postretirement benefits adjustments, net, tax	(11)	(5)
Deferred gains (losses) on hedge contracts, tax:
Current deferrals, tax	1	(1)
Deferred gains (losses) on hedge contracts, net, tax	1	(1)
Foreign currency translation adjustments, tax	(3)	2
Other comprehensive income (loss), tax	(13)	(4)
Pension and postretirement benefits adjustments, after-tax:
Amortization of net actuarial loss, after-tax	36	20
Amortization of prior service cost, after-tax	1	1
Pension and postretirement benefits adjustments, net, after-tax	37	21
Deferred gains (losses) on hedge contracts, after-tax:
Current deferrals, after-tax	(8)	3
Reclassification adjustments, after-tax	(1)	(1)
Deferred gains (losses) on hedge contracts, net, after-tax	(9)	2
Foreign currency translation adjustments, after-tax	(40)	3
Other comprehensive income (losses)	$ (12)	$ 26

Segment Information - Operating and reportable segments (Details)	3 Months Ended
	Apr. 04, 2020 segment
Operating and reportable business segments
Number of business operating segments	5
Number of reportable business segments	5

Segment Information - Revenue by segment and reconciliation of segment profit to income before income taxes (Details) - USD ($) $ in Millions	3 Months Ended
	Apr. 04, 2020	Mar. 30, 2019
Revenues
Total revenues	$ 2,777	$ 3,109
Reconciliation of segment profit to income from continuing operations before income taxes
Special charges	(39)
Income before income taxes	69	212
Operating Segment
Segment Profit
Segment Profit	156	294
Corporate
Reconciliation of segment profit to income from continuing operations before income taxes
Corporate expenses and other, net	(14)	(47)
Finance
Revenues
Finance revenues	14	17
Finance \| Operating Segment
Segment Profit
Segment Profit	3	6
Manufacturing group
Reconciliation of segment profit to income from continuing operations before income taxes
Special charges	(39)
Manufacturing group \| Reconciling Items
Reconciliation of segment profit to income from continuing operations before income taxes
Interest expense, net for Manufacturing group	(34)	(35)
Manufacturing group \| Textron Aviation
Revenues
Total revenues	872	1,134
Manufacturing group \| Textron Aviation \| Operating Segment
Segment Profit
Segment Profit	3	106
Manufacturing group \| Bell
Revenues
Total revenues	823	739
Manufacturing group \| Bell \| Operating Segment
Segment Profit
Segment Profit	115	104
Manufacturing group \| Textron Systems
Revenues
Total revenues	328	307
Manufacturing group \| Textron Systems \| Operating Segment
Segment Profit
Segment Profit	26	28
Manufacturing group \| Industrial
Revenues
Total revenues	740	912
Manufacturing group \| Industrial \| Operating Segment
Segment Profit
Segment Profit	9	50
Finance group \| Finance
Revenues
Finance revenues	$ 14	$ 17

Revenues (Details) - USD ($) $ in Millions	3 Months Ended
Revenues (Details) - USD ($) $ in Millions	Apr. 04, 2020	Mar. 30, 2019
Revenues
Total revenues	$ 2,777	$ 3,109
United States
Revenues
Total revenues	1,908	2,021
Europe
Revenues
Total revenues	349	538
Asia and Australia
Revenues
Total revenues	247	199
Other international
Revenues
Total revenues	273	351
Commercial
Revenues
Total revenues	1,870	2,318
U.S. Government
Revenues
Total revenues	907	791
Textron Aviation
Revenues
Total revenues	872	1,134
Textron Aviation \| United States
Revenues
Total revenues	597	789
Textron Aviation \| Europe
Revenues
Total revenues	84	183
Textron Aviation \| Asia and Australia
Revenues
Total revenues	123	23
Textron Aviation \| Other international
Revenues
Total revenues	68	139
Textron Aviation \| Commercial
Revenues
Total revenues	848	1,092
Textron Aviation \| U.S. Government
Revenues
Total revenues	24	42
Textron Aviation \| Aircraft
Revenues
Total revenues	515	766
Textron Aviation \| Aftermarket parts and services
Revenues
Total revenues	357	368
Bell
Revenues
Total revenues	823	739
Bell \| United States
Revenues
Total revenues	690	578
Bell \| Europe
Revenues
Total revenues	24	20
Bell \| Asia and Australia
Revenues
Total revenues	50	82
Bell \| Other international
Revenues
Total revenues	59	59
Bell \| Commercial
Revenues
Total revenues	198	230
Bell \| U.S. Government
Revenues
Total revenues	625	509
Bell \| Military aircraft and support programs
Revenues
Total revenues	620	508
Bell \| Commercial helicopters, parts and services
Revenues
Total revenues	203	231
Textron Systems
Revenues
Total revenues	328	307
Textron Systems \| United States
Revenues
Total revenues	286	257
Textron Systems \| Europe
Revenues
Total revenues	12	23
Textron Systems \| Asia and Australia
Revenues
Total revenues	20	16
Textron Systems \| Other international
Revenues
Total revenues	10	11
Textron Systems \| Commercial
Revenues
Total revenues	71	74
Textron Systems \| U.S. Government
Revenues
Total revenues	257	233
Textron Systems \| Unmanned systems
Revenues
Total revenues	148	134
Textron Systems \| Marine and land systems
Revenues
Total revenues	48	48
Textron Systems \| Simulation, training and other
Revenues
Total revenues	132	125
Industrial
Revenues
Total revenues	740	912
Industrial \| United States
Revenues
Total revenues	329	389
Industrial \| Europe
Revenues
Total revenues	228	311
Industrial \| Asia and Australia
Revenues
Total revenues	53	77
Industrial \| Other international
Revenues
Total revenues	130	135
Industrial \| Commercial
Revenues
Total revenues	739	905
Industrial \| U.S. Government
Revenues
Total revenues	1	7
Industrial \| Fuel systems and functional components
Revenues
Total revenues	465	594
Industrial \| Specialized vehicles
Revenues
Total revenues	275	318
Finance
Revenues
Finance revenues	14	17
Finance \| United States
Revenues
Finance revenues	6	8
Finance \| Europe
Revenues
Finance revenues	1	1
Finance \| Asia and Australia
Revenues
Finance revenues	1	1
Finance \| Other international
Revenues
Finance revenues	6	7
Finance \| Commercial
Revenues
Finance revenues	$ 14	$ 17

Revenues - Remaining Performance Obligations (Details) $ in Billions	Apr. 04, 2020 USD ($)
Remaining Performance Obligation, Expected Timing of Satisfaction
Remaining performance obligations	$ 9.2
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2022-01-02
Remaining Performance Obligation, Expected Timing of Satisfaction
Percentage of remaining performance obligation expected to be recognized in period	72.00%
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2023-12-30
Remaining Performance Obligation, Expected Timing of Satisfaction
Percentage of remaining performance obligation expected to be recognized in period	21.00%

Revenues - Contract Assets and Liabilities (Details) - USD ($) $ in Millions	3 Months Ended
	Apr. 04, 2020	Mar. 30, 2019	Jan. 04, 2020
Contract Assets and Liabilities
Contract assets	$ 565		$ 567
Contract liabilities	930		$ 830
Revenue recognized included in contract liabilities	$ 231	$ 311

Share-Based Compensation - General (Details) - USD ($) $ in Millions	3 Months Ended
	Apr. 04, 2020	Mar. 30, 2019
Compensation expense included in net income
Compensation (income) expense	$ (13)	$ 44
Income tax expense (benefit)	3	(11)
Total net compensation (income) expense included in net income	(10)	33
Stock Options
Compensation expense included in net income
Compensation (income) expense	$ 10	$ 11

Share-Based Compensation - Stock Options (Details) - Stock Options - USD ($) $ / shares in Units, shares in Thousands, $ in Millions	3 Months Ended
	Apr. 04, 2020	Mar. 30, 2019
Share-Based Compensation
Maximum term of options	10 years
Vesting period	3 years
Weighted-average assumptions used in Black-Scholes option-pricing model
Fair value of options at grant date	$ 10.66	$ 14.62
Dividend yield (as a percent)	0.20%	0.20%
Expected volatility (as a percent)	29.30%	26.60%
Risk-free interest rate (as a percent)	1.10%	2.50%
Expected term (in years)	4 years 8 months 12 days	4 years 8 months 12 days
Number of Options
Outstanding at beginning of period (in shares)	8,744
Granted (in shares)	1,728
Exercised (in shares)	(169)
Forfeited or expired (in shares)	(66)
Outstanding at end of period (in shares)	10,237
Exercisable at end of period (in shares)	7,018
Weighted-Average Exercise Price
Outstanding at beginning of period (in dollars per share)	$ 44.00
Granted (in dollars per share)	40.60
Exercised (in dollars per share)	(31.48)
Forfeited or expired (in dollars per share)	(51.93)
Outstanding at end of period (in dollars per share)	43.58
Exercisable at end of period (in dollars per share)	$ 41.83
Additional information
Weighted-average remaining contractual life of outstanding stock options	6 years 2 months 12 days
Weighted-average remaining contractual life of exercisable options	4 years 10 months 24 days
Aggregate intrinsic value of options exercised	$ 3	$ 16

Share-Based Compensation - Restricted Stock Units (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Millions	3 Months Ended
	Apr. 04, 2020	Mar. 30, 2019
Restricted Stock Units
Fair value
Fair value of awards vested	$ 17	$ 22
Cash paid	$ 11	$ 16
Restricted Stock Units \| Grants prior to 2020
Share-Based Compensation
Vesting percentage in third, fourth and fifth year equally	33.00%
Restricted Stock Units Payable in Stock
Number of Shares/Units
Outstanding at beginning of period, nonvested (in shares)	543
Granted (in shares)	134
Vested (in shares)	(136)
Outstanding at end of period, nonvested (in shares)	541
Weighted-Average Grant Date Fair Value
Outstanding at beginning of period, nonvested (in dollars per share)	$ 49.44
Granted (in dollars per share)	40.60
Vested (in dollars per share)	(42.31)
Outstanding at end of period, nonvested (in dollars per share)	$ 49.05
Restricted Stock Units Payable in Cash
Number of Shares/Units
Outstanding at beginning of period, nonvested (in shares)	1,104
Granted (in shares)	358
Vested (in shares)	(272)
Forfeited (in shares)	(11)
Outstanding at end of period, nonvested (in shares)	1,179
Weighted-Average Grant Date Fair Value
Outstanding at beginning of period, nonvested (in dollars per share)	$ 49.61
Granted (in dollars per share)	40.60
Vested (in dollars per share)	(42.33)
Forfeited (in dollars per share)	(50.25)
Outstanding at end of period, nonvested (in dollars per share)	$ 48.54

Share-Based Compensation - Performance Share Units (Details) - Performance Share Units - USD ($) $ / shares in Units, shares in Thousands, $ in Millions	3 Months Ended
	Apr. 04, 2020	Mar. 30, 2019
Number of Units
Outstanding at beginning of period, nonvested (in shares)	411
Granted (in shares)	276
Outstanding at end of period, nonvested (in shares)	687
Weighted-Average Grant Date Fair Value
Outstanding at beginning of period, nonvested (in dollars per share)	$ 56.03
Granted (in dollars per share)	40.60
Outstanding at end of period, nonvested (in dollars per share)	$ 49.84
Fair value
Cash paid	$ 7	$ 10

Retirement Plans - Net periodic benefit cost (Details) - USD ($) $ in Millions	3 Months Ended
	Apr. 04, 2020	Mar. 30, 2019
Pension Benefits
Net periodic benefit cost
Service cost	$ 26	$ 23
Interest cost	73	82
Expected return on plan assets	(144)	(139)
Amortization of net actuarial loss	46	25
Amortization of prior service cost	3	3
Net periodic benefit cost (credit)	4	(6)
Postretirement Benefits Other Than Pensions
Net periodic benefit cost
Service cost	1	1
Interest cost	2	2
Amortization of prior service cost	(1)	(2)
Net periodic benefit cost (credit)	$ 2	$ 1

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

Income Taxes (Details) - USD ($) $ in Millions	3 Months Ended
Income Taxes (Details) - USD ($) $ in Millions	Apr. 04, 2020	Mar. 30, 2019
Income Taxes
Effective income tax rate (as a percent)	27.50%	15.60%
U.S. federal statutory income tax rate (as a percent)	21.00%
Tax provision established related to a decision to dividend cash back from select non-U.S. jurisdictions to the U.S	$ 10
Discrete tax benefit	$ 12