Document and Entity Information - shares	6 Months Ended
Document and Entity Information - shares	Jun. 29, 2019	Jul. 12, 2019
Document and Entity Information
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Jun. 29, 2019
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		230,123,580
Entity Central Index Key	0000217346
Current Fiscal Year End Date	--01-04
Document Fiscal Year Focus	2019
Document Fiscal Period Focus	Q2
Amendment Flag	false

Consolidated Statements of Operations - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 29, 2019	Jun. 30, 2018	Jun. 29, 2019	Jun. 30, 2018
Revenues
Total revenues	$ 3,227	$ 3,726	$ 6,336	$ 7,022
Costs, expenses and other
Cost of sales	2,641	3,073	5,218	5,802
Selling and administrative expense	292	370	599	697
Interest expense	43	42	85	83
Non-service components of pension and post-retirement income, net	(28)	(19)	(57)	(38)
Total costs, expenses and other	2,948	3,466	5,845	6,544
Income before income taxes	279	260	491	478
Income tax expense	62	36	95	65
Net income	$ 217	$ 224	$ 396	$ 413
Earnings per share
Basic (in dollars per share)	$ 0.94	$ 0.88	$ 1.70	$ 1.61
Diluted (in dollars per share)	$ 0.93	$ 0.87	$ 1.69	$ 1.59
Manufacturing
Revenues
Total revenues	$ 3,211	$ 3,709	$ 6,303	$ 6,989
Finance
Revenues
Finance Revenue	$ 16	$ 17	$ 33	$ 33

Consolidated Statements of Comprehensive Income - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 29, 2019	Jun. 30, 2018	Jun. 29, 2019	Jun. 30, 2018
Net income	$ 217	$ 224	$ 396	$ 413
Other comprehensive income (loss), net of taxes:
Pension and postretirement benefits adjustments, net of reclassifications	20	31	41	62
Foreign currency translation adjustments	1	(69)	4	(27)
Deferred gains (losses) on hedge contracts, net of reclassifications		(4)	2	(3)
Other comprehensive income (loss)	21	(42)	47	32
Comprehensive income	$ 238	$ 182	$ 443	$ 445

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	Jun. 29, 2019	Dec. 29, 2018
Assets
Inventories	$ 4,311	$ 3,818
Finance receivables, net	776	760
Total assets	14,796	14,264
Liabilities
Total liabilities	9,460	9,072
Shareholders' equity
Common stock	30	30
Capital surplus	1,717	1,646
Treasury stock	(490)	(129)
Retained earnings	5,794	5,407
Accumulated other comprehensive loss	(1,715)	(1,762)
Total shareholders' equity	5,336	5,192
Total liabilities and shareholders' equity	$ 14,796	$ 14,264
Common shares outstanding	230,058	235,621
Manufacturing group
Assets
Cash and equivalents	$ 775	$ 987
Accounts receivable, net	989	1,024
Inventories	4,311	3,818
Other current assets	839	785
Total current assets	6,914	6,614
Property, plant and equipment, less accumulated depreciation and amortization of $4,317 and $4,203, respectively	2,517	2,615
Goodwill	2,147	2,218
Other assets	2,255	1,800
Total assets	13,833	13,247
Liabilities
Short-term debt and current portion of long-term debt	457	258
Accounts payable	1,231	1,099
Other current liabilities	1,891	2,149
Total current liabilities	3,579	3,506
Other liabilities	2,157	1,932
Long-term debt	2,910	2,808
Total liabilities	8,646	8,246
Finance group
Assets
Cash and equivalents	82	120
Finance receivables, net	776	760
Other assets	105	137
Total assets	963	1,017
Liabilities
Other liabilities	111	108
Debt	703	718
Total liabilities	$ 814	$ 826

Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Millions	Jun. 29, 2019	Dec. 29, 2018
Accumulated depreciation and amortization	$ 4,317	$ 4,203

Consolidated Statements of Cash Flows - USD ($) $ in Millions	6 Months Ended
	Jun. 29, 2019	Jun. 30, 2018
Cash flows from operating activities
Net income	$ 396	$ 413
Non-cash items:
Depreciation and amortization	202	216
Deferred income taxes	32	12
Other, net	40	61
Changes in assets and liabilities:
Accounts receivable, net	36	(42)
Inventories	(505)	(78)
Other assets	(19)	(38)
Accounts payable	132	(22)
Other liabilities	(338)	(165)
Income taxes, net	14	17
Pension, net	(29)	(5)
Captive finance receivables, net	(19)	26
Other operating activities, net	(2)	3
Net cash provided by (used in) operating activities of continuing operations	(60)	398
Net cash used in operating activities of discontinued operations	(1)	(1)
Net cash provided by (used in) operating activities	(61)	397
Cash flows from investing activities
Capital expenditures	(135)	(159)
Net proceeds from corporate-owned life insurance policies	4	98
Finance receivables repaid	20	25
Other investing activities, net	7	30
Net cash provided by (used in) investing activities	(104)	(6)
Cash flows from financing activities
Proceeds from long-term debt	297
Principal payments on long-term debt and nonrecourse debt	(35)	(34)
Purchases of Textron common stock	(361)	(915)
Dividends paid	(9)	(10)
Other financing activities, net	19	43
Net cash used in financing activities	(89)	(916)
Effect of exchange rate changes on cash and equivalents	4	(6)
Net decrease in cash and equivalents	(250)	(531)
Cash and equivalents at beginning of period	1,107	1,262
Cash and equivalents at end of period	857	731
Manufacturing group
Cash flows from operating activities
Net income	387	398
Non-cash items:
Depreciation and amortization	199	212
Deferred income taxes	33	14
Other, net	39	60
Changes in assets and liabilities:
Accounts receivable, net	36	(42)
Inventories	(532)	(80)
Other assets	(17)	(39)
Accounts payable	132	(22)
Other liabilities	(339)	(162)
Income taxes, net	10	28
Pension, net	(29)	(5)
Dividends received from Finance group	50	50
Other operating activities, net	(2)	3
Net cash provided by (used in) operating activities of continuing operations	(33)	415
Net cash used in operating activities of discontinued operations	(1)	(1)
Net cash provided by (used in) operating activities	(34)	414
Cash flows from investing activities
Capital expenditures	(135)	(159)
Net proceeds from corporate-owned life insurance policies	4	98
Other investing activities, net	4	10
Net cash provided by (used in) investing activities	(127)	(51)
Cash flows from financing activities
Proceeds from long-term debt	297
Principal payments on long-term debt and nonrecourse debt	(1)
Purchases of Textron common stock	(361)	(915)
Dividends paid	(9)	(10)
Other financing activities, net	19	43
Net cash used in financing activities	(55)	(882)
Effect of exchange rate changes on cash and equivalents	4	(6)
Net decrease in cash and equivalents	(212)	(525)
Cash and equivalents at beginning of period	987	1,079
Cash and equivalents at end of period	775	554
Finance group
Cash flows from operating activities
Net income	9	15
Non-cash items:
Depreciation and amortization	3	4
Deferred income taxes	(1)	(2)
Other, net	1	1
Changes in assets and liabilities:
Other assets	(2)	1
Other liabilities	1	(3)
Income taxes, net	4	(11)
Net cash provided by (used in) operating activities of continuing operations	15	5
Net cash provided by (used in) operating activities	15	5
Cash flows from investing activities
Finance receivables repaid	91	112
Finance receivables originated	(90)	(61)
Other investing activities, net	30	22
Net cash provided by (used in) investing activities	31	73
Cash flows from financing activities
Principal payments on long-term debt and nonrecourse debt	(34)	(34)
Dividends paid	(50)	(50)
Net cash used in financing activities	(84)	(84)
Net decrease in cash and equivalents	(38)	(6)
Cash and equivalents at beginning of period	120	183
Cash and equivalents at end of period	$ 82	$ 177

Basis of Presentation

6 Months Ended

Jun. 29, 2019

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 second quarter of 2019 and 2018, our cumulative catch-up adjustments increased revenue and segment profit by $27 million and $64 million, respectively, and net income by $21 million and $49 million, respectively ($0.09 and $0.19 per diluted share, respectively). In the second quarter of 2019 and 2018, gross favorable adjustments totaled $46 million and $70 million, respectively, and the gross unfavorable adjustments totaled $19 million and $6 million, respectively.

In the first half of 2019 and 2018, our cumulative catch-up adjustments increased revenue and segment profit by $58 million and $104 million, respectively, and net income by $44 million and $79 million, respectively ($0.19 and $0.30 per diluted share, respectively). In the first half of 2019 and 2018, gross favorable adjustments totaled $99 million and $126 million, respectively, and the gross unfavorable adjustments totaled $41 million and $22 million, respectively.

Summary of Significant Accounting Policies Update

6 Months Ended

Jun. 29, 2019

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 currently evaluating the impact of the standard on our consolidated financial statements.

Accounts Receivable and Finance Receivables

6 Months Ended

Jun. 29, 2019

Accounts Receivable and Finance Receivables

Note 3. Accounts Receivable and Finance Receivables

Accounts Receivable

Accounts receivable is composed of the following:


	June 29,		December 29,
(In millions)	2019		2018
Commercial	$	874	$	885
U.S. Government contracts		142		166
		1,016		1,051
Allowance for doubtful accounts		(27)		(27)
Total accounts receivable, net	$	989	$	1,024

Finance Receivables

Finance receivables are presented in the following table:


	June 29,		December 29,
(In millions)	2019		2018
Finance receivables	$	802	$	789
Allowance for losses		(26)		(29)
Total finance receivables, net	$	776	$	760

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:


	June 29,			December 29,
(Dollars in millions)	2019			2018
Performing	$	732		$	704
Watchlist		39			45
Nonaccrual		31			40
Nonaccrual as a percentage of finance receivables		3.87	%		5.07	%
Less than 31 days past due	$	726		$	719
31-60 days past due		64			56
61-90 days past due		3			5
Over 90 days past due		9			9
60+ days contractual delinquency as a percentage of finance receivables		1.50	%		1.77	%

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.


	June 29,		December 29,
(In millions)	2019		2018
Finance receivables evaluated collectively	$	669	$	630
Finance receivables evaluated individually		31		58
Allowance for losses based on collective evaluation		24		24
Allowance for losses based on individual evaluation		2		5
Impaired finance receivables with no related allowance for losses	$	23	$	43
Impaired finance receivables with related allowance for losses		8		15
Unpaid principal balance of impaired finance receivables		41		67
Average recorded investment of impaired finance receivables		40		61

Inventories

6 Months Ended

Jun. 29, 2019

Inventories

Note 4. Inventories

Inventories are composed of the following:


	June 29,		December 29,
(In millions)	2019		2018
Finished goods	$	1,743	$	1,662
Work in process		1,771		1,356
Raw materials and components		797		800
Total inventories	$	4,311	$	3,818

Other Assets

6 Months Ended

Jun. 29, 2019

Other Assets

Other Assets

Note 5. 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.

Warranty Liability

6 Months Ended

Jun. 29, 2019

Warranty Liability

Warranty Liability

Note 6. Warranty Liability

Changes in our warranty liability are as follows:


	Six Months Ended
	June 29,		June 30,
(In millions)	2019		2018
Beginning of period	$	149	$	164
Provision		30		34
Settlements		(38)		(39)
Adjustments*		(5)		7
End of period	$	136	$	166

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

Leases

6 Months Ended

Jun. 29, 2019

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 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 second quarter and first half of 2019, our operating lease cost totaled $16 million and $32 million, respectively. Our finance lease cost and our variable and short-term lease costs were not significant. In the first half of 2019, cash paid for operating lease liabilities totaled $32 million, which is classified in cash flows from operating activities. Balance sheet and other information related to our leases is as follows:


	June 29,
(Dollars in millions)	2019
Operating leases:
Other assets	$	298
Other current liabilities		53
Other liabilities		247
Finance leases:
Property, plant and equipment, less accumulated amortization of $51 million	$	116
Short-term and current portion of long-term debt		6
Long-term debt		77
Weighted-average remaining lease term (in years)
Finance leases		14.1
Operating leases		10.3
Weighted-average discount rate
Finance leases		2.73	%
Operating leases		4.46	%

Maturities of our lease liabilities at June 29, 2019 are as follows:


	Operating		Finance
(In millions)	Leases		Leases
2019	$	34	$	5
2020		57		9
2021		43		9
2022		37		9
2023		31		9
Thereafter		179		69
Total lease payments		381		110
Less: interest		(81)		(27)
Total lease liabilities	$	300	$	83

Debt

6 Months Ended

Jun. 29, 2019

Debt

Note 8. 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%.

Derivative Instruments and Fair Value Measurements

6 Months Ended

Jun. 29, 2019

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 June 29, 2019 and December 29, 2018, we had foreign currency exchange contracts with notional amounts upon which the contracts were based of $395 million and $379 million, respectively. At June 29, 2019, the fair value amounts of our foreign currency exchange contracts were a $2 million asset and a $3 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:


	June 29, 2019				December 29, 2018
	Carrying		Estimated		Carrying		Estimated
(In millions)	Value		Fair Value		Value		Fair Value
Manufacturing group
Debt, excluding leases	$	(3,301)	$	(3,414)	$	(2,996)	$	(2,971)
Finance group
Finance receivables, excluding leases		589		615		582		584
Debt		(703)		(640)		(718)		(640)

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

6 Months Ended

Jun. 29, 2019

Shareholders' Equity

Note 10. Shareholders’ Equity

A reconciliation of Shareholders’ equity is presented below:


									Accumulated
									Other		Total
	Common		Capital		Treasury		Retained		Comprehensive		Shareholders’
(In millions)	Stock		Surplus		Stock		Earnings		Loss		Equity
Three months ended June 29, 2019
Beginning of period	$	30	$	1,689	$	(331)	$	5,581	$	(1,736)	$	5,233
Net income		—		—		—		217		—		217
Other comprehensive income		—		—		—		—		21		21
Share-based compensation activity		—		28		—		—		—		28
Dividends declared		—		—		—		(4)		—		(4)
Purchases of common stock		—		—		(159)		—		—		(159)
End of period	$	30	$	1,717	$	(490)	$	5,794	$	(1,715)	$	5,336
Three months ended June 30, 2018
Beginning of period	$	33	$	1,710	$	(392)	$	5,642	$	(1,301)	$	5,692
Net income		—		—		—		224		—		224
Other comprehensive (loss)		—		—		—		—		(42)		(42)
Share-based compensation activity		—		64		—		—		—		64
Dividends declared		—		—		—		(5)		—		(5)
Purchases of common stock		—		—		(571)		—		—		(571)
End of period	$	33	$	1,774	$	(963)	$	5,861	$	(1,343)	$	5,362
Six months ended June 29, 2019
Beginning of period	$	30	$	1,646	$	(129)	$	5,407	$	(1,762)	$	5,192
Net income		—		—		—		396		—		396
Other comprehensive income		—		—		—		—		47		47
Share-based compensation activity		—		71		—		—		—		71
Dividends declared		—		—		—		(9)		—		(9)
Purchases of common stock		—		—		(361)		—		—		(361)
End of period	$	30	$	1,717	$	(490)	$	5,794	$	(1,715)	$	5,336
Six months ended June 30, 2018
Beginning of period	$	33	$	1,669	$	(48)	$	5,368	$	(1,375)	$	5,647
Adoption of ASC 606		—		—		—		90		—		90
Net income		—		—		—		413		—		413
Other comprehensive income		—		—		—		—		32		32
Share-based compensation activity		—		105		—		—		—		105
Dividends declared		—		—		—		(10)		—		(10)
Purchases of common stock		—		—		(915)		—		—		(915)
End of period	$	33	$	1,774	$	(963)	$	5,861	$	(1,343)	$	5,362

Dividends per share of common stock were $0.02 for both the second quarter of 2019 and 2018 and $0.04 for both the first half 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:


	Three Months Ended		Six Months Ended
	June 29,	June 30,	June 29,	June 30,
(In thousands)	2019	2018	2019	2018
Basic weighted-average shares outstanding	232,013	253,904	233,426	257,200
Dilutive effect of stock options	1,532	3,273	1,567	3,262
Diluted weighted-average shares outstanding	233,545	257,177	234,993	260,462

Stock options to purchase 3.1 million shares of common stock were excluded from the calculation of diluted weighted-average shares outstanding for both the second quarter and first half of 2019, as their effect would have been anti-dilutive. Stock options to purchase 1.3 million shares of common stock were excluded from the calculation of diluted weighted-average shares outstanding for both the second quarter and first half of 2018, as their effect would have been anti-dilutive.

Accumulated Other Comprehensive Loss and Other Comprehensive Income

The components of Accumulated other comprehensive loss are presented below:


	Pension and		Foreign		Deferred		Accumulated
	Postretirement		Currency		Gains (Losses)		Other
	Benefits		Translation		on Hedge		Comprehensive
(In millions)	Adjustments		Adjustments		Contracts		Loss
Balance at December 29, 2018	$	(1,727)	$	(32)	$	(3)	$	(1,762)
Other comprehensive income before reclassifications		—		4		4		8
Reclassified from Accumulated other comprehensive loss		41		—		(2)		39
Balance at June 29, 2019	$	(1,686)	$	(28)	$	(1)	$	(1,715)
Balance at December 30, 2017	$	(1,396)	$	11	$	10	$	(1,375)
Other comprehensive income before reclassifications		—		(27)		(2)		(29)
Reclassified from Accumulated other comprehensive loss		62		—		(1)		61
Balance at June 30, 2018	$	(1,334)	$	(16)	$	7	$	(1,343)

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


	June 29, 2019						June 30, 2018
			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*	$	24	$	(6)	$	18	$	39	$	(9)	$	30
Amortization of prior service cost*		3		(1)		2		2		(1)		1
Pension and postretirement benefits adjustments, net		27		(7)		20		41		(10)		31
Deferred gains (losses) on hedge contracts:
Current deferrals		2		(1)		1		(4)		1		(3)
Reclassification adjustments		(1)		—		(1)		(1)		—		(1)
Deferred gains (losses) on hedge contracts, net		1		(1)		—		(5)		1		(4)
Foreign currency translation adjustments		3		(2)		1		(66)		(3)		(69)
Total	$	31	$	(10)	$	21	$	(30)	$	(12)	$	(42)
Six Months Ended
Pension and postretirement benefits adjustments:
Amortization of net actuarial loss*	$	49	$	(11)	$	38	$	77	$	(18)	$	59
Amortization of prior service cost*		4		(1)		3		4		(1)		3
Pension and postretirement benefits adjustments, net		53		(12)		41		81		(19)		62
Deferred gains (losses) on hedge contracts:
Current deferrals		6		(2)		4		(2)		—		(2)
Reclassification adjustments		(2)		—		(2)		(1)		—		(1)
Deferred gains (losses) on hedge contracts, net		4		(2)		2		(3)		—		(3)
Foreign currency translation adjustments		4		—		4		(26)		(1)		(27)
Total	$	61	$	(14)	$	47	$	52	$	(20)	$	32

*These components of other comprehensive income 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

6 Months Ended

Jun. 29, 2019

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. On July 2, 2018, we sold our Tools and Test Equipment businesses that were previously included in the Industrial segment as discussed in Note 2 of our 2018 Annual Report on Form 10-K. 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				Six Months Ended
	June 29,		June 30,		June 29,		June 30,
(In millions)	2019		2018		2019		2018
Revenues
Textron Aviation	$	1,123	$	1,276	$	2,257	$	2,286
Bell		771		831		1,510		1,583
Textron Systems		308		380		615		767
Industrial		1,009		1,222		1,921		2,353
Finance		16		17		33		33
Total revenues	$	3,227	$	3,726	$	6,336	$	7,022
Segment Profit
Textron Aviation	$	105	$	104	$	211	$	176
Bell		103		117		207		204
Textron Systems		49		40		77		90
Industrial		76		80		126		144
Finance		6		5		12		11
Segment profit		339		346		633		625
Corporate expenses and other, net		(24)		(51)		(71)		(78)
Interest expense, net for Manufacturing group		(36)		(35)		(71)		(69)
Income before income taxes	$	279	$	260	$	491	$	478

Revenues

6 Months Ended

Jun. 29, 2019

Revenues

Note 12. Revenues

Disaggregation of Revenues

Our revenues disaggregated by major product type are presented below:


	Three Months Ended				Six Months Ended
	June 29,		June 30,		June 29,		June 30,
(In millions)	2019		2018		2019		2018
Aircraft	$	733	$	877	$	1,499	$	1,511
Aftermarket parts and services		390		399		758		775
Textron Aviation		1,123		1,276		2,257		2,286
Military aircraft and support programs		482		533		990		1,020
Commercial helicopters, parts and services		289		298		520		563
Bell		771		831		1,510		1,583
Unmanned systems		135		161		269		331
Marine and land systems		60		69		108		161
Simulation, training and other		113		150		238		275
Textron Systems		308		380		615		767
Fuel systems and functional components		592		627		1,186		1,282
Specialized vehicles		417		475		735		823
Tools and test equipment		—		120		—		248
Industrial		1,009		1,222		1,921		2,353
Finance		16		17		33		33
Total revenues	$	3,227	$	3,726	$	6,336	$	7,022

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 June 29, 2019
Customer type:
Commercial	$	1,077	$	279	$	83	$	1,004	$	16	$	2,459
U.S. Government		46		492		225		5		—		768
Total revenues	$	1,123	$	771	$	308	$	1,009	$	16	$	3,227
Geographic location:
United States	$	736	$	571	$	249	$	466	$	7	$	2,029
Europe		164		47		17		291		—		519
Asia and Australia		65		79		13		84		2		243
Other international		158		74		29		168		7		436
Total revenues	$	1,123	$	771	$	308	$	1,009	$	16	$	3,227
Three months ended June 30, 2018
Customer type:
Commercial	$	1,191	$	291	$	107	$	1,215	$	17	$	2,821
U.S. Government		85