TEXTRON INC, 10-Q filed on 7/24/2019
Quarterly Report
v3.19.2
Document and Entity Information - shares
6 Months Ended
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, $0.125 par value  
Trading Symbol TXT  
Security Exchange Name NYSE  
Entity Current Reporting Status Yes  
Entity Interactive Data Current Yes  
Entity Filer Category Large Accelerated Filer  
Entity Small Business false  
Entity Emerging Growth Company false  
Entity Shell Company false  
Entity Common Stock, Shares Outstanding   230,123,580
Entity Central Index Key 0000217346  
Current Fiscal Year End Date --01-04  
Document Fiscal Year Focus 2019  
Document Fiscal Period Focus Q2  
Amendment Flag false  
v3.19.2
Consolidated Statements of Operations - USD ($)
$ 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
v3.19.2
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
v3.19.2
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
v3.19.2
Consolidated Balance Sheets (Parenthetical) - USD ($)
$ in Millions
Jun. 29, 2019
Dec. 29, 2018
Accumulated depreciation and amortization $ 4,317 $ 4,203
v3.19.2
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
v3.19.2
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.

v3.19.2
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.

v3.19.2
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

v3.19.2
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

v3.19.2
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.

v3.19.2
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.

v3.19.2
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

                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            

v3.19.2
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%.

v3.19.2
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.

v3.19.2
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.

v3.19.2
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

v3.19.2
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

 

540

 

273

 

7

 

 

905

Total revenues

  $

1,276

  $

831

  $

380

  $

1,222

  $

17

  $

3,726

Geographic location:

 

 

 

 

 

 

United States

  $

914

  $

543

  $

297

  $

590

  $

7

  $

2,351

Europe

128

50

23

372

2

575

Asia and Australia

64

150

28

100

2

344

Other international

 

170

 

88

 

32

 

160

 

6

 

456

Total revenues

  $

1,276

  $

831

  $

380

  $

1,222

  $

17

  $

3,726

Six months ended June 29, 2019

Customer type:

Commercial

  $

2,169

  $

509

  $

157

  $

1,909

  $

33

  $

4,777

U.S. Government

88

1,001

458

12

1,559

Total revenues

  $

2,257

  $

1,510

  $

615

  $

1,921

  $

33

  $

6,336

Geographic location:

United States

  $

1,525

  $

1,149

  $

506

  $

855

  $

15

  $

4,050

Europe

347

67

40

602

1

1,057

Asia and Australia

88

161

29

161

3

442

Other international

297

133

40

303

14

787

Total revenues

  $

2,257

  $

1,510

  $

615

  $

1,921

  $

33

  $

6,336

Six months ended June 30, 2018

Customer type:

Commercial

  $

2,164

  $

543

  $

234

  $

2,339

  $

33

  $

5,313

U.S. Government

 

122

 

1,040

 

533

 

14

 

 

1,709

Total revenues

  $

2,286

  $

1,583

  $

767

  $

2,353

  $

33

  $

7,022

Geographic location:

 

 

 

 

 

 

United States

  $

1,579

  $

1,052

  $

584

  $

1,086

  $

14

  $

4,315

Europe

274

77

35

755

3

1,144

Asia and Australia

145

277

56

192

4

674

Other international

 

288

 

177

 

92

 

320

 

12

 

889

Total revenues

  $

2,286

  $

1,583

  $

767

  $

2,353

  $

33

  $

7,022

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 June 29, 2019, we had $9.3 billion in remaining performance obligations of which we expect to recognize revenues of approximately 68% through 2020, an additional 26% through 2022, and the balance thereafter.  

Contract Assets and Liabilities

Assets and liabilities related to our contracts with customers are reported on a contract-by-contract basis at the end of each reporting period.  At June 29, 2019, contract assets and contract liabilities totaled $499 million and $897 million, respectively.  At December 29, 2018, contract assets and contract liabilities totaled $461 million and $974 million, respectively. During the second quarter and first half of 2019, we recognized revenues of $146 million and $457 million, respectively, that were included in the contract liability balance at December 29, 2018. We recognized revenues of $377 million and $699 million in the second quarter and first half of 2018 that were included in the contract liability balance at December 31, 2017.

v3.19.2
Retirement Plans
6 Months Ended
Jun. 29, 2019
Retirement Plans

Note 13.  Retirement Plans

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

                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            

Three Months Ended

Six Months Ended

June 29,

June 30,

June 29,

June 30,

(In millions)

2019

2018

2019

2018

Pension Benefits

Service cost

  $

22

  $

27

  $

45

  $

53

Interest cost

81

76

163

153

Expected return on plan assets

(139)

 

(139)

(278)

 

(277)

Amortization of net actuarial loss

25

39

50

77

Amortization of prior service cost

4

 

3

7

 

7

Net periodic benefit cost (credit)

  $

(7)

  $

6

  $

(13)

  $

13

Postretirement Benefits Other Than Pensions

Service cost

  $

  $

  $

1

  $

1

Interest cost

3

3

5

5

Amortization of net actuarial loss

(1)

(1)

Amortization of prior service credit

(1)

(1)

(3)

(3)

Net periodic benefit cost

  $

1

  $

2

  $

2

  $

3

v3.19.2
Income Taxes
6 Months Ended
Jun. 29, 2019
Income Taxes

Note 14. Income Taxes

Our effective tax rate for the second quarter and first half of 2019 was 22.2% and 19.3%, respectively. In the first half of 2019, the effective tax rate was lower than the U.S. federal statutory tax rate of 21%, primarily due to a $12 million benefit recognized for additional research credits related to prior years.

Our effective tax rate for the second quarter and first half of 2018 was 13.8% and 13.6%, respectively. In the second quarter and first half of 2018, the effective tax rate was lower than the U.S. federal statutory tax rate of 21%, primarily due to a $25 million benefit recognized upon the reassessment of our reserve for uncertain tax positions based on new information, including interactions with the tax authorities and recent audit settlements.  The effective tax rate for the first half of 2018 also reflects benefits recognized from audit settlements in the first quarter of 2018.

Our reserve for unrecognized tax benefits totaled $175 million and $141 million at June 29, 2019 and December 29, 2018, respectively. The increase in this reserve largely reflects a claim filed in the first quarter of 2019 for tax credits related to prior years.

v3.19.2
Commitments and Contingencies
6 Months Ended
Jun. 29, 2019
Commitments and Contingencies

Note 15. 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.

v3.19.2
Summary of Significant Accounting Policies Update (Policies)
6 Months Ended
Jun. 29, 2019
Leases

Leases

We identify leases by evaluating our contracts to determine if the contract conveys the right to use an identified asset for a stated period of time in exchange for consideration. Specifically, we consider whether we can control the underlying asset and have the right to obtain substantially all of the economic benefits or outputs from the asset.  For our contracts that contain both lease components  (e.g., fixed payments including rent, real estate taxes and insurance costs) and non-lease components (e.g., common-area maintenance costs, other goods/services), we allocate the consideration in the contract to each component based on its standalone price.  Leases with terms greater than 12 months are classified as either operating or finance leases at the commencement date.  For these leases, we capitalize the lesser of a) the present value of the minimum lease payments over the lease term, or b) the fair value of the asset, as a right-of-use asset with an offsetting lease liability. The discount rate used to calculate the present value of the minimum lease payments is typically our incremental borrowing rate, as the rate implicit in the lease is generally not known or determinable. The lease term includes any noncancelable period for which we have the right to use the asset and may include options to extend or terminate the lease when it is reasonably certain that we will exercise the option.  Operating leases are recognized as a single lease cost on a straight-line basis over the lease term, while finance lease cost is recognized separately as amortization and interest expense.

Accounting Pronouncements Not Yet Adopted

Accounting Pronouncements Not Yet Adopted

In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments – Credit Losses. For most financial assets, such as trade and other receivables, loans and other instruments, this standard changes the current incurred loss model to a forward-looking expected credit loss model, which generally will result in the earlier recognition of allowances for losses.  The new standard is effective for our company at the beginning of 2020.  Entities are required to apply the provisions of the standard through a cumulative-effect adjustment to retained earnings as of the effective date.  We are currently evaluating the impact of the standard on our consolidated financial statements.

v3.19.2
Accounts Receivable and Finance Receivables (Tables)
6 Months Ended
Jun. 29, 2019
Accounts receivable

                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               

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

                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           

June 29,

December 29,

(In millions)

2019

2018

Finance receivables

  $

802

  $

789

Allowance for losses

(26)

 

(29)

Total finance receivables, net

  $

776

  $

760

Finance receivables by credit quality indicator and by delinquency aging category

                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              

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

%

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

                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                

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

v3.19.2
Inventories (Tables)
6 Months Ended
Jun. 29, 2019
Inventories

                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            

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

v3.19.2
Warranty Liability (Tables)
6 Months Ended
Jun. 29, 2019
Warranty Liability  
Changes in warranty liability

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.

v3.19.2
Leases (Tables)
6 Months Ended
Jun. 29, 2019
Leases  
Schedule of balance sheet and other information

                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            

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

%

Summary of maturities of operating lease liabilities

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

Summary of maturities of finance lease liabilities

                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            

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

                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            

v3.19.2
Derivative Instruments and Fair Value Measurements (Tables)
6 Months Ended
Jun. 29, 2019
Carrying value and estimated fair value of financial instruments

                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            

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)

v3.19.2
Shareholders' Equity (Tables)
6 Months Ended
Jun. 29, 2019
Schedule of Shareholder's equity

Accumulated

Other

Total

Common

Capital

Treasury

Retained

Comprehensive

Shareholders’

(In millions)

Stock

Surplus

Stock

Earnings

Loss

Equity

Three months ended 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

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

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

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 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)

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

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.

v3.19.2
Segment Information (Tables)
6 Months Ended
Jun. 29, 2019
Revenues by segment and reconciliation of segment profit to income before income taxes

                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            

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

v3.19.2
Revenues (Tables)
6 Months Ended
Jun. 29, 2019
Revenues  
Schedule of revenue by major product type, customer type and geographic location

Our revenues disaggregated by major product type are presented below:

                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            

Three Months Ended

Six Months Ended

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

 

540

 

273

 

7

 

 

905

Total revenues

  $

1,276

  $

831

  $

380

  $

1,222

  $

17

  $

3,726

Geographic location:

 

 

 

 

 

 

United States

  $

914

  $

543

  $

297

  $

590

  $

7

  $

2,351

Europe

128

50

23

372

2

575

Asia and Australia

64

150

28

100

2

344

Other international

 

170

 

88

 

32

 

160

 

6

 

456

Total revenues

  $

1,276

  $

831

  $

380

  $

1,222

  $

17

  $

3,726

Six months ended June 29, 2019

Customer type:

Commercial

  $

2,169

  $

509

  $

157

  $

1,909

  $

33

  $

4,777

U.S. Government

88

1,001

458

12

1,559

Total revenues

  $

2,257

  $

1,510

  $

615

  $

1,921

  $

33

  $

6,336

Geographic location:

United States

  $

1,525

  $

1,149

  $

506

  $

855

  $

15

  $

4,050

Europe

347

67

40

602

1

1,057

Asia and Australia

88

161

29

161

3

442

Other international

297

133

40

303

14

787

Total revenues

  $

2,257

  $

1,510

  $

615

  $

1,921

  $

33

  $

6,336

Six months ended June 30, 2018

Customer type:

Commercial

  $

2,164

  $

543

  $

234

  $

2,339

  $

33

  $

5,313

U.S. Government

 

122

 

1,040

 

533

 

14

 

 

1,709

Total revenues

  $

2,286

  $

1,583

  $

767

  $

2,353

  $

33

  $

7,022

Geographic location:

 

 

 

 

 

 

United States

  $

1,579

  $

1,052

  $

584

  $

1,086

  $

14

  $

4,315

Europe

274

77

35

755

3

1,144

Asia and Australia

145

277

56

192

4

674

Other international

 

288

 

177

 

92

 

320

 

12

 

889

Total revenues

  $

2,286

  $

1,583

  $

767

  $

2,353

  $

33

  $

7,022

v3.19.2
Retirement Plans (Tables)
6 Months Ended
Jun. 29, 2019
Components of net periodic benefit cost (credit)

                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            

Three Months Ended

Six Months Ended

June 29,

June 30,

June 29,

June 30,

(In millions)

2019

2018

2019

2018

Pension Benefits

Service cost

  $

22

  $

27

  $

45

  $

53

Interest cost

81

76

163

153

Expected return on plan assets

(139)

 

(139)

(278)

 

(277)

Amortization of net actuarial loss

25

39

50

77

Amortization of prior service cost

4

 

3

7

 

7

Net periodic benefit cost (credit)

  $

(7)

  $

6

  $

(13)

  $

13

Postretirement Benefits Other Than Pensions

Service cost

  $

  $

  $

1

  $

1

Interest cost

3

3

5

5

Amortization of net actuarial loss

(1)

(1)

Amortization of prior service credit

(1)

(1)

(3)

(3)

Net periodic benefit cost

  $

1

  $

2

  $

2

  $

3

v3.19.2
Basis of Presentation (Details)
$ / shares in Units, $ in Millions
3 Months Ended 6 Months Ended
Jun. 29, 2019
USD ($)
$ / shares
Jun. 30, 2018
USD ($)
$ / shares
Jun. 29, 2019
USD ($)
item
$ / shares
Jun. 30, 2018
USD ($)
$ / shares
Number of borrowing groups | item     2  
Cumulative catch-up method        
Cumulative catch-up adjustments $ 27 $ 64 $ 58 $ 104
Change in accounting estimate financial effect increase in net income $ 21 $ 49 $ 44 $ 79
Change in accounting estimate financial effect increase in earnings per share diluted | $ / shares $ 0.09 $ 0.19 $ 0.19 $ 0.30
Gross favorable adjustments $ 46 $ 70 $ 99 $ 126
Gross unfavorable adjustments $ 19 $ 6 $ 41 $ 22
v3.19.2
Summary of Significant Accounting Policies Update (Details) - USD ($)
$ in Millions
6 Months Ended
Jun. 29, 2019
Jan. 01, 2019
Summary of Significant Accounting Policies Update    
Operating right-of-use assets $ 298  
Operating lease liabilities $ 300  
Lease, Practical Expedient, Use of Hindsight [true false] true  
ASU 2016-02    
Summary of Significant Accounting Policies Update    
Operating right-of-use assets   $ 307
Operating lease liabilities   $ 307
v3.19.2
Accounts Receivable and Finance Receivables - Accounts receivable (Details) - Manufacturing group - USD ($)
$ in Millions
Jun. 29, 2019
Dec. 29, 2018
Accounts Receivable    
Accounts Receivable, Gross $ 1,016 $ 1,051
Allowance for doubtful accounts (27) (27)
Total accounts receivable, net 989 1,024
Commercial    
Accounts Receivable    
Accounts Receivable, Gross 874 885
U.S. Government contracts    
Accounts Receivable    
Accounts Receivable, Gross $ 142 $ 166
v3.19.2
Accounts Receivable and Finance Receivables - Finance receivables (Details) - USD ($)
$ in Millions
Jun. 29, 2019
Dec. 29, 2018
Finance Receivables    
Finance receivables $ 802 $ 789
Allowance for losses (26) (29)
Total finance receivables, net $ 776 $ 760
v3.19.2
Accounts Receivable and Finance Receivables - Finance receivables by delinquency aging category (Details)
$ in Millions
6 Months Ended
Jun. 29, 2019
USD ($)
item
Dec. 29, 2018
USD ($)
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  
60 + days contractual delinquency as a percentage of finance receivables 1.50% 1.77%
Less than 31 days past due    
Finance receivables categorized based on the internally assigned credit quality    
Total finance receivables $ 726 $ 719
31-60 days past due    
Finance receivables categorized based on the internally assigned credit quality    
Total finance receivables 64 56
61- 90 days past due    
Finance receivables categorized based on the internally assigned credit quality    
Total finance receivables 3 5
Over 90 days past due    
Finance receivables categorized based on the internally assigned credit quality    
Total finance receivables 9 9
Performing    
Finance receivables categorized based on the internally assigned credit quality    
Total finance receivables 732 704
Watchlist    
Finance receivables categorized based on the internally assigned credit quality    
Total finance receivables 39 45
Nonaccrual    
Finance receivables categorized based on the internally assigned credit quality    
Total finance receivables $ 31 $ 40
Nonaccrual as a percentage of finance receivables 3.87% 5.07%
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  
v3.19.2
Accounts Receivable and Finance Receivables - Finance receivables and allowance for losses based on the results of impairment evaluation (Details) - USD ($)
$ in Millions
6 Months Ended 12 Months Ended
Jun. 29, 2019
Dec. 29, 2018
Finance receivables    
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
v3.19.2
Inventories (Details) - USD ($)
$ in Millions
Jun. 29, 2019
Dec. 29, 2018
Inventories    
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
v3.19.2
Other Assets (Details)
$ in Millions
Apr. 01, 2019
USD ($)
Equity method investment  
Contributed assets $ 69
Allocated goodwill 71
Amount of net pre-tax gain subject to post-closing adjustments $ 18
FlightSafety Textron Aviation Training LLC  
Equity method investment  
Investment (in percentage) 30.00%
v3.19.2
Warranty Liability (Details) - USD ($)
$ in Millions
6 Months Ended
Jun. 29, 2019
Jun. 30, 2018
Changes in warranty liability    
Balance at beginning of period $ 149 $ 164
Provision 30 34
Settlements (38) (39)
Adjustments (5) 7
Balance at end of period $ 136 $ 166
v3.19.2
Leases (Details)
$ in Millions
3 Months Ended 6 Months Ended
Jun. 29, 2019
USD ($)
Jun. 29, 2019
USD ($)
Leases    
Operating lease - Option to extend   true
Operating lease cost $ 16 $ 32
Cash paid for operating lease liabilities   $ 32
Maximum    
Leases    
Operating lease and finance lease - Remaining lease term   30 years
Operating lease - Option to extend the lease, term 25 years 25 years
v3.19.2
Leases - Balance sheet and other information (Details) - USD ($)
$ in Millions
Jun. 29, 2019
Dec. 29, 2018
Operating leases:    
Other assets $ 298  
Other assets us-gaap:OtherAssets  
Other current liabilities $ 53  
Other current liabilities us-gaap:OtherLiabilitiesCurrent  
Other liabilities $ 247  
Other liabilities us-gaap:OtherLiabilities  
Finance leases:    
Property, plant and equipment, less accumulated amortization of $51 million $ 116  
Property, plant and equipment, less accumulated amortization of $51 million us-gaap:PropertyPlantAndEquipmentNet  
Accumulated amortization $ 4,317 $ 4,203
Short-term and current portion of long-term debt $ 6  
Short-term and current portion of long-term debt us-gaap:DebtCurrent  
Long-term debt $ 77  
Long-term debt us-gaap:LongTermDebtAndCapitalLeaseObligations  
Weighted-average remaining lease term (in years)    
Finance leases 14 years 1 month 6 days  
Operating leases 10 years 3 months 18 days  
Weighted-average discount rate    
Finance leases 2.73%  
Operating leases 4.46%  
Finance leased assets    
Finance leases:    
Accumulated amortization $ 51  
v3.19.2
Leases - Maturity of lease liabilities (Details)
$ in Millions
Jun. 29, 2019
USD ($)
Operating Leases  
2019 $ 34
2020 57
2021 43
2022 37
2023 31
Thereafter 179
Total lease payments 381
Less: interest (81)
Total lease liabilities 300
Finance Leases  
2019 5
2020 9
2021 9
2022 9
2023 9
Thereafter 69
Total lease payments 110
Less: interest (27)
Total lease liabilities $ 83
v3.19.2
Debt (Details) - USD ($)
$ in Millions
May 07, 2019
Jun. 24, 2019
Jun. 23, 2019
Fixed rate notes due 2029      
Debt      
Issuance of debt $ 300    
Interest rate (as a percent) 3.90%    
Net proceeds from issuance $ 297    
Fixed rate notes due 2019      
Debt      
Interest rate (as a percent)   2.88% 2.26%
Loan   $ 150  
v3.19.2
Derivative Instruments and Fair Value Measurements - Assets and liabilities recorded at fair value on a recurring basis (Details) - Manufacturing group - USD ($)
$ in Millions
6 Months Ended
Jun. 29, 2019
Dec. 29, 2018
Fair value of derivative instruments    
Forward exchange contracts maximum maturity period 3 years  
Foreign currency exchange contracts    
Fair value of derivative instruments    
Notional amounts $ 395 $ 379
Level 2 | Foreign currency exchange contracts    
Fair value of derivative instruments    
Derivative Asset, Fair Value 2 2
Derivative Liability, Fair Value $ 3 $ 10
v3.19.2
Derivative Instruments and Fair Value Measurements - Assets and liabilities not recorded at fair value (Details) - USD ($)
$ in Millions
Jun. 29, 2019
Dec. 29, 2018
Manufacturing group | Carrying Value    
Financial instruments not reflected at fair value    
Debt, excluding leases $ (3,301) $ (2,996)
Manufacturing group | Estimated Fair Value    
Financial instruments not reflected at fair value    
Debt, excluding leases (3,414) (2,971)
Finance group    
Financial instruments not reflected at fair value    
Debt (703) (718)
Finance group | Carrying Value    
Financial instruments not reflected at fair value    
Finance receivables, excluding leases 589 582
Debt (703) (718)
Finance group | Estimated Fair Value    
Financial instruments not reflected at fair value    
Finance receivables, excluding leases 615 584
Debt $ (640) $ (640)
v3.19.2
Shareholders' Equity (Details) - USD ($)
$ / shares in Units, $ in Millions
3 Months Ended 6 Months Ended
Jun. 29, 2019
Jun. 30, 2018
Jun. 29, 2019
Jun. 30, 2018
Increase (Decrease) in Stockholders' Equity        
Beginning of period $ 5,233 $ 5,692 $ 5,192 $ 5,647
Net income 217 224 396 413
Other comprehensive income (loss) 21 (42) 47 32
Share-based compensation activity 28 64 71 105
Dividends declared (4) (5) (9) (10)
Purchases of common stock (159) (571) (361) (915)
End of period $ 5,336 $ 5,362 $ 5,336 $ 5,362
Dividends per share of common stock $ 0.02 $ 0.02 $ 0.04 $ 0.04
Common Stock        
Increase (Decrease) in Stockholders' Equity        
Beginning of period $ 30 $ 33 $ 30 $ 33
End of period 30 33 30 33
Capital Surplus        
Increase (Decrease) in Stockholders' Equity        
Beginning of period 1,689 1,710 1,646 1,669
Share-based compensation activity 28 64 71 105
End of period 1,717 1,774 1,717 1,774
Treasury Stock        
Increase (Decrease) in Stockholders' Equity        
Beginning of period (331) (392) (129) (48)
Purchases of common stock (159) (571) (361) (915)
End of period (490) (963) (490) (963)
Retained Earnings        
Increase (Decrease) in Stockholders' Equity        
Beginning of period 5,581 5,642 5,407 5,368
Net income 217 224 396 413
Dividends declared (4) (5) (9) (10)
End of period 5,794 5,861 5,794 5,861
Accumulated Other Comprehensive Loss        
Increase (Decrease) in Stockholders' Equity        
Beginning of period (1,736) (1,301) (1,762) (1,375)
Other comprehensive income (loss) 21 (42) 47 32
End of period $ (1,715) $ (1,343) $ (1,715) (1,343)
ASC 606        
Increase (Decrease) in Stockholders' Equity        
Adoption of ASC 606       90
ASC 606 | Retained Earnings        
Increase (Decrease) in Stockholders' Equity        
Adoption of ASC 606       $ 90
v3.19.2
Shareholders' Equity - Earnings Per Share (Details) - shares
shares in Thousands
3 Months Ended 6 Months Ended
Jun. 29, 2019
Jun. 30, 2018
Jun. 29, 2019
Jun. 30, 2018
Weighted-average shares outstanding for basic and diluted EPS        
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
Anti-dilutive effect of weighted average shares 3,100 1,300 3,100 1,300
v3.19.2
Shareholders' Equity - Components of accumulated other comprehensive loss (Details) - USD ($)
$ in Millions
6 Months Ended
Jun. 29, 2019
Jun. 30, 2018
Components of Accumulated Other Comprehensive Loss    
Beginning of period $ (1,762)  
End of period (1,715)  
Accumulated Other Comprehensive Loss    
Components of Accumulated Other Comprehensive Loss    
Beginning of period (1,762) $ (1,375)
Other comprehensive income before reclassifications 8 (29)
Reclassified from Accumulated other comprehensive loss 39 61
End of period (1,715) (1,343)
Pension and Postretirement Benefits Adjustments    
Components of Accumulated Other Comprehensive Loss    
Beginning of period (1,727) (1,396)
Reclassified from Accumulated other comprehensive loss 41 62
End of period (1,686) (1,334)
Foreign Currency Translation Adjustments    
Components of Accumulated Other Comprehensive Loss    
Beginning of period (32) 11
Other comprehensive income before reclassifications 4 (27)
End of period (28) (16)
Deferred Gains (Losses) on Hedge Contracts    
Components of Accumulated Other Comprehensive Loss    
Beginning of period (3) 10
Other comprehensive income before reclassifications 4 (2)
Reclassified from Accumulated other comprehensive loss (2) (1)
End of period $ (1) $ 7
v3.19.2
Shareholders' Equity - Before and after-tax components of other comprehensive income (Details) - USD ($)
$ in Millions
3 Months Ended 6 Months Ended
Jun. 29, 2019
Jun. 30, 2018
Jun. 29, 2019
Jun. 30, 2018
Pension and postretirement benefits adjustments, pre-tax:        
Amortization of net actuarial loss, pre-tax $ 24 $ 39 $ 49 $ 77
Amortization of prior service cost, pre-tax 3 2 4 4
Pension and postretirement benefits adjustments, net, pre-tax 27 41 53 81
Deferred gains (losses) on hedge contracts, pre-tax:        
Current deferrals, pre-tax 2 (4) 6 (2)
Reclassification adjustments, pre-tax (1) (1) (2) (1)
Deferred gains (losses) on hedge contracts, net, pre-tax 1 (5) 4 (3)
Foreign currency translation adjustments, pre-tax:        
Foreign currency translation adjustments, pre-tax 3 (66) 4 (26)
Other comprehensive income (loss), pre-tax 31 (30) 61 52
Pension and postretirement benefits adjustments, tax:        
Amortization of net actuarial loss, tax (6) (9) (11) (18)
Amortization of prior service cost, tax (1) (1) (1) (1)
Pension and postretirement benefits adjustments, net, tax (7) (10) (12) (19)
Deferred gains (losses) on hedge contracts, tax:        
Current deferrals, tax (1) 1 (2)  
Deferred gains (losses) on hedge contracts, net, tax (1) 1 (2)  
Foreign currency translation adjustments, tax:        
Foreign currency translation adjustments, tax (2) (3)   (1)
Other comprehensive income (loss), tax (10) (12) (14) (20)
Pension and postretirement benefits adjustments, after-tax:        
Amortization of net actuarial loss, after-tax 18 30 38 59
Amortization of prior service cost, after-tax 2 1 3 3
Pension and postretirement benefits adjustments, net, after-tax 20 31 41 62
Deferred gains (losses) on hedge contracts, after-tax:        
Current deferrals, after-tax 1 (3) 4 (2)
Reclassification adjustments, after-tax (1) (1) (2) (1)
Deferred gains (losses) on hedge contracts, net, after-tax   (4) 2 (3)
Foreign currency translation adjustments, after-tax:        
Foreign currency translation adjustments, after-tax 1 (69) 4 (27)
Other comprehensive income (loss) $ 21 $ (42) $ 47 $ 32
v3.19.2
Segment Information - Operating and reportable segments (Details)
6 Months Ended
Jun. 29, 2019
segment
Operating and reportable business segments  
Number of business operating segments 5
Number of reportable business segments 5
v3.19.2
Segment Information - Revenue by segments and reconciliation of segment profit to income from continuing operations (Details) - 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
Reconciliation of segment profit to income from continuing operations before income taxes        
Income before income taxes 279 260 491 478
Operating Segment        
Segment Profit        
Segment Profit 339 346 633 625
Corporate        
Reconciliation of segment profit to income from continuing operations before income taxes        
Corporate expenses and other, net (24) (51) (71) (78)
Finance        
Revenues        
Finance Revenue 16 17 33 33
Finance | Operating Segment        
Segment Profit        
Segment Profit 6 5 12 11
Manufacturing group | Reconciling Items        
Reconciliation of segment profit to income from continuing operations before income taxes        
Interest expense, net for Manufacturing group (36) (35) (71) (69)
Manufacturing group | Textron Aviation        
Revenues        
Total revenues 1,123 1,276 2,257 2,286
Manufacturing group | Textron Aviation | Operating Segment        
Segment Profit        
Segment Profit 105 104 211 176
Manufacturing group | Bell        
Revenues        
Total revenues 771 831 1,510 1,583
Manufacturing group | Bell | Operating Segment        
Segment Profit        
Segment Profit 103 117 207 204
Manufacturing group | Textron Systems        
Revenues        
Total revenues 308 380 615 767
Manufacturing group | Textron Systems | Operating Segment        
Segment Profit        
Segment Profit 49 40 77 90
Manufacturing group | Industrial        
Revenues        
Total revenues 1,009 1,222 1,921 2,353
Manufacturing group | Industrial | Operating Segment        
Segment Profit        
Segment Profit 76 80 126 144
Finance group | Finance        
Revenues        
Finance Revenue $ 16 $ 17 $ 33 $ 33
v3.19.2
Revenues (Details) - 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
United States        
Revenues        
Total revenues 2,029 2,351 4,050 4,315
Europe        
Revenues        
Total revenues 519 575 1,057 1,144
Asia and Australia        
Revenues        
Total revenues 243 344 442 674
Other international        
Revenues        
Total revenues 436 456 787 889
Commercial        
Revenues        
Total revenues 2,459 2,821 4,777 5,313
U.S. Government        
Revenues        
Total revenues 768 905 1,559 1,709
Textron Aviation        
Revenues        
Total revenues 1,123 1,276 2,257 2,286
Textron Aviation | United States        
Revenues        
Total revenues 736 914 1,525 1,579
Textron Aviation | Europe        
Revenues        
Total revenues 164 128 347 274
Textron Aviation | Asia and Australia        
Revenues        
Total revenues 65 64 88 145
Textron Aviation | Other international        
Revenues        
Total revenues 158 170 297 288
Textron Aviation | Commercial        
Revenues        
Total revenues 1,077 1,191 2,169 2,164
Textron Aviation | U.S. Government        
Revenues        
Total revenues 46 85 88 122
Textron Aviation | Aircraft        
Revenues        
Total revenues 733 877 1,499 1,511
Textron Aviation | Aftermarket parts and services        
Revenues        
Total revenues 390 399 758 775
Bell        
Revenues        
Total revenues 771 831 1,510 1,583
Bell | United States        
Revenues        
Total revenues 571 543 1,149 1,052
Bell | Europe        
Revenues        
Total revenues 47 50 67 77
Bell | Asia and Australia        
Revenues        
Total revenues 79 150 161 277
Bell | Other international        
Revenues        
Total revenues 74 88 133 177
Bell | Commercial        
Revenues        
Total revenues 279 291 509 543
Bell | U.S. Government        
Revenues        
Total revenues 492 540 1,001 1,040
Bell | Military aircraft and support programs        
Revenues        
Total revenues 482 533 990 1,020
Bell | Commercial helicopters, parts and services        
Revenues        
Total revenues 289 298 520 563
Textron Systems        
Revenues        
Total revenues 308 380 615 767
Textron Systems | United States        
Revenues        
Total revenues 249 297 506 584
Textron Systems | Europe        
Revenues        
Total revenues 17 23 40 35
Textron Systems | Asia and Australia        
Revenues        
Total revenues 13 28 29 56
Textron Systems | Other international        
Revenues        
Total revenues 29 32 40 92
Textron Systems | Commercial        
Revenues        
Total revenues 83 107 157 234
Textron Systems | U.S. Government        
Revenues        
Total revenues 225 273 458 533
Textron Systems | Unmanned systems        
Revenues        
Total revenues 135 161 269 331
Textron Systems | Marine and land systems        
Revenues        
Total revenues 60 69 108 161
Textron Systems | Simulation, training and other        
Revenues        
Total revenues 113 150 238 275
Industrial        
Revenues        
Total revenues 1,009 1,222 1,921 2,353
Industrial | United States        
Revenues        
Total revenues 466 590 855 1,086
Industrial | Europe        
Revenues        
Total revenues 291 372 602 755
Industrial | Asia and Australia        
Revenues        
Total revenues 84 100 161 192
Industrial | Other international        
Revenues        
Total revenues 168 160 303 320
Industrial | Commercial        
Revenues        
Total revenues 1,004 1,215 1,909 2,339
Industrial | U.S. Government        
Revenues        
Total revenues 5 7 12 14
Industrial | Fuel systems and functional components        
Revenues        
Total revenues 592 627 1,186 1,282
Industrial | Specialized vehicles        
Revenues        
Total revenues 417 475 735 823
Industrial | Tools and test equipment        
Revenues        
Total revenues   120   248
Finance        
Revenues        
Finance Revenue 16 17 33 33
Finance | United States        
Revenues        
Finance Revenue 7 7 15 14
Finance | Europe        
Revenues        
Finance Revenue   2 1 3
Finance | Asia and Australia        
Revenues        
Finance Revenue 2 2 3 4
Finance | Other international        
Revenues        
Finance Revenue 7 6 14 12
Finance | Commercial        
Revenues        
Finance Revenue $ 16 $ 17 $ 33 $ 33
v3.19.2
Revenues - Remaining Performance Obligations (Details)
$ in Billions
Jun. 29, 2019
USD ($)
Remaining performance obligations $ 9.3
v3.19.2
Revenues - Remaining Performance Obligations & Revenue Expected to be recognized (Details)
Jun. 29, 2019
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2021-01-02  
Remaining Performance Obligation, Expected Timing of Satisfaction  
Percentage of remaining performance obligation expected to be recognized in period 68.00%
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2022-12-31  
Remaining Performance Obligation, Expected Timing of Satisfaction  
Percentage of remaining performance obligation expected to be recognized in period 26.00%
v3.19.2
Revenues - Contract Assets and Liabilities (Details) - USD ($)
$ in Millions
3 Months Ended 6 Months Ended
Jun. 29, 2019
Jun. 30, 2018
Jun. 29, 2019
Jun. 30, 2018
Dec. 29, 2018
Contract Assets and Liabilities          
Contract assets $ 499   $ 499   $ 461
Contract liabilities 897   897   $ 974
Revenue recognized included in contract liabilities $ 146 $ 377 $ 457 $ 699  
v3.19.2
Retirement Plans - Net periodic benefit cost (Details) - USD ($)
$ in Millions
3 Months Ended 6 Months Ended
Jun. 29, 2019
Jun. 30, 2018
Jun. 29, 2019
Jun. 30, 2018
Pension Benefits        
Net periodic benefit cost        
Service cost $ 22 $ 27 $ 45 $ 53
Interest cost 81 76 163 153
Expected return on plan assets (139) (139) (278) (277)
Amortization of net actuarial loss 25 39 50 77
Amortization of prior service cost (credit) 4 3 7 7
Net periodic benefit cost (credit) (7) 6 (13) 13
Postretirement Benefits Other Than Pensions        
Net periodic benefit cost        
Service cost     1 1
Interest cost 3 3 5 5
Amortization of net actuarial loss (1)   (1)  
Amortization of prior service cost (credit) (1) (1) (3) (3)
Net periodic benefit cost (credit) $ 1 $ 2 $ 2 $ 3
v3.19.2
Income Taxes (Details) - USD ($)
$ in Millions
3 Months Ended 6 Months Ended
Jun. 29, 2019
Jun. 30, 2018
Jun. 29, 2019
Jun. 30, 2018
Dec. 29, 2018
Income Taxes          
Effective income tax rate (as a percent) 22.20% 13.80% 19.30% 13.60%  
U.S. federal statutory income tax rate (as a percent)   21.00% 21.00% 21.00%  
Discrete tax benefit   $ 25 $ 12 $ 25  
Unrecognized tax benefits $ 175   $ 175   $ 141