0000217346--01-012021Q2FALSEus-gaap:OtherAssetsus-gaap:OtherLiabilitiesCurrentus-gaap:OtherLiabilitiesNoncurrenttrue182400002173462021-01-032021-07-03xbrli:shares00002173462021-07-16iso4217:USD0000217346txt:ManufacturingProductsAndServicesMember2021-04-042021-07-030000217346txt:ManufacturingProductsAndServicesMember2020-04-052020-07-040000217346txt:ManufacturingProductsAndServicesMember2021-01-032021-07-030000217346txt:ManufacturingProductsAndServicesMember2020-01-052020-07-040000217346us-gaap:FinancialServiceMember2021-04-042021-07-030000217346us-gaap:FinancialServiceMember2020-04-052020-07-040000217346us-gaap:FinancialServiceMember2021-01-032021-07-030000217346us-gaap:FinancialServiceMember2020-01-052020-07-0400002173462021-04-042021-07-0300002173462020-04-052020-07-0400002173462020-01-052020-07-04iso4217:USDxbrli:shares0000217346txt:ManufacturingGroupMember2021-07-030000217346txt:ManufacturingGroupMember2021-01-0200002173462021-07-0300002173462021-01-020000217346txt:FinanceGroupMember2021-07-030000217346txt:FinanceGroupMember2021-01-0200002173462020-01-0400002173462020-07-040000217346txt:ManufacturingGroupMember2021-01-032021-07-030000217346txt:ManufacturingGroupMember2020-01-052020-07-040000217346txt:FinanceGroupMember2021-01-032021-07-030000217346txt:FinanceGroupMember2020-01-052020-07-040000217346txt:ManufacturingGroupMember2020-01-040000217346txt:FinanceGroupMember2020-01-040000217346txt:ManufacturingGroupMember2020-07-040000217346txt:FinanceGroupMember2020-07-04txt:borrowingGroup0000217346txt:CumulativeCatchUpMethodMember2021-04-042021-07-030000217346txt:CumulativeCatchUpMethodMember2020-04-052020-07-040000217346txt:CumulativeCatchUpMethodMember2021-01-032021-07-030000217346txt:CumulativeCatchUpMethodMember2020-01-052020-07-040000217346us-gaap:DisposalGroupDisposedOfBySaleNotDiscontinuedOperationsMembertxt:TRUNonUSMember2021-01-252021-01-250000217346txt:ManufacturingGroupMembertxt:CommercialMember2021-07-030000217346txt:ManufacturingGroupMembertxt:CommercialMember2021-01-020000217346txt:ManufacturingGroupMembertxt:USGovernmentMember2021-07-030000217346txt:ManufacturingGroupMembertxt:USGovernmentMember2021-01-020000217346us-gaap:NonperformingFinancingReceivableMembersrt:MinimumMember2021-01-032021-07-030000217346us-gaap:NonperformingFinancingReceivableMember2021-01-032021-07-03txt:customer0000217346us-gaap:PerformingFinancingReceivableMember2021-07-030000217346us-gaap:PerformingFinancingReceivableMember2021-01-020000217346us-gaap:SpecialMentionMemberus-gaap:NonperformingFinancingReceivableMember2021-07-030000217346us-gaap:SpecialMentionMemberus-gaap:NonperformingFinancingReceivableMember2021-01-020000217346us-gaap:DoubtfulMemberus-gaap:NonperformingFinancingReceivableMember2021-07-030000217346us-gaap:DoubtfulMemberus-gaap:NonperformingFinancingReceivableMember2021-01-02xbrli:pure0000217346us-gaap:NonperformingFinancingReceivableMember2021-07-030000217346us-gaap:NonperformingFinancingReceivableMember2021-01-020000217346txt:FinancialAssetsLessThan31DaysPastDueMember2021-07-030000217346txt:FinancialAssetsLessThan31DaysPastDueMember2021-01-020000217346txt:FinancialAssets31To60DaysPastDueMember2021-07-030000217346txt:FinancialAssets31To60DaysPastDueMember2021-01-020000217346txt:FinancialAssets61To90DaysPastDueMember2021-07-030000217346txt:FinancialAssets61To90DaysPastDueMember2021-01-020000217346us-gaap:FinancingReceivablesEqualToGreaterThan90DaysPastDueMember2021-07-030000217346us-gaap:FinancingReceivablesEqualToGreaterThan90DaysPastDueMember2021-01-020000217346us-gaap:PerformingFinancingReceivableMember2021-07-0300002173462020-01-052021-01-020000217346us-gaap:CashFlowHedgingMembertxt:ManufacturingGroupMemberus-gaap:ForeignExchangeContractMember2021-07-030000217346us-gaap:CashFlowHedgingMembertxt:ManufacturingGroupMemberus-gaap:ForeignExchangeContractMember2021-01-020000217346us-gaap:CashFlowHedgingMembertxt:ManufacturingGroupMemberus-gaap:ForeignExchangeContractMemberus-gaap:FairValueInputsLevel2Member2021-07-030000217346us-gaap:CashFlowHedgingMembertxt:ManufacturingGroupMemberus-gaap:ForeignExchangeContractMemberus-gaap:FairValueInputsLevel2Member2021-01-020000217346txt:FinanceGroupMemberus-gaap:CashFlowHedgingMemberus-gaap:InterestRateSwapMember2021-07-030000217346txt:FinanceGroupMemberus-gaap:CashFlowHedgingMemberus-gaap:InterestRateSwapMember2021-01-020000217346us-gaap:CarryingReportedAmountFairValueDisclosureMembertxt:ManufacturingGroupMember2021-07-030000217346txt:ManufacturingGroupMemberus-gaap:EstimateOfFairValueFairValueDisclosureMember2021-07-030000217346us-gaap:CarryingReportedAmountFairValueDisclosureMembertxt:ManufacturingGroupMember2021-01-020000217346txt:ManufacturingGroupMemberus-gaap:EstimateOfFairValueFairValueDisclosureMember2021-01-020000217346txt:FinanceGroupMemberus-gaap:CarryingReportedAmountFairValueDisclosureMember2021-07-030000217346txt:FinanceGroupMemberus-gaap:EstimateOfFairValueFairValueDisclosureMember2021-07-030000217346txt:FinanceGroupMemberus-gaap:CarryingReportedAmountFairValueDisclosureMember2021-01-020000217346txt:FinanceGroupMemberus-gaap:EstimateOfFairValueFairValueDisclosureMember2021-01-020000217346us-gaap:CommonStockMember2021-04-030000217346us-gaap:AdditionalPaidInCapitalMember2021-04-030000217346us-gaap:TreasuryStockMember2021-04-030000217346us-gaap:RetainedEarningsMember2021-04-030000217346us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-04-0300002173462021-04-030000217346us-gaap:RetainedEarningsMember2021-04-042021-07-030000217346us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-04-042021-07-030000217346us-gaap:AdditionalPaidInCapitalMember2021-04-042021-07-030000217346us-gaap:TreasuryStockMember2021-04-042021-07-030000217346us-gaap:CommonStockMember2021-07-030000217346us-gaap:AdditionalPaidInCapitalMember2021-07-030000217346us-gaap:TreasuryStockMember2021-07-030000217346us-gaap:RetainedEarningsMember2021-07-030000217346us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-07-030000217346us-gaap:CommonStockMember2020-04-040000217346us-gaap:AdditionalPaidInCapitalMember2020-04-040000217346us-gaap:TreasuryStockMember2020-04-040000217346us-gaap:RetainedEarningsMember2020-04-040000217346us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-04-0400002173462020-04-040000217346us-gaap:RetainedEarningsMember2020-04-052020-07-040000217346us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-04-052020-07-040000217346us-gaap:AdditionalPaidInCapitalMember2020-04-052020-07-040000217346us-gaap:CommonStockMember2020-07-040000217346us-gaap:AdditionalPaidInCapitalMember2020-07-040000217346us-gaap:TreasuryStockMember2020-07-040000217346us-gaap:RetainedEarningsMember2020-07-040000217346us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-07-040000217346us-gaap:CommonStockMember2021-01-020000217346us-gaap:AdditionalPaidInCapitalMember2021-01-020000217346us-gaap:TreasuryStockMember2021-01-020000217346us-gaap:RetainedEarningsMember2021-01-020000217346us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-01-020000217346us-gaap:RetainedEarningsMember2021-01-032021-07-030000217346us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-01-032021-07-030000217346us-gaap:AdditionalPaidInCapitalMember2021-01-032021-07-030000217346us-gaap:TreasuryStockMember2021-01-032021-07-030000217346us-gaap:CommonStockMember2020-01-040000217346us-gaap:AdditionalPaidInCapitalMember2020-01-040000217346us-gaap:TreasuryStockMember2020-01-040000217346us-gaap:RetainedEarningsMember2020-01-040000217346us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-01-040000217346us-gaap:RetainedEarningsMember2020-01-052020-07-040000217346us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-01-052020-07-040000217346us-gaap:AdditionalPaidInCapitalMember2020-01-052020-07-040000217346us-gaap:TreasuryStockMember2020-01-052020-07-040000217346us-gaap:EmployeeStockOptionMember2021-01-032021-07-030000217346us-gaap:EmployeeStockOptionMember2020-04-052020-07-040000217346us-gaap:EmployeeStockOptionMember2020-01-052020-07-040000217346us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember2021-01-020000217346us-gaap:AccumulatedTranslationAdjustmentMember2021-01-020000217346us-gaap:AccumulatedGainLossNetCashFlowHedgeParentMember2021-01-020000217346us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember2021-01-032021-07-030000217346us-gaap:AccumulatedTranslationAdjustmentMember2021-01-032021-07-030000217346us-gaap:AccumulatedGainLossNetCashFlowHedgeParentMember2021-01-032021-07-030000217346us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember2021-07-030000217346us-gaap:AccumulatedTranslationAdjustmentMember2021-07-030000217346us-gaap:AccumulatedGainLossNetCashFlowHedgeParentMember2021-07-030000217346us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember2020-01-040000217346us-gaap:AccumulatedTranslationAdjustmentMember2020-01-040000217346us-gaap:AccumulatedGainLossNetCashFlowHedgeParentMember2020-01-040000217346us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember2020-01-052020-07-040000217346us-gaap:AccumulatedTranslationAdjustmentMember2020-01-052020-07-040000217346us-gaap:AccumulatedGainLossNetCashFlowHedgeParentMember2020-01-052020-07-040000217346us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember2020-07-040000217346us-gaap:AccumulatedTranslationAdjustmentMember2020-07-040000217346us-gaap:AccumulatedGainLossNetCashFlowHedgeParentMember2020-07-04txt:businessSegment0000217346us-gaap:OperatingSegmentsMembertxt:TextronAviationMembertxt:ManufacturingGroupMember2021-04-042021-07-030000217346us-gaap:OperatingSegmentsMembertxt:TextronAviationMembertxt:ManufacturingGroupMember2020-04-052020-07-040000217346us-gaap:OperatingSegmentsMembertxt:TextronAviationMembertxt:ManufacturingGroupMember2021-01-032021-07-030000217346us-gaap:OperatingSegmentsMembertxt:TextronAviationMembertxt:ManufacturingGroupMember2020-01-052020-07-040000217346us-gaap:OperatingSegmentsMembertxt:BellMembertxt:ManufacturingGroupMember2021-04-042021-07-030000217346us-gaap:OperatingSegmentsMembertxt:BellMembertxt:ManufacturingGroupMember2020-04-052020-07-040000217346us-gaap:OperatingSegmentsMembertxt:BellMembertxt:ManufacturingGroupMember2021-01-032021-07-030000217346us-gaap:OperatingSegmentsMembertxt:BellMembertxt:ManufacturingGroupMember2020-01-052020-07-040000217346us-gaap:OperatingSegmentsMembertxt:TextronSystemsMembertxt:ManufacturingGroupMember2021-04-042021-07-030000217346us-gaap:OperatingSegmentsMembertxt:TextronSystemsMembertxt:ManufacturingGroupMember2020-04-052020-07-040000217346us-gaap:OperatingSegmentsMembertxt:TextronSystemsMembertxt:ManufacturingGroupMember2021-01-032021-07-030000217346us-gaap:OperatingSegmentsMembertxt:TextronSystemsMembertxt:ManufacturingGroupMember2020-01-052020-07-040000217346us-gaap:OperatingSegmentsMembertxt:ManufacturingGroupMembertxt:IndustrialMember2021-04-042021-07-030000217346us-gaap:OperatingSegmentsMembertxt:ManufacturingGroupMembertxt:IndustrialMember2020-04-052020-07-040000217346us-gaap:OperatingSegmentsMembertxt:ManufacturingGroupMembertxt:IndustrialMember2021-01-032021-07-030000217346us-gaap:OperatingSegmentsMembertxt:ManufacturingGroupMembertxt:IndustrialMember2020-01-052020-07-040000217346us-gaap:OperatingSegmentsMembertxt:FinanceGroupMembertxt:FinanceMember2021-04-042021-07-030000217346us-gaap:OperatingSegmentsMembertxt:FinanceGroupMembertxt:FinanceMember2020-04-052020-07-040000217346us-gaap:OperatingSegmentsMembertxt:FinanceGroupMembertxt:FinanceMember2021-01-032021-07-030000217346us-gaap:OperatingSegmentsMembertxt:FinanceGroupMembertxt:FinanceMember2020-01-052020-07-040000217346us-gaap:OperatingSegmentsMembertxt:FinanceMember2021-04-042021-07-030000217346us-gaap:OperatingSegmentsMembertxt:FinanceMember2020-04-052020-07-040000217346us-gaap:OperatingSegmentsMembertxt:FinanceMember2021-01-032021-07-030000217346us-gaap:OperatingSegmentsMembertxt:FinanceMember2020-01-052020-07-040000217346us-gaap:OperatingSegmentsMember2021-04-042021-07-030000217346us-gaap:OperatingSegmentsMember2020-04-052020-07-040000217346us-gaap:OperatingSegmentsMember2021-01-032021-07-030000217346us-gaap:OperatingSegmentsMember2020-01-052020-07-040000217346us-gaap:MaterialReconcilingItemsMember2021-04-042021-07-030000217346us-gaap:MaterialReconcilingItemsMember2020-04-052020-07-040000217346us-gaap:MaterialReconcilingItemsMember2021-01-032021-07-030000217346us-gaap:MaterialReconcilingItemsMember2020-01-052020-07-040000217346us-gaap:MaterialReconcilingItemsMembertxt:ManufacturingGroupMember2021-04-042021-07-030000217346us-gaap:MaterialReconcilingItemsMembertxt:ManufacturingGroupMember2020-04-052020-07-040000217346us-gaap:MaterialReconcilingItemsMembertxt:ManufacturingGroupMember2021-01-032021-07-030000217346us-gaap:MaterialReconcilingItemsMembertxt:ManufacturingGroupMember2020-01-052020-07-040000217346txt:AircraftMembertxt:TextronAviationMember2021-04-042021-07-030000217346txt:AircraftMembertxt:TextronAviationMember2020-04-052020-07-040000217346txt:AircraftMembertxt:TextronAviationMember2021-01-032021-07-030000217346txt:AircraftMembertxt:TextronAviationMember2020-01-052020-07-040000217346txt:AftermarketPartsAndServicesMembertxt:TextronAviationMember2021-04-042021-07-030000217346txt:AftermarketPartsAndServicesMembertxt:TextronAviationMember2020-04-052020-07-040000217346txt:AftermarketPartsAndServicesMembertxt:TextronAviationMember2021-01-032021-07-030000217346txt:AftermarketPartsAndServicesMembertxt:TextronAviationMember2020-01-052020-07-040000217346txt:TextronAviationMember2021-04-042021-07-030000217346txt:TextronAviationMember2020-04-052020-07-040000217346txt:TextronAviationMember2021-01-032021-07-030000217346txt:TextronAviationMember2020-01-052020-07-040000217346txt:BellMembertxt:MilitaryAircraftAndSupportProgramsMember2021-04-042021-07-030000217346txt:BellMembertxt:MilitaryAircraftAndSupportProgramsMember2020-04-052020-07-040000217346txt:BellMembertxt:MilitaryAircraftAndSupportProgramsMember2021-01-032021-07-030000217346txt:BellMembertxt:MilitaryAircraftAndSupportProgramsMember2020-01-052020-07-040000217346txt:CommercialHelicoptersPartsAndServicesMembertxt:BellMember2021-04-042021-07-030000217346txt:CommercialHelicoptersPartsAndServicesMembertxt:BellMember2020-04-052020-07-040000217346txt:CommercialHelicoptersPartsAndServicesMembertxt:BellMember2021-01-032021-07-030000217346txt:CommercialHelicoptersPartsAndServicesMembertxt:BellMember2020-01-052020-07-040000217346txt:BellMember2021-04-042021-07-030000217346txt:BellMember2020-04-052020-07-040000217346txt:BellMember2021-01-032021-07-030000217346txt:BellMember2020-01-052020-07-040000217346txt:TextronSystemsMembertxt:AirSystemsMember2021-04-042021-07-030000217346txt:TextronSystemsMembertxt:AirSystemsMember2020-04-052020-07-040000217346txt:TextronSystemsMembertxt:AirSystemsMember2021-01-032021-07-030000217346txt:TextronSystemsMembertxt:AirSystemsMember2020-01-052020-07-040000217346txt:TextronSystemsMembertxt:LandAndSeaSystemsMember2021-04-042021-07-030000217346txt:TextronSystemsMembertxt:LandAndSeaSystemsMember2020-04-052020-07-040000217346txt:TextronSystemsMembertxt:LandAndSeaSystemsMember2021-01-032021-07-030000217346txt:TextronSystemsMembertxt:LandAndSeaSystemsMember2020-01-052020-07-040000217346txt:TextronSystemsMembertxt:OtherMember2021-04-042021-07-030000217346txt:TextronSystemsMembertxt:OtherMember2020-04-052020-07-040000217346txt:TextronSystemsMembertxt:OtherMember2021-01-032021-07-030000217346txt:TextronSystemsMembertxt:OtherMember2020-01-052020-07-040000217346txt:TextronSystemsMember2021-04-042021-07-030000217346txt:TextronSystemsMember2020-04-052020-07-040000217346txt:TextronSystemsMember2021-01-032021-07-030000217346txt:TextronSystemsMember2020-01-052020-07-040000217346txt:FuelSystemsAndFunctionalComponentsMembertxt:IndustrialMember2021-04-042021-07-030000217346txt:FuelSystemsAndFunctionalComponentsMembertxt:IndustrialMember2020-04-052020-07-040000217346txt:FuelSystemsAndFunctionalComponentsMembertxt:IndustrialMember2021-01-032021-07-030000217346txt:FuelSystemsAndFunctionalComponentsMembertxt:IndustrialMember2020-01-052020-07-040000217346txt:SpecializedVehiclesMembertxt:IndustrialMember2021-04-042021-07-030000217346txt:SpecializedVehiclesMembertxt:IndustrialMember2020-04-052020-07-040000217346txt:SpecializedVehiclesMembertxt:IndustrialMember2021-01-032021-07-030000217346txt:SpecializedVehiclesMembertxt:IndustrialMember2020-01-052020-07-040000217346txt:IndustrialMember2021-04-042021-07-030000217346txt:IndustrialMember2020-04-052020-07-040000217346txt:IndustrialMember2021-01-032021-07-030000217346txt:IndustrialMember2020-01-052020-07-040000217346txt:FinanceMember2021-04-042021-07-030000217346txt:FinanceMember2020-04-052020-07-040000217346txt:FinanceMember2021-01-032021-07-030000217346txt:FinanceMember2020-01-052020-07-040000217346txt:CommercialCustomerMembertxt:TextronAviationMember2021-04-042021-07-030000217346txt:BellMembertxt:CommercialCustomerMember2021-04-042021-07-030000217346txt:CommercialCustomerMembertxt:TextronSystemsMember2021-04-042021-07-030000217346txt:CommercialCustomerMembertxt:IndustrialMember2021-04-042021-07-030000217346txt:CommercialCustomerMembertxt:FinanceMember2021-04-042021-07-030000217346txt:CommercialCustomerMember2021-04-042021-07-030000217346txt:TextronAviationMembertxt:USGovernmentMember2021-04-042021-07-030000217346txt:BellMembertxt:USGovernmentMember2021-04-042021-07-030000217346txt:TextronSystemsMembertxt:USGovernmentMember2021-04-042021-07-030000217346txt:USGovernmentMembertxt:IndustrialMember2021-04-042021-07-030000217346txt:USGovernmentMembertxt:FinanceMember2021-04-042021-07-030000217346txt:USGovernmentMember2021-04-042021-07-030000217346country:UStxt:TextronAviationMember2021-04-042021-07-030000217346country:UStxt:BellMember2021-04-042021-07-030000217346country:UStxt:TextronSystemsMember2021-04-042021-07-030000217346country:UStxt:IndustrialMember2021-04-042021-07-030000217346country:UStxt:FinanceMember2021-04-042021-07-030000217346country:US2021-04-042021-07-030000217346txt:TextronAviationMembersrt:EuropeMember2021-04-042021-07-030000217346txt:BellMembersrt:EuropeMember2021-04-042021-07-030000217346txt:TextronSystemsMembersrt:EuropeMember2021-04-042021-07-030000217346srt:EuropeMembertxt:IndustrialMember2021-04-042021-07-030000217346txt:FinanceMembersrt:EuropeMember2021-04-042021-07-030000217346srt:EuropeMember2021-04-042021-07-030000217346txt:AsiaAndAustraliaMembertxt:TextronAviationMember2021-04-042021-07-030000217346txt:AsiaAndAustraliaMembertxt:BellMember2021-04-042021-07-030000217346txt:AsiaAndAustraliaMembertxt:TextronSystemsMember2021-04-042021-07-030000217346txt:AsiaAndAustraliaMembertxt:IndustrialMember2021-04-042021-07-030000217346txt:AsiaAndAustraliaMembertxt:FinanceMember2021-04-042021-07-030000217346txt:AsiaAndAustraliaMember2021-04-042021-07-030000217346txt:TextronAviationMembertxt:InternationalMember2021-04-042021-07-030000217346txt:BellMembertxt:InternationalMember2021-04-042021-07-030000217346txt:TextronSystemsMembertxt:InternationalMember2021-04-042021-07-030000217346txt:InternationalMembertxt:IndustrialMember2021-04-042021-07-030000217346txt:FinanceMembertxt:InternationalMember2021-04-042021-07-030000217346txt:InternationalMember2021-04-042021-07-030000217346txt:CommercialCustomerMembertxt:TextronAviationMember2020-04-052020-07-040000217346txt:BellMembertxt:CommercialCustomerMember2020-04-052020-07-040000217346txt:CommercialCustomerMembertxt:TextronSystemsMember2020-04-052020-07-040000217346txt:CommercialCustomerMembertxt:IndustrialMember2020-04-052020-07-040000217346txt:CommercialCustomerMembertxt:FinanceMember2020-04-052020-07-040000217346txt:CommercialCustomerMember2020-04-052020-07-040000217346txt:TextronAviationMembertxt:USGovernmentMember2020-04-052020-07-040000217346txt:BellMembertxt:USGovernmentMember2020-04-052020-07-040000217346txt:TextronSystemsMembertxt:USGovernmentMember2020-04-052020-07-040000217346txt:USGovernmentMembertxt:IndustrialMember2020-04-052020-07-040000217346txt:USGovernmentMembertxt:FinanceMember2020-04-052020-07-040000217346txt:USGovernmentMember2020-04-052020-07-040000217346country:UStxt:TextronAviationMember2020-04-052020-07-040000217346country:UStxt:BellMember2020-04-052020-07-040000217346country:UStxt:TextronSystemsMember2020-04-052020-07-040000217346country:UStxt:IndustrialMember2020-04-052020-07-040000217346country:UStxt:FinanceMember2020-04-052020-07-040000217346country:US2020-04-052020-07-040000217346txt:TextronAviationMembersrt:EuropeMember2020-04-052020-07-040000217346txt:BellMembersrt:EuropeMember2020-04-052020-07-040000217346txt:TextronSystemsMembersrt:EuropeMember2020-04-052020-07-040000217346srt:EuropeMembertxt:IndustrialMember2020-04-052020-07-040000217346txt:FinanceMembersrt:EuropeMember2020-04-052020-07-040000217346srt:EuropeMember2020-04-052020-07-040000217346txt:AsiaAndAustraliaMembertxt:TextronAviationMember2020-04-052020-07-040000217346txt:AsiaAndAustraliaMembertxt:BellMember2020-04-052020-07-040000217346txt:AsiaAndAustraliaMembertxt:TextronSystemsMember2020-04-052020-07-040000217346txt:AsiaAndAustraliaMembertxt:IndustrialMember2020-04-052020-07-040000217346txt:AsiaAndAustraliaMembertxt:FinanceMember2020-04-052020-07-040000217346txt:AsiaAndAustraliaMember2020-04-052020-07-040000217346txt:TextronAviationMembertxt:InternationalMember2020-04-052020-07-040000217346txt:BellMembertxt:InternationalMember2020-04-052020-07-040000217346txt:TextronSystemsMembertxt:InternationalMember2020-04-052020-07-040000217346txt:InternationalMembertxt:IndustrialMember2020-04-052020-07-040000217346txt:FinanceMembertxt:InternationalMember2020-04-052020-07-040000217346txt:InternationalMember2020-04-052020-07-040000217346txt:CommercialCustomerMembertxt:TextronAviationMember2021-01-032021-07-030000217346txt:BellMembertxt:CommercialCustomerMember2021-01-032021-07-030000217346txt:CommercialCustomerMembertxt:TextronSystemsMember2021-01-032021-07-030000217346txt:CommercialCustomerMembertxt:IndustrialMember2021-01-032021-07-030000217346txt:CommercialCustomerMembertxt:FinanceMember2021-01-032021-07-030000217346txt:CommercialCustomerMember2021-01-032021-07-030000217346txt:TextronAviationMembertxt:USGovernmentMember2021-01-032021-07-030000217346txt:BellMembertxt:USGovernmentMember2021-01-032021-07-030000217346txt:TextronSystemsMembertxt:USGovernmentMember2021-01-032021-07-030000217346txt:USGovernmentMembertxt:IndustrialMember2021-01-032021-07-030000217346txt:USGovernmentMembertxt:FinanceMember2021-01-032021-07-030000217346txt:USGovernmentMember2021-01-032021-07-030000217346country:UStxt:TextronAviationMember2021-01-032021-07-030000217346country:UStxt:BellMember2021-01-032021-07-030000217346country:UStxt:TextronSystemsMember2021-01-032021-07-030000217346country:UStxt:IndustrialMember2021-01-032021-07-030000217346country:UStxt:FinanceMember2021-01-032021-07-030000217346country:US2021-01-032021-07-030000217346txt:TextronAviationMembersrt:EuropeMember2021-01-032021-07-030000217346txt:BellMembersrt:EuropeMember2021-01-032021-07-030000217346txt:TextronSystemsMembersrt:EuropeMember2021-01-032021-07-030000217346srt:EuropeMembertxt:IndustrialMember2021-01-032021-07-030000217346txt:FinanceMembersrt:EuropeMember2021-01-032021-07-030000217346srt:EuropeMember2021-01-032021-07-030000217346txt:AsiaAndAustraliaMembertxt:TextronAviationMember2021-01-032021-07-030000217346txt:AsiaAndAustraliaMembertxt:BellMember2021-01-032021-07-030000217346txt:AsiaAndAustraliaMembertxt:TextronSystemsMember2021-01-032021-07-030000217346txt:AsiaAndAustraliaMembertxt:IndustrialMember2021-01-032021-07-030000217346txt:AsiaAndAustraliaMembertxt:FinanceMember2021-01-032021-07-030000217346txt:AsiaAndAustraliaMember2021-01-032021-07-030000217346txt:TextronAviationMembertxt:InternationalMember2021-01-032021-07-030000217346txt:BellMembertxt:InternationalMember2021-01-032021-07-030000217346txt:TextronSystemsMembertxt:InternationalMember2021-01-032021-07-030000217346txt:InternationalMembertxt:IndustrialMember2021-01-032021-07-030000217346txt:FinanceMembertxt:InternationalMember2021-01-032021-07-030000217346txt:InternationalMember2021-01-032021-07-030000217346txt:CommercialCustomerMembertxt:TextronAviationMember2020-01-052020-07-040000217346txt:BellMembertxt:CommercialCustomerMember2020-01-052020-07-040000217346txt:CommercialCustomerMembertxt:TextronSystemsMember2020-01-052020-07-040000217346txt:CommercialCustomerMembertxt:IndustrialMember2020-01-052020-07-040000217346txt:CommercialCustomerMembertxt:FinanceMember2020-01-052020-07-040000217346txt:CommercialCustomerMember2020-01-052020-07-040000217346txt:TextronAviationMembertxt:USGovernmentMember2020-01-052020-07-040000217346txt:BellMembertxt:USGovernmentMember2020-01-052020-07-040000217346txt:TextronSystemsMembertxt:USGovernmentMember2020-01-052020-07-040000217346txt:USGovernmentMembertxt:IndustrialMember2020-01-052020-07-040000217346txt:USGovernmentMembertxt:FinanceMember2020-01-052020-07-040000217346txt:USGovernmentMember2020-01-052020-07-040000217346country:UStxt:TextronAviationMember2020-01-052020-07-040000217346country:UStxt:BellMember2020-01-052020-07-040000217346country:UStxt:TextronSystemsMember2020-01-052020-07-040000217346country:UStxt:IndustrialMember2020-01-052020-07-040000217346country:UStxt:FinanceMember2020-01-052020-07-040000217346country:US2020-01-052020-07-040000217346txt:TextronAviationMembersrt:EuropeMember2020-01-052020-07-040000217346txt:BellMembersrt:EuropeMember2020-01-052020-07-040000217346txt:TextronSystemsMembersrt:EuropeMember2020-01-052020-07-040000217346srt:EuropeMembertxt:IndustrialMember2020-01-052020-07-040000217346txt:FinanceMembersrt:EuropeMember2020-01-052020-07-040000217346srt:EuropeMember2020-01-052020-07-040000217346txt:AsiaAndAustraliaMembertxt:TextronAviationMember2020-01-052020-07-040000217346txt:AsiaAndAustraliaMembertxt:BellMember2020-01-052020-07-040000217346txt:AsiaAndAustraliaMembertxt:TextronSystemsMember2020-01-052020-07-040000217346txt:AsiaAndAustraliaMembertxt:IndustrialMember2020-01-052020-07-040000217346txt:AsiaAndAustraliaMembertxt:FinanceMember2020-01-052020-07-040000217346txt:AsiaAndAustraliaMember2020-01-052020-07-040000217346txt:TextronAviationMembertxt:InternationalMember2020-01-052020-07-040000217346txt:BellMembertxt:InternationalMember2020-01-052020-07-040000217346txt:TextronSystemsMembertxt:InternationalMember2020-01-052020-07-040000217346txt:InternationalMembertxt:IndustrialMember2020-01-052020-07-040000217346txt:FinanceMembertxt:InternationalMember2020-01-052020-07-040000217346txt:InternationalMember2020-01-052020-07-0400002173462021-07-042021-07-0300002173462023-01-012021-07-030000217346us-gaap:PensionPlansDefinedBenefitMember2021-04-042021-07-030000217346us-gaap:PensionPlansDefinedBenefitMember2020-04-052020-07-040000217346us-gaap:PensionPlansDefinedBenefitMember2021-01-032021-07-030000217346us-gaap:PensionPlansDefinedBenefitMember2020-01-052020-07-040000217346us-gaap:OtherPostretirementBenefitPlansDefinedBenefitMember2021-04-042021-07-030000217346us-gaap:OtherPostretirementBenefitPlansDefinedBenefitMember2020-04-052020-07-040000217346us-gaap:OtherPostretirementBenefitPlansDefinedBenefitMember2021-01-032021-07-030000217346us-gaap:OtherPostretirementBenefitPlansDefinedBenefitMember2020-01-052020-07-040000217346us-gaap:PensionPlansDefinedBenefitMembercountry:US2021-04-042021-07-030000217346us-gaap:PensionPlansDefinedBenefitMembercountry:US2021-01-032021-07-030000217346us-gaap:PensionPlansDefinedBenefitMembercountry:US2020-04-052020-07-040000217346us-gaap:PensionPlansDefinedBenefitMembercountry:US2020-01-052020-07-040000217346us-gaap:OperatingSegmentsMembertxt:Covid19RestructuringPlanMemberus-gaap:EmployeeSeveranceMembertxt:IndustrialMember2021-04-042021-07-030000217346us-gaap:OperatingSegmentsMembertxt:Covid19RestructuringPlanMemberus-gaap:ContractTerminationMembertxt:IndustrialMember2021-04-042021-07-030000217346us-gaap:OperatingSegmentsMembertxt:Covid19RestructuringPlanMembertxt:IndustrialMember2021-04-042021-07-030000217346us-gaap:OperatingSegmentsMembertxt:IndustrialMember2021-04-042021-07-030000217346txt:Covid19RestructuringPlanMemberus-gaap:EmployeeSeveranceMember2021-04-042021-07-030000217346txt:Covid19RestructuringPlanMemberus-gaap:ContractTerminationMember2021-04-042021-07-030000217346txt:Covid19RestructuringPlanMember2021-04-042021-07-030000217346us-gaap:OperatingSegmentsMembertxt:Covid19RestructuringPlanMemberus-gaap:EmployeeSeveranceMembertxt:TextronSystemsMember2020-04-052020-07-040000217346us-gaap:OperatingSegmentsMembertxt:Covid19RestructuringPlanMembertxt:TextronSystemsMemberus-gaap:ContractTerminationMember2020-04-052020-07-040000217346us-gaap:OperatingSegmentsMembertxt:Covid19RestructuringPlanMembertxt:TextronSystemsMember2020-04-052020-07-040000217346us-gaap:OperatingSegmentsMembertxt:TextronSystemsMember2020-04-052020-07-040000217346us-gaap:OperatingSegmentsMembertxt:Covid19RestructuringPlanMemberus-gaap:EmployeeSeveranceMembertxt:TextronAviationMember2020-04-052020-07-040000217346us-gaap:OperatingSegmentsMembertxt:Covid19RestructuringPlanMembertxt:TextronAviationMemberus-gaap:ContractTerminationMember2020-04-052020-07-040000217346us-gaap:OperatingSegmentsMembertxt:Covid19RestructuringPlanMembertxt:TextronAviationMember2020-04-052020-07-040000217346us-gaap:OperatingSegmentsMembertxt:TextronAviationMember2020-04-052020-07-040000217346us-gaap:OperatingSegmentsMembertxt:Covid19RestructuringPlanMemberus-gaap:EmployeeSeveranceMembertxt:IndustrialMember2020-04-052020-07-040000217346us-gaap:OperatingSegmentsMembertxt:Covid19RestructuringPlanMemberus-gaap:ContractTerminationMembertxt:IndustrialMember2020-04-052020-07-040000217346us-gaap:OperatingSegmentsMembertxt:Covid19RestructuringPlanMembertxt:IndustrialMember2020-04-052020-07-040000217346us-gaap:OperatingSegmentsMembertxt:IndustrialMember2020-04-052020-07-040000217346txt:Covid19RestructuringPlanMemberus-gaap:CorporateNonSegmentMemberus-gaap:EmployeeSeveranceMember2020-04-052020-07-040000217346txt:Covid19RestructuringPlanMemberus-gaap:CorporateNonSegmentMemberus-gaap:ContractTerminationMember2020-04-052020-07-040000217346txt:Covid19RestructuringPlanMemberus-gaap:CorporateNonSegmentMember2020-04-052020-07-040000217346us-gaap:CorporateNonSegmentMember2020-04-052020-07-040000217346txt:Covid19RestructuringPlanMemberus-gaap:EmployeeSeveranceMember2020-04-052020-07-040000217346txt:Covid19RestructuringPlanMemberus-gaap:ContractTerminationMember2020-04-052020-07-040000217346txt:Covid19RestructuringPlanMember2020-04-052020-07-040000217346us-gaap:OperatingSegmentsMembertxt:Covid19RestructuringPlanMemberus-gaap:EmployeeSeveranceMembertxt:IndustrialMember2021-01-032021-07-030000217346us-gaap:OperatingSegmentsMembertxt:Covid19RestructuringPlanMemberus-gaap:ContractTerminationMembertxt:IndustrialMember2021-01-032021-07-030000217346us-gaap:OperatingSegmentsMembertxt:Covid19RestructuringPlanMembertxt:IndustrialMember2021-01-032021-07-030000217346us-gaap:OperatingSegmentsMembertxt:IndustrialMember2021-01-032021-07-030000217346txt:Covid19RestructuringPlanMemberus-gaap:EmployeeSeveranceMember2021-01-032021-07-030000217346txt:Covid19RestructuringPlanMemberus-gaap:ContractTerminationMember2021-01-032021-07-030000217346txt:Covid19RestructuringPlanMember2021-01-032021-07-030000217346us-gaap:OperatingSegmentsMembertxt:Covid19RestructuringPlanMemberus-gaap:EmployeeSeveranceMembertxt:TextronSystemsMember2020-01-052020-07-040000217346us-gaap:OperatingSegmentsMembertxt:Covid19RestructuringPlanMembertxt:TextronSystemsMemberus-gaap:ContractTerminationMember2020-01-052020-07-040000217346us-gaap:OperatingSegmentsMembertxt:Covid19RestructuringPlanMembertxt:TextronSystemsMember2020-01-052020-07-040000217346us-gaap:OperatingSegmentsMembertxt:TextronSystemsMember2020-01-052020-07-040000217346us-gaap:OperatingSegmentsMembertxt:Covid19RestructuringPlanMemberus-gaap:EmployeeSeveranceMembertxt:TextronAviationMember2020-01-052020-07-040000217346us-gaap:OperatingSegmentsMembertxt:Covid19RestructuringPlanMembertxt:TextronAviationMemberus-gaap:ContractTerminationMember2020-01-052020-07-040000217346us-gaap:OperatingSegmentsMembertxt:Covid19RestructuringPlanMembertxt:TextronAviationMember2020-01-052020-07-040000217346us-gaap:OperatingSegmentsMembertxt:TextronAviationMember2020-01-052020-07-040000217346us-gaap:OperatingSegmentsMembertxt:Covid19RestructuringPlanMemberus-gaap:EmployeeSeveranceMembertxt:IndustrialMember2020-01-052020-07-040000217346us-gaap:OperatingSegmentsMembertxt:Covid19RestructuringPlanMemberus-gaap:ContractTerminationMembertxt:IndustrialMember2020-01-052020-07-040000217346us-gaap:OperatingSegmentsMembertxt:Covid19RestructuringPlanMembertxt:IndustrialMember2020-01-052020-07-040000217346us-gaap:OperatingSegmentsMembertxt:IndustrialMember2020-01-052020-07-040000217346txt:Covid19RestructuringPlanMemberus-gaap:CorporateNonSegmentMemberus-gaap:EmployeeSeveranceMember2020-01-052020-07-040000217346txt:Covid19RestructuringPlanMemberus-gaap:CorporateNonSegmentMemberus-gaap:ContractTerminationMember2020-01-052020-07-040000217346txt:Covid19RestructuringPlanMemberus-gaap:CorporateNonSegmentMember2020-01-052020-07-040000217346us-gaap:CorporateNonSegmentMember2020-01-052020-07-040000217346txt:Covid19RestructuringPlanMemberus-gaap:EmployeeSeveranceMember2020-01-052020-07-040000217346txt:Covid19RestructuringPlanMemberus-gaap:ContractTerminationMember2020-01-052020-07-040000217346txt:Covid19RestructuringPlanMember2020-01-052020-07-040000217346txt:Covid19RestructuringPlanMember2020-04-042021-07-030000217346txt:Covid19RestructuringPlanMemberus-gaap:EmployeeSeveranceMember2020-04-042021-07-030000217346txt:Covid19RestructuringPlanMemberus-gaap:ContractTerminationMember2020-04-042021-07-030000217346us-gaap:OperatingSegmentsMembertxt:Covid19RestructuringPlanMembertxt:IndustrialMember2020-04-042021-07-030000217346us-gaap:OperatingSegmentsMembertxt:Covid19RestructuringPlanMembertxt:TextronSystemsMember2020-04-042021-07-030000217346us-gaap:OperatingSegmentsMembertxt:Covid19RestructuringPlanMembertxt:TextronAviationMember2020-04-042021-07-030000217346txt:Covid19RestructuringPlanMemberus-gaap:CorporateNonSegmentMember2020-04-042021-07-030000217346txt:Covid19RestructuringPlanMembersrt:MinimumMember2021-07-030000217346txt:Covid19RestructuringPlanMembersrt:MaximumMember2021-07-030000217346txt:IndustrialAndTextronAviationMember2020-01-052020-07-040000217346txt:BeechcraftAndKingAirTradeNameMember2020-01-052020-07-040000217346us-gaap:EmployeeSeveranceMember2021-01-020000217346us-gaap:ContractTerminationMember2021-01-020000217346us-gaap:EmployeeSeveranceMember2021-01-032021-07-030000217346us-gaap:ContractTerminationMember2021-01-032021-07-030000217346us-gaap:EmployeeSeveranceMember2021-07-030000217346us-gaap:ContractTerminationMember2021-07-03
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended July 3, 2021
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ______ to ______.
Commission File Number 1-5480
Textron Inc.
(Exact name of registrant as specified in its charter)
Delaware 05-0315468
(State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.)
40 Westminster Street, Providence, RI
02903
(Address of principal executive offices) (Zip code)
(401) 421-2800
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Trading Symbol (s) Name of each exchange on which registered
Common stock, $0.125 par value TXT
New York Stock Exchange (NYSE)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No ¨
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes þ No ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act (Check one):
Large accelerated filer þ Accelerated filer Non-accelerated filer
Smaller reporting company Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.¨
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No þ
As of July 16, 2021, there were 224,137,963 shares of common stock outstanding.


TEXTRON INC.
Index to Form 10-Q
For the Quarterly Period Ended July 3, 2021

    
Page
3
4
5
6
8
8
8
9
2

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

TEXTRON INC.
Consolidated Statements of Operations (Unaudited)
Three Months Ended Six Months Ended
(In millions, except per share amounts) July 3,
2021
July 4,
2020
July 3,
2021
July 4,
2020
Revenues
Manufacturing revenues $ 3,179  $ 2,457  $ 6,043  $ 5,220 
Finance revenues 12  15  27  29 
Total revenues 3,191  2,472  6,070  5,249 
Costs, expenses and other
Cost of sales 2,660  2,251  5,060  4,638 
Selling and administrative expense 314  239  612  502 
Interest expense 36  42  76  82 
Special charges 78  10  117 
Non-service components of pension and post-retirement income, net (39) (20) (79) (41)
Gain on business disposition (2) —  (17) — 
Total costs, expenses and other 2,973  2,590  5,662  5,298 
Income (loss) from continuing operations before income taxes 218  (118) 408  (49)
Income tax expense (benefit) 34  (26) 53  (7)
Income (loss) from continuing operations $ 184  $ (92) $ 355  $ (42)
Loss from discontinued operations (1) —  (1) — 
Net income (loss) $ 183  $ (92) $ 354  $ (42)
Basic Earnings (loss) per share
Continuing operations $ 0.82  $ (0.40) $ 1.57  $ (0.18)
Discontinued operations (0.01) —  (0.01) — 
Basic Earnings (loss) per share $ 0.81  $ (0.40) $ 1.56  $ (0.18)
Diluted Earnings (loss) per share
Continuing operations $ 0.81  $ (0.40) $ 1.56  $ (0.18)
Discontinued operations (0.01) —  (0.01) — 
Diluted Earnings (loss) per share $ 0.80  $ (0.40) $ 1.55  $ (0.18)
See Notes to the Consolidated Financial Statements.
3

TEXTRON INC.
Consolidated Statements of Comprehensive Income (Loss) (Unaudited)

Three Months Ended Six Months Ended
(In millions) July 3,
2021
July 4,
2020
July 3,
2021
July 4,
2020
Net income (loss) $ 183  $ (92) $ 354  $ (42)
Other comprehensive income, net of tax
Pension and postretirement benefits adjustments, net of reclassifications 30  36  60  73 
Foreign currency translation adjustments, net of reclassifications 15  30  (3) (10)
Deferred gains (losses) on hedge contracts, net of reclassifications (7)
Other comprehensive income 47  68  63  56 
Comprehensive income (loss) $ 230  $ (24) $ 417  $ 14 
See Notes to the Consolidated Financial Statements.
4

TEXTRON INC.
Consolidated Balance Sheets (Unaudited)
(Dollars in millions) July 3,
2021
January 2,
2021
Assets
Manufacturing group
Cash and equivalents $ 1,995  $ 2,146 
Accounts receivable, net 822  787 
Inventories 3,664  3,513 
Other current assets 874  950 
Total current assets 7,355  7,396 
Property, plant and equipment, less accumulated depreciation
   and amortization of $4,813 and $4,696, respectively
2,488  2,516 
Goodwill 2,155  2,157 
Other assets 2,456  2,436 
Total Manufacturing group assets 14,454  14,505 
Finance group
Cash and equivalents 193  108 
Finance receivables, net 652  744 
Other assets 80  86 
Total Finance group assets 925  938 
Total assets $ 15,379  $ 15,443 
Liabilities and shareholders’ equity
Liabilities
Manufacturing group
Current portion of long-term debt $ $ 509 
Accounts payable 965  776 
Other current liabilities 2,035  1,985 
Total current liabilities 3,007  3,270 
Other liabilities 2,327  2,357 
Long-term debt 3,182  3,198 
Total Manufacturing group liabilities 8,516  8,825 
Finance group
Other liabilities 118  111 
Debt 644  662 
Total Finance group liabilities 762  773 
Total liabilities 9,278  9,598 
Shareholders’ equity
Common stock 29  29 
Capital surplus 1,920  1,785 
Treasury stock (490) (203)
Retained earnings 6,318  5,973 
Accumulated other comprehensive loss (1,676) (1,739)
Total shareholders’ equity 6,101  5,845 
Total liabilities and shareholders’ equity $ 15,379  $ 15,443 
Common shares outstanding (in thousands) 224,402  226,444 
See Notes to the Consolidated Financial Statements.
5

TEXTRON INC.
Consolidated Statements of Cash Flows (Unaudited)
For the Six Months Ended July 3, 2021 and July 4, 2020, respectively
Consolidated
(In millions) 2021 2020
Cash flows from operating activities
Income (loss) from continuing operations $ 355  $ (42)
Adjustments to reconcile income (loss) from continuing operations to
   net cash provided by (used in) operating activities:
Non-cash items:
Depreciation and amortization 188  188 
Gain on business disposition (17) — 
Deferred income taxes 16  (41)
Asset impairments and TRU inventory charge 110 
Other, net 58  58 
Changes in assets and liabilities:
Accounts receivable, net (38) 157 
Inventories (162) (244)
Other assets 22  51 
Accounts payable 188  (400)
Other liabilities 103  17 
Income taxes, net
Pension, net (42) (8)
Captive finance receivables, net 89  (14)
Other operating activities, net (1) 13 
Net cash provided by (used in) operating activities of continuing operations 773  (152)
Net cash used in operating activities of discontinued operations (1) — 
Net cash provided by (used in) operating activities 772  (152)
Cash flows from investing activities
Capital expenditures (128) (96)
Net proceeds from business disposition 38  — 
Net proceeds from corporate-owned life insurance policies —  17 
Proceeds from the sale of property, plant and equipment — 
Net cash used in acquisitions —  (11)
Finance receivables repaid 19  20 
Other investing activities, net
Net cash used in investing activities (65) (64)
Cash flows from financing activities
Increase in short-term debt —  499 
Net proceeds from long-term debt —  642 
Proceeds from borrowings against corporate-owned life insurance policies —  377 
Payment on borrowings against corporate-owned life insurance policies —  (15)
Principal payments on long-term debt and nonrecourse debt (553) (229)
Purchases of Textron common stock (287) (54)
Dividends paid (9) (9)
Other financing activities, net 75 
Net cash provided by (used in) financing activities (774) 1,215 
Effect of exchange rate changes on cash and equivalents (10)
Net increase (decrease) in cash and equivalents (66) 989 
Cash and equivalents at beginning of period 2,254  1,357 
Cash and equivalents at end of period $ 2,188  $ 2,346 
See Notes to the Consolidated Financial Statements.
6

TEXTRON INC.
Consolidated Statements of Cash Flows (Unaudited) (Continued)
For the Six Months Ended July 3, 2021 and July 4, 2020, respectively

Manufacturing Group Finance Group
(In millions) 2021 2020 2021 2020
Cash flows from operating activities
Income (loss) from continuing operations $ 358  $ (47) $ (3) $
Adjustments to reconcile income (loss) from continuing operations to
   net cash provided by (used in) operating activities:
Non-cash items:
Depreciation and amortization 183  186 
Gain on business disposition (17) —  —  — 
Deferred income taxes 18  (39) (2) (2)
Asset impairments and TRU inventory charge 110  —  — 
Other, net 60  54  (2)
Changes in assets and liabilities:
Accounts receivable, net (38) 157  —  — 
Inventories (162) (244) — 
Other assets 23  50  (1)
Accounts payable 188  (400) —  — 
Other liabilities 103  21  —  (4)
Income taxes, net —  (1)
Pension, net (42) (8) —  — 
Other operating activities, net (1) 13  —  — 
Net cash provided by (used in) operating activities of continuing operations 679  (148) 10 
Net cash used in operating activities of discontinued operations (1) —  —  — 
Net cash provided by (used in) operating activities 678  (148) 10 
Cash flows from investing activities
Capital expenditures (128) (96) —  — 
Net proceeds from business disposition 38  —  —  — 
Net proceeds from corporate-owned life insurance policies —  17  —  — 
Proceeds from the sale of property, plant and equipment —  —  — 
Net cash used in acquisitions —  (11) —  — 
Finance receivables repaid —  —  137  65 
Finance receivables originated —  —  (29) (59)
Other investing activities, net —  — 
Net cash provided by (used in) investing activities (90) (85) 114 
Cash flows from financing activities
Increase in short-term debt —  499  —  — 
Net proceeds from long-term debt —  642  — 
Proceeds from borrowings against corporate-owned life insurance policies —  377  —  — 
Payment on borrowings against corporate-owned life insurance policies —  (15) —  — 
Principal payments on long-term debt and nonrecourse debt (519) (194) (34) (35)
Purchases of Textron common stock (287) (54) —  — 
Dividends paid (9) (9) —  — 
Other financing activities, net 75  (8) —  12 
Net cash provided by (used in) financing activities (740) 1,238  (34) (23)
Effect of exchange rate changes on cash and equivalents (10) —  — 
Net increase (decrease) in cash and equivalents (151) 995  85  (6)
Cash and equivalents at beginning of period 2,146  1,181  108  176 
Cash and equivalents at end of period $ 1,995  $ 2,176  $ 193  $ 170 
See Notes to the Consolidated Financial Statements.
7

TEXTRON INC.
Notes to the Consolidated Financial Statements (Unaudited)

Note 1. Basis of Presentation
Our Consolidated Financial Statements include the accounts of Textron Inc. (Textron) and its majority-owned subsidiaries.  We have prepared these unaudited consolidated financial statements in accordance with accounting principles generally accepted in the U.S. for interim financial information.  Accordingly, these interim financial statements do not include all of the information and footnotes required by accounting principles generally accepted in the U.S. for complete financial statements.  The consolidated interim financial statements included in this quarterly report should be read in conjunction with the consolidated financial statements included in our Annual Report on Form 10-K for the year ended January 2, 2021.  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 2021 and 2020, our cumulative catch-up adjustments increased segment profit by $15 million and $17 million, respectively. These adjustments increased net income in the second quarter of 2021 by $11 million ($0.05 per diluted share) and decreased the net loss in the second quarter of 2020 by $13 million ($0.06 per share). Gross favorable profit adjustments totaled $40 million and $46 million in the second quarter of 2021 and 2020, respectively, and the gross unfavorable profit adjustments totaled $25 million and $29 million, respectively. We recognized revenues of $20 million and $22 million in the second quarter of 2021 and 2020, respectively, from performance obligations satisfied in prior periods that related to changes in profit booking rates.
In the first half of 2021 and 2020, our cumulative catch-up adjustments increased segment profit by $29 million and $19 million, respectively. These adjustments increased net income in the first half of 2021 by $22 million ($0.10 per diluted share) and decreased the net loss in the first half of 2020 by $14 million ($0.06 per share). Gross favorable profit adjustments totaled $76 million and $73 million in the first half of 2021 and 2020, respectively, and the gross unfavorable profit adjustments totaled $47 million and $54 million, respectively. We recognized revenues of $38 million and $26 million in the first half of 2021 and 2020, respectively, from performance obligations satisfied in prior periods that related to changes in profit booking rates.
Note 2. Business Disposition
On January 25, 2021, we completed the sale of TRU Simulation + Training Canada Inc. within our Textron Systems segment for net cash proceeds of $38 million and recorded an after-tax gain of $17 million.
8

Note 3. Accounts Receivable and Finance Receivables
Accounts Receivable
Accounts receivable is composed of the following:
(In millions) July 3,
2021
January 2,
2021
Commercial $ 706  $ 668 
U.S. Government contracts 147  155 
853  823 
Allowance for credit losses (31) (36)
Total accounts receivable, net $ 822  $ 787 
Finance Receivables
Finance receivables are presented in the following table:
(In millions) July 3,
2021
January 2,
2021
Finance receivables $ 682  $ 779 
Allowance for credit losses (30) (35)
Total finance receivables, net $ 652  $ 744 
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.
Since the first quarter of 2020, the Finance segment has worked with certain customers impacted by the pandemic to provide payment relief through loan modifications. The types of temporary payment relief we offered to these customers included delays in the timing of required principal payments, deferrals of interest payments and/or interest-only payments. The majority of these modified loans have returned to paying principal and interest. For loan modifications that cover payment-relief periods in excess of six months, even if the loan was previously current, the loan is deemed a troubled debt restructuring and considered impaired. These impaired loans are classified as either nonaccrual or watchlist based on a review of the credit quality indicators as discussed above.
During the first half of 2021, we modified finance receivable contracts for 18 customers with an outstanding balance at July 3, 2021 totaling $71 million, which were all categorized as troubled debt restructurings. Due to the nature of these restructurings, the financial effects were not significant. We had one customer default related to finance receivables previously modified as a troubled debt restructuring that had an insignificant outstanding balance. We believe our allowance for credit losses adequately covers our exposure on these loans as our estimated collateral values largely exceed the outstanding loan amounts.

9

Finance receivables categorized based on the credit quality indicators and by the delinquency aging category are summarized as follows:
(Dollars in millions) July 3,
2021
January 2,
2021
Performing $ 575 $ 612
Watchlist 1 74
Nonaccrual 106 93
Nonaccrual as a percentage of finance receivables 15.54% 11.94%
Current and less than 31 days past due $ 655 $ 738
31-60 days past due 10 12
61-90 days past due 11
Over 90 days past due 17 18
60+ days contractual delinquency as a percentage of finance receivables 2.49% 3.72%
At July 3, 2021, 30% of our performing finance receivables were originated since the beginning of 2020 and 31% were originated from 2017 to 2019. For finance receivables categorized as nonaccrual, 69% were originated from 2017 to 2019.
On a quarterly basis, we evaluate individual larger balance accounts for impairment. A finance receivable is considered impaired when it is probable that we will be unable to collect all amounts due according to the contractual terms of the loan agreement based on our review of the credit quality indicators described above. Impaired finance receivables include both nonaccrual accounts and accounts for which full collection of principal and interest remains probable, but the account’s original terms have been, or are expected to be, significantly modified. If the modification specifies an interest rate equal to or greater than a market rate for a finance receivable with comparable risk, the account is not considered impaired in years subsequent to the modification.
A summary of finance receivables and the allowance for credit losses, based on the results of our impairment evaluation, is provided below. The finance receivables included in this table specifically exclude leveraged leases in accordance with U.S. generally accepted accounting principles.
(In millions) July 3,
2021
January 2,
2021
Finance receivables evaluated collectively $ 481  $ 521 
Finance receivables evaluated individually 107  163 
Allowance for credit losses based on collective evaluation 24  28 
Allowance for credit losses based on individual evaluation
Impaired finance receivables with specific allowance for credit losses $ 38  $ 46 
Impaired finance receivables with no specific allowance for credit losses 69  117 
Unpaid principal balance of impaired finance receivables 117  175 
Allowance for credit losses on impaired finance receivables
Average recorded investment of impaired finance receivables 128  126 
Note 4. Inventories
Inventories are composed of the following:
(In millions) July 3,
2021
January 2,
2021
Finished goods $ 1,137  $ 1,228 
Work in process 1,712  1,455 
Raw materials and components 815  830 
Total inventories $ 3,664  $ 3,513 
10

Note 5. Warranty Liability
Changes in our warranty liability are as follows:
Six Months Ended
(In millions) July 3,
2021
July 4,
2020
Beginning of period $ 119  $ 141 
Provision 31  22 
Settlements (35) (29)
Adjustments* (12)
End of period $ 116  $ 122 
* Adjustments include changes to prior year estimates, new issues on prior year sales and currency translation adjustments.

Note 6. Leases
We primarily lease certain manufacturing plants, offices, warehouses, training and service centers at various locations worldwide. Our operating leases have remaining lease terms up to 28 years, which include options to extend the lease term for periods up to 25 years when it is reasonably certain the option will be exercised. Operating lease cost totaled $16 million and $15 million in the second quarter of 2021 and 2020, respectively, and $32 million and $30 million in the first half of 2021 and 2020, respectively. Cash paid for operating leases totaled $33 million and $30 million in the first half of 2021 and 2020, respectively, which is classified in cash flows from operating activities. Noncash transactions totaled $63 million and $11 million in the first half of 2021 and 2020, respectively, reflecting the recognition of operating lease assets and liabilities for new or extended leases. Variable and short-term lease costs were not significant.
Balance sheet and other information related to our operating leases is as follows:
(Dollars in millions) July 3,
2021
January 2,
2021
Other assets $ 383 $ 349
Other current liabilities 57 47
Other liabilities 332 306
Weighted-average remaining lease term (in years) 10.6 11.6
Weighted-average discount rate 3.40% 4.17%
At July 3, 2021, maturities of our operating lease liabilities on an undiscounted basis totaled $36 million for the remainder of 2021, $67 million for 2022, $57 million for 2023, $48 million for 2024, $42 million for 2025 and $238 million thereafter.
Note 7. 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.
11

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 July 3, 2021 and January 2, 2021, we had foreign currency exchange contracts with notional amounts upon which the contracts were based of $410 million and $318 million, respectively. At July 3, 2021, the fair value amounts of our foreign currency exchange contracts were a $11 million asset and a $2 million liability. At January 2, 2021, the fair value amounts of our foreign currency exchange contracts were a $5 million asset and a $2 million liability.
Our Finance group enters into interest rate swap agreements to mitigate certain exposures to fluctuations in interest rates. By using these contracts, we are able to convert floating-rate cash flows to fixed-rate cash flows. These agreements are designated as cash flow hedges. At July 3, 2021, we had a swap agreement for a notional amount of $289 million with a maturity of August 2023 and a fair value of a $3 million liability. At January 2, 2021, we had a swap agreement for a notional amount of $294 million with a maturity of February 2022 and a fair value of a $4 million liability. The fair value of these swap agreements is determined using values published by third-party leading financial news and data providers. These values are observable data that represent the value that financial institutions use for contracts entered into at that date, but are not based on actual transactions, so they are classified as Level 2.
Assets and Liabilities Not Recorded at Fair Value
The carrying value and estimated fair value of our financial instruments that are not reflected in the financial statements at fair value are as follows:
July 3, 2021 January 2, 2021
Carrying Estimated Carrying Estimated
(In millions) Value Fair Value Value Fair Value
Manufacturing group
Debt, excluding leases $ (3,186) $ (3,430) $ (3,690) $ (3,986)
Finance group
Finance receivables, excluding leases 455  504  549  599 
Debt (644) (607) (662) (587)
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.
12

Note 8. Shareholders’ Equity
A reconciliation of Shareholders’ equity is presented below:
(In millions) Common
Stock
Capital
Surplus
Treasury
Stock
Retained
Earnings
Accumulated
Other
Comprehensive
Loss
Total
Shareholders'
Equity
Three months ended July 3, 2021
Beginning of period $ 29  $ 1,845  $ (294) $ 6,139  $ (1,723) $ 5,996 
Net income —  —  —  183  —  183 
Other comprehensive income —  —  —  —  47  47 
Share-based compensation activity —  75  —  —  —  75 
Dividends declared —  —  —  (4) —  (4)
Purchases of common stock —  —  (196) —  —  (196)
End of period $ 29  $ 1,920  $ (490) $ 6,318  $ (1,676) $ 6,101 
Three months ended July 4, 2020
Beginning of period $ 29  $ 1,711  $ (74) $ 5,727  $ (1,859) $ 5,534 
Net loss —  —  —  (92) —  (92)
Other comprehensive income —  —  —  —  68  68 
Share-based compensation activity —  21  —  —  —  21 
Dividends declared —  —  —  (4) —  (4)
End of period $ 29  $ 1,732  $ (74) $ 5,631  $ (1,791) $ 5,527 
Six months ended July 3, 2021
Beginning of period $ 29  $ 1,785  $ (203) $ 5,973  $ (1,739) $ 5,845 
Net income —  —  —  354  —  354 
Other comprehensive income —  —  —  —  63  63 
Share-based compensation activity —  135  —  —  —  135 
Dividends declared —  —  —  (9) —  (9)
Purchases of common stock —  —  (287) —  —  (287)
End of period $ 29  $ 1,920  $ (490) $ 6,318  $ (1,676) $ 6,101 
Six months ended July 4, 2020
Beginning of period $ 29  $ 1,674  $ (20) $ 5,682  $ (1,847) $ 5,518 
Net loss —  —  —  (42) —  (42)
Other comprehensive income —  —  —  —  56  56 
Share-based compensation activity —  58  —  —  —  58 
Dividends declared —  —  —  (9) —  (9)
Purchases of common stock —  —  (54) —  —  (54)
End of period $ 29  $ 1,732  $ (74) $ 5,631  $ (1,791) $ 5,527 
Dividends per share of common stock were $0.02 for both the second quarter of 2021 and 2020 and $0.04 for both the first half of 2021 and 2020.
Earnings Per Share
We calculate basic and diluted earnings (loss) per share (EPS) based on net income (loss), which approximates income (loss) 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
(In thousands) July 3,
2021
July 4,
2020
July 3,
2021
July 4,
2020
Basic weighted-average shares outstanding 225,963  228,247  226,486  228,279 
Dilutive effect of stock options 2,483  —  1,810  — 
Diluted weighted-average shares outstanding 228,446  228,247  228,296  228,279 
13

For the first half of 2021, stock options to purchase 2.1 million shares of common stock were excluded from the calculation of diluted weighted-average shares outstanding as their effect would have been anti-dilutive. As a result of incurring a net loss for the second quarter and first half of 2020, potential common shares of 0.1 million and 0.3 million, respectively, were excluded from diluted loss per share because the effect would have been anti-dilutive. In addition, stock options to purchase 8.9 million and 8.2 million shares of common stock were excluded from the calculation of diluted weighted-average shares outstanding for the second quarter and first half of 2020, respectively, as their effect would have been anti-dilutive.
Accumulated Other Comprehensive Loss and Other Comprehensive Income
The components of Accumulated other comprehensive loss are presented below:
(In millions) Pension and
Postretirement
Benefits
Adjustments
Foreign
Currency
Translation
Adjustments
Deferred
Gains (Losses)
on Hedge
Contracts
Accumulated
Other
Comprehensive
Loss
Balance at January 2, 2021 $ (1,780) $ 42  $ (1) $ (1,739)
Other comprehensive loss before reclassifications —  (17) (11)
Reclassified from Accumulated other comprehensive loss 60  14  —  74 
Balance at July 3, 2021 $ (1,720) $ 39  $ $ (1,676)
Balance at January 4, 2020 $ (1,811) $ (36) $ —  $ (1,847)
Other comprehensive loss before reclassifications —  (10) (5) (15)
Reclassified from Accumulated other comprehensive loss 73  —  (2) 71 
Balance at July 4, 2020 $ (1,738) $ (46) $ (7) $ (1,791)
The before and after-tax components of Other comprehensive income are presented below:
July 3, 2021 July 4, 2020
(In millions) Pre-Tax
Amount
Tax
(Expense)
Benefit
After-tax
Amount
Pre-Tax
Amount
Tax
(Expense)
Benefit
After-tax
Amount
Three Months Ended
Pension and postretirement benefits adjustments:
Amortization of net actuarial loss* $ 38  $ (9) $ 29  $ 46  $ (11) $ 35 
Amortization of prior service cost* (1) — 
Pension and postretirement benefits adjustments, net 40  (10) 30  47  (11) 36 
Foreign currency translation adjustments 15  —  15  30  —  30 
Deferred gains (losses) on hedge contracts:
Current deferrals —  (1)
Reclassification adjustments —  —  —  (2) (1)
Deferred gains (losses) on hedge contracts, net —  — 
Total $ 57  $ (10) $ 47  $ 79  $ (11) $ 68 
Six Months Ended
Pension and postretirement benefits adjustments:
Amortization of net actuarial loss* $ 76  $ (18) $ 58  $ 92  $ (21) $ 71 
Amortization of prior service cost* (2) (1)
Pension and postretirement benefits adjustments, net 80  (20) 60  95  (22) 73 
Foreign currency translation adjustments:
Foreign currency translation adjustments (17) —  (17) (7) (3) (10)
Business disposition 14  —  14  —  —  — 
Foreign currency translation adjustments, net (3) —  (3) (7) (3) (10)
Deferred gains (losses) on hedge contracts:
Current deferrals (1) (5) —  (5)
Reclassification adjustments —  —  —  (3) (2)
Deferred gains (losses) on hedge contracts, net (1) (8) (7)
Total $ 84  $ (21) $ 63  $ 80  $ (24) $ 56 
*These components of other comprehensive income are included in the computation of net periodic pension cost (credit). See Note 16 of our 2020 Annual Report on Form 10-K for additional information.

14

Note 9. Segment Information
We operate in, and report financial information for, the following five business segments: Textron Aviation, Bell, Textron Systems, Industrial and Finance. Segment profit is an important measure used for evaluating performance and for decision-making purposes. Segment profit for the manufacturing segments excludes interest expense, certain corporate expenses, gains/losses on major business dispositions and special charges. The measurement for the Finance segment includes interest income and expense along with intercompany interest income and expense.
Our revenues by segment, along with a reconciliation of segment profit to income (loss) from continuing operations before income taxes, are included in the table below:
Three Months Ended Six Months Ended
(In millions) July 3,
2021
July 4,
2020
July 3,
2021
July 4,
2020
Revenues
Textron Aviation $ 1,161  $ 747  $ 2,026  $ 1,619 
Bell 891  822  1,737  1,645 
Textron Systems 333  326  661  654 
Industrial 794  562  1,619  1,302 
Finance 12  15  27  29 
Total revenues $ 3,191  $ 2,472  $ 6,070  $ 5,249 
Segment Profit
Textron Aviation $ 96  $ (66) $ 143  $ (63)
Bell 110  118  215  233 
Textron Systems 48  37  99  63 
Industrial 32  (11) 79  (2)
Finance
Segment profit 289  82  545  238 
Corporate expenses and other, net (37) (30) (77) (44)
Interest expense, net for Manufacturing group (32) (37) (67) (71)
Special charges* (4) (78) (10) (117)
Gain on business disposition —  17  — 
Inventory charge* —  (55) —  (55)
Income (loss) from continuing operations before income taxes $ 218  $ (118) $ 408  $ (49)
* See Note 12 for additional information.
15

Note 10. Revenues
Disaggregation of Revenues
Our revenues disaggregated by major product type are presented below:
Three Months Ended Six Months Ended
(In millions) July 3,
2021
July 4,
2020
July 3,
2021
July 4,
2020
Aircraft $ 797  $ 478  $ 1,332  $ 993 
Aftermarket parts and services 364  269  694  626 
Textron Aviation 1,161  747  2,026  1,619 
Military aircraft and support programs 572  602  1,149  1,222 
Commercial helicopters, parts and services 319  220  588  423 
Bell 891  822  1,737  1,645 
Air systems* 117  149  240  285 
Land and sea systems* 64  63  121  123 
Other* 152  114  300  246 
Textron Systems 333  326  661  654 
Fuel systems and functional components 440  271  937  736 
Specialized vehicles 354  291  682  566 
Industrial 794  562  1,619  1,302 
Finance 12  15  27  29 
Total revenues $ 3,191  $ 2,472  $ 6,070  $ 5,249 
* Due to a reorganization of certain products within Textron Systems, prior year amounts have been reclassified to conform to the current year presentation for Air Systems, formerly referred to as “Unmanned Systems”, and Land and Sea Systems, formerly referred to as “Marine and Land Systems”. Other includes the following operating units and businesses: Electronic Systems, Weapons Systems, Lycoming, Airborne Tactical Advantage Company and, prior to its disposition, TRU Simulation + Training Canada Inc.
16

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 July 3, 2021
Customer type:
Commercial $ 1,127  $ 350  $ 67  $ 787  $ 12  $ 2,343 
U.S. Government 34  541  266  —  848 
Total revenues $ 1,161  $ 891  $ 333  $ 794  $ 12  $ 3,191 
Geographic location:
United States $ 885  $ 677  $ 297  $ 406  $ $ 2,271 
Europe 122  47  192  371 
Asia and Australia 75  107  20  85  288 
Other international 79  60  111  261 
Total revenues $ 1,161  $ 891  $ 333  $ 794  $ 12  $ 3,191 
Three months ended July 4, 2020
Customer type:
Commercial $ 716  $ 216  $ 57  $ 559  $ 15  $ 1,563 
U.S. Government 31  606  269  —  909 
Total revenues $ 747  $ 822  $ 326  $ 562  $ 15  $ 2,472 
Geographic location:
United States $ 518  $ 681  $ 276  $ 287  $ $ 1,770 
Europe 70  21  11  127  —  229 
Asia and Australia 50  66  15  76  —  207 
Other international 109  54  24  72  266 
Total revenues $ 747  $ 822  $ 326  $ 562  $ 15  $ 2,472 
Six months ended July 3, 2021
Customer type:
Commercial $ 1,973  $ 616  $ 125  $ 1,607  $ 27  $ 4,348 
U.S. Government 53  1,121  536  12  —  1,722 
Total revenues $ 2,026  $ 1,737  $ 661  $ 1,619  $ 27  $ 6,070 
Geographic location:
United States $ 1,494  $ 1,293  $ 586  $ 784  $ 14  $ 4,171 
Europe 206  83  19  428  737 
Asia and Australia 151  186  36  179  555 
Other international 175  175  20  228  607 
Total revenues $ 2,026  $ 1,737  $ 661  $ 1,619  $ 27  $ 6,070 
Six months ended July 4, 2020
Customer type:
Commercial $ 1,564  $ 414  $ 128  $ 1,298  $ 29  $ 3,433 
U.S. Government 55  1,231  526  —  1,816 
Total revenues $ 1,619  $ 1,645  $ 654  $ 1,302  $ 29  $ 5,249 
Geographic location:
United States $ 1,115  $ 1,371  $ 562  $ 616  $ 14  $ 3,678 
Europe 154  45  23  355  578 
Asia and Australia 173  116  35  129  454 
Other international 177  113  34  202  13  539 
Total revenues $ 1,619  $ 1,645  $ 654  $ 1,302  $ 29  $ 5,249 

17

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 July 3, 2021, we had $9.8 billion in remaining performance obligations of which we expect to recognize revenues of approximately 73% through 2022, an additional 23% through 2024, 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 July 3, 2021 and January 2, 2021, contract assets totaled $572 million and $561 million, respectively, and contract liabilities totaled $922 million and $842 million, respectively, reflecting timing differences between revenues recognized, billings and payments from customers. We recognized revenues of $170 million and $448 million in the second quarter and first half of 2021, respectively, and $121 million and $352 million in the second quarter and first half of 2020, respectively, that were included in the contract liability balance at the beginning of each year.
Note 11. 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
(In millions) July 3,
2021
July 4,
2020
July 3,
2021
July 4,
2020
Pension Benefits
Service cost $ 29  $ 26  $ 58  $ 52 
Interest cost 63  74  126  147 
Expected return on plan assets (144) (143) (288) (287)
Amortization of net actuarial loss 38  46  77  92 
Amortization of prior service cost
Net periodic benefit cost (credit)* $ (11) $ $ (21) $ 10 
Postretirement Benefits Other Than Pensions
Service cost $ —  $ $ $
Interest cost
Amortization of net actuarial gain —  —  (1) — 
Amortization of prior service credit (1) (2) (2) (3)
Net periodic benefit cost $ $ $ $
* Excludes the cost associated with the defined contribution component, included in certain of our U.S.-based defined benefit pension plans, that totaled $3 million and $6 million for the second quarter and first half of 2021, respectively, and $3 million and $6 million for the second quarter and first half of 2020, respectively.
18

Note 12. Special Charges
Special charges recorded in the second quarter and first half of 2021 and 2020 by segment and type of cost are presented in the table below.
(In millions) Severance
Costs
Contract
Termination
and Other
Asset
Impairments
Total 2020
COVID-19
Restructuring
Plan
Other Asset
Impairments
Total
Three months ended July 3, 2021
Industrial $ —  $ $ $ $ —  $
Total special charges $ —  $ $ $ $ —  $
Three months ended July 4, 2020
Textron Systems $ 14  $ 12  $ 14  $ 40  $ —  $ 40 
Textron Aviation 27  —  28  —  28 
Industrial —  —  — 
Corporate —  —  — 
Total special charges $ 51  $ 12  $ 15  $ 78  $ —  $ 78 
Six months ended July 3, 2021
Industrial $ —  $ $ $ 10  $ —  $ 10 
Total special charges $ —  $ $ $ 10  $ —  $ 10 
Six months ended July 4, 2020
Textron Systems $ 14  $ 12  $ 14  $ 40  $ —  $ 40 
Textron Aviation 27  —  28  32  60 
Industrial —  —  15 
Corporate —  —  — 
Total special charges $ 51  $ 12  $ 15  $ 78  $ 39  $ 117 
2020 COVID-19 Restructuring Plan
In the second quarter of 2020, we initiated a restructuring plan to reduce operating expenses through headcount reductions, facility consolidations and other actions in response to the economic challenges and uncertainty resulting from the COVID-19 pandemic. This plan was expanded in the third quarter of 2020 to include additional headcount reductions and facility consolidations. Since inception of the plan, we have incurred total charges of $118 million, which included severance costs of $73 million for the termination of approximately 2,700 employees, asset impairment charges of $27 million and contract terminations and other costs of $18 million. Of these amounts, $44 million was incurred at Industrial, $37 million at Textron Systems, $33 million at Textron Aviation, and $4 million at Corporate. We expect to incur additional contract termination costs and other charges in the range of $10 million to $20 million, primarily in the Industrial segment, and expect the plan to be substantially completed in the third quarter of 2021.
In the second quarter of 2020 and in connection with the restructuring plan, we ceased manufacturing at TRU Simulation + Training Canada Inc.’s facility in Montreal, Canada, resulting in a production suspension of our commercial air transport simulators. As a result of this action and market conditions, we incurred an inventory charge of $55 million, which was recorded in Cost of Sales, to write-down the related inventory to its net realizable value.
Other Asset Impairments
In the first quarter of 2020, we recognized $39 million of intangible asset impairment charges at the Textron Aviation and Industrial segments. Due to the impact of the COVID-19 pandemic, we experienced decreased demand for our products and services as our customers delayed or ceased orders due to the environment of economic uncertainty. In light of these conditions, Textron Aviation had temporarily shut down most aircraft production, including the King Air turboprop and Beechcraft piston product lines, and had instituted employee furloughs. Based on these events, we performed an interim impairment test of the indefinite-lived Beechcraft and King Air trade name intangible assets and recorded an impairment charge of $32 million.  
19

Restructuring Reserve
Our restructuring reserve activity is summarized below:
(In millions) Severance
Costs
Contract
Terminations
and Other
Total
Balance at January 2, 2021 $ 43  $ $ 52 
Provision for 2020 COVID-19 restructuring plan — 
Cash paid (16) (5) (21)
Foreign currency translation (1) —  (1)
Balance at July 3, 2021 $ 26  $ $ 35 
The majority of the remaining cash outlays of $35 million is expected to be paid in 2021. Severance costs generally are paid on a lump-sum basis and include outplacement costs, which are paid in accordance with normal payment terms.
Note 13. Income Taxes
Our effective tax rate for the second quarter and first half of 2021 was 15.6% and 13.0%, respectively. In the second quarter and first half of 2021, the effective tax rate was lower than the U.S. federal statutory rate of 21%, largely due to the favorable impact of research and development credits. In the first half of 2021, the effective tax rate also included a $12 million benefit recognized for additional research and development credits related to prior years.
Our effective tax rate for the second quarter and first half of 2020 was (22.0)% and (14.3)%, respectively, compared with the statutory rate of (21)%. In the second quarter and first half of 2020, we incurred special charges and an inventory charge in a non-U.S. jurisdiction where tax benefits cannot be realized, which were partially offset by a $14 million benefit recognized upon the release of a valuation allowance in a non-U.S. jurisdiction. In the first half of 2020, these items had a more significant impact on the effective tax rate due to the lower loss from continuing operations before income taxes compared to the second quarter of 2020.
Note 14. 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.
20

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

Consolidated Results of Operations
Three Months Ended Six Months Ended
(Dollars in millions) July 3,
2021
July 4,
2020
% Change July 3,
2021
July 4,
2020
% Change
Revenues $ 3,191  $ 2,472  29% $ 6,070  $ 5,249  16%
Cost of sales 2,660  2,251  18% 5,060  4,638  9%
Selling and administrative expense 314  239  31% 612  502  22%
Gross margin as a % of Manufacturing revenues 16.3% 8.4% 16.3% 11.1%
In the first half of 2021, customer demand for many of our commercial products increased relative to levels experienced since the pandemic began. For additional information regarding the impact of the pandemic on our operations in 2020, see our Annual Report on Form 10-K for the year ended January 2, 2021. An analysis of our consolidated operating results is set forth below.  A more detailed analysis of our segments’ operating results is provided in the Segment Analysis section on pages 22 to 27.
Revenues
Revenues increased $719 million, 29%, in the second quarter of 2021, compared with the second quarter of 2020. The revenue increase primarily included the following factors:

Higher Textron Aviation revenues of $414 million, largely due to higher Citation jet volume of $174 million, higher aftermarket volume of $98 million and higher commercial turboprop volume of $75 million.
Higher Industrial revenues of $232 million, largely due to higher volume and mix of $180 million, primarily in the Fuel Systems and Functional Components product line.
Higher Bell revenues of $69 million, reflecting higher commercial revenues of $99 million, partially offset by lower military revenues.
Revenues increased $821 million, 16%, in the first half of 2021, compared with the first half of 2020. The revenue increase primarily included the following factors:
Higher Textron Aviation revenues of $407 million, largely due to higher Citation jet volume of $178 million, higher aftermarket volume of $74 million and higher commercial turboprop volume of $63 million.
Higher Industrial revenues of $317 million, due to higher volume and mix of $227 million, primarily in the Fuel Systems and Functional Components product line, a favorable impact of $48 million from pricing, and $42 million from foreign exchange rate fluctuations.
Higher Bell revenues of $92 million, reflecting higher commercial revenues of $165 million, partially offset by lower military revenues.
Cost of Sales and Selling and Administrative Expense
Cost of sales increased $409 million, 18%, and $422 million, 9% in the second quarter and first half of 2021, respectively, compared with corresponding periods of 2020, largely due to higher net volume and mix described above. In the second quarter and first half of 2020, cost of sales included the impact of idle facility costs of $61 million and $86 million, respectively, along with a $55 million inventory charge related to the TRU business recognized in the second quarter of 2020. Gross margin as a percentage of Manufacturing revenues increased 790 basis points and 520 basis points in the second quarter and first half of 2021, respectively, primarily due to higher margins in the Textron Aviation and Industrial segments.
Selling and administrative expense increased $75 million, 31%, and $110 million, 22% in the second quarter and first half of 2021 respectively, compared with corresponding periods of 2020, primarily reflecting higher selling and administrative expense at the Industrial and Textron Aviation segments and higher share-based compensation expense.
Special Charges
In the second quarter and first half of 2021, we recorded special charges of $4 million and $10 million, respectively, compared with $78 million and $117 million in the second quarter and first half of 2020, respectively. These charges included restructuring activities and impairment charges as described in Note 12 to the Consolidated Financial Statements.
Income Taxes
Our effective tax rate for the second quarter and first half of 2021 was 15.6% and 13.0%, respectively. In the second quarter and first half of 2021, the effective tax rate was lower than the U.S. federal statutory rate of 21%, largely due to the favorable impact of research and development credits. In the first half of 2021, the effective tax rate also included a $12 million benefit recognized for additional research and development credits related to prior years.
21

Our effective tax rate for the second quarter and first half of 2020 was (22.0)% and (14.3)%, respectively, compared with the statutory rate of (21)%. In the second quarter and first half of 2020, we incurred special charges and an inventory charge in a non-U.S. jurisdiction where tax benefits cannot be realized, which were partially offset by a $14 million benefit recognized upon the release of a valuation allowance in a non-U.S. jurisdiction. In the first half of 2020, these items had a more significant impact on the effective tax rate due to the lower loss from continuing operations before income taxes compared to the second quarter of 2020.
Backlog
Our backlog is summarized below:
(In millions) July 3,
2021
January 2,
2021
Bell $ 4,775  $ 5,342 
Textron Aviation 2,744  1,603 
Textron Systems 2,296  2,556 
Total backlog $ 9,815  $ 9,501 
Backlog at Textron Aviation increased $1.1 billion, 71%, reflecting orders in excess of deliveries.
Segment Analysis
We operate in, and report financial information for, the following five business segments: Textron Aviation, Bell, Textron Systems, Industrial and Finance. Segment profit is an important measure used for evaluating performance and for decision-making purposes. Segment profit for the manufacturing segments excludes interest expense, certain corporate expenses, gains/losses on major business dispositions and special charges. The measurement for the Finance segment includes interest income and expense along with intercompany interest income and expense. Operating expenses for the Manufacturing segments include cost of sales, selling and administrative expense and other non-service components of net periodic benefit cost/(credit), and exclude certain corporate expenses and special charges.
In our discussion of comparative results for the Manufacturing group, changes in revenues and segment profit for our commercial businesses typically are expressed in terms of volume and mix, pricing, foreign exchange, acquisitions and dispositions, inflation and performance. For revenues, volume and mix represents changes in revenues from increases or decreases in the number of units delivered or services provided and the composition of products and/or services sold. For segment profit, volume and mix represents a change due to the number of units delivered or services provided and the composition of products and/or services sold at different profit margins. Pricing represents changes in unit pricing. Foreign exchange is the change resulting from translating foreign-denominated amounts into U.S. dollars at exchange rates that are different from the prior period. Revenues generated by acquired businesses are reflected in Acquisitions for a twelve-month period, while reductions in revenues and segment profit from the sale of businesses are reflected as Dispositions.  Inflation represents higher material, wages, benefits, pension service cost or other costs. Performance reflects an increase or decrease in research and development, depreciation, selling and administrative costs, warranty, product liability, quality/scrap, labor efficiency, overhead, non-service pension cost/(credit), product line profitability, start-up, ramp up and cost-reduction initiatives or other manufacturing inputs.
Approximately 30% of our 2020 revenues were derived from contracts with the U.S. Government, including those under the U.S. Government-sponsored foreign military sales program.  For our segments that contract with the U.S. Government, changes in revenues related to these contracts are expressed in terms of volume.  Changes in segment profit for these contracts are typically expressed in terms of volume and mix and performance; these include cumulative catch-up adjustments associated with a) revisions to the transaction price that may reflect contract modifications or changes in assumptions related to award fees and other variable consideration or b) changes in the total estimated costs at completion due to improved or deteriorated operating performance.
Textron Aviation
Three Months Ended Six Months Ended
(Dollars in millions) July 3,
2021
July 4,
2020
% Change July 3,
2021
July 4,
2020
% Change
Revenues:
Aircraft $ 797  $ 478  67% $ 1,332  $ 993  34%
Aftermarket parts and services 364  269  35% 694  626  11%
Total revenues 1,161  747  55% 2,026  1,619  25%
Operating expenses 1,065  813  31% 1,883  1,682  12%
Segment profit (loss) 96  (66) 245% 143  (63) 327%
Profit margin 8.3% (8.8)% 7.1% (3.9)%
22

Textron Aviation Revenues and Operating Expenses
The following factors contributed to the change in Textron Aviation’s revenues for the periods:
(In millions) Q2 2021
versus
Q2 2020
YTD 2021
versus
YTD 2020
Volume and mix $ 397  $ 384 
Pricing 17  23 
Total change $ 414  $ 407 
Textron Aviation’s revenues increased $414 million, 55%, in the second quarter of 2021, compared with the second quarter of 2020, largely due to higher Citation jet volume of $174 million, higher aftermarket volume of $98 million and higher commercial turboprop volume of $75 million. We delivered 44 Citation jets and 33 commercial turboprops in the second quarter of 2021, compared with 23 Citation jets and 15 commercial turboprops in the second quarter of 2020.
Textron Aviation’s revenues increased $407 million, 25%, in the first half of 2021, compared with the first half of 2020, largely due to higher Citation jet volume of $178 million, higher aftermarket volume of $74 million and higher commercial turboprop volume of $63 million. We delivered 72 Citation jets and 47 commercial turboprops in the first half of 2021, compared with 46 Citation jets and 31 commercial turboprops in the first half of 2020.
Textron Aviation’s operating expenses increased $252 million, 31%, and $201 million, 12%, in the second quarter and first half of 2021, respectively, compared with the corresponding periods of 2020, largely due to higher volume and mix described above. Operating expenses in the second quarter and first half of 2020 were also negatively impacted by idle facility costs of $53 million and $65 million, respectively, partially offset by cost reduction activities, including employee furloughs instituted during the first half of 2020.
Textron Aviation Segment Profit (Loss)
The following factors contributed to the change in Textron Aviation’s segment profit (loss) for the periods:
(In millions) Q2 2021
versus
Q2 2020
YTD 2021
versus
YTD 2020
Volume and mix $ 117  $ 133 
Performance 34  59 
Pricing, net of inflation 11  14 
Total change $ 162  $ 206 
Segment profit at Textron Aviation increased $162 million in the second quarter of 2021, compared with the second quarter of 2020, due to higher volume and mix of $117 million described above, a favorable impact from performance of $34 million and favorable pricing, net of inflation of $11 million. Performance included a $53 million impact from idle facility costs recognized in the second quarter of 2020, partially offset by cost reduction activities described above.

Segment profit at Textron Aviation increased $206 million in the first half of 2021, compared with the first half of 2020, primarily due to a higher volume and mix of $133 million described above, and a favorable impact from performance of $59 million and favorable pricing, net of inflation of $14 million. Performance included a $65 million impact from idle facility costs recognized in the first half of 2020, partially offset by cost reduction activities described above.

23

Bell
Three Months Ended Six Months Ended
(Dollars in millions) July 3,
2021
July 4,
2020
% Change July 3,
2021
July 4,
2020
% Change
Revenues:
Military aircraft and support programs $ 572  $ 602  (5)% $ 1,149  $ 1,222  (6)%
Commercial helicopters, parts and services 319  220  45% 588  423  39%
Total revenues 891  822  8% 1,737  1,645  6%
Operating expenses 781  704  11% 1,522  1,412  8%
Segment profit 110  118  (7)% 215  233  (8)%
Profit margin 12.3% 14.4% 12.4% 14.2%
Bell’s major U.S. Government programs at this time are the V-22 tiltrotor aircraft and the H-1 helicopter platforms, which are both in the production and support stage and represent a significant portion of Bell’s revenues from the U.S. Government.
Bell Revenues and Operating Expenses
The following factors contributed to the change in Bell’s revenues for the periods:
(In millions) Q2 2021
versus
Q2 2020
YTD 2021
versus
YTD 2020
Volume and mix $ 61  $ 80 
Other 12 
Total change $ 69  $ 92 
Bell’s revenues increased $69 million, 8%, in the second quarter of 2021, compared with the second quarter of 2020, reflecting higher commercial revenues of $99 million, partially offset by lower military revenues. We delivered 47 commercial helicopters in the second quarter of 2021, compared with 27 commercial helicopters in the second quarter of 2020.  
Bell’s revenues increased $92 million, 6%, in the first half of 2021, compared with the first half of 2020, reflecting higher commercial revenues of $165 million, partially offset by lower military revenues. We delivered 64 commercial helicopters in the first half of 2021, compared with 42 commercial helicopters in the first half of 2020.  
Bell’s operating expenses increased $77 million, 11%, and $110 million, 8% in the second quarter and first half of 2021 respectively, compared with corresponding periods of 2020, primarily due to higher net volume and mix described above and higher research and development costs, largely related to the future vertical lift programs.
Bell Segment Profit
The following factors contributed to the change in Bell’s segment profit for the periods:
(In millions) Q2 2021
versus
Q2 2020
YTD 2021
versus
YTD 2020
Performance and other $ (13) $ (22)
Pricing, net of inflation
Volume and mix —  (3)
Total change $ (8) $ (18)
Bell’s segment profit decreased $8 million, 7%, in the second quarter of 2021, compared with the second quarter 2020, reflecting an unfavorable impact of $13 million from performance, which included higher research and development costs discussed above. The increase in revenues attributed to volume and mix above had no impact on segment profit due to the mix of military and commercial products sold.
Bell’s segment profit decreased $18 million, 8%, in the first half of 2021, compared with the first half 2020, largely reflecting an unfavorable impact of $22 million from performance and other, which included higher research and development costs discussed above. The increase in revenues attributed to volume and mix above had an unfavorable impact on segment profit due to the mix of military and commercial products sold.
24

Textron Systems
Three Months Ended Six Months Ended
(Dollars in millions) July 3,
2021
July 4,
2020
% Change July 3,
2021
July 4,
2020
% Change
Revenues $ 333  $ 326  2% $ 661  $ 654  1%
Operating expenses 285  289  (1)% 562  591  (5)%
Segment profit 48  37  30% 99  63  57%
Profit margin 14.4% 11.3% 15.0% 9.6%
Textron Systems Revenues and Operating Expenses
The following factors contributed to the change in Textron Systems’ revenues for the periods:
(In millions) Q2 2021
versus
Q2 2020
YTD 2021
versus
YTD 2020
Volume $ 17  $ 23 
Other (10) (16)
Total change $ $
Textron Systems revenues increased $7 million, 2%, in the second quarter of 2021, compared with the second quarter of 2020. Higher volume in the Other product line was partially offset by lower volume of $32 million in the Air Systems product line, formally referred to as the Unmanned Systems product line, which reflected the impact from the U.S. Army’s withdrawal from Afghanistan on the product line’s fee-for-service contracts. Other in the table above included the impact of a $11 million reduction in revenues as a result of the cessation of manufacturing at the TRU Simulation + Training Canada Inc. (TRU Canada) facility which occurred in the second quarter of 2020 related to the impact of the pandemic on that business. In January 2021, we sold TRU Canada as discussed in Note 2 to the Consolidated Financial Statements.
Textron Systems revenues increased $7 million, 1%, in the first half of 2021, compared with the first half of 2020, primarily due to higher volume in the Other product line, partially offset by lower volume of $45 million in the Air Systems product line. Other in the table above included the impact of a $18 million reduction in revenues as a result of the cessation of manufacturing at the TRU Canada facility discussed above.
Textron Systems’ operating expenses decreased $4 million, 1%, in the second quarter of 2021, compared with the second quarter of 2020. Textron Systems' operating expenses decreased $29 million, 5%, in the first half of 2021, compared with the first half of 2020, primarily related to the cessation of manufacturing at TRU Canada, partially offset by higher net volume described above.
Textron Systems Segment Profit
The following factors contributed to the change in Textron Systems’ segment profit for the periods:
(In millions) Q2 2021
versus
Q2 2020
YTD 2021
versus
YTD 2020
Performance and other $ $ 36 
Volume and mix — 
Total change $ 11  $ 36 
Textron Systems’ segment profit increased $11 million, 30%, in the second quarter of 2021, compared with the second quarter of 2020, primarily due to a favorable impact from performance and other of $9 million.  
Textron Systems’ segment profit increased $36 million, 57%, in the first half of 2021, compared with the first half of 2020, due to a favorable impact of $36 million from performance and other. Performance and other included a $13 million impact largely related to unfavorable performance at TRU Canada in the first quarter of 2020.
25

Industrial
Three Months Ended Six Months Ended
(Dollars in millions) July 3,
2021
July 4,
2020
% Change July 3,
2021
July 4,
2020
% Change
Revenues:
Fuel systems and functional components $ 440  $ 271  62% $ 937  $ 736  27%
Specialized vehicles 354  291  22% 682  566  20%
Total revenues 794  562  41% 1,619  1,302  24%
Operating expenses 762  573  33% 1,540  1,304  18%
Segment profit (loss) 32  (11) 391% 79  (2) 4050%
Profit margin 4.0% (2.0)% 4.9% (0.2)%
Industrial Revenues and Operating Expenses
The following factors contributed to the change in Industrial’s revenues for the periods:
(In millions) Q2 2021
versus
Q2 2020
YTD 2021
versus
YTD 2020
Volume and mix $ 180  $ 227