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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 1, 2023
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)
Delaware05-0315468
(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 classTrading Symbol (s)Name of each exchange on which registered
Common stock, $0.125 par valueTXT
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 filerþAccelerated 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 14, 2023, there were 198,070,588 shares of common stock outstanding.

TEXTRON INC.
Index to Form 10-Q
For the Quarterly Period Ended July 1, 2023

    
Page
2
PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

TEXTRON INC.
Consolidated Statements of Operations (Unaudited)
Three Months EndedSix Months Ended
(In millions, except per share amounts)July 1,
2023		July 2,
2022		July 1,
2023		July 2,
2022
Revenues
Manufacturing product revenues$2,917 $2,689 $5,467 $5,137 
Manufacturing service revenues489 451 951 988 
Finance revenues18 14 30 30 
Total revenues3,424 3,154 6,448 6,155 
Costs, expenses and other
Cost of products sold2,465 2,304 4,641 4,373 
Cost of services sold381 337 736 760 
Selling and administrative expense289 279 594 584 
Interest expense, net19 31 39 63 
Non-service components of pension and postretirement income, net(59)(60)(118)(120)
Total costs, expenses and other3,095 2,891 5,892 5,660 
Income before income taxes329 263 556 495 
Income tax expense66 45 102 84 
Income from continuing operations263 218 454 411 
Loss from discontinued operations— (1)— (1)
Net income$263 $217 $454 $410 
Basic earnings per share
Continuing operations$1.31 $1.01 $2.24 $1.90 
Diluted earnings per share
Continuing operations$1.30 $1.00 $2.22 $1.88 
See Notes to the Consolidated Financial Statements.
3
TEXTRON INC.
Consolidated Statements of Comprehensive Income (Unaudited)

Three Months EndedSix Months Ended
(In millions)July 1,
2023		July 2,
2022		July 1,
2023		July 2,
2022
Net income$263 $217 $454 $410 
Other comprehensive income (loss), net of tax
Pension and postretirement benefits adjustments, net of reclassifications— 17 — 34 
Foreign currency translation adjustments4 (90)32 (104)
Deferred gains (losses) on hedge contracts, net of reclassifications8 (3)6 4 
Other comprehensive income (loss)12 (76)38 (66)
Comprehensive income$275 $141 $492 $344 
See Notes to the Consolidated Financial Statements.
4
TEXTRON INC.
Consolidated Balance Sheets (Unaudited)
(Dollars in millions)July 1,
2023		December 31,
2022
Assets
Manufacturing group
Cash and equivalents$1,695 $1,963 
Accounts receivable, net953 855 
Inventories4,108 3,550 
Other current assets829 1,033 
Total current assets7,585 7,401 
Property, plant and equipment, less accumulated depreciation
   and amortization of $5,212 and $5,084, respectively
2,487 2,523 
Goodwill2,291 2,283 
Other assets3,472 3,422 
Total Manufacturing group assets15,835 15,629 
Finance group
Cash and equivalents55 72 
Finance receivables, net574 563 
Other assets21 29 
Total Finance group assets650 664 
Total assets$16,485 $16,293 
Liabilities and shareholders’ equity
Liabilities
Manufacturing group
Current portion of long-term debt$357 $7 
Accounts payable1,227 1,018 
Other current liabilities2,820 2,645 
Total current liabilities4,404 3,670 
Other liabilities1,797 1,879 
Long-term debt2,825 3,175 
Total Manufacturing group liabilities9,026 8,724 
Finance group
Other liabilities71 81 
Debt354 375 
Total Finance group liabilities425 456 
Total liabilities9,451 9,180 
Shareholders’ equity
Common stock26 26 
Capital surplus1,973 1,880 
Treasury stock(740)(84)
Retained earnings6,349 5,903 
Accumulated other comprehensive loss(574)(612)
Total shareholders’ equity7,034 7,113 
Total liabilities and shareholders’ equity$16,485 $16,293 
Common shares outstanding (in thousands)198,230 206,161 
See Notes to the Consolidated Financial Statements.
5
TEXTRON INC.
Consolidated Statements of Cash Flows (Unaudited)
For the Six Months Ended July 1, 2023 and July 2, 2022, respectively
Consolidated
(In millions)20232022
Cash flows from operating activities
Income from continuing operations$454 $411 
Adjustments to reconcile income from continuing operations to net cash
  provided by operating activities:
Non-cash items:
Depreciation and amortization193 191 
Deferred income taxes(77)(118)
Other, net66 55 
Changes in assets and liabilities:
Accounts receivable, net(97)(48)
Inventories(553)(246)
Other assets252 85 
Accounts payable207 24 
Other liabilities116 269 
Income taxes, net14 32 
Pension, net(102)(83)
Captive finance receivables, net(15)35 
Other operating activities, net2 8 
Net cash provided by operating activities of continuing operations460 615 
Net cash used in operating activities of discontinued operations(1)(2)
Net cash provided by operating activities459 613 
Cash flows from investing activities
Capital expenditures(145)(114)
Net cash used in business acquisitions— (198)
Net proceeds from corporate-owned life insurance policies38 25 
Proceeds from sale of property, plant and equipment— 18 
Finance receivables repaid19 21 
Other investing activities, net2 44 
Net cash used in investing activities(86)(204)
Cash flows from financing activities
Decrease in short-term debt— (15)
Principal payments on long-term debt and nonrecourse debt(34)(223)
Purchases of Textron common stock(650)(439)
Dividends paid(8)(9)
Proceeds from options exercised31 32 
Other financing activities, net(5)(4)
Net cash used in financing activities(666)(658)
Effect of exchange rate changes on cash and equivalents8 (27)
Net decrease in cash and equivalents(285)(276)
Cash and equivalents at beginning of period2,035 2,117 
Cash and equivalents at end of period$1,750 $1,841 
See Notes to the Consolidated Financial Statements.
6

TEXTRON INC.
Consolidated Statements of Cash Flows (Unaudited) (Continued)
For the Six Months Ended July 1, 2023 and July 2, 2022, respectively

Manufacturing GroupFinance Group
(In millions)2023202220232022
Cash flows from operating activities
Income from continuing operations$438 $395 $16 $16 
Adjustments to reconcile income from continuing operations to
   net cash provided by (used in) operating activities:
Non-cash items:
Depreciation and amortization193 191 — — 
Deferred income taxes(77)(106)— (12)
Other, net69 62 (3)(7)
Changes in assets and liabilities:
Accounts receivable, net(97)(48)— — 
Inventories(553)(246)— — 
Other assets246 85 6 — 
Accounts payable207 24 — — 
Other liabilities125 279 (9)(10)
Income taxes, net16 28 (2)4 
Pension, net(102)(83)— — 
Other operating activities, net2 8 — — 
Net cash provided by (used in) operating activities of continuing operations467 589 8 (9)
Net cash used in operating activities of discontinued operations(1)(2)— — 
Net cash provided by (used in) operating activities466 587 8 (9)
Cash flows from investing activities
Capital expenditures(145)(114)— — 
Net cash used in business acquisitions— (198)— — 
Net proceeds from corporate-owned life insurance policies38 25 — — 
Proceeds from sale of property, plant and equipment— 18 — — 
Finance receivables repaid— — 67 79 
Finance receivables originated— — (63)(23)
Other investing activities, net— — 2 44 
Net cash provided by (used in) investing activities(107)(269)6 100 
Cash flows from financing activities
Decrease in short-term debt— (15)— — 
Principal payments on long-term debt and nonrecourse debt(3)(14)(31)(209)
Purchases of Textron common stock(650)(439)— — 
Dividends paid(8)(9)— — 
Proceeds from options exercised31 32 — — 
Other financing activities, net(5)(4)— — 
Net cash used in financing activities(635)(449)(31)(209)
Effect of exchange rate changes on cash and equivalents8 (27)— — 
Net decrease in cash and equivalents(268)(158)(17)(118)
Cash and equivalents at beginning of period1,963 1,922 72 195 
Cash and equivalents at end of period$1,695 $1,764 $55 $77 
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 December 31, 2022.  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, Industrial and Textron eAviation 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 2023, our cumulative catch-up adjustments increased segment profit by $10 million and net income by $8 million, $0.04 per diluted share. In the second quarter of 2022, our cumulative catch-up adjustments decreased segment profit by $4 million and net income by $3 million, $0.01 per diluted share.
In the first half of 2023, our cumulative catch-up adjustments increased segment profit by $18 million and net income by $14 million, $0.07 per diluted share. In the first half of 2022, our cumulative catch-up adjustments decreased segment profit by $21 million and net income by $16 million, $0.07 per diluted share.
Note 2. Accounts Receivable and Finance Receivables
Accounts Receivable
Accounts receivable is composed of the following:
(In millions)July 1,
2023		December 31,
2022
Commercial$855 $755 
U.S. Government contracts118 124 
973 879 
Allowance for credit losses(20)(24)
Total accounts receivable, net$953 $855 
8
Finance Receivables
Finance receivables are presented in the following table:
(In millions)July 1,
2023		December 31,
2022
Finance receivables$597 $587 
Allowance for credit losses(23)(24)
Total finance receivables, net$574 $563 
Finance Receivable Portfolio Quality
We internally assess the quality of our finance receivables based on a number of key credit quality indicators and statistics such as delinquency, loan balance to estimated collateral value and the financial strength of individual borrowers and guarantors.  Because many of these indicators are difficult to apply across an entire class of receivables, we evaluate individual loans on a quarterly basis and classify these loans into three categories based on the key credit quality indicators for the individual loan. These three categories are performing, watchlist and nonaccrual.
We classify finance receivables as nonaccrual if credit quality indicators suggest full collection of principal and interest is doubtful. In addition, we automatically classify accounts as nonaccrual once they are contractually delinquent by more than three months unless collection of principal and interest is not doubtful. Accounts are classified as watchlist when credit quality indicators have deteriorated as compared with typical underwriting criteria, and we believe collection of full principal and interest is probable but not certain. All other finance receivables that do not meet the watchlist or nonaccrual categories are classified as performing.
We measure delinquency based on the contractual payment terms of our finance receivables.  In determining the delinquency aging category of an account, any/all principal and interest received is applied to the most past-due principal and/or interest amounts due. If a significant portion of the contractually due payment is delinquent, the entire finance receivable balance is reported in accordance with the most past-due delinquency aging category.
Finance receivables categorized based on the credit quality indicators and by the delinquency aging category are summarized as follows:
(Dollars in millions)July 1,
2023		December 31,
2022
Performing$554$515
Watchlist2626
Nonaccrual1746
Nonaccrual as a percentage of finance receivables2.85%7.84%
Current and less than 31 days past due$589$579
31-60 days past due27
61-90 days past due6—
Over 90 days past due—1
60+ days contractual delinquency as a percentage of finance receivables1.01%0.17%
At July 1, 2023, 36% of our performing finance receivables were originated since the beginning of 2021 and 30% were originated from 2018 to 2020. For finance receivables categorized as watchlist 94% were originated since the beginning of 2020 and for nonaccrual, 40% were originated from 2018 to 2020 with the remainder prior to 2018.
On a quarterly basis, we evaluate individual larger balance accounts for impairment.  A finance receivable is considered impaired when it is probable that we will be unable to collect all amounts due according to the contractual terms of the loan agreement based on our review of the credit quality indicators described above. Impaired finance receivables include both nonaccrual accounts and accounts for which full collection of principal and interest remains probable, but the account’s original terms have been, or are expected to be, significantly modified.  If the modification specifies an interest rate equal to or greater than a market rate for a finance receivable with comparable risk, the account is not considered impaired in years subsequent to the modification.
9
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 1,
2023		December 31,
2022
Finance receivables evaluated collectively$494 $450 
Finance receivables evaluated individually17 46 
Allowance for credit losses based on collective evaluation20 21 
Allowance for credit losses based on individual evaluation3 3 
Impaired finance receivables with specific allowance for credit losses$11 $15 
Impaired finance receivables with no specific allowance for credit losses6 31 
Unpaid principal balance of impaired finance receivables27 60 
Allowance for credit losses on impaired finance receivables3 3 
Average recorded investment of impaired finance receivables34 67 
Note 3. Inventories
Inventories are composed of the following:
(In millions)July 1,
2023		December 31,
2022
Finished goods$1,133 $991 
Work in process1,820 1,540 
Raw materials and components1,155 1,019 
Total inventories$4,108 $3,550 
Note 4. Warranty Liability
Changes in our warranty liability are as follows:
Six Months Ended
(In millions)July 1,
2023		July 2,
2022
Beginning of period$149 $127 
Provision33 34 
Settlements(35)(34)
Adjustments*13 10 
End of period$160 $137 
* Adjustments include changes to prior year estimates, new issues on prior year sales and currency translation adjustments.

10
Note 5. Leases
We primarily lease certain manufacturing plants, offices, warehouses, training and service centers at various locations worldwide through operating leases. Our operating leases have remaining lease terms up to 26 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 $17 million in both the second quarter of 2023 and 2022, and $34 million in both the first half of 2023 and 2022. Variable and short-term lease costs were not significant. Cash paid for operating leases totaled $34 million and $35 million in the first half of 2023 and 2022, respectively, and is classified in cash flows from operating activities. Noncash transactions totaled $24 million and $17 million in the first half of 2023 and 2022, respectively, reflecting the recognition of operating lease assets and liabilities for new or extended leases.
Balance sheet and other information related to our operating leases is as follows:
(Dollars in millions)July 1,
2023		December 31,
2022
Other assets$369$372
Other current liabilities5354
Other liabilities325326
Weighted-average remaining lease term (in years)10.310.4
Weighted-average discount rate4.33%4.14%
At July 1, 2023, maturities of our operating lease liabilities on an undiscounted basis totaled $36 million for the remainder of 2023, $64 million for 2024, $56 million for 2025, $43 million for 2026, $38 million for 2027 and $244 million thereafter.
Note 6. Derivative Instruments and Fair Value Measurements
We measure fair value at the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.  We prioritize the assumptions that market participants would use in pricing the asset or liability into a three-tier fair value hierarchy. This fair value hierarchy gives the highest priority (Level 1) to quoted prices in active markets for identical assets or liabilities and the lowest priority (Level 3) to unobservable inputs in which little or no market data exist, requiring companies to develop their own assumptions. Observable inputs that do not meet the criteria of Level 1, which include quoted prices for similar assets or liabilities in active markets or quoted prices for identical assets and liabilities in markets that are not active, are categorized as Level 2. Level 3 inputs are those that reflect our estimates about the assumptions market participants would use in pricing the asset or liability based on the best information available in the circumstances. Valuation techniques for assets and liabilities measured using Level 3 inputs may include methodologies such as the market approach, the income approach or the cost approach and may use unobservable inputs such as projections, estimates and management’s interpretation of current market data. These unobservable inputs are utilized only to the extent that observable inputs are not available or cost effective to obtain.
Assets and Liabilities Recorded at Fair Value on a Recurring Basis
We manufacture and sell our products in a number of countries throughout the world, and, therefore, we are exposed to movements in foreign currency exchange rates. We primarily utilize foreign currency exchange contracts with maturities of no more than three years to manage this volatility. These contracts qualify as cash flow hedges and are intended to offset the effect of exchange rate fluctuations on forecasted sales, inventory purchases and overhead expenses. Net gains and losses recognized in earnings and Accumulated other comprehensive loss on cash flow hedges, including gains and losses related to hedge ineffectiveness, were not significant in the periods presented.
Our foreign currency exchange contracts are measured at fair value using the market method valuation technique. The inputs to this technique utilize current foreign currency exchange forward market rates published by third-party leading financial news and data providers. These are observable data that represent the rates that the financial institution uses for contracts entered into at that date; however, they are not based on actual transactions, so they are classified as Level 2. At July 1, 2023 and December 31, 2022, we had foreign currency exchange contracts with notional amounts upon which the contracts were based of $567 million and $354 million, respectively. At July 1, 2023, the fair value amounts of our foreign currency exchange contracts were a $5 million asset and a $9 million liability. At December 31, 2022, the fair value amount of our foreign currency exchange contracts was an $11 million liability.

11
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 the floating-rate cash flows to fixed-rate cash flows on certain debt. These agreements are designated as cash flow hedges.
In the second quarter of 2023, we entered into swap agreements related to our Floating Rate Junior Subordinated Notes for an aggregate notional amount of $185 million and a weighted-average fixed rate of 5.17%; these agreements have a forward start date of August 15, 2023 and maturities ranging from August 15, 2025 to August 15, 2028. Subsequent to August 15, 2023, in compliance with the Adjustable Interest Rate (LIBOR) Act of 2022, the benchmark interest rate on the Notes will change to the three-month CME Term Secured Overnight Funding Rate + 1.99661%. At December 31, 2022, we had a swap agreement with a notional amount of $272 million that matures on August 15, 2023. We also entered into an interest rate swap agreement in May 2022 with a notional amount of $25 million that matures in June 2025 and effectively converts variable-rate interest on a term loan to a fixed rate of 2.75%.
At July 1, 2023 and December 31, 2022, the fair value of our outstanding swap agreements was an $8 million asset. The fair value of these swap agreements is determined using values published by third-party leading financial news and data providers. These values are observable data that represent the value that financial institutions use for contracts entered into at that date, but are not based on actual transactions, so they are classified as Level 2.
Assets and Liabilities Not Recorded at Fair Value
The carrying value and estimated fair value of our financial instruments that are not reflected in the financial statements at fair value are as follows:
July 1, 2023December 31, 2022
CarryingEstimatedCarryingEstimated
(In millions)ValueFair ValueValueFair Value
Manufacturing group
Debt, excluding leases$(3,174)$(2,904)$(3,175)$(2,872)
Finance group
Finance receivables, excluding leases405 396 390 369 
Debt(354)(281)(375)(294)
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 7. 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 1, 2023
Beginning of period$26 $1,942 $(464)$6,090 $(586)$7,008 
Net income— — — 263 — 263 
Other comprehensive income— — — — 12 12 
Share-based compensation activity— 31 — — — 31 
Dividends declared— — — (4)— (4)
Purchases of common stock,
  including excise tax*		— — (276)— — (276)
End of period$26 $1,973 $(740)$6,349 $(574)$7,034 
Three months ended July 2, 2022
Beginning of period$28 $1,924 $(314)$6,058 $(779)$6,917 
Net income— — — 217 — 217 
Other comprehensive loss— — — — (76)(76)
Share-based compensation activity— 29 — — — 29 
Dividends declared— — — (4)— (4)
Purchases of common stock— — (282)— — (282)
End of period$28 $1,953 $(596)$6,271 $(855)$6,801 
Six months ended July 1, 2023
Beginning of period$26 $1,880 $(84)$5,903 $(612)$7,113 
Net income— — — 454 — 454 
Other comprehensive income— — — — 38 38 
Share-based compensation activity— 93 — — — 93 
Dividends declared— — — (8)— (8)
Purchases of common stock,
  including excise tax*		— — (656)— — (656)
End of period$26 $1,973 $(740)$6,349 $(574)$7,034 
Six months ended July 2, 2022
Beginning of period$28 $1,863 $(157)$5,870 $(789)$6,815 
Net income— — — 410 — 410 
Other comprehensive loss— — — — (66)(66)
Share-based compensation activity— 90 — — — 90 
Dividends declared— — — (9)— (9)
Purchases of common stock— — (439)— — (439)
End of period$28 $1,953 $(596)$6,271 $(855)$6,801 
*Includes amounts accrued for excise tax imposed on common share repurchases beginning on January 1, 2023 as part of the Inflation Reduction Act that totaled $3 million for the second quarter of 2023 and $6 million for first half of 2023.
Dividends per share of common stock were $0.02 for both the second quarter of 2023 and 2022 and $0.04 for both the first half of 2023 and 2022.
Earnings Per Share
We calculate basic and diluted earnings per share (EPS) based on net income, which approximates income available to common shareholders for each period.  Basic EPS is calculated using the two-class method, which includes the weighted-average number of common shares outstanding during the period and restricted stock units to be paid in stock that are deemed participating securities as they provide nonforfeitable rights to dividends. Diluted EPS considers the dilutive effect of all potential future common stock, including stock options.  
13
The weighted-average shares outstanding for basic and diluted EPS are as follows:
Three Months EndedSix Months Ended
(In thousands)July 1,
2023		July 2,
2022		July 1,
2023		July 2,
2022
Basic weighted-average shares outstanding200,701 214,587 202,768 215,799 
Dilutive effect of stock options1,808 2,071 1,992 2,334 
Diluted weighted-average shares outstanding202,509 216,658 204,760 218,133 
Stock options to purchase 2.0 million shares of common stock were excluded from the calculation of diluted weighted-average shares outstanding for both the second quarter and first half of 2023 as their effect would have been anti-dilutive. For both the second quarter and first half of 2022, stock options to purchase 1.0 million shares of common stock were excluded from the calculation of diluted weighted-average shares outstanding as their effect would have been anti-dilutive.
Accumulated Other Comprehensive Loss and Other Comprehensive Income (Loss)
The components of Accumulated other comprehensive loss are presented below:
(In millions)Pension and
Postretirement
Benefits
Adjustments		Foreign
Currency
Translation
Adjustments		Deferred
Gains (Losses)
on Hedge
Contracts		Accumulated
Other
Comprehensive
Loss
Balance at December 31, 2022$(516)$(94)$(2)$(612)
Other comprehensive income before reclassifications— 32 3 35 
Reclassified from Accumulated other comprehensive loss— — 3 3 
Balance at July 1, 2023$(516)$(62)$4 $(574)
Balance at January 1, 2022$(799)$9 $1 $(789)
Other comprehensive loss before reclassifications— (104)4 (100)
Reclassified from Accumulated other comprehensive loss34 — — 34 
Balance at July 2, 2022$(765)$(95)$5 $(855)
The before and after-tax components of Other comprehensive income (loss) are presented below:
July 1, 2023July 2, 2022
(In millions)Pre-Tax
Amount		Tax
(Expense)
Benefit		After-tax
Amount		Pre-Tax
Amount		Tax
(Expense)
Benefit		After-tax
Amount
Three Months Ended
Pension and postretirement benefits adjustments:
Amortization of net actuarial (gain) loss*$(1)$— $(1)$21 $(6)$15 
Amortization of prior service cost*2 (1)1 2 — 2 
Pension and postretirement benefits adjustments, net1 (1)— 23 (6)17 
Foreign currency translation adjustments4 — 4 (90)— (90)
Deferred gains (losses) on hedge contracts:
Current deferrals7 (1)6 (5)2 (3)
Reclassification adjustments2 — 2 — — — 
Deferred gains (losses) on hedge contracts, net9 (1)8 (5)2 (3)
Total$14 $(2)$12 $(72)$(4)$(76)
Six Months Ended
Pension and postretirement benefits adjustments:
Amortization of net actuarial (gain) loss*$(3)$1 $(2)$42 $(11)$31 
Amortization of prior service cost*4 (2)2 4 (1)3 
Pension and postretirement benefits adjustments, net1 (1)— 46 (12)34 
Foreign currency translation adjustments32 — 32 (104)— (104)
Deferred gains on hedge contracts:
Current deferrals3 — 3 5 (1)4 
Reclassification adjustments4 (1)3 — — — 
Deferred gains on hedge contracts, net7 (1)6 5 (1)4 
Total$40 $(2)$38 $(53)$(13)$(66)
*These components of other comprehensive income (loss) are included in the computation of net periodic pension cost (income). See Note 15 of our 2022 Annual Report on Form 10-K for additional information.
14
Note 8. Segment Information
We operate in, and reported financial information for, the following six business segments: Textron Aviation, Bell, Textron Systems, Industrial, Textron eAviation and Finance. Segment profit is an important measure used for evaluating performance and for decision-making purposes. Beginning in 2023, we changed how we measure our manufacturing segment operating results to exclude the non-service components of pension and postretirement income, net; LIFO inventory provision; and intangible asset amortization. This measure also continues to exclude interest expense, net for Manufacturing group; certain corporate expenses; gains/losses on major business dispositions; and special charges. The prior period has been recast to conform to this presentation. The measurement for the Finance segment includes interest income and expense along with intercompany interest income and expense.
Our revenues by segment, along with a reconciliation of segment profit to income before income taxes, are included in the table below:
Three Months EndedSix Months Ended
(In millions)July 1,
2023		July 2,
2022		July 1,
2023		July 2,
2022
Revenues
Textron Aviation$1,362 $1,284 $2,511 $2,324 
Bell701 687 1,322 1,521 
Textron Systems306 293 612 566 
Industrial1,026 871 1,958 1,709 
Textron eAviation11 5 15 5 
Finance18 14 30 30 
Total revenues$3,424 $3,154 $6,448 $6,155 
Segment Profit
Textron Aviation$171 $149 $296 $259 
Bell65 54 125 145 
Textron Systems37 38 71 66 
Industrial79 37 120 76 
Textron eAviation(12)(7)(21)(7)
Finance12 10 20 19 
Segment profit352 281 611 558 
Corporate expenses and other, net(21)(20)(60)(72)
Interest expense, net for Manufacturing group(16)(28)(33)(56)
LIFO inventory provision(35)(17)(60)(29)
Intangible asset amortization(10)(13)(20)(26)
Non-service components of pension and postretirement income, net59 60 118 120 
Income before income taxes$329 $263 $556 $495 
15
Note 9. Revenues
Disaggregation of Revenues
Our revenues for our segments disaggregated by major product type are presented below:
Three Months EndedSix Months Ended
(In millions)July 1,
2023		July 2,
2022		July 1,
2023		July 2,
2022
Aircraft$920 $856 $1,638 $1,502 
Aftermarket parts and services442 428 873 822 
Textron Aviation1,362 1,284 2,511 2,324 
Military aircraft and support programs395 402 780 999 
Commercial helicopters, parts and services306 285 542 522 
Bell701 687 1,322 1,521 
Textron Systems306 293 612 566 
Fuel systems and functional components523 435 1,011 899 
Specialized vehicles503 436 947 810 
Industrial1,026 871 1,958 1,709 
Textron eAviation11 5 15 5 
Finance18 14 30 30 
Total revenues$3,424 $3,154 $6,448 $6,155 
16
Our revenues for our segments by customer type and geographic location are presented below:
(In millions)Textron
Aviation		BellTextron
Systems		IndustrialTextron eAviationFinanceTotal
Three months ended July 1, 2023
Customer type:
Commercial$1,321 $301 $70 $1,024 $11 $18 $2,745 
U.S. Government41 400 236 2 — — 679 
Total revenues$1,362 $701 $306 $1,026 $11 $18 $3,424 
Geographic location:
United States$933 $534 $274 $566 $7 $4 $2,318 
Europe159 35 17 201 4 1 417 
Other international270 132 15 259 — 13 689 
Total revenues$1,362 $701 $306 $1,026 $11 $18 $3,424 
Three months ended July 2, 2022
Customer type:
Commercial$1,253 $279 $65 $862 $5 $14 $2,478 
U.S. Government31 408 228 9 — — 676 
Total revenues$1,284 $687 $293 $871 $5 $14 $3,154 
Geographic location:
United States$776 $504 $268 $466 $1 $5 $2,020 
Europe239 43 10 185 3 — 480 
Other international269 140 15 220 1 9 654 
Total revenues$1,284 $687 $293 $871 $5 $14 $3,154 
Six months ended July 1, 2023
Customer type:
Commercial$2,428 $533 $144 $1,951 $15 $30 $5,101 
U.S. Government83 789 468 7 — — 1,347 
Total revenues$2,511 $1,322 $612