Textron TXT · USD

Segment Financial InformationFor the periods presented, we operate in, and report financial information for, the following six operating segments: Textron Aviation, Bell, Textron Systems, Industrial, Textron eAviation and Finance. The accounting policies of these segments are the same as those described in Note 1. Effective January 4, 2026, the beginning of our 2026 fiscal year, the business activities of the Textron eAviation segment were realigned within Textron's other operating segments resulting in the elimination of the Textron eAviation segment as a separate reporting segment. Additional information regarding this segment change is provided below. Textron Aviation products and services include Cessna Citation jets, Beechcraft and Cessna turboprop aircraft, military trainer and defense aircraft, piston engine aircraft, advanced flight training devices, aftermarket parts and maintenance, inspection and repair services. Textron Aviation has a diverse customer base including fractional aircraft businesses, charter and fleet operators, corporate aviation, individual buyers, training schools, airlines, and special mission, military and government operators.Bell products and services include development of the MV-75 tiltrotor aircraft, the V-22 tiltrotor aircraft, advanced military helicopters, and aftermarket parts and support services to the U.S. and non-U.S. governments. Bell also supplies commercial helicopters and aftermarket parts and services to corporate, private, law enforcement, utility, public safety and emergency medical helicopter operators, and U.S. and foreign governments.Textron Systems products and services include electronic systems and solutions, advanced marine craft, piston aircraft engines, live military air-to-air and air-to-ship training, weapons and related components, unmanned aircraft systems, and both manned and unmanned armored and specialty vehicles for U.S. and international military, government and commercial customers.

RevenuesDisaggregation of RevenuesOur revenues disaggregated by major product type are presented below:(In millions)202520242023Aircraft$3,922 $3,374 $3,577 Aftermarket parts and services2,033 1,910 1,796 Textron Aviation$5,955 $5,284 $5,373 Military aircraft and support programs2,618 2,048 1,701 Commercial helicopters, parts and services1,664 1,531 1,446 Bell$4,282 $3,579 $3,147 Textron Systems$1,247 $1,241 $1,235 Fuel systems and functional components1,883 1,891 1,954 Specialized vehicles1,330 1,624 1,887 Industrial$3,213 $3,515 $3,841 Textron eAviation$27 $33 $32 Finance$75 $50 $55 Total revenues$14,799 $13,702 $13,683 Our revenues for our segments by customer type and geographic location are presented below:(In millions)TextronAviationBellTextronSystemsIndustrialTextron eAviationFinanceTotal2025Customer type:Commercial$5,579 $1,634 $306 $3,185 $27 $75 $10,806 U.S. Government376 2,648 941 28 — — 3,993 Total revenues$5,955 $4,282 $1,247 $3,213 $27 $75 $14,799 Geographic location:United States$4,281 $3,156 $1,129 $1,668 $14 $35 $10,283 Europe467 122 43 649 7 1 1,289 South and Latin America628 281 7 336 2 26 1,280 Other international579 723 68 560 4 13 1,947 Total revenues$5,955 $4,282 $1,247 $3,213 $27 $75 $14,799 2024Customer type:Commercial$4,985 $1,490 $292 $3,482 $33 $50 $10,332 U.S. Government299 2,089 949 33 — — 3,370 Total revenues$5,284 $3,579 $1,241 $3,515 $33 $50 $13,702 Geographic location:United States$4,019 $2,644 $1,112 $1,865 $19 $17 $9,676 Europe371 85 45 693 11 5 1,210 South and Latin America336 201 12 306 — 19 874 Other international558 649 72 651 3 9 1,942 Total revenues$5,284 $3,579 $1,241 $3,515 $33 $50 $13,702 2023Customer type:Commercial$5,155 $1,407 $282 $3,819 $32 $55 $10,750 U.S. Government218 1,740 953 22 — — 2,933 Total revenues$5,373 $3,147 $1,235 $3,841 $32 $55 $13,683 Geographic location:United States$3,873 $2,228 $1,103 $2,067 $17 $17 $9,305 Europe432 149 54 766 11 2 1,414 South and Latin America284 224 12 300 1 21 842 Other international784 546 66 708 3 15 2,122 Total revenues$5,373 $3,147 $1,235 $3,841 $32 $55 $13,683 Remaining Performance ObligationsOur 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 revenue in future periods when we perform under the contracts.

Commitments and ContingenciesWe are subject to actual and threatened 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; disputes with suppliers, production partners or other third parties; product liability; patent and trademark infringement; employment disputes; and environmental, health and safety 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.In the ordinary course of business, we enter into standby letter of credit agreements and surety bonds with financial institutions to meet various performance and other obligations. These outstanding letter of credit arrangements and surety bonds aggregated to approximately $380 million and $336 million at January 3, 2026 and December 28, 2024, respectively.Environmental RemediationAs with other industrial enterprises engaged in similar businesses, we are involved in a number of remedial actions under various federal and state laws and regulations relating to the environment that impose liability on companies to clean up, or contribute to the cost of cleaning up, sites on which hazardous wastes or materials were disposed or released. Our accrued environmental liabilities relate to installation of remediation systems, disposal costs, U.S. Environmental Protection Agency oversight costs, legal fees, and operating and maintenance costs for both currently and formerly owned or operated facilities.

Debt and Credit FacilitiesOur debt is summarized in the table below:(In millions)January 3,2026December 28,2024Manufacturing group3.875% due 2025$— $350 4.00% due 2026*— 350 3.65% due 2027350 350 3.375% due 2028300 300 3.90% due 2029300 300 3.00% due 2030650 650 2.45% due 2031500 500 6.10% due 2033350 350 5.50% due 2035500 — 4.95% due 2036500 — Other (weighted-average rate of 6.08% and 5.87%, respectively)89 97 Total Manufacturing group debt$3,539 $3,247 Less: Current portion of long-term debt(5)(357)Total Long-term debt$3,534 $2,890 Finance groupVariable-rate note due 2028 (weighted-average rate of 5.04% and 5.70%, respectively)$25 $25 Fixed-rate note due 2027 (4.40%)50 50 Floating Rate Junior Subordinated Notes due 2067 (5.85% and 6.52%, respectively)264 264 Other— 2 Total Finance group debt$339 $341 * On December 31, 2025, we repaid our $350 million 4.00% notes due in March 2026.The following table shows required principal payments during the next five years on debt outstanding at January 3, 2026:(In millions)20262027202820292030Manufacturing group$5 $355 $375 $301 $651 Finance group— 50 25 — — Total$5 $405 $400 $301 $651 On October 16, 2025, Textron entered into a senior unsecured revolving credit facility for an aggregate principal amount of $1.0 billion, of which $100 million is available for the issuance of letters of credit. We may elect to increase the aggregate amount of commitments under the facility to up to $1.3 billion by designating an additional lender or by an existing lender agreeing to increase its commitment. The facility expires in October 2030 and provides for two one-year extensions at our option with the consent of lenders representing a majority of the commitments under the facility. The new facility replaces the prior 5-year facility which was scheduled to expire in October 2027. At January 3, 2026 and December 28, 2024, there were no amounts borrowed against either facility. At January 3, 2026, there were no letters of credit issued and outstanding under the new facility, and at December 28, 2024, there was a $9 million letter of credit issued and outstanding under the prior facility. Floating Rate Junior Subordinated NotesThe Finance group’s $264 million of Floating Rate Junior Subordinated Notes are unsecured and rank junior to all of its existing and future senior debt.

Income TaxesWe conduct business globally and, as a result, file numerous consolidated and separate income tax returns within and outside the U.S. For all of our U.S. subsidiaries, we file a consolidated federal income tax return. Income from continuing operations before income taxes is as follows:(In millions)202520242023U.S.$903 $739 $905 Non-U.S.234 204 182 Income from continuing operations before income taxes$1,137 $943 $1,087 Income tax expense is summarized as follows:(In millions)202520242023Current:Federal$(7)$84 $267 State8 21 18 Non-U.S.58 61 72 Total current59 166 357 Deferred:Federal165 (34)(181)State(6)(24)1 Non-U.S.(4)10 (12)Total deferred155 (48)(192)Total income tax expense (benefit):Federal158 50 86 State2 (3)19 Non-U.S.54 71 60 Total income tax expense$214 $118 $165 In 2025, we adopted Accounting Standards Update 2023-09 – Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which requires disclosure of disaggregated information about a reporting entity’s effective tax rate reconciliation as well as information on income taxes paid. This standard has been adopted on a prospective basis and the new presentation of the U.S. Federal statutory income tax rate to our effective tax rate for 2025 is provided below. 2025(Dollars in millions)AmountPercentageU.S. Federal statutory income tax rate$239 21.0 %State and local income taxes, net of Federal income tax effects*2 0.2 %Foreign tax effects6 0.5 %Effect of cross-border tax laws(2)(0.2)%Tax credits - research and development(36)(3.2)%Non-taxable or nondeductible items:Share-based compensation29 2.6 %Other6 0.5 %Changes in unrecognized tax benefits:Audit settlement(17)(1.5)%Other3 0.3 %Other adjustments(16)(1.4)%Effective income tax rate$214 18.8 %* State income taxes for Kansas and Texas comprise the majority (greater than 50%) of this category. In 2025, an $18 million benefit was recognized related to the enactment of a single sales factor apportionment in Kansas.For 2025, income tax payments, net of refunds by jurisdiction totaled $19 million for the U.S. Federal jurisdiction, $13 million for the states and $72 million for non-U.S. jurisdictions, which included $23 million, $18 million, $8 million, $6 million and $(5) million in Canada, Mexico, China, Czech Republic and Spain, respectively.A reconciliation of the U.S. Federal statutory income tax rate to our effective income tax rate for prior years is provided below.20242023U.S. Federal statutory income tax rate21.0%21.

Share-Based CompensationUnder our 2024 Long-Term Incentive Plan (the 2024 Plan), which replaced our 2015 Long-Term Incentive Plan (the 2015 Plan) in April 2024, we have authorization to provide awards to selected employees and non-employee directors in the form of stock options, restricted stock, restricted stock units, stock appreciation rights, performance stock, performance share units and other awards. A maximum of 10 million shares is authorized for issuance for all purposes under the 2024 Plan plus any shares that become available upon cancellation, forfeiture or expiration of awards granted under the 2015 Plan. Under the 2024 Plan, the maximum number of shares that may be issued pursuant to awards payable in shares, such as restricted stock, restricted stock units, performance stock, performance share units, or other awards is 3.127 million, plus any shares that become available upon cancellation, forfeiture or expiration of such awards which were granted under the 2015 Plan. For 2025, 2024 and 2023, the awards granted under these plans primarily included stock options, restricted stock units and performance share units.Share-based compensation costs are reflected primarily in selling and administrative expense. Compensation expense included in net income for our share-based compensation plans is as follows:(In millions)202520242023Compensation expense$81 $66 $94 Income tax benefit(20)(16)(23)Total compensation expense included in net income$61 $50 $71 Compensation cost for awards subject only to service conditions that vest ratably is recognized on a straight-line basis over the requisite service period for each separately vesting portion of the award utilizing an estimated forfeiture rate. Our awards include continued vesting provisions for retirement eligible employees. Upon reaching retirement eligibility, the service requirement for these individuals is considered to have been satisfied and compensation expense for future awards is recognized on the date of the grant.As of January 3, 2026, we had not recognized $27 million of total compensation costs associated with unvested awards subject only to service conditions. We expect to recognize compensation expense for these awards over a weighted-average period of approximately two years. We typically grant stock appreciation rights to selected non-U.S. employees. At January 3, 2026, outstanding stock appreciation rights totaled 386,329 with a weighted-average exercise price of $68.

LeasesWe primarily lease certain manufacturing plants, offices, warehouses, training and service centers at various locations worldwide that are classified as either operating or finance leases. Our leases have remaining lease terms up to 25 years, which include options to extend the lease term for periods up to 20 years when it is reasonably certain the option will be exercised. Operating lease cost totaled $73 million, $74 million and $69 million in 2025, 2024 and 2023, respectively. Cash paid for operating lease liabilities approximated the lease expense and is classified in cash flows from operating activities. Noncash transactions related to operating leases totaled $82 million, $49 million and $54 million in 2025, 2024 and 2023, respectively, reflecting the recognition of operating lease assets and liabilities for new or modified leases and changes from the reassessment of lease options. In 2024, non-cash transactions included the recognition of a $72 million asset and liability related to a new finance lease that matures in 2028. Finance lease, variable and short-term lease costs were not significant. Balance sheet and other information related to our leases is as follows: (Dollars in millions)January 3,2026December 28,2024Operating leases:Other assets$390 $360 Other current liabilities58 55 Other liabilities346 316 Weighted-average remaining lease term (in years)9.510.0Weighted-average discount rate4.97%4.84%Finance leases:Property, plant and equipment, less accumulated amortization of $14 million and $9 million, respectively$95 $95 Long-term debt, including current portion100 97 Weighted-average remaining lease term (in years)5.95.9Weighted-average discount rate6.63%6.72%At January 3, 2026, maturities of our operating lease liabilities on an undiscounted basis totaled $74 million for 2026, $65 million for 2027, $60 million for 2028, $55 million for 2029, $48 million for 2030 and $213 million thereafter.

Cybersecurity related risks have been identified as material business risks, and identifying, assessing and managing these risks is integrated into our Enterprise Risk Management (ERM) process, which is designed to identify, assess and guide in managing material risks throughout Textron at both the business segment and enterprise levels. We maintain cyber risk/network protection mitigation plans through our ERM process to assist in management of these risks. Our full Board oversees our ERM process through discussions at our Board of Directors’ Annual Strategic Business and Risk Review and at an annual dedicated ERM Review. In addition, high risk areas, including cybersecurity matters, are reviewed and discussed with the full Board or other Board Committees, as appropriate. The Audit Committee, as reflected in its charter, has been designated to assist the Board in its oversight of our ERM process, including with respect to cybersecurity risk.We maintain a detailed Cybersecurity Incident Response Plan that guides our incident response process. Upon the occurrence of a cybersecurity event, the cyber incident response team will follow a predefined process, documenting each step taken, to analyze and validate the event, and, if a cybersecurity incident is suspected to have occurred, quickly perform an initial analysis to determine the incident’s scope. The team will prioritize the response to each incident based on its estimate of the business impact caused by the incident and the estimated efforts required to recover from the incident. Notification of the incident is made to various stakeholders, including senior management and, if appropriate based upon the incident severity assessment, our Board. The team will also conduct incident containment, eradication and recovery, and post incident activity.Our Security CultureWe protect our information assets and manage risk by promoting a culture that communicates security risks, designs secure IT systems and operates according to approved processes to reduce the likelihood and impact of security incidents. We achieve this objective by: •Designing, implementing and maintaining solutions with appropriate security controls. •Sustaining solutions with required patching and vulnerability remediation.•Creating and executing controls in support of policy as well as regulatory compliance.•Ensuring that our policies, processes, practices and technologies proactively protect, shield, defend and remediate cyber threats.