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What changed in Textron's 10-K — 2024 vs 2025

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Paragraph-level year-over-year comparison of Textron's 2024 and 2025 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2025 report.

+228 added−198 removedSource: 10-K (2025-02-06) vs 10-K (2024-02-12)

Top changes in Textron's 2025 10-K

228 paragraphs added · 198 removed · 156 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

48 edited+12 added−5 removed32 unchanged
Biggest changeTo maintain and enhance the safety of our employees, we promote a workplace safety culture of continuous improvement, shared responsibility, and individual accountability We use an annual goal setting process to drive injury rate improvements, and the injury rate reduction goal is a performance metric that is tracked and reported to senior leadership and the Audit Committee of the Board of Directors. 6 Table of Contents Talent and Career Development Our talent development programs are designed to prepare our employees at all levels to take on new career and growth opportunities at Textron.
Biggest changeWe use an annual goal setting 6 Table of Contents process to drive injury rate improvements, and the injury rate reduction goal is a performance metric that is tracked and reported to senior leadership and the Audit Committee of the Board of Directors.
For an aircraft to be manufactured and sold, the model must receive a type certificate from the appropriate aviation authority, and each aircraft must receive a certificate of airworthiness. Aircraft outfitting and completions also require approval by the appropriate aviation authority. See Strategic Risks section in Item 1A.
For an aircraft to be manufactured and sold, the model must receive a type certificate from the appropriate aviation authority, and each aircraft must receive a certificate of airworthiness. Aircraft outfitting and completions also require approval by the appropriate aviation authority. See the Strategic Risks section in Item 1A.
For discussion of certain risks relating to human capital management, see Risks Related to Human Capital section in Item 1A. Risk Factors. Patents and Trademarks We own, or are licensed under, numerous patents throughout the world relating to products, services and methods of manufacturing. Patents developed while under contract with the U.S.
For discussion of certain risks relating to human capital management, see the Risks Related to Human Capital section in Item 1A. Risk Factors. Patents and Trademarks We own, or are licensed under, numerous patents throughout the world relating to products, services and methods of manufacturing. Patents developed while under contract with the U.S.
The current and future talent needs of each of our businesses are assessed annually through a formal talent review process which enables us to develop leadership succession plans and provide our employees with potential new career opportunities. In addition, leaders from functional areas within each business belong to enterprise-wide councils which conduct annual talent reviews.
The current and future talent needs of each of our businesses are assessed annually through a formal talent review process which enables us to develop leadership succession plans and provide our employees with potential new career opportunities. In addition, leaders from functional areas within each business belong to enterprise-wide councils that conduct annual talent reviews.
Government may not be liable for assets we own and utilize to provide services under the “fee-for-service” contracts; and (d) we may be liable for excess costs incurred by the U.S. Government in procuring undelivered items from another source. See Aerospace and Defense Industry section in Item 1A. Risk Factors for additional information related to regulation of U.S. Government business.
Government may not be liable for assets we own and utilize to provide services under the “fee-for-service” contracts; and (d) we may be liable for excess costs incurred by the U.S. Government in procuring undelivered items from another source. See the Aerospace and Defense Industry section in Item 1A. Risk Factors for additional information related to regulation of U.S.
Sales are made through a network of independent distributors and dealers worldwide and the Bass Pro Shops and Cabela's retail outlets, which sell our products under the Tracker Off Road brand, as well as factory direct resources. In addition, we also manufacture products for OEMs for resale to customers under the OEM’s branding.
Sales are made through a network of independent distributors and dealers worldwide and the Bass Pro Shops and Cabela's retail outlets, which sell our powersports products under the Tracker Off Road brand, as well as factory direct resources. In addition, we also manufacture powersports products for OEMs for resale to customers under the OEM’s branding.
We need highly skilled personnel in multiple areas including, among others, engineering, manufacturing, information technology, cybersecurity, flight operations, business development and strategy and management. In order to attract and retain highly skilled employees, we offer comprehensive compensation and benefit programs, career opportunities and an engaging, inclusive environment where all employees are treated with dignity and respect.
We need highly skilled personnel in multiple areas including, among others, engineering, manufacturing, information technology, cybersecurity, flight operations, business development and strategy and management. In order to attract and retain highly skilled employees, we offer comprehensive compensation and benefit programs, career opportunities and an engaging, inclusive environment where employees are treated with dignity and respect.
Product and service offerings of this segment 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. Notable products developed and produced by the Textron Systems segment include the Ship-to-Shore Connector, the U.S.
Product and service offerings of this segment 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. Notable products currently developed and produced by the Textron Systems segment include the Ship-to-Shore Connector, the U.S.
Our commercial aircraft manufacturing businesses are regulated by the FAA in the U.S. and by similar aviation regulatory governing authorities internationally, including, the European Aviation Safety Agency. Maintenance facilities and aftermarket services must also comply with FAA and international regulations. These regulations address production and quality systems, airworthiness and installation approvals, repair procedures and continuing operational safety.
Government business. Our commercial aircraft manufacturing businesses are regulated by the FAA in the U.S. and by similar aviation regulatory governing authorities internationally, including, the European Aviation Safety Agency. Maintenance facilities and aftermarket services must also comply with FAA and international regulations. These regulations address production and quality systems, airworthiness and installation approvals, repair procedures and continuing operational safety.
We conduct our business through six operating segments: Textron Aviation, Bell, Textron Systems, Industrial and Textron eAviation, which represent our manufacturing businesses, and Finance, which represents our captive finance business. Our segments include numerous separately incorporated subsidiaries. Total revenues for 2023 were $13.7 billion and are presented below by segment and customer type.
We conduct our business through six operating segments: Textron Aviation, Bell, Textron Systems, Industrial and Textron eAviation, which represent our manufacturing businesses, and Finance, which represents our captive finance business. Our segments include numerous separately incorporated subsidiaries. Total revenues for 2024 were $13.7 billion and are presented below by segment and customer type.
Government’s convenience or for our failure to perform, to change applicable procurement and accounting policies, or, under certain circumstances, to withhold payment or suspend or debar us as a contractor eligible to receive future contract awards; • Changes in foreign military funding priorities or budget constraints and determinations, or changes in government regulations or policies on the export and import of military and commercial products; • Volatility in the global economy or changes in worldwide political conditions that adversely impact demand for our products; • Volatility in interest rates or foreign exchange rates and inflationary pressures; • Risks related to our international business, including establishing and maintaining facilities in locations around the world and relying on joint venture partners, subcontractors, suppliers, representatives, consultants and other business partners in connection with international business, including in emerging market countries; • Our Finance segment’s ability to maintain portfolio credit quality or to realize full value of receivables; • Performance issues with key suppliers or subcontractors; • Legislative or regulatory actions, both domestic and foreign, impacting our operations or demand for our products; • Our ability to control costs and successfully implement various cost-reduction activities; • The efficacy of research and development investments to develop new products or unanticipated expenses in connection with the launching of significant new products or programs; • The timing of our new product launches or certifications of our new aircraft products; • Our ability to keep pace with our competitors in the introduction of new products and upgrades with features and technologies desired by our customers; • Pension plan assumptions and future contributions; • Demand softness or volatility in the markets in which we do business; • Cybersecurity threats, including the potential misappropriation of assets or sensitive information, corruption of data or operational disruption; • Difficulty or unanticipated expenses in connection with integrating acquired businesses; • The risk that acquisitions do not perform as planned, including, for example, the risk that acquired businesses will not achieve revenue and profit projections; • The impact of changes in tax legislation; 8 Table of Contents • The risk of disruptions to our business and the business of our suppliers, customers and other business partners due to unexpected events, such as pandemics, natural disasters, acts of war, strikes, terrorism, social unrest or other societal or political conditions; and • The ability of our businesses to hire and retain the highly skilled personnel necessary for our businesses to succeed.
Government’s convenience or for our failure to perform, to change applicable procurement and accounting policies, or, under certain circumstances, to withhold payment or suspend or debar us as a contractor eligible to receive future contract awards; • Changes in foreign military funding priorities or budget constraints and determinations, or changes in government regulations or policies on the export and import of military and commercial products; • Volatility in the global economy or changes in worldwide political conditions that adversely impact demand for our products; • Volatility in interest rates or foreign exchange rates and inflationary pressures; • Risks related to our international business, including establishing and maintaining facilities in locations around the world and relying on joint venture partners, subcontractors, suppliers, representatives, consultants and other business partners in connection with international business, including in emerging market countries; • Our Finance segment’s ability to maintain portfolio credit quality or to realize full value of receivables; • Performance issues with key suppliers or subcontractors; • Legislative or regulatory actions, both domestic and foreign, impacting our operations or demand for our products; 8 Table of Contents • Our ability to control costs and successfully implement various cost-reduction activities; • The efficacy of research and development investments to develop new products or unanticipated expenses in connection with the launching of significant new products or programs; • The timing of our new product launches or certifications of our new aircraft products; • Our ability to keep pace with our competitors in the introduction of new products and upgrades with features and technologies desired by our customers; • Pension plan assumptions and future contributions; • Demand softness or volatility in the markets in which we do business; • Cybersecurity threats, including the potential misappropriation of assets or sensitive information, corruption of data or operational disruption; • Difficulty or unanticipated expenses in connection with integrating acquired businesses; • The risk that acquisitions do not perform as planned, including, for example, the risk that acquired businesses will not achieve revenue and profit projections; • The impact of changes in tax legislation; • The risk of disruptions to our business and the business of our suppliers, customers and other business partners due to unexpected events, such as pandemics, natural disasters, acts of war, strikes, terrorism, social unrest or other societal, geopolitical or macroeconomic conditions; • Risks related to changing U.S. and foreign trade policies, including increased trade restrictions or tariffs; and • The ability of our businesses to hire, train and retain the highly skilled personnel necessary for our businesses to succeed.
Financial Statements and Supplementary Data, and Business and Operational Risks and Risks Related to Regulatory, Legal and Other Matters sections in Item 1A. Risk Factors.
Financial Statements and Supplementary Data, and the Business and Operational Risks and Risks Related to Regulatory, Legal and Other Matters sections in Item 1A. Risk Factors.
Risk Factors for additional information with respect to risks related to obtaining certification of new aircraft products. Our operations are subject to numerous laws and regulations designed to protect the environment. For additional information regarding environmental matters, see Note 18 to the Consolidated Financial Statements in Item 8.
Risk Factors for additional information with respect to risks related to obtaining certification of new aircraft products. Our operations are subject to numerous laws and regulations designed to protect the environment. For additional information regarding environmental matters, see Note 17 to the Consolidated Financial Statements in Item 8.
Approximately 7,400, or 27%, of our U.S. employees, most of whom work for our Bell and Textron Aviation segments, are represented by unions under collective bargaining agreements, and certain of our non-U.S. employees are represented by organized works councils. From time to time our collective bargaining agreements expire.
Approximately 7,400, or 28%, of our U.S. employees, most of whom work for our Bell and Textron Aviation segments, are represented by unions under collective bargaining agreements, and certain of our non-U.S. employees are represented by organized works councils. From time to time, our collective bargaining agreements expire.
In that role she was responsible for managing the corporate 7 Table of Contents litigation staff with primary oversight of litigation throughout Textron. She has also played an active role in developing, implementing and standardizing human resources policies across the Company and served as the senior legal advisor on employment and benefits issues. Mr.
In that role she was responsible for managing the corporate litigation staff with primary oversight of litigation throughout Textron. She has also played an active role in developing, implementing and standardizing human resources policies across the Company and served as the senior legal advisor on employment and benefits issues. Mr.
Our cleaning systems are comprised of nozzles, reservoirs, inlets and pumps to support onboard cleaning for windscreens, headlamps and ADAS cameras and sensors. In addition, Kautex produces plastic tanks for selective catalytic reduction systems used to 4 Table of Contents reduce emissions from diesel engines, and other fuel system components.
Our cleaning systems are comprised of nozzles, reservoirs, inlets and pumps to support onboard cleaning for windscreens, headlamps and ADAS cameras and sensors. In addition, Kautex produces plastic tanks for selective catalytic reduction systems used to reduce emissions from diesel engines, and other fuel system components.
The diversified customer base for the Specialized Vehicles product line includes golf courses and resorts, government agencies and municipalities, consumers, outdoor enthusiasts, and commercial and industrial users such as factories, warehouses, airlines, planned communities, hunting preserves, educational and corporate campuses, sporting venues and landscaping professionals.
The diversified customer base for Textron Specialized Vehicles includes golf courses and resorts, government agencies and municipalities, consumers, outdoor enthusiasts, and commercial and industrial users such as factories, warehouses, airlines, planned communities, hunting preserves, educational and corporate campuses, sporting venues and landscaping professionals.
These laws and regulations, among other things, require certification and disclosure of all cost and pricing data in connection with contract negotiation; define allowable and unallowable costs and otherwise govern our right to reimbursement under certain cost-based U.S.
These laws and regulations, among other things, require certification and disclosure of all cost and pricing 5 Table of Contents data in connection with contract negotiation; define allowable and unallowable costs and otherwise govern our right to reimbursement under certain cost-based U.S.
Notable service offerings of the segment include fee-for-service programs, using unmanned aircraft systems, and live military air-to-air and air-to-ship training and support services for U.S. Navy, Marine and Air Force personnel provided by Airborne Tactical Advantage Company. Industrial Segment Our Industrial segment designs and manufactures a variety of products within the Kautex and Specialized Vehicles product lines.
Notable service offerings of the segment include fee-for-service programs, using unmanned aircraft systems, and live military air-to-air and air-to-ship training and support services for U.S. Navy, Marine and Air Force personnel provided by Airborne Tactical Advantage Company. Industrial Segment Our Industrial segment designs and manufactures a variety of products within the Kautex and Textron Specialized Vehicles businesses.
In 2023 and 2022, our Finance group made payments of $160 million and $92 million, respectively, to finance the Manufacturing group's sale of Textron-manufactured products to third parties. Backlog Backlog represents amounts allocated to contracts that we expect to recognize as revenue in future periods when we perform under the contracts.
In 2024 and 2023, our Finance group made payments of $109 million and $160 million, respectively, to finance the Manufacturing group's sale of Textron-manufactured products to third parties. Backlog Backlog represents amounts allocated to contracts that we expect to recognize as revenue in future periods when we perform under the contracts.
Government-sponsored foreign military sales program, generated approximately 21% of our consolidated revenues in 2023, primarily in our Bell and Textron Systems segments. We must comply with and are affected by laws and regulations relating to the formation, administration and performance of U.S. Government contracts.
Government-sponsored foreign military sales program, generated approximately 25% of our consolidated revenues in 2024, primarily in our Bell and Textron Systems segments. We must comply with and are affected by laws and regulations relating to the formation, administration and performance of U.S. Government contracts.
Duffy 58 Executive Vice President and Chief Human Resources Officer E. Robert Lupone 64 Executive Vice President, General Counsel, Secretary and Chief Compliance Officer Mr. Donnelly joined Textron in June 2008 as Executive Vice President and Chief Operating Officer and was promoted to President and Chief Operating Officer in January 2009.
Duffy 59 Executive Vice President and Chief Human Resources Officer E. Robert Lupone 65 Executive Vice President, General Counsel, Secretary and Chief Compliance Officer Mr. Donnelly joined Textron in June 2008 as Executive Vice President and Chief Operating Officer and was promoted to President and Chief Operating Officer in January 2009.
Kautex, which is headquartered in Bonn, Germany, operates over 30 plants in 13 countries in close proximity to its customers, along with 9 engineering/research and development locations around the world. Our Specialized Vehicles product line includes products sold by the Textron Specialized Vehicles businesses under our E-Z-GO, Arctic Cat, TUG Technologies, Douglas Equipment, Premier, Safeaero, Ransomes, Jacobsen and Cushman brands.
Kautex, which is headquartered in Bonn, Germany, operates over 30 plants in 13 countries in close proximity to its customers, along with 9 engineering/research and development locations around the world. Our Textron Specialized Vehicles businesses manufacture and sell products under our E-Z-GO, Arctic Cat, TUG Technologies, Douglas Equipment, Premier, Safeaero, Ransomes, Jacobsen and Cushman brands.
Textron Aviation also offers piston engine aircraft including the Beechcraft Baron G58 and Bonanza G36, and the Cessna Skyhawk, Skylane, Turbo Skylane, and Turbo Stationair HD. Textron Aviation markets its products worldwide through its own sales force, as well as through a network of authorized independent sales representatives.
Textron Aviation’s piston engine aircraft include the Cessna Skyhawk, Skylane, Turbo Skylane, Turbo Stationair HD and the Beechcraft Baron G58 and Bonanza G36. Textron Aviation markets its products worldwide through its own sales force, as well as through a network of authorized independent sales representatives.
The segment has two principal product lines: aircraft and aftermarket parts and services. Aircraft includes sales of business jets, turboprop aircraft, military trainer and defense aircraft and piston engine aircraft. Aftermarket parts and services includes commercial parts sales and maintenance, inspection and repair services.
The segment has two principal product lines: aircraft and aftermarket parts and services. Aircraft includes sales of business jets, turboprop aircraft, military trainer and defense aircraft and piston engine aircraft. Aftermarket parts and services includes commercial parts sales and maintenance, inspection and repair services, and advanced flight training devices.
The commercial helicopters currently offered by Bell include the 429, 407GXi, 412EPX and 505 Jet Ranger X. Bell’s first super medium commercial helicopter, the 525 Relentless, is currently in the certification process with the FAA. For both its military programs and its commercial products, Bell provides post-sale support and service for an installed base of approximately 13,000 helicopters.
The commercial helicopters currently offered by Bell include the 429, 407GXi, 412EPX and 505 Jet Ranger X. Bell’s super medium commercial helicopter, the 525 Relentless, continues toward FAA certification. For both its military programs and its commercial products, Bell provides post-sale support and service for an installed base of approximately 13,000 helicopters.
Navy's next generation of Landing Craft Air Cushion vehicles; a family of test and simulation products; Shadow, the U.S. Army's premier tactical unmanned aircraft system; the Aerosonde Small Unmanned Aircraft System, a multi-mission capable unmanned aircraft system for commercial and military operations; and piston aircraft engines under the Lycoming brand.
Navy's next generation of Landing Craft Air Cushion vehicles; a family of test and simulation products; the Aerosonde Small Unmanned Aircraft System, a multi-mission capable unmanned aircraft system for commercial and military operations; and piston aircraft engines under the Lycoming brand.
Government generally may be terminated by the U.S. Government for convenience or if we default in whole or in part by failing to perform under the terms of the applicable contract. If the U.S.
Government for convenience or if we default in whole or in part by failing to perform under the terms of the applicable contract. If the U.S.
Kautex has also developed and begun to offer lightweight, composite Pentatonic battery systems, which include enclosures, underbody protection and thermal management systems, for use in electric vehicles, from hybrid to full battery-powered. Kautex’s business model is focused on developing and maintaining long-term customer relationships with leading global original equipment manufacturers (OEMs).
Kautex also offers lightweight, composite Pentatonic battery systems, which include enclosures, underbody protection and thermal management systems, for use in electric vehicles, from hybrid to full battery-powered. 4 Table of Contents Kautex’s business model is focused on developing and maintaining long-term customer relationships with leading global original equipment manufacturers (OEMs).
Government contracts; and safeguard and restrict the use and dissemination of 5 Table of Contents classified and covered defense information and the export of certain products and technical data. New laws, regulations or procurement requirements, or changes to current ones, can significantly increase our costs, reducing our profitability. Our contracts with the U.S.
Government contracts; and safeguard and restrict the use and dissemination of classified and covered defense information and the export of certain products and technical data. New laws, regulations or procurement requirements, or changes to current ones, can significantly increase our costs, reducing our profitability. Our contracts with the U.S. Government generally may be terminated by the U.S.
Information about our Executive Officers The following table sets forth certain information concerning our executive officers as of February 12, 2024. Name Age Current Position with Textron Inc. Scott C. Donnelly 62 Chairman, President and Chief Executive Officer Frank T. Connor 64 Executive Vice President and Chief Financial Officer Julie G.
Information about our Executive Officers The following table sets forth certain information concerning our executive officers as of February 6, 2025. Name Age Current Position with Textron Inc. Scott C. Donnelly 63 Chairman, President and Chief Executive Officer Frank T. Connor 65 Executive Vice President and Chief Financial Officer Julie G.
Bell operates a global network of eight Company-operated service centers, two of which are co-located with Textron Aviation, and four global parts distribution centers. In addition, approximately 85 independent service centers are located in about 35 countries.
Bell operates a global network of eight Company-operated service centers and four global parts distribution centers. In addition, approximately 85 independent service centers are located in about 35 countries.
Human Capital Resources At December 30, 2023, we employed approximately 35,000 employees worldwide, with approximately 80% located in the U.S. and the remainder located outside of the U.S.
Human Capital Resources At December 28, 2024, we employed approximately 34,000 employees worldwide, with approximately 80% located in the U.S. and the remainder located outside of the U.S.
Backlog excludes unexercised contract options and potential orders under ordering-type contracts, such as Indefinite Delivery, Indefinite Quantity contracts. Our backlog at the end of 2023 and 2022 is summarized below: (In millions) December 30, 2023 December 31, 2022 Textron Aviation $ 7,169 $ 6,387 Bell 4,780 4,781 Textron Systems 1,950 2,098 Total backlog $ 13,899 $ 13,266 U.S.
Backlog excludes unexercised contract options and potential orders under ordering-type contracts, such as Indefinite Delivery, Indefinite Quantity contracts. Our backlog at the end of 2024 and 2023 is summarized below: (In millions) December 28, 2024 December 30, 2023 Textron Aviation $ 7,845 $ 7,169 Bell 7,469 4,780 Textron Systems 2,594 1,950 Total backlog $ 17,908 $ 13,899 U.S.
These processes enable us to fill talent needs by matching employees who are ready to assume significant leadership roles with opportunities that best fit their career path, which may be in other businesses within the enterprise. Textron is committed to having a diverse workforce and inclusive workplaces throughout our global operations.
These processes enable us to fill talent needs by matching employees who are ready to assume significant leadership roles with opportunities that best fit their career path, which may be in other businesses within the enterprise.
With a product lineup ranging from introductory training aircraft through super mid-size business jets, Textron Aviation’s diverse customer base includes fractional aircraft businesses, charter and fleet operators, corporate aviation, individual buyers, training schools, airlines, and special mission, military and government operators.
With a product lineup ranging from introductory training aircraft through super mid-size business jets, Textron Aviation’s diverse customer base includes fractional aircraft businesses, charter and fleet operators, corporate aviation, individual buyers, training schools, airlines, and special mission, military and government operators. 3 Table of Contents In support of its family of aircraft, Textron Aviation operates a global network of more than 20 service centers.
Health and Safety The health and safety of our employees, contractors and communities is a priority, and we strive to provide our employees with healthy working conditions and safe facilities.
Health and Safety The health and safety of our employees, contractors and communities is a priority, and we strive to provide our employees with healthy working conditions and safe facilities. To maintain and enhance the safety of our employees, we promote a workplace safety culture of continuous improvement, shared responsibility, and individual accountability.
Leadership, professional and functional training courses are tailored for employees at each stage of their careers and include a mix of enterprise-wide and business unit-specific programs.
Talent and Career Development Our talent development programs are designed to prepare our employees at all levels to take on new career and growth opportunities at Textron. Leadership, professional and functional training courses are tailored for employees at each stage of their careers and include a mix of enterprise-wide and business unit-specific programs.
Tiltrotor aircraft are designed to provide the benefits of both helicopters and fixed-wing aircraft. Bell supplies advanced military helicopters and provides parts and support services to the U.S. Government and to military customers outside the United States. Bell’s major U.S. Government programs are for the production and support of V-22 tiltrotor aircraft, primarily for the U.S.
Bell Segment Bell is a leading supplier of military and commercial helicopters, tiltrotor aircraft, and related spare parts and services in the world. Tiltrotor aircraft are designed to provide the benefits of both helicopters and fixed-wing aircraft. Bell supplies advanced military helicopters and provides parts and support services to the U.S. Government and to military customers outside the United States.
Textron eAviation Segment Our Textron eAviation segment includes Pipistrel, a manufacturer of light aircraft, along with other research and development initiatives related to sustainable aviation solutions. Pipistrel offers a family of light aircraft and gliders with both electric and combustion engines.
Textron eAviation Segment Our Textron eAviation segment is focused on research and development initiatives related to sustainable aviation solutions and includes Pipistrel, a manufacturer of light aircraft.
Department of Defense; the development of the V-280 Valor, a next generation tiltrotor aircraft for the U.S. Army’s Future Long Range Assault Aircraft (FLRAA) program; and production and support of H-1 helicopters for the U.S. Marine Corps. Under the U.S. Government-sponsored foreign military sales program, Bell offers the V-22 tiltrotor aircraft and H-1 helicopter products for sale to other countries.
Bell’s primary U.S. Government programs are for the development of a next generation tiltrotor aircraft for the U.S. Army’s Future Long Range Assault Aircraft (FLRAA) program and the production and support of the V-22 tiltrotor aircraft and H-1 helicopters. Under the U.S.
In support of its family of aircraft, Textron Aviation operates a global network of more than 20 service centers, two of which are co-located with Bell. In addition, more than 300 authorized independent service centers are located throughout the world. Textron Aviation-owned service centers provide customers with 24-hour service and maintenance.
In addition, more than 300 authorized independent service centers are located throughout the world. Textron Aviation-owned service centers provide customers with 24-hour service and maintenance. Textron Aviation also provides its customers with around-the-clock parts support and offers a mobile support program with over 80 mobile service units.
In addition, Textron Aviation’s military trainer and defense aircraft include the Beechcraft T-6 trainer, which has been used to train pilots from more than 40 countries, and the AT-6 light attack military aircraft, which has achieved military type certification from the U.S. Air Force.
The Denali will be powered by an engine expected to be up to 20% more efficient than similarly sized engines. Textron Aviation’s military trainer and defense aircraft include the Beechcraft T-6 trainer, which has been used to train pilots from more than 40 countries, and the AT-6 light attack military aircraft.
Connor joined the Corporate Finance Department of Goldman, Sachs & Co. in 1986 and became a Vice President in 1990 and a Managing Director in 1996. Ms. Duffy was named Executive Vice President, Human Resources in July 2017 and Executive Vice President and Chief Human Resources Officer in April 2022. Ms.
Duffy was named Executive Vice President, Human Resources in July 2017 and Executive Vice President and Chief Human Resources Officer in April 2022. Ms.
Pipistrel’s Velis Electro is the world’s first, and currently only, electric aircraft to receive full type certification from the European Union Aviation Safety Agency and from the UK Civil Aviation Authority. Finance Segment Our Finance segment, or the Finance group, is a commercial finance business that consists of Textron Financial Corporation (TFC) and its consolidated subsidiaries.
Pipistrel offers a family of light aircraft and gliders with both electric and combustion engines, including the Velis Electro, which is the world’s first, and currently only, electric aircraft to receive full type certification from the European Union Aviation Safety Agency and from the UK Civil Aviation Authority.
Textron Aviation also provides its customers with around-the-clock parts support and offers a mobile support program with over 80 mobile service units. Textron Aviation is developing the Citation Ascend, a high-performance midsize business jet, which is expected to enter into service in 2025.
In addition, Textron Aviation is developing the Citation Ascend, a high-performance midsize business jet, which is continuing to progress through the Federal Aviation Administration's (FAA) certification process and is expected to enter into service in 2025.
Textron Aviation's business jets include the Cessna Citation M2 Gen2, Citation CJ3 Gen2, Citation CJ4 Gen2, Citation XLS Gen2, Citation Latitude and the Citation Longitude. Textron Aviation’s turboprop aircraft include the Beechcraft King Air 260, King Air 360ER and King Air 360, and the Cessna Caravan, Grand Caravan EX and SkyCourier.
Textron Aviation’s turboprop aircraft include the Beechcraft King Air 260, King Air 360ER and King Air 360, and the Cessna Caravan, Grand Caravan EX and SkyCourier. The Beechcraft Denali, a high-performance single engine turboprop aircraft under development, continues toward FAA certification.
Historically, we have been successful in negotiating renewals to expiring agreements without any material disruption of operating activities, and management considers employee relations to be good. Our success is highly dependent upon our ability to hire and retain a workforce with the skills necessary for our businesses to develop and manufacture the products desired by our customers.
On October 20, 2024, Textron Aviation and the union reached an agreement and a new five-year labor contract was ratified. Our success is highly dependent upon our ability to hire, train and retain a workforce with the skills necessary for our businesses to develop and manufacture the products desired by our customers.
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The Beechcraft Denali, a high-performance single engine turboprop aircraft also under development, achieved its first flight in November 2021 and is in the certification process with the Federal Aviation Administration (FAA).
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Textron Aviation's business jets include the Cessna Citation M2 Gen2, Citation CJ3+, Citation CJ4 Gen2, Citation XLS Gen2, Citation Latitude and the Citation Longitude. In October 2024, Textron Aviation introduced its next generation of light jets, the Citation M2 Gen3, CJ3 Gen3 and CJ4 Gen3, which will include the revolutionary Garmin Emergency Autoland technology.
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The Denali will be powered by an engine expected to be up to 20% more efficient than similarly sized engines. 3 Table of Contents Bell Segment Bell is one of the leading suppliers of military and commercial helicopters, tiltrotor aircraft, and related spare parts and services in the world.
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Currently under development, the CJ3 Gen2 is expected to enter into service in 2025, the CJ4 Gen3 is expected to enter into service in 2026, and the M2 Gen3 and CJ3 Gen3 are expected to enter into service in 2027.
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The FLRAA development contract was awarded to Bell in December 2022 as part of the U.S. Army’s Future Vertical Lift (FVL) initiative. Bell is developing a tiltrotor aircraft, based on the V-280 Valor, to meet U.S. Army weapon system requirements. The V-280 Valor first flew in December 2017 and has conducted over 200 hours of flight testing.
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Government-sponsored foreign military sales program, Bell offers the V-22 tiltrotor aircraft and H-1 helicopter products for sale to other countries. The FLRAA development contract was awarded to Bell in December 2022. In 2024, the U.S.
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Bell is also developing a new rotorcraft, the Bell 360 Invictus, for the U.S. Army's Future Attack Reconnaissance Aircraft (FARA) Competitive Prototype Program, which is part of the U.S. government's FVL initiative. In March 2020, the U.S. Army selected the 360 Invictus to move to the second phase of the Competitive Prototype Program.
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Army announced approval of Milestone B for the FLRAA program, establishing FLRAA as a program of record and transitioning the program to the Engineering and Manufacturing Development phase. This phase includes continued digital modeling, detailed hardware and software design, and fabrication of hardware, as Bell proceeds to critical design review and the first prototype flight planned for 2026.
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Bell continues to progress on its development of the 360 Invictus Prototype under this phase of the cost-share program. On February 8, 2024, as part of plans to rebalance its aviation modernization investments, the U.S. Army announced plans to discontinue development of the FARA at the conclusion of FY24 prototyping activities.
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In 2024, the FAA granted a light-sport aircraft airworthiness exemption for the Pipistrel Velis Electro, allowing flight training in an electric aircraft within the United States.
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The Textron eAviation segment is also developing both hybrid and electric propulsion aircraft, including Pipistrel's Nuuva V300, a long-range, large-capacity hybrid-electric vertical takeoff and landing aircraft, and an electric vertical takeoff and landing (eVTOL) aircraft.
Added
The Nuuva V300's first hover flight is expected in 2025 and initial testing on the Nexus, a full-scale technology demonstrator eVTOL, is expected to begin in 2025. Finance Segment Our Finance segment, or the Finance group, is a commercial finance business that consists of Textron Financial Corporation (TFC) and its consolidated subsidiaries.
Added
Historically, we have been successful in negotiating renewals to expiring agreements without any material disruption of operating activities; however, on September 21, 2024, Textron Aviation’s largest union rejected a proposed new contract and initiated a strike. The strike impacted approximately 5,000 of Textron Aviation’s employees at its manufacturing, parts and distribution and service center facilities in Wichita, Kansas.
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Connor joined the Corporate Finance Department of Goldman, Sachs & Co. in 1986 and became a Vice President in 1990 and a Managing Director in 1996. 7 Table of Contents On October 23, 2024, we announced that Mr. Connor will be retiring effective February 28, 2025.
Added
David Rosenberg, currently our Vice President – Investor Relations, has been appointed Executive Vice President and Chief Financial Officer to succeed Mr. Connor, effective March 1, 2025. Mr. Rosenberg, 48, has more than 24 years of experience in the aviation industry.
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Prior to his role as Vice President – Investor Relations, he served as Senior Vice President & Chief Financial Officer of Textron Aviation from 2018 through 2023, having previously held leadership positions in finance at Textron Aviation. Following Textron’s acquisition of Beechcraft in 2014, as Textron Aviation’s Vice President, Integration & Strategy, Mr.
Added
Rosenberg led the successful merger and integration of Beechcraft and Textron’s Cessna Aircraft business, which created today’s Textron Aviation segment. Prior to Textron’s acquisition of Beechcraft, Mr. Rosenberg held a series of leadership positions in financial planning, business management, strategic planning and operations with Beechcraft and its predecessor companies. Ms.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeRisks Related to Human Capital Our success is highly dependent on our ability to hire and retain a qualified workforce. Our success is highly dependent upon our ability to hire and retain a workforce with the skills necessary for our businesses to develop and manufacture the products desired by our customers.
Biggest changeAdditionally, our intellectual property could be at risk due to cybersecurity threats. 15 Table of Contents Risks Related to Human Capital Our success is highly dependent on our ability to hire, train and retain a qualified workforce.
Negative macroeconomic factors may have an adverse effect on our business, results of operations and financial condition, as well as on our distributors, customers and suppliers, and on activity in many of the industries and markets we serve.
Negative macroeconomic factors may have an adverse effect on our business, results of operations and financial condition, as well as on our distributors, customers, subcontractors and suppliers, and on activity in many of the industries and markets we serve.
Such risks include difficulties in integrating newly acquired businesses and operations in an efficient and cost-effective manner; challenges in achieving expected strategic objectives, cost savings and other benefits; the risk that the acquired businesses’ markets do not evolve as anticipated and that the acquired businesses’ products and technologies do not prove to be those needed to be successful in those markets; the risk that our due diligence reviews of the acquired business do not identify or adequately assess all of the material issues which impact valuation of the business or result in costs or liabilities in excess of what we anticipated; the risk that we pay a purchase price that exceeds what the future results of operations would have merited; the risk 11 Table of Contents that the acquired business may have significant internal control deficiencies or exposure to regulatory sanctions; and the potential loss of key customers, suppliers and employees of the acquired businesses.
Such risks include difficulties in integrating newly acquired businesses and operations in an efficient and cost-effective manner; challenges in achieving expected strategic objectives, cost savings and other benefits; the risk that the acquired businesses’ markets do not evolve as anticipated and that the acquired businesses’ products and technologies do not prove to be those needed to be successful in those markets; the risk that our due diligence reviews of the acquired business do not identify or adequately assess all of the material issues which impact valuation of the business or result in costs or liabilities in excess of what we anticipated; the risk that we pay a purchase price that exceeds what the future results of operations would have merited; the risk that the acquired business may have significant internal control deficiencies or exposure to regulatory sanctions; and the potential loss of key customers, suppliers and employees of the acquired businesses.
Under each type of contract, if we are unable to control costs or if our initial cost estimates are incorrect, our cash flows, results of operations and financial condition could be adversely affected. Cost overruns also may adversely affect our ability to sustain existing programs and obtain future contract awards. 10 Table of Contents The market for U.S.
Under each type of contract, if we are unable to control costs or if our initial cost estimates are incorrect, our cash flows, results of operations and financial condition could be adversely affected. Cost overruns also may adversely affect our ability to sustain existing programs and obtain future contract awards. The market for U.S.
Due to the nature of our work under government contracts, we sometimes experience unforeseen technological or schedule difficulties and cost overruns due to inflation, labor shortages, supply chain challenges and/or other factors.
Due to the nature of our work under government contracts, we sometimes experience unforeseen technological or schedule difficulties and cost overruns due to inflation, labor shortages, supply chain challenges, bid protests, and/or other factors.
Government programs for which we currently provide or propose to provide products or services from time to time has resulted and, in the future, may result in a loss of anticipated revenues. A loss of such revenues could materially and adversely impact our results of operations and financial condition. In addition, because our U.S.
Government programs for which we currently provide or propose to provide products or services from time to time has resulted and, in the future, may result in a loss of anticipated revenues. A loss of such revenues could materially 9 Table of Contents and adversely impact our results of operations and financial condition. In addition, because our U.S.
We also enter into “fee for service” contracts with the U.S. Government where we retain ownership of, and consequently the risk of loss on, aircraft and equipment 9 Table of Contents supplied to perform under these contracts. Termination of these contracts could materially and adversely impact our results of operations.
We also enter into “fee for service” contracts with the U.S. Government where we retain ownership of, and consequently the risk of loss on, aircraft and equipment supplied to perform under these contracts. Termination of these contracts could materially and adversely impact our results of operations.
Existing insurance arrangements may not provide full protection for the costs that may arise from such events. The occurrence of any of these events could materially increase our costs and expenses and have a material adverse effect on our business, financial condition and results of operations.
Existing insurance arrangements may not provide full protection for the costs that may arise from such events. The occurrence of any of 13 Table of Contents these events could materially increase our costs and expenses and have a material adverse effect on our business, financial condition and results of operations.
Additionally, laws regulating certain consumer products exist in some states, as well as in other countries in which we sell our products, and more restrictive laws and regulations could be adopted in the future. Increased regulation and stakeholder expectations related to global climate change could negatively affect our operating results.
Additionally, laws regulating certain consumer products exist in some states, as well as in other countries in which we sell our products, and more restrictive laws and regulations could be adopted in the future. 14 Table of Contents Increased regulation and stakeholder expectations related to global climate change could negatively affect our operating results.
During 2023, we derived approximately 21% of our revenues from sales to a variety of U.S. Government entities. Our revenues from the U.S. Government largely result from contracts awarded to us under various U.S. Government defense-related programs. Considerable uncertainty exists regarding how future budget and program decisions will develop.
During 2024, we derived approximately 25% of our revenues from sales to a variety of U.S. Government entities. Our revenues from the U.S. Government largely result from contracts awarded to us under various U.S. Government defense-related programs. Considerable uncertainty exists regarding how future budget and program decisions will develop.
Future attacks or breaches of data security, whether of our systems or the systems of our service providers or other third parties who may have access to our data for business purposes, could disrupt our operations, cause the loss of business information or compromise confidential information, exposing us to liability or regulatory action.
Future attacks or breaches of data security, whether of our systems, the systems of our customers, suppliers, subcontractors or other business partners, or the systems of our service providers or other third parties who may have access to our data for business purposes, could disrupt our operations, cause the loss of business information or compromise confidential information, exposing us to liability or regulatory action.
In addition, our stakeholders expect us to reduce greenhouse gas emissions from the use of our products, including by developing and incorporating sustainable technologies into 14 Table of Contents our products.
In addition, our stakeholders expect us to reduce greenhouse gas emissions from the use of our products, including by developing and incorporating sustainable technologies into our products.
If current macroeconomic pressures, including from inflation and labor and supply chain challenges, continue or if global macroeconomic conditions deteriorate and remain at depressed levels for extended periods, our business, results of operations and financial condition could be materially adversely affected. Our business could be negatively impacted by cybersecurity threats and other disruptions.
If current macroeconomic pressures, including from inflation and labor and supply chain challenges, continue or if global macroeconomic conditions deteriorate and remain at depressed levels for extended periods, our business, results of operations and financial condition could be materially adversely affected.
In addition, we own the rights to many patents, trademarks, brand names, trade names and trade secrets that are important to our business. Our inability to enforce these intellectual property rights could have an adverse effect on our results of operations. Additionally, our intellectual property could be at risk due to cybersecurity threats.
In addition, we own the rights to many patents, trademarks, brand names, trade names and trade secrets that are important to our business. Our inability to enforce these intellectual property rights could have an adverse effect on our results of operations.
Under fixed-price incentive contracts, we share with the U.S. Government cost underrun savings, which are derived from total cost being less than target costs; we also share in cost overruns, which occur when total costs exceed target costs up to a negotiated cost ceiling; however, we are solely responsible for costs above the ceiling.
Government cost underrun savings, which are derived from total cost being less than target costs; we also share in cost overruns, which occur when total costs exceed target costs up to a negotiated cost ceiling; however, we are solely responsible for costs above the ceiling.
Such events may adversely affect our financial results, damage our reputation and relationships with our customers, and result in regulatory actions and/or litigation. 12 Table of Contents We are subject to the risks of doing business in foreign countries that could adversely impact our business. During 2023, we derived approximately 32% of our revenues from international business, including U.S. exports.
Such events may adversely affect our financial results, damage our reputation and relationships with our customers, and result in regulatory actions and/or litigation. We are subject to risks of doing business globally that could adversely impact our business. During 2024, we derived approximately 29% of our revenues from international business, including U.S. exports.
Aerospace and Defense Industry Risks Demand for our aircraft products is cyclical and lower demand adversely affects our financial results. Demand for business jets, turbo props and commercial helicopters has been cyclical and difficult to forecast. The demand for our aircraft products has been adversely impacted by unexpected events and may be impacted by such events in the future.
Aerospace and Defense Industry Risks Demand for our aircraft products is cyclical and lower demand adversely affects our financial results. Demand for business jets, turbo props and commercial helicopters has been cyclical and difficult to forecast.
We are subject to income taxes in the U.S. and various non-U.S. jurisdictions, and our domestic and international tax liabilities are subject to the location of income among these different jurisdictions.
Unanticipated changes in our tax rates or exposure to additional income tax liabilities could affect our profitability. We are subject to income taxes in the U.S. and various non-U.S. jurisdictions, and our domestic and international tax liabilities are subject to the location of income among these different jurisdictions.
Increased worldwide public awareness and concern regarding global climate change has resulted and is likely to continue to result in more legislative and regulatory efforts to address the negative impacts of climate change.
Increased worldwide public awareness and concern regarding global climate change has resulted and is likely to continue to result in more legislative and regulatory efforts, in the U.S., the European Union and in other jurisdictions in which we operate, in an effort to address the negative impacts of climate change.
Therefore, future demand for these products could be significantly and unexpectedly less than anticipated and/or less than previous period deliveries. Similarly, there is uncertainty as to when or whether our existing commercial backlog for aircraft products will convert to revenues as the conversion depends on production capacity, customer needs and credit availability, among other factors.
Similarly, there is uncertainty as to when or whether our existing commercial backlog for aircraft products will convert to revenues as the conversion depends on production capacity, customer needs and credit availability, among other factors.
Subcontractors also perform services that we provide to our customers in certain circumstances. We depend on these suppliers and subcontractors to meet our contractual obligations to our customers and conduct our operations.
We rely on other companies to provide raw materials, major components and subsystems for our products. Subcontractors also perform services that we provide to our customers in certain circumstances. We depend on these suppliers and subcontractors to meet our contractual obligations to our customers and conduct our operations.
We may not be successful in hiring or retaining such employees which could adversely impact our business and results of operations. 15 Table of Contents The increasing costs of certain employee and retiree benefits could adversely affect our results.
We may not be successful in hiring or retaining such employees which could adversely impact our business and results of operations. The increasing costs of certain employee and retiree benefits could adversely affect our results. Our results of operations and cash flows may be adversely impacted by increasing costs and funding requirements related to our employee benefit plans.
Our information technology (IT) and related systems are critical to the efficient operation of our business and essential to our ability to perform day to day processes.
Our business could be negatively impacted by cybersecurity threats and other disruptions. Our information technology (IT) and related systems are critical to the efficient operation of our business and essential to our ability to perform day to day processes.
In addition, our investments in equipment or technology that we believe will enable us to obtain future contracts for our U.S. Government or other customers may not result in contracts or revenues sufficient to offset such investment. We cannot be sure that our competitors will not develop competing technologies which gain superior market acceptance compared to our products.
In addition, our investments in equipment or technology that we believe will enable us to obtain future contracts for our U.S. Government or other customers may not result in contracts or revenues sufficient to offset such investment.
Our results of operations and cash flows may be adversely impacted by increasing costs and funding requirements related to our employee benefit plans. The obligation for our defined benefit pension plans is driven by, among other things, our assumptions of the expected long-term rate of return on plan assets and the discount rate used for future payment obligations.
The obligation for our defined benefit pension plans is driven by, among other things, our assumptions of the expected long-term rate of return on plan assets and the discount rate used for future payment obligations.
Also, changes in pension legislation and regulations could increase the cost associated with our defined benefit pension plans. Our business could be adversely affected by strikes or work stoppages and other labor issues. Approximately 7,400, or 27%, of our U.S. employees are unionized, and many of our non-U.S. employees are represented by organized councils.
Also, changes in pension legislation and regulations could increase the cost associated with our defined benefit pension plans. Our business could be adversely affected by strikes or work stoppages and other labor issues.
As a U.S. defense contractor, we face persistent security threats, including threats to our IT infrastructure and unlawful attempts to gain access to our information via phishing/malware campaigns and other cyberattack methods, as well as threats to the physical security of our facilities and employees, as do our customers, suppliers, subcontractors and joint venture partners.
We routinely face persistent security threats, including threats to our IT infrastructure and unlawful attempts to gain access to our confidential, classified or otherwise proprietary information via phishing/malware campaigns and other cyberattack methods, as well as threats to the physical security of our facilities and employees.
Government, are increasingly requiring cybersecurity protections and mandating cybersecurity standards in our products, and we may incur additional costs to comply with such demands. Challenges faced by our subcontractors or suppliers could materially and adversely affect our performance. We rely on other companies to provide raw materials, major components and subsystems for our products.
Government, are increasingly requiring cybersecurity protections and mandating cybersecurity standards in our products, and we may incur additional costs to comply with such demands. For information on our cybersecurity governance, risk management and strategy, see Item 1C. Cybersecurity. 12 Table of Contents Challenges faced by our subcontractors or suppliers could materially and adversely affect our performance.
We expect that compliance with such laws and regulations will require additional internal resources and may necessitate larger investment in product development and manufacturing equipment and/or facilities, as well as sourcing from new suppliers and/or higher costs from existing suppliers, all of which would increase our direct and indirect costs and negatively impact our business, results of operations, financial condition and competitive position.
Compliance with stricter limits may necessitate larger investment in product development and manufacturing equipment and/or facilities, as well as sourcing from new suppliers and/or higher costs from existing suppliers. These increased regulatory requirements are expected to increase our direct and indirect costs and could negatively impact our business, results of operations, financial condition and competitive position.
Changes in underlying assumptions, circumstances or estimates used in developing the pricing for such contracts can adversely affect our results of operations. Additionally, fixed-price contracts generally require progress payments rather than performance-based payments which can delay our ability to recover a significant amount of costs incurred on a contract and thus affect the timing of our cash flows.
Additionally, fixed-price contracts generally require progress payments rather than performance-based payments which can delay our ability to recover a significant amount of costs 10 Table of Contents incurred on a contract and thus affect the timing of our cash flows. Under fixed-price incentive contracts, we share with the U.S.
Such laws and regulations are likely to include more prescriptive reporting on environmental metrics, climate change related risks and associated financial impacts, as well as increased oversight of and reporting on our supply chain and other compliance requirements. Stricter limits on greenhouse gas emissions generated by our facilities or by our products that produce carbon emissions could also be imposed.
Recently enacted laws and regulations include, and future such laws and regulations may include, more prescriptive required reporting on environmental metrics, climate change related risks and associated financial and other impacts, as well as increased oversight of and reporting on our supply chain and other compliance requirements.
Our access to the debt capital markets and the cost of borrowings are affected by a number of factors including market conditions and the strength of our credit ratings.
Our access to the debt capital markets and the cost of borrowings are affected by a number of factors including market conditions and the strength of our credit ratings. If we cannot obtain adequate sources of credit on favorable terms, or at all, our business, operating results, and financial condition could be adversely affected.
In addition, the workforces of many of our suppliers and customers are represented by labor unions. Work stoppages or strikes at the plants of our key suppliers could disrupt our manufacturing processes; similar actions at the plants of our customers could result in delayed or canceled orders for our products.
Work stoppages or strikes at the plants of our key suppliers could disrupt our manufacturing processes; similar actions at the plants of our customers could result in delayed or canceled orders for our products. Any of these events could adversely affect our results of operations. Item 1B. Unresolved Staff Comments None.
While we have experienced cybersecurity attacks, such attacks have not resulted in a material information security breach and we have not suffered any material losses relating to such attacks.
Developments in artificial intelligence and machine learning provide threat actors with the capability to use more sophisticated means to attack our systems and may exacerbate cybersecurity risk. While we have experienced cybersecurity attacks, such attacks have not resulted in a material information security breach and we have not suffered any material losses relating to such attacks.
We need highly skilled personnel in multiple areas including, among others, engineering, manufacturing, information technology, cybersecurity, flight operations, business development and strategy and management.
Our success is highly dependent upon our ability to hire, train and retain a workforce with the skills necessary for our businesses to develop and manufacture the products desired by our customers. We need highly skilled personnel in multiple areas including, among others, engineering, manufacturing, information technology, cybersecurity, flight operations, business development and strategy and management.
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Attempts to gain unauthorized access to our confidential, classified or otherwise proprietary information or that of our employees or customers, as well as other security breaches, are persistent, continue to evolve and require highly skilled IT resources.
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From time to time, the demand for our aircraft products has been adversely impacted by unexpected events and may be impacted by such events in the future. Therefore, future demand for these products could be significantly and unexpectedly less than anticipated and/or less than previous period deliveries.
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If we cannot obtain adequate sources of credit on favorable terms, or at all, our business, operating results, and financial condition could be adversely affected. 13 Table of Contents Unanticipated changes in our tax rates or exposure to additional income tax liabilities could affect our profitability.
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Changes in underlying assumptions, circumstances or estimates used in developing the pricing for such contracts can adversely affect our results of operations.
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As a result, from time to time we experience work stoppages, which can negatively impact our ability to manufacture our products on a timely basis, resulting in strain on our relationships with our customers, loss or delay of revenues and/or increased cost. The presence of unions also may limit our flexibility in responding to competitive pressures in the marketplace.
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We cannot be sure that our competitors will not develop competing technologies which gain superior market acceptance compared to our 11 Table of Contents products.
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Any of these events could adversely affect our results of operations. Item 1B. Unresolved Staff Comments None.
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In addition, changes in laws or policies governing the terms of foreign trade, and in particular increased trade restrictions, tariffs or taxes on imports from countries where we manufacture or sell our products or from where we import products or raw materials (either directly or through our suppliers) could adversely impact our competitive position, business operations and financial results.
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The threats we face vary from those common to most industries, to attacks by more advanced and persistent, highly organized adversaries, including nation state actors, which target us for the national security information in our possession, for our role in developing advanced technology systems or with the goal of committing fraudulent activity.
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Our customers, suppliers and subcontractors are likewise targeted, and attack methods continue to evolve. Some cyberattacks depend on human error or manipulation, including phishing attacks or schemes that use social engineering or artificial intelligence to gain access to systems or carry out disbursement of funds or other frauds.
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We expect that compliance with such laws and regulations will require additional internal and external resources. Stricter limits on greenhouse gas emissions generated by our facilities or by our products that produce carbon emissions, carbon pricing mechanisms and/or energy taxes could also be imposed.
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Approximately 7,400, or 28%, of our U.S. employees are represented by labor unions under various collective bargaining agreements with varying durations and expiration dates, and many of our non-U.S. employees are represented by organized councils. From time to time, our collective bargaining agreements expire and are subject to renegotiation at that time.
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We may not be able to negotiate successor collective bargaining agreements upon expiration without experiencing labor disputes, including strikes or work stoppages, or we may be unable to renegotiate such contracts on favorable terms.
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For example, on September 21, 2024, Textron Aviation’s largest union rejected a proposed new contract and engaged in a strike that had an adverse effect on Textron Aviation's ability to meet its production and delivery schedules, and negatively impacted revenues and segment profit in 2024.
Added
If we experience any extended interruption of operations at any of our facilities as a result of labor disputes, strikes or other work stoppages, our business, financial condition or results of operations could be adversely affected. In addition, the workforces of many of our suppliers and customers are represented by labor unions.

Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeWe conduct periodic compliance training for our employees regarding the protection of sensitive information, which includes training intended to prevent the success of cyberattacks. We also conduct regular phishing simulations to increase employee awareness on how to spot phishing attempts, and what to do if they suspect an email to be a phishing attack.
Biggest changeWe also conduct regular phishing simulations to increase employee awareness on how to spot phishing attempts, and what to do if they suspect an email to be a phishing attack. We execute penetration testing against our technical environment and processes, and continuously monitor our network and systems for signs of intrusion.
He previously led strategic IT projects and teams responsible for delivering global IT solutions for several large U.S. based companies. 16 Table of Contents Our corporate information security organization, led by our Chief Information Security Officer (CISO), who reports to our CIO, is responsible for our overall information security strategy, policy, security engineering, operations and cyber threat detection and response.
He previously led strategic IT projects and teams responsible for delivering global IT solutions for several large U.S. based companies. Our corporate information security organization, led by our Chief Information Security Officer (CISO), who reports to our CIO, is responsible for our overall information security strategy, policy, security engineering, operations and cyber threat detection and response.
Management of Cybersecurity Risks Textron Information Services is led by our CIO who has held positions of increasing responsibility within our corporate, Bell and Textron Systems IT organizations since 2008, including leading the IT organizations at both segments in maintaining compliance with U.S. Department of Defense information security requirements, as well as with our enterprise information security policies and standards.
Management of Cybersecurity Risks Textron Information Services is led by our CIO who has held positions of increasing responsibility within our corporate, Bell and Textron Systems IT organizations since 2008, including leading the IT organizations at both segments in maintaining compliance with the DoD information security requirements, as well as with our enterprise information security policies and standards.
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. • Delivering quality communications and annual training to stakeholders on cyber awareness and computing hygiene.
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. • Delivering quality communications and annual training to stakeholders on cyber awareness and computing hygiene. 17 Table of Contents We believe that the conduct of our employees is critical to the success of our information security.
Governance Board Oversight of Cybersecurity Matters Oversight of information security matters is conducted by our full Board of Directors. The Board annually receives a comprehensive presentation on information security and controls from our Chief Information Officer (CIO) and, as may be necessary for specific topics, follow up occurs at additional meetings during the course of the year.
The Board annually receives a comprehensive presentation on information security and controls from our Chief Information Officer (CIO) and, as may be necessary for specific topics, follow up occurs at additional meetings during the course of the year.
We believe that the conduct of our employees is critical to the success of our information security. Through our security awareness program, we keep our employees apprised of threats, risks and the part that they play in protecting both themselves and the company.
Through our security awareness program, we keep our employees apprised of threats, risks and the part that they play in protecting both themselves and the company.
We execute penetration testing against our technical environment and processes, and continuously monitor our network and systems for signs of intrusion. We also retain consultants to enhance our penetration testing program with current trends and methodologies utilized against other companies, ensuring we are proactively reducing risk from emerging threats.
We also retain consultants to enhance our penetration testing program with current trends and methodologies utilized against other companies, ensuring we are proactively reducing risk from emerging threats. In addition, we conduct tabletop exercises to prepare for responding to potential cybersecurity events.
Our centrally defined security policies and processes are based on industry best practices and are revisited regularly to ensure their appropriateness based on risk, threats and current technological capabilities. We monitor compliance with these policies and processes through frequent internal audits and a set of robust metrics that assist in protection of our environment.
We monitor compliance with these policies and processes through frequent internal audits and a set of robust metrics that assist in protection of our environment.
Protections against insider threat is a critical component of our security strategy, particularly within our defense business units.
Protections against insider threat is a critical component of our security strategy, particularly within our defense business units. Our insider threat detection processes are designed to identify and evaluate potential insider threats so that appropriate mitigation can be implemented.
Our insider threat detection processes are designed to identify and evaluate potential insider threats so that appropriate mitigation can be implemented. 17 Table of Contents Collaboration with our industry partners and government customers contributes to the protection of Textron’s computing environment as well as our military stakeholders.
Collaboration with our industry partners and government customers contributes to the protection of Textron’s computing environment as well as our military stakeholders.
As a U.S. defense contractor, we are additionally obligated to comply with current Department of Defense regulations such as Defense Federal Acquisition Regulation Supplement and the evolving Cybersecurity Maturity Model Certification guidelines.
As a U.S. defense contractor, we are required to comply with extensive regulations, including requirements imposed by the Defense Federal Acquisition Regulation Supplement related to adequately safeguarding controlled unclassified information (CUI) and reporting cybersecurity incidents to the U.S. Department of Defense (DoD).
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Item 1C. Cybersecurity Overview Our IT and related systems are critical to the efficient operation of our business and essential to our ability to perform day to day processes.
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Item 1C. Cybersecurity Overview Our centrally defined cybersecurity policies and processes are based on industry best practices and are revisited regularly to ensure their appropriateness based on risk, threats and current technological capabilities. We use a multi-layered approach to security with processes and tools aligned with the National Institute of Standards and Technology Cybersecurity Framework.
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We face persistent security threats, including threats to our IT infrastructure and unlawful attempts to gain access to our confidential, classified or otherwise proprietary information, or that of our employees or customers, via phishing/malware campaigns and other cyberattack methods.
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We will also be 16 Table of Contents required to achieve Cybersecurity Maturity Model Certification which will certify our compliance with the federally mandated CUI program.
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These penetration tests are conducted at a random interval and target our infrastructure and certain of the products we deliver to our customers.
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For more information regarding the risks we face from cybersecurity threats, see Item 1A. Risk Factors. Governance Board Oversight of Cybersecurity Matters Oversight of information security matters is conducted by our full Board of Directors.
Added
We conduct periodic compliance training for our employees regarding the protection of sensitive information, which includes mandatory annual cyber safety training for all users with access to our computer network intended to reduce the likelihood of success of cyberattacks which target our employees.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeItem 2. Properties On December 30, 2023, we operated a total of 56 plants located throughout the U.S. and 44 plants outside the U.S. We own 59 plants and lease the remainder for a total manufacturing space of approximately 23.7 million square feet.
Biggest changeItem 2. Properties On December 28, 2024, we operated a total of 56 plants located throughout the U.S. and 44 plants outside the U.S. We own 60 plants and lease the remainder for a total manufacturing space of approximately 23.6 million square feet.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeGovernment 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. Item 4. Mine Safety Disclosures Not applicable. PART II
Biggest changeGovernment 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. Item 4. Mine Safety Disclosures Not applicable. 18 Table of Contents PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeIssuer Repurchases of Equity Securities The following provides information about our fourth quarter 2023 repurchases of equity securities that are registered pursuant to Section 12 of the Securities Exchange Act of 1934, as amended: Period (shares in thousands) Total Number of Shares Purchased * Average Price Paid per Share (excluding commissions) Total Number of Shares Purchased as part of Publicly Announced Plan * Maximum Number of Shares that may yet be Purchased under the Plan October 1, 2023 – November 4, 2023 495 $ 76.41 495 31,650 November 5, 2023 – December 2, 2023 1,075 76.93 1,075 30,575 December 3, 2023 – December 30, 2023 2,099 77.76 2,099 28,476 Total 3,669 $ 77.33 3,669 * These shares were purchased pursuant to a plan authorizing the repurchases of up to 35 million shares of Textron common stock that was approved on July 24, 2023 by our Board of Directors.
Biggest changeIssuer Repurchases of Equity Securities The following provides information about our fourth quarter 2024 repurchases of equity securities that are registered pursuant to Section 12 of the Securities Exchange Act of 1934, as amended: Period (shares in thousands) Total Number of Shares Purchased * Average Price Paid per Share (excluding commissions) Total Number of Shares Purchased as part of Publicly Announced Plan * Maximum Number of Shares that may yet be Purchased under the Plan September 29, 2024 – November 2, 2024 500 $ 82.32 500 17,881 November 3, 2024 – November 30, 2024 1,475 84.88 1,475 16,406 December 1, 2024 – December 28, 2024 820 80.60 820 15,586 Total 2,795 $ 83.17 2,795 * These shares were purchased pursuant to a plan authorizing the repurchases of up to 35 million shares of Textron common stock that was approved on July 24, 2023 by our Board of Directors.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities The principal market on which our common stock is traded is the New York Stock Exchange under the symbol "TXT." At December 30, 2023, there were approximately 5,200 record holders of Textron common stock.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities The principal market on which our common stock is traded is the New York Stock Exchange under the symbol "TXT." At December 28, 2024, there were approximately 4,800 record holders of Textron common stock.
This share repurchase program has no expiration date. 18 Table of Contents Stock Performance Graph The following graph compares the total return on a cumulative basis at the end of each year of $100 invested in our common stock on December 31, 2018 with the Standard & Poor’s (S&P) 500 Stock Index, the S&P 500 Aerospace & Defense (A&D) Index and the S&P 500 Industrials Index, all of which include Textron.
Stock Performance Graph The following graph compares the total return on a cumulative basis at the end of each year of $100 invested in our common stock on December 31, 2019 with the Standard & Poor’s (S&P) 500 Stock Index, the S&P 500 Aerospace & Defense (A&D) Index and the S&P 500 Industrials Index, all of which include Textron.
Removed
The values calculated assume dividend reinvestment. 2018 2019 2020 2021 2022 2023 Textron Inc. $ 100.00 $ 98.17 $ 106.29 $ 170.00 $ 156.09 $ 177.49 S&P 500 100.00 132.82 157.02 202.09 165.49 209.00 S&P 500 A&D 100.00 137.16 110.84 125.50 147.30 157.27 S&P 500 Industrials 100.00 133.52 164.01 209.76 169.06 220.52
Added
This share repurchase program has no expiration date.
Added
The values calculated assume dividend reinvestment. 2019 2020 2021 2022 2023 2024 Textron Inc. $ 100.00 $ 108.62 $ 173.72 $ 159.50 $ 181.37 $ 174.29 S&P 500 100.00 118.40 152.39 124.79 157.59 199.99 S&P 500 A&D 100.00 83.94 95.03 111.54 119.09 138.18 S&P 500 Industrials 100.00 111.06 134.52 127.15 150.20 178.38 Item 6. [Reserved] 19 Table of Contents

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

54 edited+43 added−29 removed25 unchanged
Biggest changeConsolidated Results of Operations % Change (Dollars in millions) 2023 2022 2021 2023 2022 Revenues $ 13,683 $ 12,869 $ 12,382 6% 4% Cost of sales 11,405 10,800 10,297 6% 5% Gross margin as a percentage of Manufacturing revenues 16.3% 15.7% 16.5% Selling and administrative expense 1,225 1,186 1,221 3% (3)% Interest expense, net 77 107 142 (28)% (25)% Special charges 126 — 25 — — Non-service components of pension and postretirement income, net 237 240 159 (1)% 51% Revenues Revenues increased $814 million, 6%, in 2023, compared with 2022.
Biggest changeConsolidated Results of Operations % Change (Dollars in millions) 2024 2023 2022 2024 2023 Revenues $ 13,702 $ 13,683 $ 12,869 —% 6% Cost of sales 11,200 10,835 10,199 3% 6% Gross margin as a percentage of Manufacturing revenues 18.0% 20.5% 20.4% Research and development costs 491 570 601 (14)% (5)% Selling and administrative expense 1,156 1,225 1,186 (6)% 3% Interest expense, net 97 77 107 26% (28)% Special charges 78 126 — (38)% 100% Non-service components of pension and postretirement income, net 263 237 240 11% (1)% 20 Table of Contents Revenues Revenues increased $19 million in 2024, compared with 2023, largely due to the following factors: • Higher Bell revenues of $432 million, largely reflecting higher military aircraft and support revenues of $347 million, primarily due to higher volume on the FLRAA program, partially offset by lower volume on the V-22 program. • Lower Industrial revenues of $326 million, due to lower revenues of $263 million at Textron Specialized Vehicles, principally in the powersports and personal transportation vehicles product lines due to reduced demand in their end markets, and lower revenues of $63 million at Kautex. • Lower Textron Aviation revenues of $89 million, reflecting lower volume and mix of $270 million, principally a result of the strike discussed in the Segment Analysis section below, partially offset by higher pricing of $181 million in both the aircraft and aftermarket parts and services product lines.
For an overview of our business segments, including a discussion of our major products and services, refer to Item 1. Business. A discussion of our financial condition and operating results for 2023 compared with 2022 is provided below, while a discussion of 2022 compared with 2021 can be found in Item 7.
For an overview of our business segments, including a discussion of our major products and services, refer to Item 1. Business. A discussion of our financial condition and operating results for 2024 compared with 2023 is provided below, while a discussion of 2023 compared with 2022 can be found in Item 7.
Government for which we have full recourse under customary contract termination clauses. Credit Facilities and Other Sources of Capital Textron has 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.
Government for which we have full recourse under customary contract termination clauses. 25 Table of Contents Credit Facilities and Other Sources of Capital Textron has 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.
The facility expires in October 2027 and provides for two one-year extensions at our option with the consent of lenders representing a majority of the commitments under the facility. At December 30, 2023 and December 31, 2022, there were no amounts borrowed against the facility and there were $9 million of outstanding letters of credit issued under the facility.
The facility expires in October 2027 and provides for two one-year extensions at our option with the consent of lenders representing a majority of the commitments under the facility. At December 28, 2024 and December 30, 2023, there were no amounts borrowed against the facility and there were $9 million of outstanding letters of credit issued under the facility.
A change of 50 basis-points higher or lower, with all other assumptions held constant, in this weighted-average discount rate in 2023 would have changed our pension income for our domestic plans by approximately $10 million. 31 Table of Contents
A change of 50 basis-points higher or lower, with all other assumptions held constant, in this weighted-average discount rate in 2024 would have changed our pension income for our domestic plans by approximately $10 million. 29 Table of Contents
The impact of our cumulative catch-up adjustments on segment profit recognized in prior periods is presented below: (In millions) 2023 2022 2021 Gross favorable $ 106 $ 101 $ 154 Gross unfavorable (62) (117) (73) Net adjustments $ 44 $ (16) $ 81 Due to the significance of judgment in the estimation process described above, it is likely that materially different revenues and/or cost of sales amounts could be recorded if we used different assumptions or if the underlying circumstances were to change.
The impact of our cumulative catch-up adjustments on segment profit recognized in prior periods is presented below: (In millions) 2024 2023 2022 Gross favorable $ 122 $ 106 $ 101 Gross unfavorable (91) (62) (117) Net adjustments $ 31 $ 44 $ (16) Due to the significance of judgment in the estimation process described above, it is likely that materially different revenues and/or cost of sales amounts could be recorded if we used different assumptions or if the underlying circumstances were to change.
Reclassification adjustments included in the Consolidated Statements of Cash Flows on page 38 are summarized below: (In millions) 2023 2022 2021 Reclassification adjustments from investing activities to operating activities: Finance receivable originations for Manufacturing group inventory sales $ (160) $ (92) $ (100) Cash received from customers 143 127 231 Other — 1 — Total reclassification adjustments from investing activities to operating activities $ (17) $ 36 $ 131 Under a Support Agreement between Textron and TFC, Textron is required to maintain a controlling interest in TFC.
Reclassification adjustments included in the Consolidated Statements of Cash Flows on page 36 are summarized below: (In millions) 2024 2023 2022 Reclassification adjustments from investing activities to operating activities: Finance receivable originations for Manufacturing group inventory sales $ (109) $ (160) $ (92) Cash received from customers 108 143 127 Other — — 1 Total reclassification adjustments from investing activities to operating activities $ (1) $ (17) $ 36 Under a Support Agreement between Textron and TFC, Textron is required to maintain a controlling interest in TFC.
Income Taxes 2023 2022 2021 Effective tax rate 15.2% 15.2% 14.4% In 2023 and 2022, the effective tax rate of 15.2% was lower than the U.S. federal statutory tax rate of 21%, largely due to the favorable impact of research and development credits and tax deductions for foreign-derived intangible income.
In 2023, the effective tax rate of 15.2% was lower than the U.S. federal statutory tax rate of 21%, largely due to the favorable impact of research and development credits and tax deductions for foreign-derived intangible income.
Cash flows used by financing activities in 2023 included $1,168 million of cash paid to repurchase an aggregate of 16.2 million shares of our common stock under the 2023 share repurchase plan described below, partially offset by $348 million of net proceeds from the issuance of long-term debt.
In 2023, cash flows used by financing activities included $1.2 billion of cash paid to repurchase an aggregate of 16.2 million shares of our common stock, partially offset by $348 million of net proceeds from the issuance of long-term debt.
Assessment of Liquidity and Significant Future Cash Requirements Key information that is utilized in assessing our liquidity is summarized below: (Dollars in millions) December 30, 2023 December 31, 2022 Manufacturing group Cash and equivalents $ 2,121 $ 1,963 Debt 3,526 3,182 Shareholders’ equity 6,987 7,113 Capital (debt plus shareholders’ equity) 10,513 10,295 Net debt (net of cash and equivalents) to capital 17% 15% Debt to capital 34% 31% Finance group Cash and equivalents $ 60 $ 72 Debt 348 375 We believe that our calculations of debt to capital and net debt to capital are useful measures as they provide a summary indication of the level of debt financing (i.e., leverage) that is in place to support our capital structure, as well as to provide an indication of our capacity to add further leverage.
Assessment of Liquidity and Significant Future Cash Requirements Key information that is utilized in assessing our liquidity is summarized below: (Dollars in millions) December 28, 2024 December 30, 2023 Manufacturing group Cash and equivalents $ 1,386 $ 2,121 Debt 3,247 3,526 Shareholders’ equity 7,204 6,987 Capital (debt plus shareholders’ equity) 10,451 10,513 Net debt (net of cash and equivalents) to capital 21% 17% Debt to capital 31% 34% Finance group Cash and equivalents $ 55 $ 60 Debt 341 348 We believe that our calculations of debt to capital and net debt to capital are useful measures as they provide a summary indication of the level of debt financing (i.e., leverage) that is in place to support our capital structure, as well as to provide an indication of our capacity to add further leverage.
For 2023 and 2022, the assumed expected long-term rate of return on plan assets used in calculating pension income was 7.14% and 7.10%, respectively. For 2023, the assumed rate of return for our domestic plans, which represent approximately 90% of our total pension assets, was 7.25%.
A lower expected rate of return on plan assets will decrease pension income. For 2024 and 2023, the assumed expected long-term rate of return on plan assets used in calculating pension income was 7.16% and 7.14%, respectively. For 2024, the assumed rate of return for our domestic plans, which represent approximately 90% of our total pension assets, was 7.25%.
We calculate the fair value of each reporting unit using discounted cash flows. These cash flows incorporate assumptions for revenue growth rates and operating margins that are based on our strategic plans and long-range planning forecasts, which include our best estimates of current and forecasted market conditions, cost structure and anticipated net cost reductions.
These cash flows incorporate assumptions for revenue growth rates and operating margins that are based on our strategic plans and long-range planning forecasts, which include our best estimates of current and forecasted market conditions, cost structure and anticipated net cost reductions.
Financial highlights for 2023 also include: • Generated $1.3 billion of net cash from operating activities from our manufacturing businesses. • Invested $570 million in research and development projects and $402 million in capital expenditures. • Returned $1.2 billion to our shareholders through the repurchase of 16.2 million shares of our common stock.
Financial highlights for 2024 also include: • Generated $1.0 billion of net cash from operating activities from our manufacturing businesses. • Invested $491 million in research and development projects and $364 million in capital expenditures. • Returned $1.1 billion to our shareholders through the repurchase of 12.9 million shares of our common stock.
Our earnings could be reduced by a material amount resulting in a charge to earnings if (a) total estimated contract costs are significantly higher than expected due to changes in customer specifications prior to contract amendment, (b) total estimated contract costs are significantly higher than previously estimated due to cost overruns or inflation, (c) there is a change in engineering efforts required during the development stage of the contract or (d) we are unable to meet contract milestones. 30 Table of Contents Goodwill We evaluate the recoverability of goodwill annually in the fourth quarter or more frequently if events or changes in circumstances indicate a potential impairment of a reporting unit.
Our earnings could be reduced by a material amount resulting in a charge to earnings if (a) total estimated contract costs are significantly higher than expected due to changes in customer specifications prior to contract amendment, (b) total estimated contract costs are significantly higher than previously estimated due to cost overruns or inflation, (c) there is a change in engineering efforts required during the development stage of the contract or (d) we are unable to meet contract milestones.
Cash flows used by financing activities in 2023 included $1,168 million of share repurchases, partially offset by $348 million of net proceeds from the issuance of long-term debt. In 2022, cash flows used by financing activities included $867 million of share repurchases and $234 million of payments on long-term debt.
In 2023, cash flows used by financing activities included $1.2 billion of share repurchases, partially offset by $348 million of net proceeds from the issuance of long-term debt.
In 2023, the weighted-average discount rate used in calculating pension income was 5.51%, compared with 2.99% in 2022. For our domestic plans, the assumed discount rate was 5.55% in 2023, compared with 3.05% in 2022.
In 2024, the weighted-average discount rate used in calculating pension income was 5.19%, compared with 5.51% in 2023. For our domestic plans, the assumed discount rate was 5.25% in 2024, compared with 5.55% in 2023.
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.
In our discussion of comparative results for the Manufacturing group, material changes in revenues and segment profit for our commercial businesses typically are expressed in terms of product line revenues, including volume and mix and pricing; foreign exchange; acquisitions and dispositions; inflation; manufacturing efficiency; and changes in research and development costs and selling and administrative expense.
The agreement, as amended in December 2015, also requires Textron to ensure that TFC maintains fixed charge coverage of no less than 125% and consolidated shareholders' equity of no less than $125 million.
The agreement, as amended in December 2015, also requires Textron to ensure that TFC maintains fixed charge coverage of no less than 125% and consolidated shareholders' equity of no less than $125 million. There were no cash contributions required to be paid to TFC in 2024 and 2023 to maintain compliance with the support agreement.
The discount rate enables us to state expected future benefit payments as a present value on the measurement date, reflecting the current rate at which the pension liabilities could be effectively settled.
Net periodic benefit income is sensitive to changes in the expected long-term rate of return on plan assets. The discount rate enables us to state expected future benefit payments as a present value on the measurement date, reflecting the current rate at which the pension liabilities could be effectively settled.
For a full reconciliation of our effective tax rate to the U.S. federal statutory tax rate, see Note 17 to the Consolidated Financial Statements in Item 8. Financial Statements and Supplementary Data. Segment Analysis We conduct our business through six operating segments: Textron Aviation, Bell, Textron Systems, Industrial, Textron eAviation and Finance.
For a full reconciliation of our effective tax rate to the U.S. federal statutory tax rate, see Note 16 to the Consolidated Financial Statements on page 63 . 21 Table of Contents Segment Analysis We operate in, and report financial information for, the following six operating segments: Textron Aviation, Bell, Textron Systems, Industrial, Textron eAviation and Finance.
Net income tax payments were $338 million and $332 million in 2023 and 2022, respectively. Pension contributions were $45 million and $49 million in 2023 and 2022, respectively. In 2023, investing cash flows included capital expenditures of $402 million, partially offset by $40 million of net proceeds from corporate-owned life insurance policies.
In 2024 and 2023, investing cash flows included capital expenditures of $364 million and $402 million, respectively, partially offset by net proceeds from corporate-owned life insurance policies of $85 million and $40 million, respectively.
We believe this approach yields a discount rate that is consistent with an implied rate of return that an independent investor or market participant would require for an investment in a company having similar risks and business characteristics to the reporting unit being assessed.
We believe this approach yields a discount rate that is consistent with an implied rate of return that an independent investor or market participant would require for an investment in a company having similar risks and business characteristics to the reporting unit being assessed. 28 Table of Contents Based on our annual impairment review, the fair value calculated using the estimates discussed above exceeded the carrying value by an adequate amount for each reporting group.
In addition to our manufacturing operating cash requirements, future material cash outlays include our contractual combined debt and interest payments for the Manufacturing group of $483 million in 2024, $467 million in 2025, $452 million in 2026 and $2.8 billion thereafter, and for the Finance Group of $32 million in 2024, $49 million in 2025, $22 million in 2026 and $613 million thereafter.
In addition to our manufacturing operating cash requirements, future material cash outlays include our contractual combined debt and interest payments for the Manufacturing group of $473 million in 2025, $457 million in 2026, $444 million in 2027 and $2.5 billion thereafter, and for the Finance group of $46 million in 2025, $20 million in 2026, $69 million in 2027 and $507 million thereafter.
We generally use the cost-to-cost method to measure progress for these contracts because it best depicts the transfer of control to the customer that occurs as we incur costs on our contracts.
Government-sponsored foreign military sales program, for the design, development, manufacture or modification of aerospace and defense products as well as related services. We generally use the cost-to-cost method to measure progress for these contracts because it best depicts the transfer of control to the customer that occurs as we incur costs on our contracts.
Interest Expense, Net Interest expense, net includes interest expense for both the Finance and Manufacturing borrowing groups, with interest on intercompany borrowings eliminated, and interest income earned on cash and equivalents for the Manufacturing borrowing group. In 2023, interest expense, net decreased $30 million, 28%, compared with 2022, primarily due to an increase in interest income of $34 million.
Interest Expense, Net Interest expense, net includes interest expense for both the Finance and Manufacturing borrowing groups, with interest on intercompany borrowings eliminated, and interest income earned on cash and equivalents for the Manufacturing borrowing group.
We also maintain an effective shelf registration statement filed with the Securities and Exchange Commission that allows us to issue an unlimited amount of public debt and other securities. In November 2023, we issued $350 million in SEC-registered fixed-rate notes due in November 2033 with an annual interest rate of 6.10%.
We also maintain an effective shelf registration statement filed with the Securities and Exchange Commission that allows us to issue an unlimited amount of public debt and other securities. On March 1, 2024, we repaid our $350 million 4.30% Notes due March 2024.
This share repurchase program allows us to continue our practice of repurchasing shares to offset the impact of dilution from stock-based compensation and benefit plans and for opportunistic capital management purposes. The new program has no expiration date and replaced the prior 2022 share repurchase program, which was utilized in 2022 for repurchases.
In July 2023, Textron's Board of Directors approved a program for the repurchase of up to 35 million shares of our common stock. This share repurchase program allows us to continue our practice of repurchasing shares to offset the impact of dilution from stock-based compensation and benefit plans and for opportunistic capital management purposes.
For our segments that contract with the U.S. Government, changes in revenues related to these contracts are expressed in terms of volume.
Government, material changes in revenues related to these contracts are expressed in terms of volume.
Management’s Discussion and Analysis of Financial Condition and Results of Operations of our Annual Report on Form 10-K for the year ended December 31, 2022. Beginning in 2023, we changed how we measure our segment profit for the manufacturing segments, as discussed in the Segment Analysis section below.
Management’s Discussion and Analysis of Financial Condition and Results of Operations of our Annual Report on Form 10-K for the year ended December 30, 2023.
Key assumptions used in determining these obligations and related expenses or benefits include the expected long-term rates of return on plan assets and discount rates. We also make assumptions regarding employee demographic factors such as retirement patterns, mortality, turnover and rate of compensation increases. We evaluate and update these assumptions annually.
We also make assumptions regarding employee demographic factors such as retirement patterns, mortality, turnover and rate of compensation increases. We evaluate and update these assumptions annually. To determine the weighted-average expected long-term rate of return on plan assets, we consider the current and expected asset allocation, as well as historical and expected returns on each plan asset class.
Finance Group Cash Flows The cash flows from continuing operations for the Finance group as presented in our Consolidated Statements of Cash Flows are summarized below: (In millions) 2023 2022 2021 Operating activities $ 14 $ (7) $ (1) Investing activities 11 100 185 Financing activities (37) (216) (97) In 2023, cash flows from operating activities were $14 million, compared with cash outflows of $7 million in 2022.
Manufacturing Group Cash Flows Cash flows from continuing operations for the Manufacturing group as presented in our Consolidated Statements of Cash Flows are summarized below: (In millions) 2024 2023 2022 Operating activities $ 1,008 $ 1,270 $ 1,461 Investing activities (288) (345) (511) Financing activities (1,438) (776) (875) Cash flows from operating activities were $1.0 billion in 2024, compared with $1.3 billion in 2023.
Purchase obligations include undiscounted amounts committed under legally enforceable contracts or purchase orders for goods and services with defined terms as to price, quantity and delivery dates, as well as property, plant and equipment. Approximately 14% of our purchase obligations represent purchase orders issued for goods and services to be delivered under firm contracts with the U.S.
Approximately 28% of our purchase obligations represent purchase orders issued for goods and services to be delivered under firm contracts with the U.S.
The accounting policies that we believe are most critical to the portrayal of our financial condition and results of operations are listed below. We believe these policies require our most difficult, subjective and complex judgments in estimating the effect of inherent uncertainties. This section should be read in conjunction with Note 1 to the Consolidated Financial Statements in Item 8.
Critical Accounting Estimates To prepare our Consolidated Financial Statements to be in conformity with generally accepted accounting principles, we must make complex and subjective judgments in the selection and application of accounting policies. The accounting policies that we believe are most critical to the portrayal of our financial condition and results of operations are listed below.
Management’s Discussion and Analysis of Financial Condition and Results of Operations of our Annual Report on Form 10-K for the year ended December 31, 2022 was insignificant. The following discussion should be read in conjunction with our Consolidated Financial Statements and related Notes included in Item 8. Financial Statements and Supplementary Data.
The following discussion should be read in conjunction with our Consolidated Financial Statements and related Notes included in Item 8. Financial Statements and Supplementary Data.
Volume and mix included lower Citation jet and pre-owned volume, partially offset by higher defense, aftermarket, commercial turboprop and other aircraft volume. We delivered 168 Citation jets and 153 commercial turboprops in 2023, compared with 178 Citation jets and 146 commercial turboprops in 2022.
Aircraft revenues decreased $203 million, 6%, due to lower volume and mix, largely from Citation jet and commercial turboprop deliveries, partially offset by higher pricing. We delivered 151 Citation jets and 127 commercial turboprops in 2024, compared with 168 Citation jets and 153 commercial turboprops in 2023.
In 2022, cash flows used by financing activities included $867 million of cash paid to repurchase an aggregate of 13.1 million shares of our common stock under a 2022 share repurchase plan. On July 24, 2023, Textron's Board of Directors approved a new program for the repurchase of up to 35 million shares of our common stock.
Cash flows used by financing activities in 2024 included $1.1 billion of cash paid to repurchase an aggregate of 12.9 million shares of our common stock under the 2023 share repurchase plan described below and payments on long-term debt of $361 million.
Consolidated Cash Flows The consolidated cash flows from continuing operations, after elimination of activity between the borrowing groups, are summarized below: (In millions) 2023 2022 2021 Operating activities $ 1,267 $ 1,490 $ 1,599 Investing activities (317) (447) (281) Financing activities (813) (1,091) (1,446) Consolidated cash flows from operating activities were $1,267 million in 2023, compared with $1,490 million in 2022 as higher earnings were more than offset by changes in working capital and a net cash outflow from captive finance receivables of $52 million.
Cash flows used in financing activities included payments on long-term and nonrecourse debt of $16 million and $37 million in 2024 and 2023, respectively. 26 Table of Contents Consolidated Cash Flows The consolidated cash flows from continuing operations, after elimination of activity between the borrowing groups, are summarized below: (In millions) 2024 2023 2022 Operating activities $ 1,015 $ 1,267 $ 1,490 Investing activities (284) (317) (447) Financing activities (1,454) (813) (1,091) Consolidated cash flows from operating activities were $1.0 billion in 2024, compared with $1.3 billion in 2023.
For 2023, 2022 and 2021, gross interest expense totaled $133 million, $129 million and $142 million, respectively. Special Charges Special charges include restructuring activities and asset impairment charges as described in Note 16 to the Consolidated Financial Statements in Item 8. Financial Statements and Supplementary Data.
Special Charges Special charges of $78 million and $126 million in 2024 and 2023, respectively, include restructuring activities and asset impairment charges as described in Note 15 to the Consolidated Financial Statements on page 62 .
Cost of Sales and Selling and Administrative Expense Cost of sales includes cost of products and services sold for the Manufacturing group. In 2023, cost of sales increased $605 million, 6%, compared with 2022, largely due to the impact of higher net volume and mix described above, and $257 million of inflation.
Cost of Sales Cost of sales includes cost of products and services sold for the Manufacturing group. In 2024, cost of sales increased $365 million, 3%, compared with 2023.
Retirement Benefits We sponsor funded and unfunded domestic and international pension plans for certain of our employees. Beginning on January 1, 2010, we initiated actions to commence the closure of the pension plans to new entrants. We provide employees hired subsequent to these closures with defined contribution benefits. Our pension benefit obligations are calculated based on actuarial valuations.
Accordingly, we do not believe that there is a reasonable possibility that any units might fail the impairment test in the foreseeable future. Retirement Benefits We sponsor funded and unfunded domestic and international pension plans for certain of our employees. Beginning on January 1, 2010, we initiated actions to commence the closure of the pension plans to new entrants.
Financial Statements and Supplementary Data, which includes other significant accounting policies. Revenue Recognition A substantial portion of our revenues is related to long-term contracts with the U.S. Government, including those under the U.S. Government-sponsored foreign military sales program, for the design, development, manufacture or modification of aerospace and defense products as well as related services.
This section should be read in conjunction with Note 1 to the Consolidated Financial Statements on page 38 , which includes other significant accounting policies. 27 Table of Contents Revenue Recognition A substantial portion of our revenues is related to long-term contracts with the U.S. Government, including those under the U.S.
Working capital changes between the periods primarily reflected an increase in inventories and lower accounts payable, 28 Table of Contents partially offset by a decrease in other assets. Net income tax payments were $352 million and $356 million in 2023 and 2022, respectively. Pension contributions were $45 million and $49 million in 2023 and 2022, respectively.
The decrease of $252 million in cash flows was largely due to changes in working capital and lower earnings, partially offset by $161 million in lower net tax payments. Net income tax payments were $191 million and $352 million in 2024 and 2023, respectively. Pension contributions were $44 million and $45 million in 2024 and 2023, respectively.
In 2023, investing cash flows included capital expenditures of $402 million, partially offset by $40 million of net proceeds from corporate-owned life insurance policies. Investing cash flows in 2022 included capital expenditures of $354 million and $202 million of net cash paid for business acquisitions, largely related to the Pipistrel acquisition.
In 2024 and 2023, investing cash flows included capital expenditures of $364 million and $402 million, respectively, partially offset by net proceeds from corporate-owned life insurance policies of $85 million and $40 million, respectively. Cash flows used by financing activities in 2024 included $1.1 billion of share repurchases and payments on long-term debt of $377 million.
Volume and mix included lower military volume of $39 million, as higher volume from the FLRAA program was more than offset by lower volume on the V-22 and H-1 programs. Commercial volume and mix increased $27 million, reflecting a favorable mix as we delivered 171 commercial helicopters in 2023, compared with 179 commercial helicopters in 2022.
Bell’s military and support programs revenues increased $347 million, 20%, in 2024, compared with 2023, primarily due to higher volume on the FLRAA program, partially offset by lower volume on the V-22 program. Commercial helicopters, parts and services increased $85 million, 6%. We delivered 172 commercial helicopters in 2024, compared with 171 commercial helicopters in 2023.
For the Manufacturing Group, we also have purchase obligations that require material future cash outlays totaling $2.9 billion in 2024, $445 million in 2025 and $107 million thereafter.
For the Manufacturing group, we also have purchase obligations that require material future cash outlays totaling $2.7 billion in 2025, $501 million in 2026 and $355 million thereafter. Purchase obligations include undiscounted amounts committed under contracts or purchase orders for goods and services with defined terms as to price, quantity and delivery dates, as well as property, plant and equipment.
Performance reflects an increase or decrease in research and development, depreciation, selling and administrative costs, warranty, product liability, quality/scrap, labor efficiency, overhead, product line profitability, start-up, ramp up and cost-reduction initiatives or other manufacturing inputs. Approximately 21% of our 2023 revenues were derived from contracts with the U.S. Government, including those under the U.S. Government-sponsored foreign military sales program.
Manufacturing efficiency includes changes in material, labor and overhead variances to standards, typically due to scrap rates, labor efficiency or inefficiencies, facility usage and other manufacturing productivity inputs. Approximately 25% of our 2024 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.
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. 21 Table of Contents Textron Aviation % Change (Dollars in millions) 2023 2022 2021 2023 2022 Revenues: Aircraft $ 3,577 $ 3,387 $ 3,116 6% 9% Aftermarket parts and services 1,796 1,686 1,450 7% 16% Total revenues 5,373 5,073 4,566 6% 11% Operating expenses 4,724 4,513 4,217 5% 7% Segment profit $ 649 $ 560 $ 349 16% 60% Profit margin 12.1% 11.0% 7.6% Backlog $ 7,169 $ 6,387 $ 4,120 12% 55% Textron Aviation Revenues and Operating Expenses Factors contributing to the 2023 year-over-year revenue change are provided below: (In millions) 2023 versus 2022 Pricing $ 335 Volume and mix (35) Total change $ 300 Textron Aviation’s revenues increased $300 million, 6%, in 2023, compared with 2022, reflecting higher pricing of $335 million, partially offset by lower volume and mix of $35 million.
Changes in segment profit for these contracts are typically expressed in terms of volume and mix and contract performance, which includes 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.
The $21 million increase in cash flows was primarily due to higher earnings and $10 million in lower income tax payments. The Finance group’s cash flows from investing activities primarily included collections on finance receivables totaling $169 million and $147 million in 2023 and 2022, respectively, partially offset by finance receivable originations of $160 million and $92 million, respectively.
Finance Group Cash Flows The cash flows from continuing operations for the Finance group as presented in our Consolidated Statements of Cash Flows are summarized below: (In millions) 2024 2023 2022 Operating activities $ 8 $ 14 $ (7) Investing activities 3 11 100 Financing activities (16) (37) (216) The Finance group’s cash flows from investing activities primarily included collections on finance receivables totaling $133 million and $169 million in 2024 and 2023, respectively, partially offset by finance receivable originations of $130 million and $160 million, respectively.
Textron Aviation Backlog Textron Aviation’s backlog increased $782 million in 2023, reflecting orders in excess of deliveries. 22 Table of Contents Bell % Change (Dollars in millions) 2023 2022 2021 2023 2022 Revenues: Military aircraft and support programs $ 1,701 $ 1,740 $ 2,073 (2)% (16)% Commercial helicopters, parts and services 1,446 1,351 1,291 7% 5% Total revenues 3,147 3,091 3,364 2% (8)% Operating expenses 2,827 2,809 2,965 1% (5)% Segment profit $ 320 $ 282 $ 399 13% (29)% Profit margin 10.2% 9.1% 11.9% Backlog $ 4,780 $ 4,781 $ 3,871 0% 24% A significant portion of Bell’s military aircraft and support program revenues has been from the U.S.
Bell % Change (Dollars in millions) 2024 2023 2022 2024 2023 Revenues: Military aircraft and support programs $ 2,048 $ 1,701 $ 1,740 20% (2)% Commercial helicopters, parts and services 1,531 1,446 1,351 6% 7% Total revenues 3,579 3,147 3,091 14% 2% Cost of sales 2,899 2,392 2,316 21% 3% Research and development costs 97 192 266 (49)% (28)% Selling and administrative expense 213 243 227 (12)% 7% Segment profit $ 370 $ 320 $ 282 16% 13% Profit margin 10.3% 10.2% 9.1% Backlog $ 7,469 $ 4,780 $ 4,781 56% —% Bell’s military aircraft and support programs include a development contract for the U.S.
Operating expenses for the Industrial segment increased $303 million, 9%, in 2023 compared with 2022, primarily reflecting the impact of higher volume and mix described above.
Industrial's cost of sales decreased $228 million, 7%, in 2024 compared with 2023, primarily reflecting the impact of lower volume and mix.
Industrial % Change (Dollars in millions) 2023 2022 2021 2023 2022 Revenues: Kautex $ 1,954 $ 1,771 $ 1,735 10% 2% Specialized Vehicles 1,887 1,694 1,395 11% 21% Total revenues 3,841 3,465 3,130 11% 11% Operating expenses 3,613 3,310 3,010 9% 10% Segment profit $ 228 $ 155 $ 120 47% 29% Profit margin 5.9% 4.5% 3.8% 24 Table of Contents Industrial Revenues and Operating Expenses Factors contributing to the 2023 year-over-year revenue change are provided below: (In millions) 2023 versus 2022 Volume and mix $ 280 Pricing 99 Foreign exchange (3) Total change $ 376 Industrial segment revenues increased $376 million, 11%, in 2023, compared with 2022, largely due to higher volume and mix of $280 million across both product lines and a favorable impact of $99 million from pricing, principally in the Specialized Vehicles product line.
Industrial % Change (Dollars in millions) 2024 2023 2022 2024 2023 Revenues: Kautex $ 1,891 $ 1,954 $ 1,771 (3)% 10% Textron Specialized Vehicles 1,624 1,887 1,694 (14)% 11% Total revenues 3,515 3,841 3,465 (8)% 11% Cost of sales 2,993 3,221 2,959 (7)% 9% Research and development costs 72 80 71 (10)% 13% Selling and administrative expense 299 312 280 (4)% 11% Segment profit $ 151 $ 228 $ 155 (34)% 47% Profit margin 4.3% 5.9% 4.5% Industrial segment revenues decreased $326 million, 8%, in 2024, compared with 2023, largely due to lower volume and mix.
Segment profit increased 17%, compared with 2022, largely due to higher pricing, net of inflation at the Textron Aviation and Industrial segments. Our backlog increased 5% in 2023 to $13.9 billion, which included a $782 million increase at the Textron Aviation segment.
Textron Aviation’s segment profit decreased $83 million, 13%, in 2024, compared with 2023, primarily due to lower volume and mix and the manufacturing inefficiencies discussed above, partially offset by higher pricing, net of inflation. Textron Aviation’s backlog increased $676 million, 9%, in 2024, reflecting orders in excess of deliveries.
Bell’s operating expenses increased $18 million, 1%, in 2023, compared with 2022, primarily due to inflation of $55 million and higher operating expenses due to the mix of products and services sold, partially offset by lower research and development costs described below.
Bell’s segment profit increased $50 million, 16%, in 2024, compared with 2023, primarily due to lower research and development costs, as described above, partially offset by an unfavorable impact from mix as volume increased on lower margin FLRAA development activities while volume decreased on higher margin V-22 program revenues.
Segment profit is an important measure used for evaluating performance and for decision-making purposes. Beginning in 2023, we changed how we measure our segment profit for the manufacturing segments to exclude the non-service components of pension and postretirement income, net; LIFO inventory provision; and intangible asset amortization.
Segment profit for the manufacturing segments excludes the non-service components of pension and postretirement income, net; LIFO inventory provision; intangible asset amortization; interest expense, net for Manufacturing group; certain corporate expenses; gains/losses on major business dispositions; special charges and the inventory valuation charge to write down production-related powersports inventory.
Removed
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations Overview In 2023, Textron’s revenues increased 6%, compared with 2022, reflecting the impact of higher pricing, principally at the Textron Aviation, Industrial and Bell segments, and higher volume and mix at the Industrial segment.
Added
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations Overview In 2024, our operating results were adversely impacted by a strike at the Textron Aviation segment. On September 21, 2024, the International Association of Machinists and Aerospace Workers (IAM) District 70, Local Lodge 774 called a strike against Textron Aviation.
Removed
During 2023, we continued to manage through the impacts of ongoing global supply chain shortages/delays and labor shortages to deliver products to our customers.
Added
On October 20, 2024, an agreement was reached on a new five-year labor contract. As a result, our revenues and profit were unfavorably impacted in the second half of 2024 due to delayed aircraft deliveries and manufacturing inefficiencies associated with the labor disruption and the recovery of operating activities.
Removed
As a result of this change, the prior periods have been recast to conform to this presentation. The impact of the change in the segment profit measure on the narrative discussion of fluctuations in segment profit provided in Item 7.
Added
At the Industrial segment, we experienced lower revenues and profit in 2024, largely resulting from a decline in demand in our end markets for Textron Specialized Vehicles products. We are in the process of conducting a strategic review of our powersports product line, as discussed in Note 15 to the Consolidated Financial Statements on page 62 .
Removed
The revenue increase primarily included the following factors: • Higher Industrial revenues of $376 million due to higher volume and mix of $280 million across both product lines and a favorable impact from pricing of $99 million. • Higher Textron Aviation revenues of $300 million, reflecting higher pricing of $335 million, partially offset by lower volume and mix of $35 million. • Higher Textron Systems revenues of $63 million, primarily due to higher volume of $44 million. • Higher Bell revenues of $56 million, reflecting higher pricing of $68 million, partially offset by lower volume and mix of $12 million.
Added
At our Bell segment, the ramp up of the FLRAA program contributed to a 14% growth in its revenues for the year. In August, the U.S. Army announced approval of Milestone B for the FLRAA program, establishing it as a program of record and transitioning it to the Engineering and Manufacturing Development phase.
Removed
Gross margin as a percentage of Manufacturing revenues increased 60 basis points in 2023, compared with 2022, largely due to higher margins at the Industrial, Bell and Textron Aviation segments. 20 Table of Contents Selling and administrative expense increased $39 million, 3%, in 2023, compared with 2022, primarily reflecting higher share-based compensation expense and $27 million of inflation, largely in labor costs, partially offset by a $17 million recovery of amounts that were previously written off related to one customer relationship at the Finance segment.
Added
In the second half of the year, Bell was awarded contracts totaling approximately $3.0 billion for this phase of the program that contributed to a total company backlog increase of $4.0 billion, 29%, to $17.9 billion at the end of 2024.
Removed
Non-service Components of Pension and Postretirement Income, Net Non-service components of pension and postretirement income, net decreased by $3 million, 1%, in 2023, compared with 2022.
Added
This backlog increase included growth of $676 million at the Textron Aviation segment, reflecting steady customer demand supported by new products, and $644 million at the Textron Systems segment, which included new contract awards for the Ship-to-Shore Connector program.
Removed
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 periods have 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.
Added
In November 2023, the Financial Accounting Standards Board issued Accounting Standard Update (ASU) No. 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures , which requires a public entity to disclose, on an annual and interim basis, significant segment expenses and other segment items that are regularly provided to the Chief Operating Decision Maker.
Removed
Operating expenses for the Manufacturing segments include cost of sales and selling and administrative expense, while excluding certain corporate expenses, LIFO inventory provision, intangible asset amortization and special charges.
Added
The new standard is effective for fiscal years beginning after December 15, 2023. We adopted ASU 2023-07 in the fourth quarter of 2024 and have recast management’s discussion and analysis of the results of operations of our company to include a discussion of the additional expense categories.
Removed
Textron Aviation’s operating expenses increased $211 million, 5%, in 2023, compared with 2022, largely reflecting inflation of $176 million.
Added
In connection with the adoption of this standard, research and development costs previously included within Cost of products sold are now reported on a separate line in our Consolidated Statements of Operations. Prior period amounts have been recast to conform to the new presentation.
Removed
Textron Aviation Segment Profit Factors contributing to 2023 year-over-year segment profit change are provided below: (In millions) 2023 versus 2022 Pricing, net of inflation $ 159 Volume and mix 9 Performance (79) Total change $ 89 Textron Aviation’s segment profit increased $89 million, 16%, in 2023, compared with 2022, due to favorable pricing, net of inflation of $159 million and a favorable impact from the mix of products and services sold, partially offset by an unfavorable impact from performance of $79 million, largely related to supply chain and labor inefficiencies.
Added
The increase in cost was largely due to a $299 million impact from inflation and higher LIFO inventory provision and a $38 million inventory valuation charge to write down inventory to its net realizable value at Textron Specialized Vehicles as discussed in Note 15 to the Consolidated Financial Statements on page 62 .
Removed
Government for the V-22 tiltrotor aircraft and the H-1 helicopter platforms. Under current contracts, production of the V-22 tiltrotor aircraft is expected to end with final deliveries in the next two years after which this program will transition to the support stage.
Added
Consolidated gross margin as a percentage of Manufacturing revenues decreased 250 basis points in 2024, compared with 2023, primarily due to lower gross margin at the Bell segment, largely due to the mix of contracts discussed above, and at the Textron Aviation segment, reflecting the mix of aircraft sold and manufacturing inefficiencies, largely due to the strike.
Removed
For the H-1 helicopter, final deliveries under the current contract are expected to be completed in early 2024, fully transitioning this platform to the support stage. In December 2022, Bell was awarded the development contract for the U.S. Army's FLRAA program, which has begun to represent an increasing portion of Bell’s military aircraft and support program revenues.
Added
In addition, higher LIFO inventory provision and the inventory valuation charge noted above accounted for 80 basis points of the decrease.
Removed
Bell Revenues and Operating Expenses Factors contributing to the 2023 year-over-year revenue change are provided below: (In millions) 2023 versus 2022 Pricing $ 68 Volume and mix (12) Total change $ 56 Bell’s revenues increased $56 million, 2%, in 2023, compared with 2022, reflecting higher pricing of $68 million, partially offset by lower volume and mix of $12 million.
Added
Research and Development Costs Research and development costs decreased $79 million, 14%, in 2024, compared with 2023, largely reflecting the winddown of the Future Attack Reconnaissance Aircraft Program at the Bell segment, partially offset by a $17 million increase at the Textron eAviation segment, largely due to development efforts on hybrid and electric propulsion aircraft.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeDecember 30, 2023 December 31, 2022 ( In millions ) Carrying Value* Fair Value* Sensitivity of Fair Value to a 10% Change Carrying Value* Fair Value* Sensitivity of Fair Value to a 10% Change Manufacturing group Foreign currency exchange risk Debt $ (6) $ (6) $ (1) $ (6) $ (6) $ (1) Foreign currency exchange contracts 1 1 30 (11) (11) 28 $ (5) $ (5) $ 29 $ (17) $ (17) $ 27 Interest rate risk Debt $ (3,520) $ (3,342) $ (54) $ (3,175) $ (2,872) $ (51) Finance group Interest rate risk Finance receivables $ 417 $ 423 $ 9 $ 390 $ 369 $ 10 Debt (348) (293) (1) (375) (294) (1) * The value represents an asset or (liability). 32 Table of Contents
Biggest changeDecember 28, 2024 December 30, 2023 ( In millions ) Carrying Value* Fair Value* Sensitivity of Fair Value to a 10% Change Carrying Value* Fair Value* Sensitivity of Fair Value to a 10% Change Manufacturing group Foreign currency exchange risk Foreign currency exchange contracts $ (14) $ (14) $ 31 $ 1 $ 1 $ 30 Interest rate risk Debt (3,164) (2,989) (49) (3,520) (3,342) (54) Finance group Interest rate risk Finance receivables 439 454 9 417 423 9 Debt (341) (311) — (348) (293) (1) * The value represents an asset or (liability). 30 Table of Contents
These contracts generally are used to fix the local currency cost of purchased goods or services or selling prices denominated in currencies other than the functional currency. The notional amount of outstanding foreign currency exchange contracts was $478 million and $354 million at December 30, 2023 and December 31, 2022, respectively.
These contracts generally are used to fix the local currency cost of purchased goods or services or selling prices denominated in currencies other than the functional currency. The notional amount of outstanding foreign currency exchange contracts was $464 million and $478 million at December 28, 2024 and December 30, 2023, respectively.
This strategy includes the use of interest rate swap agreements. We had interest rate swap agreements with a total notional amount of $210 million at December 30, 2023 and $297 million at December 31, 2022, which effectively converted certain floating-rate debt to a fixed-rate equivalent.
This strategy includes the use of interest rate swap agreements. We had interest rate swap agreements with a total notional amount of $289 million at December 28, 2024 and $210 million at December 30, 2023, which effectively converted certain floating-rate debt to a fixed-rate equivalent.

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