2015 ANNUAL REPORT 2015 ANNUAL
2015 ANNUAL REPORT Textron’s Diverse Product Portfolio Textron is known around the world for its powerful brands of aircraft, defense and industrial products that provide customers with groundbreaking technologies, innovative solutions and first-class service.
TEXTRON AVIATION BELL HELICOPTER INDUSTRIAL TEXTRON SYSTEMS
Citation® Longitude® Bell Boeing V-22 Osprey Sherman + ReillyTM P2000X Puller Shadow® M2
Citation® M2® Bell 429WLG E-Z-GO Freedom® RXV Lycoming Race Engines
Beechcraft® King Air® 350i Bell 525 RelentlessTM Greenlee® DataScout® 10Gx TRU Level D Full Flight Simulator
Cessna® TTx® Bell 407GXP Kautex NGFS® Fuel Tank Ship to Shore Connector (SSC)
Beechcraft® T-6 Military Trainer Bell 412EPI Dixie Chopper® Stryker Stand-on FuryTM Precision Guided Weapon
Cessna® Grand Caravan® EX Bell 505 Jet Ranger XTM TUGTM MA Tow Tractor COMMANDOTM Elite Textron’s Global Network of Businesses
TEXTRON AVIATION BELL HELICOPTER INDUSTRIAL TEXTRON SYSTEMS FINANCE
Textron Aviation is home Bell Helicopter is one Our Industrial segment Textron Systems’ Our Finance segment, to the iconic Beechcraft, of the leading suppliers offers three main businesses provide operated by Textron Cessna and Hawker of helicopters and product lines: fuel innovative solutions to Financial Corporation brands, and continues related spare parts and systems and functional the defense, aerospace (TFC), is a commercial to lead general aviation services in the world. components produced and general aviation finance business that through two principal Bell is the pioneer of by Kautex; specialized markets. Product lines provides financing lines of business: aircraft the revolutionary tiltrotor vehicles and equipment include unmanned solutions for purchasers of sales and aftermarket. aircraft and has delivered manufactured by the systems, armored Textron products, primarily Aircraft sales include more than 35,000 aircraft Textron Specialized vehicles, advanced Textron Aviation aircraft business jet, turboprop to customers around Vehicles businesses and marine craft, intelligent and Bell helicopters. For and piston aircraft, as the world. Greater than Jacobsen; and tools and battlefield and more than five decades, well as special mission 29% of all helicopters in test equipment made by surveillance systems, TFC has played a key and military aircraft. operation today carry the the Textron Tools & Test intelligence software role for Textron customers Aftermarket includes Bell brand, including both companies. solutions, piston engines, around the globe. commercial parts sales, military and commercial simulation, training maintenance, inspection applications. and other defense and and repair services. aviation mission support products and services.
Selected Year-Over-Year Financial Data
(Dollars in Millions, Except Per Share Amounts) 2015 2014 Total Revenues $13,423 $13,878 Total Segment Profit 1,255 1,214 Income from Continuing Operations 698 605 PER SHARE OF COMMON STOCK Common Stock Price: High $ 46.93 $ 44.23 Low 32.20 32.28 Year-End 42.01 42.17 Diluted Earnings from Continuing Operations 2.50 2.15
COMMON SHARES OUTSTANDING (In Thousands) Diluted Average 278,727 281,790 Year-End 274,228 276,582 FINANCIAL POSITION Total Assets $14,708 $14,605 Manufacturing Group Debt 2,697 2,811 Finance Group Debt 913 1,063 Shareholders’ Equity 4,964 4,272 Manufacturing Group Debt-to-Capital (Net of Cash) 26% 33% Manufacturing Group Debt-to-Capital 35% 40% KEY PERFORMANCE METRICS Net Cash Provided by Operating Activities of Continuing Operations for Manufacturing Group—GAAP $ 1,038 $ 1,097 Manufacturing Cash Flow Before Pension Contributions—Non-GAAP1 631 753
1. Manufacturing Cash Flow Before Pension Contributions is a Non-GAAP Measure. See page immediately preceding Form 10-K for Reconciliation to GAAP.
TEXTRON 2015 ANNUAL REPORT 1 Fellow Shareholders, 2015 was a year of strong execution for our company as we recorded a segment profit of $1.3 billion and a profit margin of 9.3 percent. With revenues of $13.4 billion for the year, we positioned ourselves for continued long-term growth by achieving significant milestones on a number of important programs, introducing new products and enhancing our sales channels, actions that will enable us to expand our markets and align with the needs of our customers. Scott C. Donnelly Chairman and Chief Executive Officer
Successfully executing on our commitments supported by expanded global sales efforts. Successful first flight Our financial results reflect the successful execution of our efforts of the new Bell 525 Relentless—the first-ever commercial fly-by-wire to realize new opportunities for growth, improve our operational helicopter— was a major milestone for the business in 2015. On the efficiency and fulfill our commitments to customers, despite military side, Bell Helicopter secured several notable contracts, both continued challenges in a number of the markets in which we domestically and internationally, for the H-1 and V-22 programs. compete. At Textron Aviation, higher jet deliveries helped to lift Our Textron Systems segment won a number of U.S. and revenues to $4.8 billion in 2015 from $4.6 billion in 2014, while the international military contracts, including additional craft for continued successful integration of our Beechcraft and Cessna the U.S. Navy’s Ship to Shore Connector program and a contract businesses helped to drive profits to $400 million, a 71 percent for 55 COMMANDO Select vehicles to the Afghan National Army increase over the previous year. The business celebrated Federal that were delivered in 2015. Aviation Administration (FAA) certification and subsequent first deliveries of the Citation Latitude and the new Pro Line Fusion- Our Industrial segment delivered solid financial performance with equipped Beechcraft King Air 350i and 250 turboprop aircraft. continued expansion of our margin rates. By introducing new products and leveraging the strength of our recent acquisitions, our While the commercial helicopter market continued to be challenging businesses grew and extended their product reach into new markets. for Bell Helicopter, its long-term growth outlook remains strong with new commercial products and upgrades on the horizon to be In our Finance segment, Textron Financial completed another successful year of responding to our customers’ needs with attractive TOTAL REVENUES BY SEGMENT financing options in support of Textron aircraft product sales. Successfully launching new products and winning customers
Textron Aviation $4.8B Bringing new products to our markets creates excitement among Bell Helicopter $3.5B customers, which results in new orders and sales. A prime example Industrial $3.5B was Bell Helicopter’s introduction of the Bell 407GXP long light single Textron Systems $1.5B aircraft at Heli-Expo in March, which resulted in the largest single Finance $0.1B order—up to 200 from one customer—in Bell’s history and one of the largest in the rotorcraft industry. Similarly, Bell Helicopter continued to collect customer letters of intent to purchase two new products under development: the Bell 505 Jet Ranger X short light single
2 TEXTRON 2015 ANNUAL REPORT 2015 Milestones
Moving with great speed, we brought a number of new products to market in 2015 so Certification and first deliveries Introduction of 407GXP First international customer of Citation Latitude for the V-22 our customers can accomplish great things—in the air, on the ground and on the battlefield— and backed it up with outstanding Introduction of Jacobsen Completion of COMMANDO First dual FAA and EASA sales support and service. ProSeriesTM vehicles for Afghan qualification for TRU’s B757 National Army Full Flight Simulator
helicopter, scheduled to be certified and delivered in 2016, and the As production continued on the first two craft as part of the Bell 525 Relentless super-medium commercial helicopter, expected Ship to Shore Connector program at Textron Systems Marine & to achieve certification in 2017. Land Systems, the U.S. Navy ordered an additional two units as part of an $84 million contract option. The first two units are The success of the V-22 Osprey tiltrotor, which has amassed more scheduled for completion in 2017 and 2018. Our Aerosond Small than 300,000 flight hours, continues to drive new orders. Japan Unmanned Aircraft System fee-for-service program performed became the V-22’s first international customer with an agreement well and continued to grow. Four new sites were added to our to purchase five aircraft, while the U.S. Navy announced its plans U.S. Department of Defense contract, while flight hours per month to procure 44 V-22s for its Carrier Onboard Delivery program. increased at all of our sites around the world and surpassed a Building on the success of the V-22, our V-280 development program total of 120,000 flight hours. continues to make progress. In addition to starting initial assembly of the aircraft, our teams developed a simulator that allows potential TRU Simulation + Training won significant new contracts and customers to experience this next-generation tiltrotor at military regulatory approvals as it continued to establish strong relationships tradeshows and other venues. The V-280 demonstrator aircraft with customers and grow its business globally. Among the notable is preparing for first flight in 2017 as part of the U.S. Department successes was a contract with Lufthansa Flight Training for an Airbus of Defense’s Future Vertical Lift/Joint Multi-Role technology A350 FFS X Level D full motion flight simulator, representing TRU’s demonstration program. first venture to meet the flight training solution needs for this new generation of wide body aircraft. Also, TRU Flight Training Iceland, In August, customers began taking delivery of the new Citation a joint venture with Icelandair, earned FAA qualification of its Boeing Latitude. This is the fifth Citation jet to be certified during an 757 Level D Full Flight Simulator, the first with regulatory approval 18-month period, demonstrating the rapid pace of Textron Aviation’s from the FAA and the European Aviation Safety Agency. product development program. Textron Aviation continues to invest in larger business jets as the Citation Longitude prepares for Building on the technology of its Dixie Chopper business, Jacobsen its first flight in 2016 and is expected to enter into service in 2017. launched a new line of zero-turn mowers to expand its business Rounding out the Citation family of jets in the large-cabin segment beyond golf to reach professional landscapers. Textron Specialized is the Hemisphere, targeting first flight in 2019. Textron Aviation Vehicles updated its popular E-Z-GO RXV golf car to include new also announced the development of a new, clean-sheet single engine styling and greater comfort and amenities, and introduced a new turboprop aircraft that is expected to have a range of more than Cushman Hauler 72-volt electric utility vehicle and the Gasoline 1,500 nautical miles and speeds higher than 280 knots. Hauler 4x4. Greenlee Communications launched its AirScout for technicians to more easily survey a home or business for Wi-Fi
TEXTRON 2015 ANNUAL REPORT 3
Looking Forward
We have many exciting milestones ahead. Having a continuous pipeline of new First deliveries of Canadian Certification and first deliveries First flight of Citation Longitude TAPV (targeted for 2016) of the 505 Jet Ranger X (targeted for 2016) products means there are always (targeted for 2016) a number of “firsts”— from first flights to first deliveries. Rapidly developing new products is First craft completed for Certification and first deliveries First flight of Citation central to our growth strategy. Ship to Shore Connector of the 525 Relentless (targeted Hemisphere (targeted program (targeted for 2017) for 2017) for 2019)
performance. In June, Kautex began production of the first all-plastic presence. Bell Helicopter opened regional sales offices in Tokyo pressurized fuel tank for hybrid vehicles. These tanks use patented and Mexico City and partnered with Textron Systems to open an plastic reinforcements between the tank’s bottom and top, as office in Abu Dhabi. Our ProFlight business, acquired in 2014 by opposed to metal straps, to reduce weight and costs. The design TRU Simulation + Training to meet the needs of our customers for is a first in the industry. advanced pilot and maintenance training, opened a second training facility in Tampa. Meanwhile, TRU is better serving the needs Building on our acquisitions of avionics technicians and aircraft mechanics with the opening In 2015, we made strategic acquisitions to continue expanding our in October of a new Aviation Maintenance Training Academy on businesses’ range of products and services. In January, Textron Textron Aviation’s Mid-Continent campus in Wichita. Over the past Specialized Vehicles acquired Douglas Equipment, an aviation year, Textron Aviation’s 21 company-operated service centers ground support equipment (GSE) business in the United Kingdom. have received certifications to expand their capabilities and service This acquisition built on the acquisition in the previous year of Beechcraft, Cessna and Hawker customers. This represents another TUG Technologies, strengthening our presence in this industry way we are building and growing our relationships with customers. and complementing our aviation businesses. In February, Textron In addition, the company tripled the size of its Paris Service Center Aviation acquired an aircraft interiors business, giving us the at Paris-Le Bourget Airport. capabilities to design and build interior components for our Citation and King Air aircraft to ensure that we’re giving our customers the On course for profitable growth highest quality features and to improve on-time manufacturing Our solid financial results in 2015 were based on following through performance. 2015 marked the first full year of the Beechcraft and on our strategy: developing new products, expanding our markets, Cessna integration, and the business continued to successfully enhancing our sales channels and strategically acquiring new generate operational efficiencies that benefit our company as well businesses. As we enter 2016, we are continuing to make the as our customers. investments in our products, processes and people that will drive growth for the year ahead and beyond. Growing our presence around the world to serve customers As we grow globally, we’ve enhanced our capacity to engage with customers before, during and after the sale. Over the past year, we’ve opened sales offices and training facilities in new locations Scott C. Donnelly and enhanced our service to customers where we already have a Chairman and Chief Executive Officer
4 TEXTRON 2015 ANNUAL REPORT Leadership Board of Directors Scott C. Donnelly (1) Ivor J. Evans (2) (3) Lord Powell of Bayswater Numbers Indicate Committee Chairman, President and CEO Executive Chairman KCMG (3) (4) Memberships: Textron Inc. Meritor, Inc. Former Private Secretary and (1) Executive Committee: Advisor on Foreign Affairs and Chair, Scott C. Donnelly Kathleen M. Bader (1) (3) Lawrence K. Fish (3) (4) Defense to Prime Ministers (2) Audit Committee: President and CEO (Retired) Chairman and CEO (Retired) Margaret Thatcher and Chair, R. Kerry Clark NatureWorks LLC Citizens Financial Group, Inc. John Major (3) Nominating and Corporate (1) (2) (5) (2) (4) R. Kerry Clark Paul E. Gagné Lloyd G. Trotter (1) (4) Governance Committee: Chair, Kathleen M. Bader Chairman and CEO (Retired) Chairman Managing Partner Cardinal Health, Inc. Wajax Corporation GenNx 360 Capital Partners (4) Organization and Compensation (2) (3) (2) (4) Committee: James T. Conway Dain M. Hancock James L. Ziemer (2) (4) Chair, Lloyd G. Trotter General (Retired) Executive Vice President President and CEO (Retired) U.S. Marine Corps (Retired) (5) Lead Director: Harley-Davidson, Inc. R. Kerry Clark Lockheed Martin Corporation
Segment and Business Unit Executive Officers Presidents Corporate Officers
Scott C. Donnelly Scott A. Ernest Mark S. Bamford Thomas N. Nichipor Chairman, President and CEO President and CEO Vice President and Vice President – Textron Textron Inc. Textron Aviation Corporate Controller Audit Services Textron Inc. Textron Inc. Frank T. Connor J. Scott Hall Executive Vice President and President and CEO Julie G. Duffy Elizabeth C. Perkins Chief Financial Officer Industrial Segment and Vice President and Deputy Vice President and Textron Inc. Greenlee General Counsel – Litigation Deputy General Counsel Textron Inc. Textron Inc. Cheryl H. Johnson Kevin P. Holleran Executive Vice President, President and CEO Dana L. Goldberg Robert O. Rowland Human Resources Textron Specialized Vehicles Vice President – Tax Senior Vice President – Textron Inc. Textron Inc. Washington Operations Ellen M. Lord Textron Inc. E. Robert Lupone President and CEO Scott P. Hegstrom Executive Vice President, Textron Systems Segment Vice President – Mergers & Diane K. Schwarz General Counsel and Secretary Acquisitions Vice President and R. Danny Maldonado Textron Inc. Textron Inc. Chief Information Officer President and CEO Textron Inc. Textron Financial Corporation Mary F. Lovejoy Vice President and Treasurer Cathy A. Streker Vicente Perez Textron Inc. Vice President – President and CEO Human Resources Kautex Paul Mc Gartoll Textron Inc. Vice President – Strategy and Mitch Snyder Business Development Douglas R. Wilburne President and CEO Textron Inc. Vice President – Bell Helicopter Investor Relations . Ian K. Walsh Textron Inc. President and CEO TRU Simulation + Training Inc. David Withers President and CEO Jacobsen
TEXTRON 2015 ANNUAL REPORT 5 FOOTNOTE TO SELECTED YEAR-OVER-YEAR FINANCIAL DATA
1 We use Manufacturing Cash Flow Before Pension Contributions as our measure of free cash flow. This measure is not a financial measure under generally accepted accounting principles (GAAP) and should be used in conjunction with GAAP cash measures provided in our Consolidated Statements of Cash Flows. Free cash flow is a measure generally used by investors, analysts and management to gauge a company’s ability to generate cash from operations in excess of that necessary to be reinvested to sustain and grow the business and fund its obligations.
Our definition of Manufacturing Cash Flow Before Pension Contributions adjusts net cash from operating activities of continuing operations for the Manufacturing group for dividends received from TFC, capital contributions provided under the Support Agreement and debt agreements, capital expenditures, proceeds from the sale of property, plant and equipment and contributions to our pension plans. We believe that our calculation provides a relevant measure of liquidity and is a useful basis for assessing our ability to fund operations and obligations. This measure may not be comparable with similarly titled measures reported by other companies, as there is no definitive accounting standard on how the measure should be calculated. A reconciliation of net cash from operating activities of continuing operations for the Manufacturing group as presented in our Consolidated Statement of Cash Flows to Manufacturing Cash Flow Before Pension Contributions is provided below:
(In Millions) 2015 2014
Net cash provided by operating activities of continuing operations for the Manufacturing group—GAAP $1,038 $1,097 Less: Capital expenditures (420) (429) Dividends received from TFC (63) — Plus: Total pension contributions 68 76 Proceeds from the sale of property, plant and equipment 8 9
Manufacturing Cash Flow Before Pension Contributions—Non-GAAP $ 631 $ 753
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UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10-K >[@ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended January 2, 2016 RU >@ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to .
Commission File Number 1-5480 Textron Inc. ([DFWQDPHRIUHJLVWUDQWDVVSHFLILHGLQLWVFKDUWHU
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Mine Safety Disclosures 1RWDSSOLFDEOH 7(;7521$118$/5(3257 This proof is printed at 94% of original size This line represents final trim and will not print PART II 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 January 2, 2016, there were approximately 10,000 record holders of Textron common stock. The high and low sales prices per share of our common stock as reported on the New York Stock Exchange and the dividends paid per share are provided in the following table: 2015 2014 Dividends Dividends High Low per Share High Low per Share First quarter $ 45.61 $ 40.95 $ 0.02 $ 40.18 $ 34.28 $ 0.02 Second quarter 46.93 42.97 0.02 40.93 36.96 0.02 Third quarter 44.98 32.20 0.02 39.03 35.54 0.02 Fourth quarter 43.93 38.18 0.02 44.23 32.28 0.02 Issuer Repurchases of Equity Securities The following provides information about our fourth quarter 2015 repurchases of equity securities that are registered pursuant to Section 12 of the Securities Exchange Act of 1934, as amended: Maximum Total Average Price Total Number of Number of Shares Number of Paid per Share Shares Purchased as that may yet be Shares (excluding part of Publicly Purchased under Period (shares in thousands) Purchased (1) commissions) Announced Plan (1) the Plan October 4, 2015 – November 7, 2015 208 $ 37.63 208 10,882 November 8, 2015 – December 5, 2015 — — — 10,882 December 6, 2015 – January 2, 2016 — — — 10,882 Total 208 $ 37.63 208 (1) These shares were purchased pursuant to a plan authorizing the repurchase of up to 25 million shares of Textron common stock that had been announced on January 23, 2013. This plan has no expiration date. 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, 2010 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. The values calculated assume dividend reinvestment. 2010 2011 2012 2013 2014 2015 Textron Inc. $ 100.00 $ 78.53 $ 105.62 $ 157.05 $ 180.27 $ 180.18 S&P 500 100.00 102.11 118.45 156.82 178.29 180.75 S&P 500 A&D 100.00 105.28 120.61 186.85 208.21 219.52 S&P 500 Industrials 100.00 105.43 120.98 159.26 178.94 184.13 7(;7521$118$/5(3257 This proof is printed at 94% of original size This line represents final trim and will not print Item 6. Selected Financial Data Dollars in millions, except per share amounts 2015 2014 2013 2012 2011 Revenues 7H[WURQ$YLDWLRQ %HOO 7H[WURQ6\VWHPV ,QGXVWULDO )LQDQFH Total revenues Segment profit 7H[WURQ$YLDWLRQ D %HOO 7H[WURQ6\VWHPV ,QGXVWULDO )LQDQFH E Total segment profit &RUSRUDWHH[SHQVHVDQGRWKHUQHW ,QWHUHVWH[SHQVHQHWIRU0DQXIDFWXULQJJURXS $FTXLVLWLRQDQGUHVWUXFWXULQJFRVWV F ² ² ² ² ,QFRPHWD[H[SHQVH Income from continuing operations Per share of common stock ,QFRPHIURPFRQWLQXLQJRSHUDWLRQV²EDVLF ,QFRPHIURPFRQWLQXLQJRSHUDWLRQV²GLOXWHG 'LYLGHQGVGHFODUHG %RRNYDOXHDW\HDUHQG &RPPRQVWRFNSULFH +LJK /RZ (b) For 2011, segment profit includes a $186 million initial mark-to-market adjustment for finance receivables in the Golf Mortgage portfolio that were transferred to the held for sale classification. (c) Acquisition and restructuring costs are related to the acquisition of Beech Holdings, LLC, the parent of Beechcraft Corporation, which was completed on March 14, 2014. 7(;7521$118$/5(3257 This proof is printed at 94% of original size This line represents final trim and will not print Item 7. 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Financial Statements and Supplementary Data 2XU&RQVROLGDWHG)LQDQFLDO6WDWHPHQWVDQGWKHUHODWHGUHSRUWRIRXULQGHSHQGHQWUHJLVWHUHGSXEOLFDFFRXQWLQJILUPWKHUHRQDUHLQFOXGHGLQWKLV $QQXDO5HSRUWRQ)RUP.RQWKHSDJHVLQGLFDWHGEHORZ Page &RQVROLGDWHG6WDWHPHQWVRI2SHUDWLRQVIRUHDFKRIWKH\HDUVLQWKHWKUHH\HDUSHULRGHQGHG-DQXDU\ &RQVROLGDWHG6WDWHPHQWVRI&RPSUHKHQVLYH,QFRPHIRUHDFKRIWKH\HDUVLQWKHWKUHH\HDUSHULRGHQGHG-DQXDU\ &RQVROLGDWHG%DODQFH6KHHWVDVRI-DQXDU\DQG-DQXDU\ &RQVROLGDWHG6WDWHPHQWVRI6KDUHKROGHUV¶(TXLW\IRUHDFKRIWKH\HDUVLQWKHWKUHH\HDUSHULRGHQGHG-DQXDU\ &RQVROLGDWHG6WDWHPHQWVRI&DVK)ORZVIRUHDFKRIWKH\HDUVLQWKHWKUHH\HDUSHULRGHQGHG-DQXDU\ 1RWHVWRWKH&RQVROLGDWHG)LQDQFLDO6WDWHPHQWV 1RWH 6XPPDU\RI6LJQLILFDQW$FFRXQWLQJ3ROLFLHV 1RWH %XVLQHVV$FTXLVLWLRQV*RRGZLOODQG,QWDQJLEOH$VVHWV 1RWH $FFRXQWV5HFHLYDEOHDQG)LQDQFH5HFHLYDEOHV 1RWH ,QYHQWRULHV 1RWH 3URSHUW\3ODQWDQG(TXLSPHQW1HW 1RWH $FFUXHG/LDELOLWLHV 1RWH 'HEWDQG&UHGLW)DFLOLWLHV 1RWH 'HULYDWLYH,QVWUXPHQWVDQG)DLU9DOXH0HDVXUHPHQWV 1RWH 6KDUHKROGHUV¶(TXLW\ 1RWH 6KDUH%DVHG&RPSHQVDWLRQ 1RWH 5HWLUHPHQW3ODQV 1RWH ,QFRPH7D[HV 1RWH &RPPLWPHQWVDQG&RQWLQJHQFLHV 1RWH 6XSSOHPHQWDO&DVK)ORZ,QIRUPDWLRQ 1RWH 6HJPHQWDQG*HRJUDSKLF'DWD 5HSRUWRI,QGHSHQGHQW5HJLVWHUHG3XEOLF$FFRXQWLQJ)LUP 6XSSOHPHQWDU\,QIRUPDWLRQ 4XDUWHUO\'DWDIRUDQG 8QDXGLWHG 6FKHGXOH,,±9DOXDWLRQDQG4XDOLI\LQJ$FFRXQWV $OORWKHUVFKHGXOHVDUHRPLWWHGHLWKHUEHFDXVHWKH\DUHQRWDSSOLFDEOHRUQRWUHTXLUHGRUEHFDXVHWKHUHTXLUHGLQIRUPDWLRQLVLQFOXGHGLQWKH ILQDQFLDOVWDWHPHQWVRUQRWHVWKHUHWR 7(;7521$118$/5(3257 This proof is printed at 94% of original size This line represents final trim and will not print Consolidated Statements of Operations )RUHDFKRIWKH\HDUVLQWKHWKUHH\HDUSHULRGHQGHG-DQXDU\ (In millions, except per share data) 2015 2014 2013 Revenues 0DQXIDFWXULQJUHYHQXHV )LQDQFHUHYHQXHV 7RWDOUHYHQXHV Costs and expenses &RVWRIVDOHV 6HOOLQJDQGDGPLQLVWUDWLYHH[SHQVH ,QWHUHVWH[SHQVH $FTXLVLWLRQDQGUHVWUXFWXULQJFRVWV ² ² 7RWDOFRVWVDQGH[SHQVHV ,QFRPHIURPFRQWLQXLQJRSHUDWLRQVEHIRUHLQFRPHWD[HV ,QFRPHWD[H[SHQVH Income from continuing operations /RVVIURPGLVFRQWLQXHGRSHUDWLRQVQHWRILQFRPHWD[HV ² Net income Basic earnings per share &RQWLQXLQJRSHUDWLRQV 'LVFRQWLQXHGRSHUDWLRQV ² ² Basic earnings per share Diluted earnings per share &RQWLQXLQJRSHUDWLRQV 'LVFRQWLQXHGRSHUDWLRQV ² ² Diluted earnings per share See Notes to the Consolidated Financial Statements. 7(;7521$118$/5(3257 This proof is printed at 94% of original size This line represents final trim and will not print Consolidated Statements of Comprehensive Income )RUHDFKRIWKH\HDUVLQWKHWKUHH\HDUSHULRGHQGHG-DQXDU\ (In millions) 2015 2014 2013 Net income 2WKHUFRPSUHKHQVLYHLQFRPH ORVV QHWRIWD[ 3HQVLRQDQGSRVWUHWLUHPHQWEHQHILWVDGMXVWPHQWVQHWRIUHFODVVLILFDWLRQV )RUHLJQFXUUHQF\WUDQVODWLRQDGMXVWPHQWV 'HIHUUHGORVVHVRQKHGJHFRQWUDFWVQHWRIUHFODVVLILFDWLRQV 2WKHUFRPSUHKHQVLYHLQFRPH ORVV Comprehensive income See Notes to the Consolidated Financial Statements. 7(;7521$118$/5(3257 This proof is printed at 94% of original size This line represents final trim and will not print Consolidated Balance Sheets January 2, January 3, (In millions, except share data) 2016 2015 Assets Manufacturing group &DVKDQGHTXLYDOHQWV $FFRXQWVUHFHLYDEOHQHW ,QYHQWRULHV 2WKHUFXUUHQWDVVHWV Total current assets 3URSHUW\SODQWDQGHTXLSPHQWQHW *RRGZLOO 2WKHUDVVHWV Total Manufacturing group assets Finance group &DVKDQGHTXLYDOHQWV )LQDQFHUHFHLYDEOHVQHW 2WKHUDVVHWV Total Finance group assets Total assets Liabilities and shareholders’ equity Liabilities Manufacturing group 6KRUWWHUPGHEWDQGFXUUHQWSRUWLRQRIORQJWHUPGHEW $FFRXQWVSD\DEOH $FFUXHGOLDELOLWLHV Total current liabilities 2WKHUOLDELOLWLHV /RQJWHUPGHEW Total Manufacturing group liabilities Finance group 2WKHUOLDELOLWLHV 'HEW Total Finance group liabilities Total liabilities Shareholders’ equity &RPPRQVWRFN PLOOLRQDQGPLOOLRQVKDUHVLVVXHGUHVSHFWLYHO\ DQGPLOOLRQDQGPLOOLRQVKDUHVRXWVWDQGLQJUHVSHFWLYHO\ &DSLWDOVXUSOXV 7UHDVXU\VWRFN 5HWDLQHGHDUQLQJV $FFXPXODWHGRWKHUFRPSUHKHQVLYHORVV Total shareholders’ equity Total liabilities and shareholders’ equity See Notes to the Consolidated Financial Statements. 7(;7521$118$/5(3257 This proof is printed at 94% of original size This line represents final trim and will not print Consolidated Statements of Shareholders’ Equity Accumulated Other Total Common Capital Treasury Retained Comprehensive Shareholders’ (In millions, except per share data) Stock Surplus Stock Earnings Loss Equity %DODQFHDW'HFHPEHU 1HWLQFRPH 2WKHUFRPSUHKHQVLYHLQFRPH 'LYLGHQGVGHFODUHG SHUVKDUH 6KDUHEDVHGFRPSHQVDWLRQDFWLYLW\ 3XUFKDVHVFRQYHUVLRQVRIFRQYHUWLEOHQRWHV ² 6HWWOHPHQWRIFDSSHGFDOO 5HWLUHPHQWRIWUHDVXU\VWRFN ² %DODQFHDW'HFHPEHU ² 1HWLQFRPH 2WKHUFRPSUHKHQVLYHORVV 'LYLGHQGVGHFODUHG SHUVKDUH 6KDUHEDVHGFRPSHQVDWLRQDFWLYLW\ 3XUFKDVHVRIFRPPRQVWRFN 2WKHU %DODQFHDW-DQXDU\ 1HWLQFRPH 2WKHUFRPSUHKHQVLYHLQFRPH 'LYLGHQGVGHFODUHG SHUVKDUH 6KDUHEDVHGFRPSHQVDWLRQDFWLYLW\ 3XUFKDVHVRIFRPPRQVWRFN 2WKHU %DODQFHDW-DQXDU\ See Notes to the Consolidated Financial Statements. 7(;7521$118$/5(3257 This proof is printed at 94% of original size This line represents final trim and will not print Consolidated Statements of Cash Flows For each of the years in the three-year period ended January 2, 2016 Consolidated (In millions) 2015 2014 2013 Cash flows from operating activities Net income $ 697 $ 600 $ 498 Less: Loss from discontinued operations (1) (5) — Income from continuing operations 698 605 498 Adjustments to reconcile income from continuing operations to net cash provided by operating activities: Non-cash items: Depreciation and amortization 461 459 389 Deferred income taxes 4 (19) 86 Other, net 106 100 61 Changes in assets and liabilities: Accounts receivable, net (14) 56 (118) Inventories (239) (209) (118) Other assets (36) (33) (42) Accounts payable 43 (228) 65 Accrued and other liabilities (155) 311 (182) Pension, net 69 46 17 Income taxes, net 71 (22) (84) Captive finance receivables, net 90 150 237 Other operating activities, net (4) (5) 4 Net cash provided by operating activities of continuing operations 1,094 1,211 813 Net cash used in operating activities of discontinued operations (4) (3) (3) Net cash provided by operating activities 1,090 1,208 810 Cash flows from investing activities Capital expenditures (420) (429) (444) Net cash used in acquisitions (81) (1,628) (196) Finance receivables repaid 67 91 190 Proceeds from sales of receivables and other finance assets 38 43 178 Other investing activities, net 8 4 8 Net cash used in investing activities (388) (1,919) (264) Cash flows from financing activities Principal payments on long-term debt and nonrecourse debt (356) (904) (1,056) Proceeds from long-term debt 61 1,567 448 Purchases of Textron common stock (219) (340) — Settlement of convertible notes — — (215) Proceeds from settlement of capped call — — 75 Proceeds from exercise of stock options 32 50 31 Dividends paid (22) (28) (22) Other financing activities, net — (10) (3) Net cash provided by (used in) financing activities (504) 335 (742) Effect of exchange rate changes on cash and equivalents (15) (13) (6) Net increase (decrease) in cash and equivalents 183 (389) (202) Cash and equivalents at beginning of year 822 1,211 1,413 Cash and equivalents at end of year $ 1,005 $ 822 $ 1,211 See Notes to the Consolidated Financial Statements. 7(;7521$118$/5(3257 This proof is printed at 94% of original size This line represents final trim and will not print Consolidated Statements of Cash Flows continued For each of the years in the three-year period ended January 2, 2016 Manufacturing Group Finance Group (In millions) 2015 2014 2013 2015 2014 2013 Cash flows from operating activities Net income $ 683 $ 585 $ 470 $ 14 $ 15 $ 28 Less: Loss from discontinued operations (1) (5) — — — — Income from continuing operations 684 590 470 14 15 28 Adjustments to reconcile income from continuing operations to net cash provided by operating activities: Non-cash items: Depreciation and amortization 449 446 371 12 13 18 Deferred income taxes 14 (7) 51 (10) (12) 35 Other, net 97 86 86 9 14 (25) Changes in assets and liabilities: Accounts receivable, net (14) 56 (118) —— — Inventories (241) (168) (135) — — — Other assets (40) (18) (41) 4 (15) — Accounts payable 43 (228) 65 — — — Accrued and other liabilities (144) 316 (171) (8) (5) (21) Pension, net 69 46 21 — — (4) Income taxes, net 62 (17) (119) 9 (5) 35 Dividends received from Finance group 63 — 175 — — — Other operating activities, net (4) (5) 3 — — — Net cash provided by operating activities of continuing operations 1,038 1,097 658 30 5 66 Net cash used in operating activities of discontinued operations (4) (3) (3) — — — Net cash provided by operating activities 1,034 1,094 655 30 5 66 Cash flows from investing activities Capital expenditures (420) (429) (444) — — — Net cash used in acquisitions (81) (1,628) (196) —— — Finance receivables repaid — — — 351 456 675 Finance receivables originated — — — (194) (215) (271) Proceeds from sales of receivables and other finance assets — — — 38 43 178 Other investing activities, net 5 (8) 16 2 (29) 42 Net cash provided by (used in) investing activities (496) (2,065) (624) 197 255 624 Cash flows from financing activities Principal payments on long-term and nonrecourse debt (100) (559) (313) (256) (345) (743) Proceeds from long-term debt — 1,439 150 61 128 298 Purchases of Textron common stock (219) (340) — — — — Settlement of convertible notes — — (215) —— — Proceeds from settlement of capped call — — 75 — — — Proceeds from exercise of stock options 32 50 31 — — — Dividends paid (22) (28) (22) (63) — (175) Intergroup financing — — 57 — — (57) Other financing activities, net 1 (10) (3) (1) — — Net cash provided by (used in) financing activities (308) 552 (240) (259) (217) (677) Effect of exchange rate changes on cash and equivalents (15) (13) (6) — — — Net increase (decrease) in cash and equivalents 215 (432) (215) (32) 43 13 Cash and equivalents at beginning of year 731 1,163 1,378 91 48 35 Cash and equivalents at end of year $ 946 $ 731 $ 1,163 $ 59 $ 91 $ 48 See Notes to the Consolidated Financial Statements. 7(;7521$118$/5(3257 This proof is printed at 94% of original size This line represents final trim and will not print Notes to the Consolidated Financial Statements Note 1. 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Inventories ,QYHQWRULHVDUHFRPSRVHGRIWKHIROORZLQJ January 2, January 3, (In millions) 2016 2015 )LQLVKHGJRRGV :RUNLQSURFHVV 5DZPDWHULDOVDQGFRPSRQHQWV 3URJUHVVPLOHVWRQHSD\PHQWV 7RWDO ,QYHQWRULHVYDOXHGE\WKH/,)2PHWKRGWRWDOHGELOOLRQDQGELOOLRQDW-DQXDU\DQG-DQXDU\UHVSHFWLYHO\ DQGWKHFDUU\LQJYDOXHVRIWKHVHLQYHQWRULHVZRXOGKDYHEHHQKLJKHUE\DSSUR[LPDWHO\PLOOLRQDQGPLOOLRQUHVSHFWLYHO\ KDG RXU /,)2 LQYHQWRULHV EHHQ YDOXHG DW FXUUHQW FRVWV ,QYHQWRULHV UHODWHG WR ORQJWHUP FRQWUDFWV QHW RI SURJUHVVPLOHVWRQH SD\PHQWVZHUHPLOOLRQDQGPLOOLRQDW-DQXDU\DQG-DQXDU\UHVSHFWLYHO\ 7(;7521$118$/5(3257 This proof is printed at 94% of original size This line represents final trim and will not print Note 5. Property, Plant and Equipment, Net 2XU0DQXIDFWXULQJJURXS¶VSURSHUW\SODQWDQGHTXLSPHQWQHWDUHFRPSRVHGRIWKHIROORZLQJ Useful Lives January 2, January 3, (Dollars in millions) (in years) 2016 2015 /DQGDQGEXLOGLQJV 0DFKLQHU\DQGHTXLSPHQW $FFXPXODWHGGHSUHFLDWLRQDQGDPRUWL]DWLRQ 7RWDO $W-DQXDU\DQG-DQXDU\DVVHWVXQGHUFDSLWDOOHDVHVWRWDOHGPLOOLRQDQG PLOOLRQUHVSHFWLYHO\DQGKDG DFFXPXODWHGDPRUWL]DWLRQRIPLOOLRQDQGPLOOLRQUHVSHFWLYHO\7KH0DQXIDFWXULQJJURXS¶VGHSUHFLDWLRQH[SHQVHZKLFK LQFOXGHGDPRUWL]DWLRQH[SHQVHRQFDSLWDOOHDVHVWRWDOHGPLOOLRQ PLOOLRQDQGPLOOLRQLQDQG UHVSHFWLYHO\ Note 6. Accrued Liabilities 7KHDFFUXHGOLDELOLWLHVRIRXU0DQXIDFWXULQJJURXSDUHVXPPDUL]HGEHORZ January 2, January 3, (In millions) 2016 2015 &XVWRPHUGHSRVLWV 6DODULHVZDJHVDQGHPSOR\HUWD[HV &XUUHQWSRUWLRQRIZDUUDQW\DQGSURGXFWPDLQWHQDQFHFRQWUDFWV 2WKHU 7RWDO &KDQJHVLQRXUZDUUDQW\OLDELOLW\DUHDVIROORZV (In millions) 2015 2014 2013 %HJLQQLQJRISHULRG 3URYLVLRQ 6HWWOHPHQWV $FTXLVLWLRQV ² $GMXVWPHQWV (QGRISHULRG * Adjustments include changes to prior year estimates, new issues on prior year sales and currency translation adjustments. 7(;7521$118$/5(3257 This proof is printed at 94% of original size This line represents final trim and will not print Note 7. Debt and Credit Facilities 2XUGHEWLVVXPPDUL]HGLQWKHWDEOHEHORZ January 2, January 3, (In millions) 2016 2015 Manufacturing group GXH GXH 9DULDEOHUDWHQRWHGXH DQGUHVSHFWLYHO\ GXH 9DULDEOHUDWHQRWHGXH DQGUHVSHFWLYHO\ GXH GXH GXH GXH GXH 2WKHU ZHLJKWHGDYHUDJHUDWHRI DQGUHVSHFWLYHO\ 7RWDO0DQXIDFWXULQJJURXSGHEW /HVV 6KRUWWHUPDQGFXUUHQWSRUWLRQRIORQJWHUPGHEW 7RWDO/RQJWHUPGHEW Finance group )L[HGUDWHQRWHVGXH ZHLJKWHGDYHUDJHUDWHRI D 9DULDEOHUDWHQRWHVGXHDQG ZHLJKWHGDYHUDJHUDWHRIDQGUHVSHFWLYHO\ )L[HGUDWHQRWHVGXH ZHLJKWHGDYHUDJHUDWHRI DQGUHVSHFWLYHO\ D E 9DULDEOHUDWHQRWHVGXH ZHLJKWHGDYHUDJHUDWHRIDQGUHVSHFWLYHO\ D E 6HFXULWL]HGGHEW ZHLJKWHGDYHUDJHUDWHRI E )L[HGWR)ORDWLQJ5DWH-XQLRU6XERUGLQDWHG1RWHV )DLUYDOXHDGMXVWPHQWVDQGXQDPRUWL]HGGLVFRXQW ² 7RWDO)LQDQFHJURXSGHEW (a) Notes amortize on a quarterly or semi-annual basis. (b) Notes are secured by finance receivables as described in Note 3. 7KHIROORZLQJWDEOHVKRZVUHTXLUHGSD\PHQWVGXULQJWKHQH[WILYH\HDUVRQGHEWRXWVWDQGLQJDW-DQXDU\ (In millions) 2016 2017 2018 2019 2020 0DQXIDFWXULQJJURXS )LQDQFHJURXS 7RWDO 7H[WURQKDVDVHQLRUXQVHFXUHGUHYROYLQJFUHGLWIDFLOLW\WKDWH[SLUHVLQ2FWREHUIRUDQDJJUHJDWHSULQFLSDODPRXQWRI ELOOLRQRIZKLFKXSWRPLOOLRQLVDYDLODEOHIRUWKHLVVXDQFHRIOHWWHUVRIFUHGLW$W-DQXDU\WKHUHZHUHQRDPRXQWV ERUURZHGDJDLQVWWKHIDFLOLW\DQGWKHUHZHUHPLOOLRQRIOHWWHUVRIFUHGLWLVVXHGDJDLQVWLW 6% Fixed-to-Floating Rate Junior Subordinated Notes 7KH)LQDQFHJURXS¶V PLOOLRQRI)L[HGWR)ORDWLQJ5DWH-XQLRU6XERUGLQDWHG1RWHVDUHXQVHFXUHGDQGUDQNMXQLRUWRDOORI LWVH[LVWLQJDQGIXWXUHVHQLRUGHEW7KHQRWHVPDWXUHRQ)HEUXDU\ KRZHYHUZHKDYHWKHULJKWWRUHGHHPWKHQRWHVDWSDU RQRUDIWHU)HEUXDU\DQGDUHREOLJDWHGWRUHGHHPWKHQRWHVEHJLQQLQJRQ)HEUXDU\,QWHUHVWRQWKHQRWHVLVIL[HG DWXQWLO)HEUXDU\DQGIORDWVDWWKHWKUHHPRQWK/RQGRQ,QWHUEDQN2IIHUHG5DWHWKHUHDIWHU Support Agreement 8QGHUD6XSSRUW$JUHHPHQWDVDPHQGHGLQ'HFHPEHU7H[WURQ,QFLVUHTXLUHGWRHQVXUHWKDW7)&PDLQWDLQVIL[HGFKDUJH FRYHUDJH RI QR OHVV WKDQ DQG FRQVROLGDWHG VKDUHKROGHU¶V HTXLW\ RI QR OHVV WKDQ PLOOLRQ 7KHUH ZHUH QR FDVK FRQWULEXWLRQVUHTXLUHGWREHSDLGWR7)&LQDQGWRPDLQWDLQFRPSOLDQFHZLWKWKHVXSSRUWDJUHHPHQW 7(;7521$118$/5(3257 This proof is printed at 94% of original size This line represents final trim and will not print Note 8. Derivative Instruments and Fair Value Measurements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Shareholders’ Equity Capital Stock :HKDYHDXWKRUL]DWLRQIRUPLOOLRQVKDUHVRISUHIHUUHGVWRFNZLWKDSDUYDOXHRIDQGPLOOLRQVKDUHVRIFRPPRQVWRFN ZLWKDSDUYDOXHRI2XWVWDQGLQJFRPPRQVWRFNDFWLYLW\IRUWKHWKUHH\HDUVHQGHG-DQXDU\LVSUHVHQWHGEHORZ (In thousands) 2015 2014 2013 %HJLQQLQJEDODQFH ([HUFLVHRIVWRFNRSWLRQV ,VVXHGWR7H[WURQ6DYLQJV3ODQ 6WRFNUHSXUFKDVHV ² ([HUFLVHRIZDUUDQWV ² ² ,VVXHGXSRQYHVWLQJRIUHVWULFWHGVWRFNXQLWV (QGLQJEDODQFH Earnings Per Share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n thousands) 2015 2014 2013 %DVLFZHLJKWHGDYHUDJHVKDUHVRXWVWDQGLQJ 'LOXWLYHHIIHFWRI 6WRFNRSWLRQV $65 ² ² &RQYHUWLEOHQRWHVDQGZDUUDQWV ² ² 'LOXWHGZHLJKWHGDYHUDJHVKDUHVRXWVWDQGLQJ 7(;7521$118$/5(3257 This proof is printed at 94% of original size This line represents final trim and will not print ,QDQGRSWLRQVWRSXUFKDVHPLOOLRQPLOOLRQDQGPLOOLRQVKDUHVUHVSHFWLYHO\RIFRPPRQVWRFNDUHH[FOXGHG IURPWKHFDOFXODWLRQRIGLOXWHGZHLJKWHGDYHUDJHVKDUHVRXWVWDQGLQJDVWKHLUHIIHFWZRXOGKDYHEHHQDQWLGLOXWLYH Accumulated Other Comprehensive Loss 7KHFRPSRQHQWVRI$FFXPXODWHG2WKHU&RPSUHKHQVLYH/RVVDUHSUHVHQWHGEHORZ Pension and Foreign Deferred Accumulated Postretirement Currency Losses Other Benefits Translation on Hedge Comprehensive (In millions) Adjustments Adjustments Contracts Loss %DODQFHDW'HFHPEHU 2WKHUFRPSUHKHQVLYHORVVEHIRUHUHFODVVLILFDWLRQV 5HFODVVLILHGIURP$FFXPXODWHGRWKHUFRPSUHKHQVLYHORVV ² 2WKHUFRPSUHKHQVLYHORVV %DODQFHDW-DQXDU\ 2WKHUFRPSUHKHQVLYHLQFRPH ORVV EHIRUHUHFODVVLILFDWLRQV 5HFODVVLILHGIURP$FFXPXODWHGRWKHUFRPSUHKHQVLYHORVV ² 2WKHUFRPSUHKHQVLYHLQFRPH ORVV %DODQFHDW-DQXDU\ Other Comprehensive Income (Loss) 7KHEHIRUHDQGDIWHUWD[FRPSRQHQWVRIRWKHUFRPSUHKHQVLYHLQFRPH ORVV DUHSUHVHQWHGEHORZ 2015 2014 2013 Tax Tax Tax Pre-Tax (Expense) After-Tax Pre-Tax (Expense) After-Tax Pre-Tax (Expense) After-Tax (In millions) Amount Benefit Amount Amount Benefit Amount Amount Benefit Amount 3HQVLRQDQGSRVWUHWLUHPHQW EHQHILWVDGMXVWPHQWV 8QUHDOL]HGJDLQV ORVVHV $PRUWL]DWLRQRIQHWDFWXDULDOORVV $PRUWL]DWLRQRISULRUVHUYLFHFUHGLW 5HFRJQLWLRQRISULRUVHUYLFHFRVW ² ² ² 3HQVLRQDQGSRVWUHWLUHPHQW EHQHILWVDGMXVWPHQWVQHW 'HIHUUHGORVVHVRQKHGJHFRQWUDFWV &XUUHQWGHIHUUDOV 5HFODVVLILFDWLRQDGMXVWPHQWV ² 'HIHUUHGORVVHVRQKHGJHFRQWUDFWVQHW )RUHLJQFXUUHQF\WUDQVODWLRQ DGMXVWPHQWV 7RWDO *These components of other comprehensive income (loss) are included in the computation of net periodic pension cost. 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of Beechcraft acquired inventories sold during the periods. (b) Acquisition and restructuring costs include restructuring costs of $5 million, $20 million, $3 million and $13 million for the first, second, third and fourth quarters of 2014, respectively, related to the acquisition of Beech Holdings, LLC, the parent of Beechcraft Corporation, which was completed on March 14, 2014. 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Textron Inc. 40 Westminster Street Investor Relations Providence, RI 02903 40 Westminster Street (401) 421-2800 Providence, RI 02903 www.textron.com Investor Relations phone line: (401) 457-2288 ANNUAL MEETING News media phone line: Textron’s annual meeting of shareholders will be held (401) 457-2362 on Wednesday, April 27, 2016, at 11 a.m. at Textron Inc., 40 Westminster Street, 18th Floor, For more information, visit our website at www.textron.com. Providence, RI 02903. COMPANY PUBLICATIONS AND GENERAL TRANSFER AGENT, REGISTRAR AND INFORMATION DIVIDEND PAYING AGENT To receive a copy of Textron’s Forms 10-K and 10-Q, Proxy For shareholder services such as change of address, Statement or Annual Report without charge, visit our website at lost certificates or dividend checks, change in registered www.textron.com or send a written request to Textron Investor ownership or the Dividend Reinvestment Plan, write or call: Relations at the address listed above. For the most recent company news and earnings press releases, visit our website American Stock Transfer & Trust Company, LLC at www.textron.com. Operations Center 6201 15th Avenue Textron is an Equal Opportunity Employer. Brooklyn, NY 11219 phone: (866) 621-2790 TEXTRON BOARD OF DIRECTORS email: [email protected] To contact the Textron Board of Directors or to report concerns or complaints about accounting, internal accounting controls or STOCK EXCHANGE INFORMATION auditing matters, you may write to Board of Directors, (Symbol: TXT) Textron Inc., 40 Westminster Street, Providence, RI 02903; Textron common stock is listed on the New York call (866) 698-6655 or (401) 457-2269; or send an email to Stock Exchange. [email protected]. 2015 ANNUAL REPORT 2015 ANNUAL 40 Westminster Street Providence, RI 02903 (401) 421-2800 www.textron.com © 2016 TEXTRON INC.