TEXTRON INC

Previous wording

Changes to the United States trade policy have resulted in new or higher tariffs on goods imported from numerous countries, and some countries have imposed retaliatory tariffs on imports from the United States. We are principally a North American manufacturer and 71% of our 2024 revenues were generated in the U.S. Our aircraft products, subassemblies, parts and components manufactured in Canada and Mexico are largely qualified under the rules of the United States-Mexico-Canada Agreement (USMCA) for preferential treatment on tariffs imposed by the U.S. on Canada and Mexico imports. In addition, our operations outside of North America primarily source materials and components from outside of North America and manufacture products for non-U.S. customers. Many of our businesses also source materials and components from outside of North America. These businesses have been and will continue to be impacted by these imposed U.S. tariffs. In order to mitigate these impacts our businesses have been managing, and will continue to manage, pricing and supply chain optimization strategies. In addition, our aircraft businesses have begun the tariff reconciliation and refund process with the U.S. Government to recover tariff costs that were previously paid related to materials and components that were subsequently determined to be USMCA compliant. To date, we have not experienced a material adverse impact from these tariffs. We will continue to evaluate the ongoing impact of these tariffs and any further developments or changes in global tariff policies on our business and financial position.

Current wording

Beginning in 2025, the United States has made various changes to its trade policy resulting in new or higher tariffs on goods imported from numerous countries. These tariffs were imposed under various legal authorities, including the International Emergency Economic Powers Act (IEEPA). We are principally a North American manufacturer and 69% of our 2025 revenues were generated in the U.S. Many of our aircraft materials and components qualify under the rules of the United States-Mexico-Canada Agreement for preferential treatment on tariffs imposed by the U.S. on imports from Canada and Mexico. In addition, our operations outside of North America primarily source materials and components from outside of North America and manufacture products for non-U.S. customers. Many of our businesses also source materials and components from outside of North America. These businesses have been and will continue to be impacted by these imposed U.S. tariffs. In order to mitigate these impacts our businesses have been managing, and will continue to manage, pricing and supply chain optimization strategies. To date, we have not experienced a material adverse impact from these tariffs.

Previous wording

An analysis of our consolidated operating results is set forth below. A more detailed analysis of our segments’ operating results is provided in the Segment Analysis section on pages 24 to 28.

Current wording

An analysis of our consolidated operating results is set forth below. A more detailed analysis of our segments’ operating results is provided in the Segment Analysis section on pages 21 to 24.

Previous wording

Revenues increased $175 million, 5%, in the third quarter of 2025, compared with the third quarter of 2024. The revenue increase primarily included the following factors:

Current wording

Revenues increased $389 million, 12%, in the first quarter of 2026, compared with the first quarter of 2025. The revenue increase primarily included the following factors:

Previous wording

•Higher Textron Aviation revenues of $138 million, reflecting higher aircraft revenues of $116 million and higher aftermarket parts and services revenues of $22 million.

Current wording

•Higher Textron Aviation revenues of $269 million, reflecting higher aircraft revenues of $221 million, largely due to higher Citation jet and commercial turboprop volume, and higher aftermarket parts and services revenues of $48 million.

Previous wording

•Higher Bell revenues of $575 million, due to higher military aircraft and support programs revenues of $431 million, primarily for the MV-75 program and for military sustainment programs, as well as higher commercial revenues of $144 million.

Current wording

•Higher Bell revenues of $87 million, due to higher military aircraft and support programs revenues of $161 million, largely from the MV-75 program, partially offset by lower volume on V-22 production and on military sustainment programs. The increase in military revenues was partially offset by lower commercial revenues of $74 million.

Previous wording

•Higher Textron Systems revenues of $6 million, largely due to higher volume.

Current wording

•Higher Textron Systems revenues of $39 million, largely due to higher volume.

Previous wording

•Lower Industrial revenues of $79 million, due to lower revenues of $97 million at Textron Specialized Vehicles, largely reflecting the impact from the disposition of the Powersports business in April 2025 as discussed in Note 12 to the Consolidated Financial Statements, partially offset by higher revenues of $18 million at Kautex.

Current wording

•Lower Industrial revenues of $6 million, reflecting lower revenues of $42 million at Textron Specialized Vehicles, largely due to the impact from the disposition of the Powersports business in April 2025, partially offset by higher revenues of $36 million at Kautex, primarily due to a favorable impact from foreign exchange rate fluctuations and higher volume and mix.

Previous wording

Cost of sales increased $514 million, 6%, in the first nine months of 2025, compared with the first nine months of 2024, largely due to higher net volume and mix of $401 million and a $193 million impact from inflation and higher LIFO inventory provision, partially offset by the impact from the disposition. Gross margin as a percentage of Manufacturing revenues decreased 90 basis points in the first nine months of 2025, primarily due to lower margin at the Bell segment.

Current wording

Cost of sales includes cost of products and services sold for the Manufacturing group. Cost of sales increased $351 million, 13%, in the first quarter of 2026, compared with the first quarter of 2025, largely due to higher net volume and mix of $287 million and an $81 million impact from inflation and higher LIFO inventory provision, partially offset by the impact from the Powersports disposition. Gross margin as a percentage of Manufacturing revenues decreased 100 basis points in the first quarter of 2026, primarily due to lower margin at the Bell segment.

Previous wording

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 the third quarter and first nine months of 2025, interest expense, net increased $4 million, 15%, and $19 million, 27%, respectively, compared with the corresponding periods of 2024. The increase in expense in the first nine months of 2025 primarily reflected lower interest income. Gross interest expense totaled $39 million and $36 million in the third quarter of 2025 and 2024, respectively, and $116 million and $110 million in the first nine months of 2025 and 2024, respectively.

Current wording

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 the first quarter of 2026, interest expense, net increased $5 million, 17%, compared with the first quarter of 2025, primarily due to higher average debt outstanding. Gross interest expense totaled $43 million and $38 million in the first quarter of 2026 and 2025, respectively.

Previous wording

In the third quarter of 2024, the effective tax rate was lower than the U.S. federal statutory rate, largely due to the favorable impact of research and development credits and foreign tax credits. Our effective tax rate for the first nine months of 2024 was lower than the U.S. federal statutory rate largely due to the favorable impact of research and development credits and tax deductions for foreign-derived intangible income.

Current wording

Our effective tax rate for the first quarter of 2026 and 2025 was 17.6% and 14.1%, respectively. In the first quarter of 2026, the effective tax rate was lower than the U.S. federal statutory rate of 21%, primarily due to the favorable impact of research and development credits and tax deductions for foreign-derived deduction eligible income, which replaced foreign-derived intangible income beginning in 2026. In the first quarter of 2025, the effective tax rate was lower than the U.S. federal statutory rate of 21%, largely due to the favorable impact of research and development credits and tax deductions for foreign-derived intangible income.

Previous wording

We operate in, and report financial information for, the following six operating segments: Textron Aviation, Bell, Textron Systems, Industrial, Textron eAviation and Finance. Segment profit is an important measure used for evaluating performance and for decision-making purposes. 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; and special charges. The operating costs used to derive segment profit for our manufacturing segments includes cost of sales, research and development costs and selling and administrative expense. The cost of sales discussed in this Segment Analysis section excludes the LIFO inventory provision and intangible asset amortization discussed above that are reported within Cost of products sold or Cost of services sold on the Consolidated Statements of Operations. The measurement for the Finance segment includes interest income and expense along with intercompany interest income and expense.

Current wording

Segment profit is an important measure used for evaluating performance and for decision-making purposes. 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; and special charges. The operating costs used to derive segment profit for our manufacturing segments includes cost of sales, research and development costs and selling and administrative expense. The cost of sales discussed in this Segment Analysis section excludes the LIFO inventory provision and intangible asset amortization discussed above that are reported within Cost of products sold or Cost of services sold on the Consolidated Statements of Operations. The measurement for the Finance segment includes interest income and expense along with intercompany interest income and expense.

Previous wording

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. Government, material changes in revenues related to these contracts are expressed in terms of volume. Changes in segment profit for these contracts are typically expressed in terms of volume and mix and 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.

Current wording

Approximately 27% of our 2025 revenues were derived from contracts with the U.S. Government, including those under the U.S. Government-sponsored foreign military sales program. For our segments that contract with the U.S. Government, material changes in revenues related to these contracts are expressed in terms of volume. Changes in segment profit for these contracts are typically expressed in terms of volume and mix and 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 among other factors. See the Critical Accounting Estimates - Revenue Recognition section in Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations of our 2025 Annual Report on Form 10-K for a discussion of the factors that impact our estimated costs.

Previous wording

Textron Aviation’s revenues increased $138 million, 10%, in the third quarter of 2025, compared with the third quarter of 2024, reflecting higher aircraft revenues of $116 million and higher aftermarket parts and services revenues of $22 million. The increase in aircraft revenues was largely due to higher volume and mix, which included higher commercial turboprop and Citation jet volume, partially offset by lower defense volume. The higher volume and mix also reflects the impact of the strike in the third quarter of 2024. We delivered 42 Citation jets and 39 commercial turboprops in the third quarter of 2025, compared with 41 Citation jets and 25 commercial turboprops in the third quarter of 2024.

Current wording

Textron Aviation’s revenues increased $269 million, 22%, in the first quarter of 2026, compared with the first quarter of 2025, reflecting higher aircraft revenues of $221 million and higher aftermarket parts and services revenues of $48 million. The increase in aircraft revenues was primarily due to higher volume and mix, largely reflecting higher Citation jet and commercial turboprop volume. We delivered 37 Citation jets and 35 commercial turboprops in the first quarter of 2026, compared with 31 Citation jets and 30 commercial turboprops in the first quarter of 2025. The increase in aftermarket parts and services revenues was due to higher volume and pricing.

Previous wording

Textron Aviation's segment profit increased $20 million, 4%, in the first nine months of 2025, compared with the first nine months of 2024, primarily due to higher pricing, net of inflation, lower selling and administrative costs and higher aircraft volume and mix, partially offset by higher warranty costs.

Current wording

Textron Aviation's segment profit increased $32 million, 26%, in the first quarter of 2026, compared with the first quarter of 2025, primarily due to higher aircraft volume and mix, partially offset by higher selling and administrative expense and warranty costs.

Previous wording

Bell’s military aircraft and support programs revenues increased $431 million, 28%, in the first nine months of 2025, compared with the first nine months of 2024, largely due to higher volume on the MV-75 program and on military sustainment programs. Commercial helicopters, parts and services revenues increased $144 million, 16%, in the first nine months of 2025, compared with the first nine months of 2024, primarily due to the mix of aircraft sold. We delivered 91 commercial helicopters in the first nine months of 2025, compared with 94 commercial helicopters in the first nine months of 2024.

Current wording

Bell’s military aircraft and support programs revenues increased $161 million, 25%, in the first quarter of 2026, compared with the first quarter of 2025, largely due to higher volume on the MV-75 program, partially offset by lower volume on V-22 production and on military sustainment programs. Commercial helicopters, parts and services revenues decreased $74 million, 21%, in the first quarter of 2026, compared with the first quarter of 2025, primarily due to lower volume and mix as we delivered 20 commercial helicopters in the first quarter of 2026, compared with 29 commercial helicopters in the first quarter of 2025.

Previous wording

Bell’s segment profit decreased $6 million, 6%, in the third quarter of 2025, compared with the third quarter of 2024, and its profit margin decreased 150 basis points, primarily reflecting higher volume on lower margin MV-75 development activities.

Current wording

Bell's segment profit decreased $18 million, 20%, in the first quarter of 2026, compared with the first quarter of 2025, and its profit margin decreased 250 basis points, largely reflecting an unfavorable impact from the mix of military programs described above and lower commercial volume and mix.

Previous wording

Textron Systems’ revenues increased $6 million, 2%, in the third quarter of 2025, compared with the third quarter of 2024, largely due to higher volume. The increase in volume included higher volume on the Ship-to-Shore Connector program, partially offset by the impact of the termination of certain U.S. Government development programs.

Current wording

Textron Systems’ revenues increased $39 million, 13%, in the first quarter of 2026, compared with the first quarter of 2025, largely due to higher volume on the Ship-to-Shore Connector program and military training and support services provided by Airborne Tactical Advantage Company (ATAC), partially offset by lower net volume on other programs.

Previous wording

Textron Systems’ segment profit increased $13 million, 33%, and $20 million, 18%, in the third quarter and first nine months of 2025, compared with the corresponding periods of 2024, largely due to lower selling and administrative expense as discussed above.

Current wording

Textron Systems’ segment profit increased $4 million, 11%, in the first quarter of 2026, compared with the first quarter of 2025, largely due to higher net volume described above.

Previous wording

Industrial segment revenues decreased $254 million, 10%, in the first nine months of 2025, compared with the first nine months of 2024. Textron Specialized Vehicles' revenues decreased $225 million, 19%, largely reflecting a $123 million impact from the disposition and lower volume and mix, primarily in golf products. Kautex revenues decreased $29 million, 2%, largely due to lower volume.

Current wording

Industrial segment revenues decreased $6 million, 1%, in the first quarter of 2026, compared with the first quarter of 2025. Textron Specialized Vehicles' revenues decreased $42 million, 12%, largely reflecting a $55 million impact from the disposition of the Powersports business in April 2025. Kautex revenues increased $36 million, 8%, primarily due to a favorable impact of $20 million from foreign exchange rate fluctuations and higher volume and mix.

Previous wording

Our financings are conducted through two separate borrowing groups. The Manufacturing group consists of Textron consolidated with its majority-owned subsidiaries that operate in the Textron Aviation, Bell, Textron Systems, Industrial and Textron eAviation segments. The Finance group, which also is the Finance segment, consists of Textron Financial Corporation and its consolidated subsidiaries. We designed this framework to enhance our borrowing power by separating the Finance group. Our Manufacturing group operations include the development, production and delivery of tangible goods and services, while our Finance group provides financial services. Due to the fundamental differences between each borrowing group’s activities, investors, rating agencies and analysts use different measures to evaluate each group’s performance. To support those evaluations, we present balance sheet and cash flow information for each borrowing group within the Consolidated Financial Statements.

Current wording

Our financings are conducted through two separate borrowing groups. The Manufacturing group consists of Textron consolidated with its majority-owned subsidiaries that operate in the Textron Aviation, Bell, Textron Systems and Industrial segments. The Finance group, which also is the Finance segment, consists of Textron Financial Corporation and its consolidated subsidiaries. We designed this framework to enhance our borrowing power by separating the Finance group. Our Manufacturing group operations include the development, production and delivery of tangible goods and services, while our Finance group provides financial services. Due to the fundamental differences between each borrowing group’s activities, investors, rating agencies and analysts use different measures to evaluate each group’s performance. To support those evaluations, we present balance sheet and cash flow information for each borrowing group within the Consolidated Financial Statements.

Previous wording

On October 16, 2025, Textron entered into a senior unsecured revolving credit facility for an aggregate principal amount of $1.0 billion, of which $100 million is available for the issuance of letters of credit. We may elect to increase the aggregate amount of commitments under the facility to up to $1.3 billion by designating an additional lender or by an existing lender agreeing to increase its commitment. The facility expires in October 2030 and provides for two one-year extensions at our option with the consent of lenders representing a majority of the commitments under the facility. The new facility replaces the existing 5-year facility which was scheduled to expire in October 2027. There were no amounts borrowed against either facility and at September 27, 2025 and December 28, 2024, there was a $9 million letter of credit issued and outstanding under the prior facility that remains outstanding under the new facility.

Current wording

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. We may elect to increase the aggregate amount of commitments under the facility to up to $1.3 billion by designating an additional lender or by an existing lender agreeing to increase its commitment. The facility expires in October 2030 and provides for two one-year extensions at our option with the consent of lenders representing a majority of the commitments under the facility. At April 4, 2026 and January 3, 2026, there were no amounts borrowed against the facility and there were no letters of credit issued and outstanding under the facility.

Previous wording

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 February 13, 2025, we issued $500 million of SEC-registered fixed-rate notes due in May 2035 with an annual interest rate of 5.50%. On March 3, 2025, we repaid our $350 million 3.875% Notes due in 2025.

Current wording

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.

Previous wording

Cash flows used in investing activities included $210 million and $211 million of capital expenditures in the first nine months of 2025 and 2024, respectively, partially offset by $77 million and $27 million of net proceeds from corporate-owned life insurance policies, respectively. In the first nine months of 2025, cash flows used in investing activities also included $16 million of net proceeds from the disposition of the Powersports business as discussed in Note 12 to the Consolidated Financial Statements.

Current wording

Cash flows used in investing activities included $133 million and $56 million of capital expenditures in the first quarter of 2026 and 2025, respectively. In the first quarter of 2025, cash flows used in investing activities also included $31 million of net proceeds from corporate-owned life insurance policies.

Previous wording

Cash flows used in financing activities in the first nine months of 2025 included $635 million of cash paid to repurchase an aggregate of 8.4 million shares of our common stock and $355 million of payments on long-term debt, partially offset by $495 million of net proceeds from the issuance of long-term debt. In the first nine months of 2024, cash flows used in financing activities included $890 million of cash paid to repurchase an aggregate of 10.1 million shares of our common stock and $360 million of payments on long-term debt.

Current wording

Cash flows used in financing activities in the first quarter of 2026 included $168 million of cash paid to repurchase an aggregate of 1.8 million shares of our common stock and $74 million of payments on long-term debt, partially offset by $56 million of proceeds from the exercise of stock options granted to employees. In the first quarter of 2025, cash flows used in financing activities included $352 million of payments on long-term debt and $215 million of cash paid to repurchase an aggregate of 2.9 million shares of our common stock, largely offset by $495 million of net proceeds from the issuance of long-term debt.

Previous wording

The Finance group’s cash flows from investing activities included finance receivable originations of $167 million and $90 million in the first nine months of 2025 and 2024, respectively, and collections on finance receivables totaling $119 million and $99 million, respectively. In the first nine months of 2025, investing cash flows also included $66 million of proceeds from the disposition of non-captive assets. In the first nine months of 2025 and 2024, financing activities included payments on long-term and nonrecourse debt of $12 million and $15 million, respectively.

Current wording

The Finance group’s cash flows from investing activities included finance receivable originations of $49 million and $33 million in the first quarter of 2026 and 2025, respectively, and collections on finance receivables totaling $34 million and $29 million, respectively. In the first quarter of 2026, investing cash flows also included $24 million of proceeds from the disposition of non-captive assets.

Previous wording

Cash flows used in investing activities included $210 million and $211 million of capital expenditures in the first nine months of 2025 and 2024, respectively, partially offset by $77 million and $27 million of net proceeds from corporate-owned life insurance policies, respectively. In the first nine months of 2025, cash flows used in investing activities also included $66 million of proceeds from the disposition of non-captive assets and $16 million of net proceeds from the disposition of the Powersports business.

Current wording

Cash flows used in investing activities in the first quarter of 2026 included $133 million of capital expenditures, partially offset by $24 million of proceeds from the disposition of non-captive assets. In the first quarter of 2025, cash flows used in investing activities included $56 million of capital expenditures, partially offset by $31 million of net proceeds from corporate-owned life insurance policies.

Previous wording

Cash flows used in financing activities in the first nine months of 2025 included $635 million of cash paid to repurchase shares of our outstanding common stock and $367 million of payments on long-term and non-recourse debt, partially offset by $495 million of net proceeds from the issuance of long-term debt. In the first nine months of 2024, cash flows used in financing activities included $890 million of cash paid to repurchase shares of our outstanding common stock and $375 million of payments on long-term and non-recourse debt.

Current wording

Cash flows used in financing activities in the first quarter of 2026 included $168 million of cash paid to repurchase shares of our outstanding common stock and $74 million of payments on long-term debt, partially offset by $56 million of proceeds from the exercise of stock options granted to employees. In the first quarter of 2025, cash flows used in financing activities included $355 million of payments on long-term and non-recourse debt and $215 million of cash paid to repurchase shares of our outstanding common stock, largely offset by $495 million of net proceeds from the issuance of long-term debt.

Previous wording

•Risks related to changing U.S. and foreign trade policies, including increased trade restrictions or tariffs; and

Current wording

•Risks related to changing U.S. and foreign trade policies, including increased trade restrictions or tariffs;