Finance segment revenues and profit were both flat with last year’s second quarter.

Conference Call Information

Textron will host its conference call today, July 18, 2018 at 8:00 a.m. (Eastern) to discuss its results and outlook. The call will be available via webcast at www.textron.com or by direct dial at (800) 230-1951 in the U.S. or (612) 288-0340 outside of the U.S. (request the Textron Earnings Call).

In addition, the call will be recorded and available for playback beginning at 10:30 a.m. (Eastern) on Wednesday, July 18, 2018 by dialing (320) 365-3844; Access Code: 431861.

A package containing key data that will be covered on today’s call can be found in the Investor Relations section of the company’s website at www.textron.com.

About Textron Inc.

Textron Inc. is a multi-industry company that leverages its global network of aircraft, defense, industrial and finance businesses to provide customers with innovative solutions and services. Textron is known around the world for its powerful brands such as Bell, Cessna, Beechcraft, Hawker, Jacobsen, Kautex, Lycoming, E-Z-GO, Textron Off Road, Arctic Cat, Textron Systems, and TRU Simulation + Training. For more information visit: www.textron.com.

Forward-looking Information

Certain statements in this release and other oral and written statements made by us from time to time are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements, which may describe strategies, goals, outlook or other non-historical matters, or project revenues, income, returns or other financial measures, often include words such as “believe,” “expect,” “anticipate,” “intend,” “plan,” “estimate,” “guidance,” “project,” “target,” “potential,” “will,” “should,” “could,” “likely” or “may” and similar expressions intended to identify forward-looking statements. These statements are only predictions and involve known and unknown risks, uncertainties, and other factors that may cause our actual results to differ materially from those expressed or implied by such forward-looking statements. Given these uncertainties, you should not place undue reliance on these forward-looking statements. Forward-looking statements speak only as of the date on which they are made, and we undertake no obligation to update or revise any forward-looking statements. In addition to those factors described in our Annual Report on Form 10-K and our Quarterly Reports on Form 10-Q under “Risk Factors”, among the factors that could cause actual results to differ materially from past and projected future results are the following: Interruptions in the U.S. Government’s ability to fund its activities and/or pay its obligations; changing priorities or reductions in the U.S. Government defense budget, including those related to military operations in foreign countries; our ability to perform as anticipated and to control costs under contracts with the U.S. Government; the U.S. Government’s ability to unilaterally modify or terminate its contracts with us for the U.S. 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; 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 (including the recently enacted Tax Cuts and Jobs Act); and risks related to the timing and scope of future repurchases of our common stock.

TEXTRON INC. Revenues by Segment and Reconciliation of Segment Profit to Net Income (Dollars in millions, except per share amounts) (Unaudited)
								Three Months Ended													Six Months Ended
								June 30, 2018						July 1, 2017							June 30, 2018						July 1, 2017
REVENUES
MANUFACTURING:
		Textron Aviation							$	1,276					$	1,171						$	2,286					$	2,141
		Bell								831						825							1,583						1,522
		Textron Systems								380						477							767						893
		Industrial								1,222						1,113							2,353						2,105
										3,709						3,586							6,989						6,661
FINANCE										17						18							33						36
		Total revenues							$	3,726					$	3,604						$	7,022					$	6,697
SEGMENT PROFIT
MANUFACTURING:
		Textron Aviation							$	104					$	54						$	176					$	90
		Bell								117						112							204						195
		Textron Systems								40						42							90						62
		Industrial								80						82							144						158
										341						290							614						505
FINANCE										5						5							11						9
		Segment Profit								346						295							625						514
Corporate expenses and other, net										(51	)					(31	)						(78	)					(58	)
Interest expense, net for Manufacturing group										(35	)					(36	)						(69	)					(70	)
Special charges (a)										-						(13	)						-						(50	)
Income from continuing operations before income taxes										260						215							478						336
Income tax expense										(36	)					(62	)						(65	)					(83	)
Income from continuing operations										224						153							413						253
	Discontinued operations, net of income taxes									-						-							-						1
Net income									$	224					$	153						$	413					$	254
Earnings per share:
	Income from continuing operations								$	0.87					$	0.57						$	1.59					$	0.94
	Discontinued operations, net of income taxes									-						-							-						-
	Net income								$	0.87					$	0.57						$	1.59					$	0.94
		Diluted average shares outstanding								257,177,000						269,299,000							260,462,000						271,076,000

At the beginning of 2018, we adopted the new revenue recognition accounting standard using a modified retrospective transition method applied to contracts that were not substantially complete at the end of 2017. We recorded a $90 million adjustment to increase retained earnings to reflect the cumulative impact of adopting this standard at the beginning of 2018, primarily related to long-term contracts with the U.S. Government. Revenues associated with these contracts in 2018 are primarily recognized as costs are incurred, while revenues for 2017 were primarily recognized as units were delivered. The comparative information has not been restated and is reported under the accounting standards in effect for those periods.

Income from Continuing Operations and Diluted Earnings Per Share (EPS) GAAP to Non-GAAP Reconciliation:
							Three Months Ended July 1, 2017															Six Months Ended July 1, 2017
																	Diluted EPS															Diluted EPS
Income from continuing operations - GAAP							$					153					$	0.57				$					253					$	0.94
Restructuring, net of taxes of $4 million and $9 million, respectively												8						0.03									18						0.07
Arctic Cat restructuring, integration and transaction costs, net of taxes of $0 million and $7 million, respectively												1						-									16						0.05
	Total Special charges, net of income taxes											9						0.03									34						0.12
Adjusted income from continuing operations - Non-GAAP (b)							$					162					$	0.60				$					287					$	1.06

(a)			Special charges for the three and six months ended July 1, 2017 include $12 million and $27 million, respectively, related to a 2016 restructuring plan and $1 million and $23 million, respectively, of restructuring and transaction costs related to the Arctic Cat acquisition.
(b)			Adjusted income from continuing operations and adjusted diluted earnings per share are non-GAAP financial measures as defined in "Non-GAAP Financial Measures" attached to this release.

Textron Inc. Condensed Consolidated Balance Sheets (In millions) (Unaudited)
							June 30, 2018				December 30, 2017
Assets (a)
Cash and equivalents							$	554			$	1,079
Accounts receivable, net								1,121				1,363
Inventories								3,925				4,150
Assets of businesses held for sale (b)								407				-
Other current assets								763				435
Net property, plant and equipment								2,608				2,721
Goodwill								2,207				2,364
Other assets								1,869				2,059
Finance group assets								1,104				1,169
	Total Assets						$	14,558			$	15,340
Liabilities and Shareholders' Equity (a)
Short-term debt and current portion of long-term debt							$	9			$	14
Current liabilities								3,322				3,646
Liabilities of businesses held for sale (b)								66				-
Other liabilities								1,809				2,006
Long-term debt								3,070				3,074
Finance group liabilities								920				953
	Total Liabilities							9,196				9,693
Total Shareholders' Equity								5,362				5,647
	Total Liabilities and Shareholders' Equity						$	14,558			$	15,340

(a)			At the beginning of 2018, we adopted the new revenue recognition accounting standard using a modified retrospective transition method applied to contracts that were not substantially complete at the end of 2017. We recorded a $90 million adjustment to increase retained earnings to reflect the cumulative impact of adopting this standard at the beginning of 2018, primarily related to long-term contracts with the U.S. Government. Revenues associated with these contracts in 2018 are primarily recognized as costs are incurred, while revenues for 2017 were primarily recognized as units were delivered. The comparative information has not been restated and is reported under the accounting standards in effect for those periods.
(b)			On April 18, 2018, we entered into a definitive agreement to sell the businesses that manufacture and sell the products in our Tools and Test Equipment product line within our Industrial segment. The assets and liabilities of these businesses have been classified as held for sale at June 30, 2018. We completed this disposition on July 2, 2018.

TEXTRON INC. MANUFACTURING GROUP Condensed Schedule of Cash Flows (In millions) (Unaudited)
								Three Months Ended												Six Months Ended
								June 30,					July 1,							June 30,					July 1,
								2018					2017							2018					2017
Cash flows from operating activities:
Income from continuing operations								$	219				$	150						$	398				$	244
Depreciation and amortization									109					108							212					211
Changes in working capital (a)									98					88							(278	)				(249	)
Changes in other assets and liabilities and non-cash items (a)									42					67							33					42
Dividends received from TFC									-					-							50					-
Net cash from operating activities of continuing operations (a)									468					413							415					248
Cash flows from investing activities:
Capital expenditures									(82	)				(85	)						(159	)				(161	)
Net proceeds from corporate-owned life insurance policies (a)									40					-							98					22
Proceeds from the sale of property, plant and equipment									1					-							10					-
Net cash used in acquisitions									-					(11	)						-					(329	)
Other investing activities, net									-					-							-					1
Net cash from investing activities (a)									(41	)				(96	)						(51	)				(467	)
Cash flows from financing activities:
Decrease in short-term debt									(2	)				(100	)						-					-
Proceeds from long-term debt									-					-							-					347
Purchases of Textron common stock									(571	)				(143	)						(915	)				(329	)
Other financing activities, net									30					(3	)						33					10
Net cash from financing activities									(543	)				(246	)						(882	)				28
Total cash flows from continuing operations									(116	)				71							(518	)				(191	)
Total cash flows from discontinued operations									(1	)				2							(1	)				(23	)
Effect of exchange rate changes on cash and equivalents									(17	)				7							(6	)				15
Net change in cash and equivalents									(134	)				80							(525	)				(199	)
Cash and equivalents at beginning of period									688					858							1,079					1,137
Cash and equivalents at end of period								$	554				$	938						$	554				$	938
Manufacturing Cash Flow GAAP to Non-GAAP Reconciliation:
Net cash from operating activities of continuing operations - GAAP								$	468				$	413						$	415				$	248
Less:		Capital expenditures							(82	)				(85	)						(159	)				(161	)
		Dividends received from TFC							-					-							(50	)				-
Plus:		Total pension contributions							12					13							25					27
		Proceeds from the sale of property, plant and equipment							1					-							10					-
Manufacturing cash flow before pension contributions- Non-GAAP (a)								$	399				$	341						$	241				$	114

(a)			For the six months ended July 1, 2017, $22 million of net cash proceeds received from the settlement of corporate-owned life insurance policies were reclassified from operating activities to investing activities as a result of the adoption of a new accounting standard at the beginning of 2018.
(b)			Manufacturing cash flow before pension contributions is a non-GAAP financial measure as defined in "Non-GAAP Financial Measures" attached to this release.

TEXTRON INC. Condensed Consolidated Schedule of Cash Flows (In millions) (Unaudited)
								Three Months Ended											Six Months Ended
								June 30,					July 1,						June 30,					July 1,
								2018					2017						2018					2017
Cash flows from operating activities:
Income from continuing operations								$	224				$	153					$	413				$	253
Depreciation and amortization									111					112						216					218
Changes in working capital (a)									105					128						(264	)				(243	)
Changes in other assets and liabilities and non-cash items (a)									43					65						33					39
Net cash from operating activities of continuing operations (a)									483					458						398					267
Cash flows from investing activities:
Capital expenditures									(82	)				(85	)					(159	)				(161	)
Net proceeds from corporate-owned life insurance policies (a)									40					-						98					22
Finance receivables repaid									9					9						25					24
Net cash used in acquisitions									-					(11	)					-					(329	)
Other investing activities, net									21					21						30					34
Net cash from investing activities (a)									(12	)				(66	)					(6	)				(410	)
Cash flows from financing activities:
Decrease in short-term debt									(2	)				(100	)					-					-
Principal payments on long-term debt and nonrecourse debt									(15	)				(36	)					(34	)				(74	)
Proceeds from long-term debt									-					13						-					375
Purchases of Textron common stock									(571	)				(143	)					(915	)				(329	)
Other financing activities, net									30					(3	)					33					10
Net cash from financing activities									(558	)				(269	)					(916	)				(18	)
Total cash flows from continuing operations									(87	)				123						(524	)				(161	)
Total cash flows from discontinued operations									(1	)				2						(1	)				(23	)
Effect of exchange rate changes on cash and equivalents									(17	)				7						(6	)				15
Net change in cash and equivalents									(105	)				132						(531	)				(169	)
Cash and equivalents at beginning of period									836					997						1,262					1,298
Cash and equivalents at end of period								$	731				$	1,129					$	731				$	1,129

(a)			For the six months ended July 1, 2017, $22 million of net cash proceeds received from the settlement of corporate-owned life insurance policies were reclassified from operating activities to investing activities as a result of the adoption of a new accounting standard at the beginning of 2018.

TEXTRON INC. Non-GAAP Financial Measures (Dollars in millions, except per share amounts)
We supplement the reporting of our financial information determined under U.S. generally accepted accounting principles (GAAP) with certain non-GAAP financial measures. These non-GAAP financial measures exclude certain significant items that may not be indicative of, or are unrelated to, results from our ongoing business operations. We believe that these non-GAAP measures may be useful for period-over-period comparisons of underlying business trends and our ongoing business performance, however, they should be used in conjunction with GAAP measures. Our non-GAAP measures should not be considered in isolation or as a substitute for the related GAAP measures, and other companies may define similarly named measures differently. We encourage investors to review our financial statements and publicly-filed reports in the entirety and not to rely on any single financial measure. We utilize the following definitions for the non-GAAP financial measures included in this release:
Adjusted income from continuing operations and adjusted diluted earnings per share
Adjusted income from continuing operations and adjusted diluted earnings per share both exclude Special charges, net of income taxes. We consider items recorded in Special charges such as enterprise-wide restructuring and acquisition-related restructuring, integration and transaction costs, to be of a non-recurring nature that is not indicative of ongoing operations.
Manufacturing cash flow before pension contributions
Manufacturing cash flow before pension contributions adjusts net cash from operating activities of continuing operations (GAAP) for the following:
• Deducts capital expenditures and includes proceeds from the sale of property, plant and equipment to arrive at the net capital investment required to support ongoing manufacturing operations;
• Excludes dividends received from Textron Financial Corporation (TFC) and capital contributions to TFC provided under the Support Agreement and debt agreements as these cash flows are not representative of manufacturing operations;
• Adds back pension contributions as we consider our pension obligations to be debt-like liabilities. Additionally, these contributions can fluctuate significantly from period to period and we believe that they are not representative of cash used by our manufacturing operations during the period.
While we believe this measure provides a focus on cash generated from manufacturing operations, before pension contributions, and may be used as an additional relevant measure of liquidity, it does not necessarily provide the amount available for discretionary expenditures since we have certain non-discretionary obligations that are not deducted from the measure.

Income from Continuing Operations and Diluted Earnings Per Share (EPS) GAAP to Non-GAAP Reconciliation:
							Three Months Ended July 1, 2017												Six Months Ended July 1, 2017
												Diluted EPS												Diluted EPS
Income from continuing operations - GAAP							$	153					$	0.57					$	253					$	0.94
Restructuring, net of taxes of $4 million and $9 million, respectively								8						0.03						18						0.07
Arctic Cat restructuring, integration and transaction costs, net of taxes of $0 million and $7 million, respectively								1						-						16						0.05
	Total Special charges, net of income taxes							9						0.03						34						0.12
Adjusted income from continuing operations - Non-GAAP							$	162					$	0.60					$	287					$	1.06
Manufacturing Cash Flow Before Pension Contributions GAAP to Non-GAAP Reconciliation and Outlook:
							Three Months Ended												Six Months Ended
							June 30, 2018					July 1, 2017							June 30, 2018					July 1, 2017
Net cash from operating activities of continuing operations - GAAP (a)							$	468					$	413					$	415					$	248
Less:	Capital expenditures							(82	)					(85	)					(159	)					(161	)
	Dividends received from TFC							-						-						(50	)					-
Plus:	Total pension contributions							12						13						25						27
	Proceeds from the sale of property, plant and equipment							1						-						10						-
Manufacturing cash flow before pension contributions - Non-GAAP (a)							$	399					$	341					$	241					$	114
																			2018 Outlook
Net cash from operating activities of continuing operations - GAAP																			$	1,235			-		$	1,335
Less:	Capital expenditures																						(500)
	Dividends received from TFC																						(50)
Plus:	Total pension contributions																						55
	Proceeds from the sale of property, plant and equipment																						10
Manufacturing cash flow before pension contributions - Non-GAAP																			$	750			-		$	850

(a)

For the six months ended July 1, 2017, $22 million of net cash proceeds received from the settlement of corporate-owned life insurance policies were reclassified from operating activities to investing activities as a result of the adoption of a new accounting standard at the beginning of 2018.

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