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(Unaudited)
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- Manufacturing Group and Finance Group
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Finance Receivables (Details)
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Finance Receivable Portfolio Quality (Details)
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Finance Receivables and Allowance for Losses Based
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(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title
of each class
Trading Symbol (s)
Name of each exchange on which registered
iCommon stock, $0.125 par value
iTXT
New York Stock Exchange (iNYSE)
Indicate
by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. iYesþ No ¨
Indicate by check mark whether the
registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). iYesþ No ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer,
smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,”“accelerated filer,”“smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act (Check one):
iLarge
accelerated filer
þ
Accelerated filer
☐
Non-accelerated filer
☐
Smaller reporting company
i☐
Emerging growth company
i☐
If
an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.¨
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes i☐
No þ
As of July 15, 2022, there were i211,531,587 shares of common stock outstanding.
Notes to the Consolidated Financial Statements (Unaudited)
Note 1. iBasis
of Presentation
Our Consolidated Financial Statements include the accounts of Textron Inc. (Textron) and its majority-owned subsidiaries. We have prepared these unaudited consolidated financial statements in accordance with accounting principles generally accepted in the U.S. for interim financial information. Accordingly, these interim financial statements do not include all of the information and footnotes required by accounting principles generally accepted in the U.S. for complete financial statements. The consolidated interim financial statements included in this quarterly report should be read in conjunction with the consolidated financial statements included in our Annual Report on Form 10-K for the year ended January 1, 2022. In the opinion of management, the interim
financial statements reflect all adjustments (consisting only of normal recurring adjustments) that are necessary for the fair presentation of our consolidated financial position, results of operations and cash flows for the interim periods presented. The results of operations for the interim periods are not necessarily indicative of the results to be expected for the full year.
Our financings are conducted through itwo 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, and our new reporting segment, Textron eAviation, formed in the second quarter of 2022. Textron eAviation includes the operating results of Pipistrel, a manufacturer of electrically powered aircraft acquired on April 15, 2022, as discussed in Note 2, along with other research and development initiatives related to sustainable aviation solutions. 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. All significant intercompany transactions are eliminated from the Consolidated Financial Statements, including retail financing activities for inventory sold by our Manufacturing group and financed by our Finance group.
i
Use of
Estimates
We prepare our financial statements in conformity with generally accepted accounting principles, which require us to make estimates and assumptions that affect the amounts reported in the financial statements. Actual results could differ from those estimates. Our estimates and assumptions are reviewed periodically, and the effects of changes, if any, are reflected in the Consolidated Statements of Operations in the period that they are determined.
For contracts where revenue is recognized over time, we recognize changes in estimated contract
revenues, costs and profits using the cumulative catch-up method of accounting. This method recognizes the cumulative effect of changes on current and prior periods with the impact of the change from inception-to-date recorded in the current period. Anticipated losses on contracts are recognized in full in the period in which the losses become probable and estimable.
In the second quarter of 2022, our cumulative catch-up adjustments decreased segment profit by $i4
million and net income by $i3 million, $i0.01
per diluted share. In the second quarter of 2021, our cumulative catch-up adjustments increased segment profit by $i15 million and net income by $i11
million, $i0.05 per diluted share. Gross favorable profit adjustments totaled $i25 million and $i40
million in the second quarter of 2022 and 2021, respectively, and gross unfavorable profit adjustments totaled $i29 million and $i25 million, respectively. We reduced revenues by
$i21 million and recognized revenues of $i20
million in the second quarter of 2022 and 2021, respectively, from performance obligations satisfied in prior periods that related to changes in profit booking rates.
In the first half of 2022, our cumulative catch-up adjustments decreased segment profit by $i21 million and net income by $i16
million, $i0.07 per diluted share. In the first half of 2021, our cumulative catch-up adjustments increased segment profit by $i29
million and net income by $i22 million, $i0.10
per diluted share. Gross favorable profit adjustments totaled $i41 million and $i76 million in the first half of 2022 and 2021, respectively, and gross unfavorable profit adjustments totaled
$i62 million and $i47 million, respectively. We reduced revenues by $i33
million and recognized revenues of $i38 million in the first half of 2022 and 2021, respectively, from performance obligations satisfied in prior periods that related to changes in profit booking rates.
On April 15, 2022, we acquired Pipistrel, a manufacturer of electrically powered aircraft, for a cash purchase price of $i240
million, which included the assumption of $i35 million of debt and other contractual obligations under the agreement and a final fixed payment of $i21
million due in 2024. Beginning in the second quarter of 2022, this business is included in a new reporting segment, Textron eAviation, which combines the operating results of Pipistrel along with other research and development initiatives related to sustainable aviation solutions.
We allocated the purchase price for this business on a preliminary basis to the assets acquired and liabilities assumed based on their estimated fair values at the acquisition date. We expect to finalize the purchase accounting as soon as reasonably possible during the one-year measurement period. Based on the preliminary allocation, $i142
million has been allocated to goodwill, related to expected synergies and the value of the assembled workforce, and $i76 million to intangible assets, primarily including developed technologies. The intangible assets were primarily valued using the relief-from-royalty method. This method utilizes significant unobservable inputs, or Level 3 inputs, as defined by the fair value hierarchy and requires
us to make estimates and assumptions about sales, growth rates, royalty rates and discount rates based on marketplace data.
Note 3. iAccounts Receivable and Finance Receivables
We internally assess the quality of our finance receivables based on a number of key credit quality indicators and statistics such as delinquency, loan balance to estimated collateral value and the financial strength of individual borrowers and guarantors. Because many of these indicators are difficult to apply across an entire class of receivables, we evaluate individual loans on a quarterly basis and classify these loans into three categories based on the key credit quality indicators for the individual loan. These three categories are performing, watchlist and nonaccrual.
We classify finance receivables as nonaccrual if credit quality indicators suggest full collection of principal and interest is doubtful. In addition, we automatically classify accounts as nonaccrual once they are contractually delinquent by more than ithree
months unless collection of principal and interest is not doubtful. Accounts are classified as watchlist when credit quality indicators have deteriorated as compared with typical underwriting criteria, and we believe collection of full principal and interest is probable but not certain. All other finance receivables that do not meet the watchlist or nonaccrual categories are classified as performing.
We measure delinquency based on the contractual payment terms of our finance receivables. In determining the delinquency aging category of an account, any/all principal and interest received is applied to the most past-due principal and/or interest amounts due. If a significant portion of the contractually due payment is delinquent, the entire finance receivable balance is reported in accordance with the most past-due delinquency aging category.
60+ days contractual delinquency as a percentage of finance
receivables
i0.85%
i0.16%
//
At
July 2, 2022, i39% of our performing finance receivables were originated since the beginning of 2020 and i27%
were originated from 2017 to 2019. For finance receivables categorized as nonaccrual, i7% were originated since the beginning of 2020 and i70%
were originated from 2017 to 2019.
On a quarterly basis, we evaluate individual larger balance accounts for impairment. A finance receivable is considered impaired when it is probable that we will be unable to collect all amounts due according to the contractual terms of the loan agreement based on our review of the credit quality indicators described above. Impaired finance receivables include both nonaccrual accounts and accounts for which full collection of principal and interest remains probable, but the account’s original terms have been, or are expected to be, significantly modified. If the modification specifies an interest rate equal to or greater than a market rate for a finance receivable with comparable risk, the account is not considered impaired in years subsequent to the modification.
i
A
summary of finance receivables and the allowance for credit losses, based on the results of our impairment evaluation, is provided below. The finance receivables included in this table specifically exclude leveraged leases in accordance with U.S. generally accepted accounting principles.
*
Adjustments include changes to prior year estimates, new issues on prior year sales, acquisitions and currency translation adjustments.
/
Note 6. iLeases
We primarily lease certain manufacturing
plants, offices, warehouses, training and service centers at various locations worldwide through operating leases. Our operating leases have remaining lease terms up to i27 years, which include options to iextend the lease term for periods up to
i25 years when it is reasonably certain the option will be exercised. Operating lease cost totaled $i17 million and $i16
million in the second quarter of 2022 and 2021, respectively, and $i34 million and $i32 million in the first half of 2022 and 2021, respectively. Variable and short-term lease costs were not significant.
Cash paid for operating leases totaled $i35 million and $i33 million in the first half of 2022 and 2021, respectively, and is classified in cash flows from operating activities. Noncash
transactions totaled $i17 million and $i63
million in the first half of 2022 and 2021, respectively, reflecting the recognition of operating lease assets and liabilities for new or extended leases.
i
Balance sheet and other information related to our operating leases is as follows:
At
July 2, 2022, maturities of our operating lease liabilities on an undiscounted basis totaled $i35 million for the remainder of 2022, $i65
million for 2023, $i55 million for 2024, $i47 million for 2025, $i35
million for 2026 and $i217 million thereafter.
Note 7. iDerivative
Instruments and Fair Value Measurements
We measure fair value at the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. We prioritize the assumptions that market participants would use in pricing the asset or liability into a three-tier fair value hierarchy. This fair value hierarchy gives the highest priority (Level 1) to quoted prices in active markets for identical assets or liabilities and the lowest priority (Level 3) to unobservable inputs in which little or no market data exist, requiring companies to develop their own assumptions. Observable inputs that do not meet the criteria of Level 1, which include quoted prices for similar assets or liabilities in active markets or quoted prices for identical assets and liabilities in markets that are not active, are categorized as Level 2. Level 3 inputs are those
that reflect our estimates about the assumptions market participants would use in pricing the asset or liability based on the best information available in the circumstances. Valuation techniques for assets and liabilities measured using Level 3 inputs may include methodologies such as the market approach, the income approach or the cost approach and may use unobservable inputs such as projections, estimates and management’s interpretation of current market data. These unobservable inputs are utilized only to the extent that observable inputs are not available or cost effective to obtain.
Assets and Liabilities Recorded at Fair Value on a Recurring Basis
We manufacture and sell our products in a number of countries throughout the world, and, therefore, we are exposed to movements in foreign currency exchange rates. We primarily utilize foreign currency exchange contracts
with maturities of no more than ithree years to manage this volatility. These contracts qualify as cash flow hedges and are intended to offset the effect of exchange rate fluctuations on forecasted sales, inventory purchases and overhead expenses. Net gains and losses recognized in earnings and Accumulated other comprehensive loss on cash flow hedges, including gains and losses related to hedge ineffectiveness, were not significant in the periods presented.
Our foreign currency exchange contracts are measured at fair value using the market method valuation technique. The inputs to this technique utilize current foreign currency exchange forward market rates published by third-party leading financial news and data providers. These are observable data that represent the rates that the financial institution uses for contracts entered into at that date; however, they are not based on actual transactions, so they are classified as Level 2. At July 2, 2022 and January 1, 2022, we had foreign currency exchange contracts
with notional amounts upon which the contracts were based of $i264 million and $i272 million, respectively.
At July 2, 2022, the fair value amounts of our foreign currency exchange contracts were a $i3 million asset and a $i4
million liability. At January 1, 2022, the fair value amounts of our foreign currency exchange contracts were a $i4 million asset and a $i3
million liability.
Our Finance group enters into interest rate swap agreements to mitigate certain exposures to fluctuations in interest rates. By using these contracts, we are able to convert floating-rate cash flows to fixed-rate cash flows. These agreements are designated as cash flow hedges. At July 2, 2022, we had a swap agreement for a notional amount of $i272 million with a maturity of August
2023, and a swap agreement for a notional amount of $i25 million, maturing in June 2025, with a combined fair value of a $i7 million
asset. At January 1, 2022, we had a swap agreement for a notional amount of $i289 million with a maturity of August 2023 and an insignificant fair value. The fair value of these swap agreements is determined using values published by third-party leading financial news and data providers. These values are observable data that represent the value that financial institutions use for contracts entered into at that date, but are not based on actual
transactions, so they are classified as Level 2.
Assets and Liabilities Not Recorded at Fair Value
i
The carrying value and estimated fair value of our financial instruments that are not reflected in the financial statements at fair value are as follows:
Fair
value for the Manufacturing group debt is determined using market observable data for similar transactions (Level 2). The fair value for the Finance group debt was determined primarily based on discounted cash flow analyses using observable market inputs from debt with similar duration, subordination and credit default expectations (Level 2). Fair value estimates for finance receivables were determined based on internally developed discounted cash flow models primarily utilizing significant unobservable inputs (Level 3), which include estimates of the rate of return, financing cost, capital structure and/or discount rate expectations of current market participants combined with estimated loan cash flows based on credit losses, payment rates and expectations of borrowers’ ability to make payments on a timely basis.
Dividends
per share of common stock were $ii0.02/
for both the second quarter of 2022 and 2021 and $ii0.04/
for both the first half of 2022 and 2021.
Earnings Per Share
We calculate basic and diluted earnings per share (EPS) based on net income, which approximates income available to common shareholders for each period. Basic EPS is calculated using the two-class method, which includes the weighted-average number of common shares outstanding during the period and restricted stock units to be paid in stock that are deemed participating securities as they provide nonforfeitable rights to dividends. Diluted EPS considers the dilutive effect of all potential future common stock, including stock options.
i
The
weighted-average shares outstanding for basic and diluted EPS are as follows:
For both the second quarter and first half of 2022, stock options to purchase ii1.0/
million shares of common stock were excluded from the calculation of diluted weighted-average shares outstanding as their effect would have been anti-dilutive. For the first half of 2021, stock options to purchase i2.1 million shares of common stock were excluded from the calculation of diluted weighted-average shares outstanding as their effect would have been anti-dilutive.
Accumulated Other Comprehensive Loss and Other
Comprehensive Income
i
The components of Accumulated other comprehensive loss are presented below:
*These
components of other comprehensive income (loss) are included in the computation of net periodic pension cost (income). See Note 15 of our 2021 Annual Report on Form 10-K for additional information.
Through the first quarter of 2022, we operated in, and reported financial information for, the following iifive/
business segments: Textron Aviation, Bell, Textron Systems, Industrial and Finance. Beginning in the second quarter of 2022, we formed a new reporting segment within the Manufacturing group, Textron eAviation, which includes the operating results of Pipistrel, a manufacturer of electrically powered aircraft that we acquired on April 15, 2022, as discussed in Note 2, along with other research and development initiatives related to sustainable aviation solutions. Segment profit is an important measure used for evaluating performance and for decision-making purposes. Segment profit for the manufacturing segments excludes interest expense, certain corporate expenses, gains/losses on major business dispositions and special charges. The measurement for the Finance segment includes interest income and expense along with intercompany interest income and expense.
i
Our
revenues by segment, along with a reconciliation of segment profit to income from continuing operations before income taxes, are included in the table below:
Our remaining performance obligations, which is the equivalent of our backlog, represent the expected transaction price allocated to our contracts that we expect to recognize as revenues in future periods when we perform under the contracts. These remaining obligations exclude unexercised contract options and potential orders under ordering-type contracts such as Indefinite Delivery, Indefinite Quantity contracts. At July 2,
2022, we had $i13.2 billion in remaining performance obligations of which we expect to recognize revenues of approximately i75% through 2023, an additional
i21% through 2025, and the balance thereafter.
Assets
and liabilities related to our contracts with customers are reported on a contract-by-contract basis at the end of each reporting period. At July 2, 2022 and January 1, 2022, contract assets totaled $i643
million and $i717 million, respectively, and contract liabilities totaled $i1.6
billion and $i1.2 billion, respectively, reflecting timing differences between revenues recognized, billings and payments from customers. We recognized revenues of $i293
million and $i170 million in the second quarter of 2022 and 2021, respectively, and $i499
million and $i448 million in the first half of 2022 and 2021, respectively, that were included in the contract liability balance at the beginning of each year.
Note 11. iRetirement
Plans
We provide defined benefit pension plans and other postretirement benefits to eligible employees. iThe components of net periodic benefit (income) cost for these plans are as follows:
*
Excludes the cost associated with the defined contribution component, included in certain of our U.S.-based defined benefit pension plans, that totaled $i3 million and $i3
million in the second quarter of 2022 and 2021, respectively, and $i7 million and $i6 million for the first half of
2022 and 2021, respectively.
Note 12. iSpecial Charges
In the second quarter and first half of 2021, we recognized special charges of $i4
million and $i10 million, respectively, related to a restructuring plan initiated in 2020 in response to the economic challenges and uncertainty resulting from the COVID-19 pandemic. There were iino/
special charges recorded in the second quarter and first half of 2022.
i
Our restructuring reserve activity is summarized below:
The
majority of the remaining cash outlays of $i16 million is expected to be paid in the next nine months.
Note 13. iIncome
Taxes
Our effective tax rate for the second quarter and first half of 2022 was i17.1% and i17.0%, respectively.
In the second quarter and first half of 2022, the effective tax rate was lower than the U.S. federal statutory rate of ii21/%,
largely due to the favorable impact of research and development credits.
Our effective tax rate for the second quarter and first half of 2021 was i15.6% and i13.0%,
respectively. In the second quarter and first half of 2021, the effective tax rate was lower than the U.S. federal statutory rate of ii21/%,
largely due to the favorable impact of research and development credits. In the first half of 2021, the effective tax rate also included a $i12 million benefit recognized for additional research and development credits related to prior years.
We are subject to legal proceedings and other claims arising out of the conduct of our business, including proceedings and claims relating to commercial and financial transactions; government contracts; alleged lack of compliance with applicable laws and regulations; production partners;
product liability; patent and trademark infringement; employment disputes; and environmental, safety and health matters. Some of these legal proceedings and claims seek damages, fines or penalties in substantial amounts or remediation of environmental contamination. As a government contractor, we are subject to audits, reviews and investigations to determine whether our operations are being conducted in accordance with applicable regulatory requirements. Under federal government procurement regulations, certain claims brought by the U.S. Government could result in our suspension or debarment from U.S. Government contracting for a period of time. On the basis of information presently available, we do not believe that existing proceedings and claims will have a material effect on our financial position or results of operations.
During
the first half of 2022, all of our manufacturing segments were impacted by labor shortages and ongoing global supply chain shortages and delays resulting from the continuation of the COVID-19 pandemic and the war in Ukraine. While our businesses are managing through these challenges, in some cases they have caused, and we expect will continue to cause, some manufacturing inefficiencies and delays in delivery of certain of our products to customers.
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 20 to 25.
Revenues
Revenues decreased $37 million in the second quarter of 2022, compared with the second quarter of 2021. The revenue decrease primarily included the following factors:
•Lower
Bell revenues of $204 million, largely due to lower military revenues of $170 million, primarily in the H-1 program due to lower aircraft and spares production volume, reflecting lower demand, and lower commercial revenues of $34 million.
•Lower Textron Systems revenues of $40 million, largely due to lower volume of $44 million, which included a $39 million decrease from our Afghanistan fee-for-service and aircraft support contracts.
•Higher Textron Aviation revenues of $123 million, reflecting higher volume and mix of $79 million and higher pricing of $44 million.
•Higher Industrial revenues of $77 million, due to favorable impact from pricing of $64 million and higher volume
and mix of $37 million, principally in the Specialized Vehicles product line, partially offset by $24 million from foreign exchange rate fluctuations.
Revenues increased $85 million in the first half of 2022, compared with the first half of 2021. The revenue increase primarily included the following factors:
•Higher Textron Aviation revenues of $298 million, reflecting higher volume and mix of $221 million and higher pricing of $77 million.
•Higher Industrial revenues of $90 million, largely due to favorable impact from pricing of $110 million, principally in the Specialized Vehicles product line, partially offset by $33 million from exchange rate fluctuations.
•Lower Bell revenues of $216 million, largely due to lower military
revenues of $150 million, primarily in the H-1 program due to lower aircraft and spares production volume, reflecting lower demand, and lower commercial revenues of $66 million.
•Lower Textron Systems revenues of $95 million, largely due to lower volume of $103 million, which included a $78 million decrease from our Afghanistan fee-for-service and aircraft support contracts.
Cost of Sales and Selling and Administrative Expense
Cost of sales decreased $19 million in the second quarter of 2022, compared with the second quarter of 2021, largely due to lower net volume and mix described above, partially offset by inflation of $108 million, principally reflecting higher material cost in the Industrial and Textron Aviation segments.
Gross margin as a percentage of Manufacturing revenues decreased 40 basis points in the second quarter of 2022 as higher margin at the Textron Aviation segment, reflecting higher volume and mix, was more than offset by lower margin at the other Manufacturing segments, primarily at the Bell Segment, reflecting lower volume and mix.
Cost of sales increased $73 million in the first half of 2022, compared with the first half of 2021, largely due to inflation of $181 million, principally reflecting higher material cost in the Industrial and Textron Aviation segments, partially offset by lower net volume and mix. Gross margin as a percentage of Manufacturing revenues decreased 10 basis points in the first half of 2022 as higher margin at the Textron Aviation segment, reflecting higher volume and mix, was offset by lower margin at the other Manufacturing segments.
Selling and administrative expense decreased $36 million, 11%, and $29 million, 5%, in the second quarter and first half of 2022, respectively, compared with the corresponding periods in 2021, primarily reflecting lower share-based compensation expense.
Non-service components of pension and postretirement income, net
In the second quarter of 2022, non-service components of pension and postretirement income, net increased by $21 million, 54%, to $60 million. In the first half of 2022, non-service components of pension and postretirement income, net increased by $42 million, 53%, to $121 million. The increase in both periods was primarily driven by an increase in the discount rate utilized for our domestic qualified pension plans and actual pension asset returns that exceeded our expected
return on plan assets assumption.
Income Taxes
Our effective tax rate for the second quarter and first half of 2022 was 17.1% and 17.0%, respectively. In the second quarter and first half of 2022, 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.
Our effective tax rate for the second quarter and first half of 2021 was 15.6% and 13.0%, respectively. In the second quarter and first half of 2021, 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. In the first half of 2021, the effective tax rate also included a $12 million benefit recognized for additional research and development credits related to prior years.
Textron Aviation's backlog increased $1.7 billion, 42%, in the first half of 2022, reflecting orders in excess of deliveries. Backlog at Bell increased $1.4 billion, 36%, largely due to new orders in excess of deliveries and revenues recognized. Bell was awarded a $1.4 billion 5-year contract with the U.S. Government for spares and logistic support for the
V-22 tiltrotor aircraft in the first quarter of 2022.
Segment Analysis
Through the first quarter of 2022, we operated in, and reported financial information for, the following five business segments: Textron Aviation, Bell, Textron Systems, Industrial and Finance. Beginning in the second quarter of 2022, we formed a new reporting segment within the Manufacturing group, Textron eAviation. This new segment includes the operating results of Pipistrel, a manufacturer of electrically powered aircraft that we acquired on April 15, 2022, as discussed in Note 2 to the Consolidated Financial Statements, along with other research and development initiatives related to sustainable aviation solutions.
Segment
profit is an important measure used for evaluating performance and for decision-making purposes. Segment profit for the manufacturing segments excludes interest expense, certain corporate expenses, gains/losses on major business dispositions and special charges. The measurement for the Finance segment includes interest income and expense along with intercompany interest income and expense. Operating expenses for the Manufacturing segments include cost of sales, selling and administrative expense and other non-service components of net periodic benefit cost/(income), and exclude certain corporate expenses and special charges.
In our discussion of comparative results for the Manufacturing group, changes in revenues and segment profit for our commercial businesses typically are expressed in terms of volume and mix, pricing, foreign exchange, acquisitions and dispositions, inflation and performance. For revenues, volume and mix
represents changes in revenues from increases or decreases in the number of units delivered or services provided and the composition of products and/or services sold. For segment profit, volume and mix represents a change due to the number of units delivered or services provided and the composition of products and/or services sold at different profit margins. Pricing represents changes in unit pricing. Foreign exchange is the change resulting from translating foreign-denominated amounts into U.S. dollars at exchange rates that are different from the prior period. Revenues generated by acquired businesses are reflected in Acquisitions for a twelve-month period, while reductions in revenues and segment profit from the sale of businesses are reflected as Dispositions. Inflation represents higher material, wages, benefits, pension service cost or other costs. Performance reflects an increase or decrease in research and development, depreciation, selling and administrative
costs, warranty, product liability, quality/scrap, labor efficiency, overhead, non-service pension cost/(income), product line profitability, start-up, ramp up and cost-reduction initiatives or other manufacturing inputs.
Approximately 26% of our 2021 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,
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 performance; these include cumulative catch-up adjustments associated with a) revisions to the transaction price that may reflect contract modifications or changes in assumptions related to award fees and other variable consideration or b) changes in the total estimated costs at completion due to improved or deteriorated operating performance.
The following factors contributed to the change in Textron Aviation’s revenues for the periods:
(In millions)
Q2 2022 versus Q2 2021
YTD 2022 versus YTD
2021
Volume and mix
$
79
$
221
Pricing
44
77
Total change
$
123
$
298
Textron Aviation’s revenues increased $123 million, 11%, in the second quarter of 2022, compared
with the second quarter of 2021, reflecting higher volume and mix of $79 million and higher pricing of $44 million. The increase in volume and mix was largely due to higher Citation jet and aftermarket volume, partially offset by lower pre-owned volume. The higher aftermarket volume reflected increased aircraft utilization. We delivered 48 Citation jets and 35 commercial turboprops in the second quarter of 2022, compared with 44 Citation jets and 33 commercial turboprops in the second quarter of 2021.
Textron Aviation’s revenues increased $298 million, 15%, in the first half of 2022, compared with the first half of 2021, reflecting higher volume and mix of $221 million and higher pricing of $77 million. The increase in volume and mix was largely due to higher Citation jet, aftermarket and commercial turboprop volume, partially offset by lower pre-owned volume. The higher aftermarket volume reflected increased aircraft utilization.
We delivered 87 Citation jets and 66 commercial turboprops in the first half of 2022, compared with 72 Citation jets and 47 commercial turboprops in the first half of 2021.
Textron Aviation’s operating expenses increased $64 million, 6%, and $165 million, 9%, in the second quarter and first half of 2022, respectively, compared with the corresponding periods of 2021, largely due to higher volume and mix described above and inflation of $29 million and $46 million, respectively.
Textron Aviation Segment Profit
The following factors contributed to the change in Textron Aviation’s segment profit for the periods:
(In
millions)
Q2 2022 versus Q2 2021
YTD 2022 versus YTD 2021
Volume and mix
$
25
$
80
Pricing, net of inflation
15
31
Performance
19
22
Total
change
$
59
$
133
Segment profit at Textron Aviation increased $59 million, 61%, in the second quarter of 2022, compared with the second quarter of 2021, largely due to the impact from higher volume and mix of $25 million described above, a favorable impact from performance of $19 million and favorable pricing, net of inflation of $15 million.
Segment profit at
Textron Aviation increased $133 million, 93%, in the first half of 2022, compared with the first half of 2021, largely due to the impact from higher volume and mix described above, favorable pricing, net of inflation of $31 million and a favorable impact from performance of $22 million.
Bell’s
major U.S. Government programs at this time are the V-22 tiltrotor aircraft and the H-1 helicopter platforms, which are both in the production and support stage and represent a significant portion of Bell’s revenues from the U.S. Government. Over the next several years, the H-1 helicopter program with the U.S. Government will be transitioning from the production stage to the support stage.
Bell Revenues and Operating Expenses
The following factors contributed to the change in Bell’s revenues for the periods:
(In millions)
Q2 2022 versus Q2 2021
YTD
2022 versus YTD 2021
Volume and mix
$
(217)
$
(240)
Pricing
13
24
Total change
$
(204)
$
(216)
Bell’s
revenues decreased $204 million, 23%, in the second quarter of 2022, compared with the second quarter of 2021, largely due to lower military revenues of $170 million, primarily in the H-1 program due to lower aircraft and spares production volume, reflecting lower demand. Commercial revenues decreased $34 million, primarily due to lower volume and mix. We delivered 34 commercial helicopters in the second quarter of 2022, compared with 47 commercial helicopters in the second quarter of 2021.
Bell’s revenues decreased $216 million, 12%, in the first half of 2022, compared with the first half of 2021, largely due to lower military revenues of $150 million, primarily in the H-1 program due to lower aircraft and spares production volume, reflecting lower demand. Commercial revenues decreased $66 million, primarily due to lower volume and mix. We delivered 59 commercial helicopters in the first half of 2022, compared with 64
commercial helicopters in the first half of 2021.
Bell’s operating expenses decreased $157 million, 20%, and $162 million, 11% in the second quarter and first half of 2022, respectively, compared with the corresponding periods of 2021, primarily due to lower volume and mix described above.
Bell Segment Profit
The following factors contributed to the change in Bell’s segment profit for the periods:
(In millions)
Q2 2022 versus Q2 2021
YTD 2022 versus YTD
2021
Volume and mix
$
(62)
$
(72)
Performance
16
22
Inflation, net of pricing
(1)
(4)
Total change
$
(47)
$
(54)
Bell’s
segment profit decreased $47 million, 43%, in the second quarter of 2022, compared with the second quarter of 2021, primarily reflecting lower volume and mix as described above, partially offset by a favorable impact from performance of $16 million. Performance included lower research and development costs, pension costs and selling and administrative expense of $26 million, partially offset by an unfavorable change in net program adjustments.
Bell’s segment profit decreased $54 million, 25%, in the first half of 2022, compared with the first half of 2021, primarily reflecting lower volume and mix described above, partially offset
by a favorable impact from performance of $22 million. Performance included lower research and development costs, pension costs and selling and administrative expense of $57 million, partially offset by an unfavorable change in net program adjustments.
The following factors contributed to the change in Textron Systems’ revenues for the periods:
(In millions)
Q2 2022 versus Q2 2021
YTD 2022 versus YTD
2021
Volume
$
(44)
$
(103)
Other
4
8
Total change
$
(40)
$
(95)
Textron Systems'
revenues decreased $40 million, 12%, and $95 million, 14%, in the second quarter and first half of 2022, respectively, compared with the corresponding periods of 2021. Lower volume of $44 million and $103 million, respectively, included a decrease of $39 million and $78 million, respectively, from our Afghanistan fee-for-service and aircraft support contracts, primarily reflecting the impact from the U.S. Army’s withdrawal from Afghanistan.
Textron Systems’ operating expenses decreased $34 million, 12%, and $71 million, 13% in the second quarter and first half of 2022, respectively, compared with the corresponding periods of 2021, primarily related to lower net volume described above.
Textron Systems Segment Profit
The following factors contributed
to the change in Textron Systems’ segment profit for the periods:
(In millions)
Q2 2022 versus Q2 2021
YTD 2022 versus YTD 2021
Volume and mix
$
(4)
$
(15)
Performance and other
(2)
(9)
Total
change
$
(6)
$
(24)
Textron Systems’ segment profit decreased $6 million, 13%, in the second quarter of 2022, compared with the second quarter of 2021, primarily due to lower volume and mix of $4 million described above.
Textron Systems’ segment profit decreased $24 million, 24%, in the first half of 2022, compared with the first half of 2021, due to lower volume and mix of $15 million described above and an unfavorable impact from performance and other of $9 million.
The following factors contributed to the change in Industrial’s revenues for the periods:
(In millions)
Q2 2022 versus Q2 2021
YTD 2022 versus YTD
2021
Pricing
$
64
$
110
Volume and mix
37
13
Foreign exchange
(24)
(33)
Total change
$
77
$
90
Industrial
segment revenues increased $77 million, 10%, in the second quarter of 2022, compared with the second quarter of 2021, primarily due to a $64 million favorable impact from pricing and $37 million from higher volume and mix, principally in the Specialized Vehicles product line, partially offset by $24 million from foreign exchange rate fluctuations, primarily related to the Euro.
Industrial segment revenues increased $90 million, 6%, in the first half of 2022, compared with the first half of 2021, primarily due to a $110 million favorable impact from pricing, principally in the Specialized Vehicles product line, partially offset by $33 million from foreign exchange rate fluctuations, primarily related to the Euro. Higher volume and mix in the Specialized Vehicles product line was partially offset by lower volume and mix in the Fuel Systems and Functional Components product line, primarily due to the impact of global supply
chain shortages on our original equipment manufacturer customers.
Industrial's operating expenses increased $68 million, 9%, in the second quarter of 2022, compared with the second quarter of 2021, primarily reflecting inflation of $70 million, largely in material costs, and the impact of higher volume and mix described above, partially offset by a favorable impact of $22 million from foreign exchange rate fluctuations.
Industrial's operating expenses increased $85 million, 6%, in the first half of 2022, compared with the first half of 2021, primarily reflecting inflation of $115 million, largely in material costs, partially offset by a favorable impact of $30 million from foreign exchange rate fluctuations.
Industrial Segment Profit
The following factors contributed to the change in Industrial’s
segment profit for the periods:
(In millions)
Q2 2022 versus Q2 2021
YTD 2022 versus YTD 2021
Performance
$
6
$
8
Volume and mix
11
5
Inflation,
net of pricing
(6)
(5)
Foreign exchange
(2)
(3)
Total change
$
9
$
5
Segment profit for the Industrial segment increased $9 million, 28%, in the second quarter of 2022, compared with the second quarter of 2021, primarily due to higher volume and mix of $11 million described above and favorable performance
of $6 million, partially offset by inflation, net of pricing of $6 million.
Segment profit for the Industrial segment increased $5 million, 6%, in the first half of 2022, compared with the first half of 2021, primarily due to favorable performance of $8 million and higher volume and mix of $5 million described above, partially offset by inflation, net of pricing of $5 million.
Textron eAviation
In the second quarter of 2022, Textron eAviation segment revenues and segment loss totaled $5 million and $8 million, respectively, which reflected
the operating results of Pipistrel since its acquisition along with research and development costs for initiatives related to the development of sustainable aviation solutions.
Finance
segment revenues increased $2 million and $3 million in the second quarter and first half of 2022, respectively, compared with the corresponding periods of 2021, and segment profit increased $7 million and $10 million, respectively. The following table reflects information about the Finance segment’s credit performance related to finance receivables.
Ratio of allowance for credit losses to finance receivables
4.27%
3.97%
Nonaccrual finance receivables
68
94
Ratio of nonaccrual finance receivables to finance receivables
11.60%
14.92%
60+ days contractual delinquency
5
1
60+
days contractual delinquency as a percentage of finance receivables
0.85%
0.16%
We believe our allowance for credit losses adequately covers our exposure on these loans as our estimated collateral values largely exceed the outstanding loan amounts. Key portfolio quality indicators are discussed in Note 3 to the Consolidated Financial Statements.
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 along with Textron eAviation, a new segment formed at the beginning of the second quarter of 2022. 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.
Key information that is utilized in assessing our liquidity is summarized below:
We
believe that our calculations of debt to capital and net debt to capital are useful measures as they provide a summary indication of the level of debt financing (i.e., leverage) that is in place to support our capital structure, as well as to provide an indication of the capacity to add further leverage. We expect to have sufficient cash to meet our needs based on our existing cash balances, the cash we expect to generate from our manufacturing operations and the availability of our existing credit facility.
Credit Facilities and Other Sources of Capital
Textron has a senior unsecured revolving credit facility for an aggregate principal amount of $1.0 billion, of which up to $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 2024, subject to up to two one-year extensions at our option with the consent of lenders representing a majority of the commitments under the facility. There were no amounts borrowed against the facility and there were $9 million of outstanding letters of credit issued under the facility at both July 2, 2022 and January 1, 2022.
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.
Manufacturing Group Cash Flows
Cash flows for the Manufacturing group as presented in our Consolidated Statements of Cash Flows are summarized
below:
In the first half of 2022, cash flows from operating activities decreased $90 million to $589 million, compared with $679 million in the first half of 2021, primarily due to an increase in income tax payments of $140 million, largely resulting from a change in tax legislation. Effective at the beginning of 2022, the Tax Cuts and Jobs Act of 2017 eliminated the option to deduct research and development expenditures immediately in the year incurred and requires taxpayers to amortize such expenditures over five years.
Without the option to deduct these expenses in the year incurred, our tax payments are expected to increase by approximately $300 million for the full year of 2022, depending on the final amount of research and development expenses incurred during the year.
Cash flows used in investing activities in the first half of 2022 included $198 million of net cash paid for business acquisitions, largely related to the Pipistrel acquisition discussed in Note 2 to the Consolidated Financial Statements, and $114 million of capital expenditures. Investing activities in the first half of 2021 included $128 million of capital expenditures,
partially offset by $38 million of net proceeds from the disposition of TRU Simulation + Training Canada Inc.
Cash flows used in financing activities in the first half of 2022 included $439 million of cash paid to repurchase an aggregate of 6.6 million shares of our common stock. In the first half of 2021, cash flows used in financing activities included $519 million of payments on long-term debt and $287 million of cash paid to repurchase an aggregate of 4.8 million shares of our common stock.
On January 25, 2022, we announced the authorization of the repurchase of up to 25 million shares of our common stock. This new plan allows us to continue our practice of repurchasing shares to offset the impact of dilution from stock-based compensation and benefit plans and for opportunistic capital management purposes. The 2022 plan has no
expiration date and replaced the prior 2020 share repurchase authorization.
Finance Group Cash Flows
Cash flows for the Finance group as presented in our Consolidated Statements of Cash Flows are summarized below:
The Finance group’s cash flows from investing activities included collections on finance receivables totaling $79 million and $137 million in the first half of 2022 and 2021, respectively, and finance receivable originations
of $23 million and $29 million, respectively. Cash flows provided by investing activities in the first half of 2022 also included $44 million of other investing activities, largely related to proceeds from the sale of operating lease assets. In the first half of 2022 and 2021, financing activities included payments on long-term and nonrecourse debt of $209 million and $34 million, respectively.
Consolidated Cash Flows
The consolidated cash flows after elimination of activity between the borrowing groups, are summarized below:
In
the first half of 2022, cash flows from operating activities decreased $158 million to $615 million, compared with $773 million in the first half of 2021, primarily due to an increase in income tax payments of $151 million, largely resulting from a change in tax legislation discussed above.
Cash flows used in investing activities in the first half of 2022 included $198 million of net cash paid for business acquisitions, largely related to the Pipistrel acquisition, and $114 million of capital expenditures, partially offset by $44 million of other investing activities, which included proceeds from the sale of operating lease assets. Investing activities in the first half of 2021 included $128 million of capital expenditures, partially offset by $38 million of net proceeds from the disposition of TRU Simulation + Training Canada Inc.
Cash flows used in financing activities in the
first half of 2022 included $439 million of cash paid to repurchase shares of our outstanding common stock and $223 million of payments on long-term debt. In the first half of 2021, cash flows used in financing activities included $553 million of payments on long-term debt and $287 million of cash paid to repurchase shares of our outstanding common stock.
Captive Financing and Other Intercompany Transactions
The Finance group provides financing primarily to purchasers of new and pre-owned Textron Aviation aircraft and Bell helicopters manufactured by our Manufacturing group, otherwise known as captive financing. In the Consolidated Statements of Cash Flows, cash received from customers is reflected as operating activities when received from third parties. However, in the cash flow information provided for the separate borrowing groups, cash flows related to captive financing activities
are reflected based on the operations of each group. For example, when product is sold by our Manufacturing group to a customer and is financed by the
Finance group, the origination of the finance receivable is recorded within investing activities as a cash outflow in the Finance group’s statement of cash flows. Meanwhile, in the Manufacturing group’s statement of cash flows, the cash received from the Finance group on the customer’s behalf is recorded within operating cash flows as a cash inflow. Although cash is transferred between the two borrowing groups, there is no cash transaction reported in the consolidated cash flows
at the time of the original financing. These captive financing activities, along with all significant intercompany transactions, are reclassified or eliminated from the Consolidated Statements of Cash Flows.
Reclassification adjustments included in the Consolidated Statements of Cash Flows are summarized below:
Reclassification
adjustments from investing activities to operating activities:
Cash received from customers
$
58
$
118
Finance receivable originations for Manufacturing group inventory sales
(23)
(29)
Total
reclassification adjustments from investing activities to operating activities
$
35
$
89
Critical Accounting Estimates Update
Our Consolidated Financial Statements are prepared in conformity with U.S. generally accepted accounting principles, which require us to make estimates and assumptions that affect the amounts reported in the financial statements. The accounting estimates that we believe are most critical to the portrayal of our financial condition and results of operations are reported in Item 7 of our Annual Report on Form 10-K for
the year ended January 1, 2022. The following section provides an update of the year-end disclosure.
Revenue Recognition
A substantial portion of our revenues is related to long-term contracts with the U.S. Government, including those under the U.S. Government-sponsored foreign military sales program, for the design, development, manufacture or modification of aerospace and defense products as well as related services. We generally use the cost-to-cost method to measure progress for these contracts because it best depicts the transfer of control to the customer that occurs as we incur costs on our contracts.
Under this measure, the extent of progress towards completion is measured based on the ratio of costs incurred to date to the estimated costs at completion of the performance obligation, and revenue is recorded proportionally as costs are incurred.
Changes in our estimate of the total expected cost or in the transaction price for a contract typically impact our profit booking rate. We utilize the cumulative catch-up method of accounting to recognize the impact of these changes on our profit booking rate for a contract. Under this method, the inception-to-date impact of a profit adjustment on a contract is recognized in the period the adjustment is identified.
The impact of our cumulative catch-up adjustments on segment profit recognized in prior periods is presented below:
Certain statements in this Quarterly Report on Form 10-Q 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 2021 Annual Report on Form 10-K 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 and inflationary pressures;
•Risks related to our international business, including establishing and maintaining facilities in locations around the world and relying on joint venture partners, subcontractors, suppliers, representatives, consultants and other business partners in connection with international business, including in emerging market countries;
•Our Finance segment’s ability to maintain portfolio credit quality or to realize full value
of receivables;
•Performance issues with key suppliers or subcontractors;
•Legislative or regulatory actions, both domestic and foreign, impacting our operations or demand for our products;
•Our ability to control costs and successfully implement various cost-reduction activities;
•The efficacy of research and development investments to develop new products or unanticipated expenses in connection with the launching of significant new products or programs;
•The timing of our new product launches or certifications of our new aircraft products;
•Our ability to keep pace
with our competitors in the introduction of new products and upgrades with features and technologies desired by our customers;
•Pension plan assumptions and future contributions;
•Demand softness or volatility in the markets in which we do business;
•Cybersecurity threats, including the potential misappropriation of assets or sensitive information, corruption of data or operational disruption;
•Difficulty or unanticipated expenses in connection with integrating acquired businesses;
•The risk that acquisitions do not perform as planned, including, for example, the risk that acquired businesses will not achieve revenues and profit projections;
•The
impact of changes in tax legislation;
•Risks and uncertainties related to the ongoing impact of the COVID-19 pandemic and the war between Russia and Ukraine on our business and operations; and
•The ability of our businesses to hire and retain the highly skilled personnel necessary for our businesses to succeed.
Item 3. Quantitative and
Qualitative Disclosures About Market Risk
There has been no significant change in our exposure to market risk during the fiscal quarter ended July 2, 2022. For discussion of our exposure to market risk, refer to Item 7A. Quantitative and Qualitative Disclosures about Market Risk contained in Textron’s 2021 Annual Report on Form 10-K.
Item 4. Controls and Procedures
We performed an evaluation of the effectiveness of our disclosure controls and procedures as of July 2, 2022. The evaluation was performed with the participation of senior management of each business segment and key Corporate functions, under the supervision
of our Chairman, President and Chief Executive Officer (CEO) and our Executive Vice President and Chief Financial Officer (CFO). Based on this evaluation, the CEO and CFO concluded that our disclosure controls and procedures were operating and effective as of July 2, 2022.
There were no changes in our internal control over financial reporting during the fiscal quarter ended July 2, 2022 that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
PART II. OTHER INFORMATION
Item
1. Legal Proceedings
As previously reported in Textron’s Annual Report on Form 10-K for the fiscal year ended January 4, 2020, on August 22, 2019, a purported shareholder class action lawsuit was filed in the United States District Court in the Southern District of New York against Textron, its Chairman and Chief Executive Officer and its Chief Financial Officer. The suit, filed by Building Trades Pension Fund of Western Pennsylvania, alleges that the defendants violated the federal securities laws by making materially false and misleading statements and concealing material adverse facts related to the Arctic Cat acquisition and integration. The complaint seeks unspecified compensatory damages. On November 12, 2019, the Court appointed IWA Forest Industry Pension Fund (IWA) as
the sole lead plaintiff in the case. On December 24, 2019, IWA filed an Amended Complaint in the now entitled In re Textron Inc. Securities Litigation. On February 14, 2020, IWA filed a Second Amended Complaint, and on March 6, 2020, Textron filed a motion to dismiss the Second Amended Complaint. On July 20, 2020, the Court granted Textron’s motion to dismiss and closed the case. On August 18, 2020, plaintiffs filed a notice of appeal contesting the dismissal, which Textron opposed. On September 17, 2021, the Second Circuit Court of Appeals narrowed the case, unanimously upholding dismissal of most of the Second Amended Complaint, but reversing dismissal of one aspect of the
Second Amended Complaint and remanding that remaining portion back to the District Court for further proceedings.
On June 23, 2022, as a result of a mediation process overseen by an independent mediator, the Parties entered into a settlement agreement, subject to court approval, to settle plaintiff’s claims for an amount not material to Textron. Neither Textron nor any of the other defendants admitted any wrongdoing with respect to the allegations in the case.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
The following provides information about our second quarter of 2022 repurchases of equity securities that are registered pursuant to Section 12
of the Securities Exchange Act of 1934, as amended:
Period (shares in thousands)
Total Number of Shares Purchased *
Average Price Paid per Share (excluding commissions)
Total Number of Shares Purchased as part of Publicly Announced Plan *
Maximum Number of Shares that may yet be Purchased under the Plan
* On January 25, 2022, our Board of Directors authorized the repurchase of up to 25 million shares of our
common stock. This new plan has no expiration date and replaced the existing plan adopted in 2020.
The following materials from Textron Inc.’s Quarterly Report on Form 10-Q for the quarterly period ended July 2, 2022, formatted in XBRL (eXtensible Business Reporting Language): (i) the Consolidated Statements of Operations,
(ii) the Consolidated Statements of Comprehensive Income, (iii) the Consolidated Balance Sheets, (iv) the Consolidated Statements of Cash Flows and (v) the Notes to the Consolidated Financial Statements.
104
Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).
Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
