(a) During 2016, we initiated a plan to restructure and realign our businesses by implementing headcount reductions, facility consolidations and other actions in order to improve overall operating efficiency across Textron. In the three and six months ended July 1, 2017, we recorded Special charges of $12 million and $27 million, respectively, related to this plan. In connection with the acquisition of Arctic Cat, we recorded Special charges of $23 million in the six months ended July 1, 2017, which consisted of severance costs of $19 million, principally related to change-of-control provisions, and integration and transaction costs of $4 million.

(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)
					July 1, 2017					December 31, 2016
Assets
Cash and equivalents					$	938			$	1,137
Accounts receivable, net						1,236				1,064
Inventories						4,655				4,464
Other current assets						357				388
Net property, plant and equipment						2,669				2,581
Goodwill						2,340				2,113
Other assets						2,376				2,331
Finance group assets						1,204				1,280
Total Assets					$	15,775			$	15,358
Liabilities and Shareholders' Equity
Short-term debt and current portion of long-term debt					$	362			$	363
Current liabilities						3,643				3,530
Other liabilities						2,275				2,354
Long-term debt						2,774				2,414
Finance group liabilities						1,039				1,123
Total Liabilities						10,093				9,784
Total Shareholders' Equity						5,682				5,574
Total Liabilities and Shareholders' Equity					$	15,775			$	15,358

TEXTRON INC.
MANUFACTURING GROUP
Condensed Schedule of Cash Flows
(In millions)
(Unaudited)
				Three Months Ended												Six Months Ended
				July 1,						July 2,						July 1,						July 2,
				2017						2016						2017						2016
Cash flows from operating activities:
Income from continuing operations				$	150					$	174					$	244					$	322
Depreciation and amortization					108						111						211						217
Changes in working capital					88						(211	)					(225	)					(601	)
Changes in other assets and liabilities and non-cash items					67						4						40						(8	)
Dividends Received from TFC					-						29						-						29
Net cash from operating activities of continuing operations					413						107						270						(41	)
Cash flows from investing activities:
Net cash used in acquisitions					(11	)					(15	)					(329	)					(179	)
Capital expenditures					(85	)					(119	)					(161	)					(207	)
Proceeds from the sale of property, plant and equipment					-						3						-						5
Other investing activities, net					-						-						1						(2	)
Net cash from investing activities					(96	)					(131	)					(489	)					(383	)
Cash flows from financing activities:
Proceeds from long-term debt					-						-						347						345
Increase (decrease) in short-term debt					(100	)					(30	)					-						12
Purchases of Textron common stock					(143	)					-						(329	)					(215	)
Other financing activities, net					(3	)					(2	)					10						(1	)
Net cash from financing activities					(246	)					(32	)					28						141
Total cash flows from continuing operations					71						(56	)					(191	)					(283	)
Total cash flows from discontinued operations					2						(1	)					(23	)					(1	)
Effect of exchange rate changes on cash and equivalents					7						(5	)					15						(1	)
Net change in cash and equivalents					80						(62	)					(199	)					(285	)
Cash and equivalents at beginning of period					858						723						1,137						946
Cash and equivalents at end of period				$	938					$	661					$	938					$	661
Manufacturing Cash Flow GAAP to Non-GAAP Reconciliation:
Net cash from operating activities of continuing operations - GAAP				$	413					$	107					$	270					$	(41	)
Less: Capital expenditures					(85	)					(119	)					(161	)					(207	)
Dividends received from TFC					-						(29	)					-						(29	)
Plus: Total pension contributions					13						12						27						24
Proceeds from the sale of property, plant and equipment					-						3						-						5
Manufacturing cash flow before pension contributions- Non-GAAP (a)				$	341					$	(26	)				$	136					$	(248	)
(a) 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
				July 1,						July 2,						July 1,						July 2,
				2017						2016						2017						2016
Cash flows from operating activities:
Income from continuing operations				$	153					$	178					$	253					$	329
Depreciation and amortization					112						114						218						223
Changes in working capital					128						(168	)					(219	)					(568	)
Changes in other assets and liabilities and non-cash items					65						(4	)					37						(14	)
Net cash from operating activities of continuing operations					458						120						289						(30	)
Cash flows from investing activities:
Net cash used in acquisitions					(11	)					(15	)					(329	)					(179	)
Capital expenditures					(85	)					(119	)					(161	)					(207	)
Finance receivables repaid					9						19						24						36
Other investing activities, net					21						42						34						52
Net cash from investing activities					(66	)					(73	)					(432	)					(298	)
Cash flows from financing activities:
Proceeds from long-term debt					13						-						375						362
Increase (decrease) in short-term debt					(100	)					(30	)					-						12
Principal payments on long-term debt and nonrecourse debt					(36	)					(44	)					(74	)					(90	)
Purchases of Textron common stock					(143	)					-						(329	)					(215	)
Other financing activities, net					(3	)					(2	)					10						(1	)
Net cash from financing activities					(269	)					(76	)					(18	)					68
Total cash flows from continuing operations					123						(29	)					(161	)					(260	)
Total cash flows from discontinued operations					2						(1	)					(23	)					(1	)
Effect of exchange rate changes on cash and equivalents					7						(5	)					15						(1	)
Net change in cash and equivalents					132						(35	)					(169	)					(262	)
Cash and equivalents at beginning of period					997						778						1,298						1,005
Cash and equivalents at end of period				$	1,129					$	743					$	1,129					$	743

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: