FORM 10-K

21 Special charges recorded for these plans are as follows: (In millions) Severance Costs Asset Impairments Contract Terminations and Other Acquisition Integration/ Transaction Costs Total Special Charges 2017 Industrial $ 26 $ 1 $ 19 $ 12 $ 58 Textron Aviation 11 17 — — 28 Bell 3 12 8 — 23 Textron Systems 6 16 (1) — 21 Total $ 46 $ 46 $ 26 $ 12 $ 130 2016 Industrial $ 17 $ 2 $ 1 $ — $ 20 Textron Aviation 33 1 1 — 35 Bell 4 1 — — 5 Textron Systems 15 34 13 — 62 Corporate 1 — — — 1 Total $ 70 $ 38 $ 15 $ — $ 123 Income Taxes 2017 2016 2015 Effective tax rate 59.8% 3.8% 28.1% In 2017, our effective tax rate was significantly higher than the U.S. federal statutory tax rate of 35%, largely due to the impact from the Tax Cuts and Jobs Act (the “Act”). In the fourth quarter of 2017, we recorded a provisional estimate of $266 million for one- time adjustments resulting from the Act. Approximately $154 million of this provisional estimate represents a charge resulting from the remeasurement of our U.S. federal deferred tax assets and liabilities, and the remainder represents a provision for the transition tax on post-1986 earnings and profits previously deferred from U.S. income taxes. In addition, the Act reduces the U.S. federal corporate tax rate from 35% to 21%, which is expected to lower our effective tax rate for 2018 and future years. In 2016, our effective tax rate was significantly lower than the U.S. federal statutory tax rate of 35%, largely due to a settlement with the U.S. Internal Revenue Service Office of Appeals for our 1998 to 2008 tax years. This settlement resulted in a $206 million benefit recognized in continuing operations and a $113 million benefit in discontinued operations. For a full reconciliation of our effective tax rate to the U.S. federal statutory tax rate of 35% see Note 13 to the Consolidated Financial Statements. Segment Analysis We operate in, and report financial information for, the following five business segments: Textron Aviation, Bell, Textron Systems, Industrial and Finance. 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 and special charges. The measurement for the Finance segment includes interest income and expense along with intercompany interest income and expense. In our discussion of comparative results for the Manufacturing group, changes in revenues and segment profit typically are expressed for our commercial business in terms of volume, pricing, foreign exchange and acquisitions. Additionally, changes in segment profit may be expressed in terms of mix, inflation and cost performance. Volume changes in revenues represent increases/decreases in the number of units delivered or services provided. 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. For segment profit, mix represents a change due to the composition of products and/or services sold at different profit margins. Inflation represents higher material, wages, benefits, pension 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, product line profitability, start- up, ramp up and cost-reduction initiatives or other manufacturing inputs.