FORM 10-K

23 Textron Aviation Segment Profit Factors contributing to 2017 year-over-year segment profit change are provided below: (In millions) 2017 versus 2016 Volume and mix $ (99) Pricing, net of inflation 56 Performance and other (43) Total change $ (86) Segment profit at Textron Aviation decreased $86 million, 22%, in 2017, compared with 2016, primarily as a result of lower net volume and mix as described above. The favorable impact of $56 million from pricing, net of inflation, was largely offset by an unfavorable impact of $43 million from performance and other, largely reflecting higher research, development and engineering costs, which included costs related to the Scorpion program in 2017. Factors contributing to 2016 year-over-year segment profit change are provided below: (In millions) 2016 versus 2015 Performance and other $ 65 Volume and mix (49) Inflation and pricing (27) Total change $ (11) Segment profit at Textron Aviation decreased $11 million, 3%, in 2016, compared with 2015, primarily as a result of the mix of products sold and the unfavorable impact from inflation and pricing of $27 million. These decreases were partially offset by favorable performance and other of $65 million, largely attributable to lower research and development costs and lower compensation expense. Bell % Change (Dollars in millions) 2017 2016 2015 2017 2016 Revenues: V-22 Program $ 1,129 $ 1,151 $ 1,194 (2)% (4)% Other Military 947 936 839 1% 12% Commercial 1,241 1,152 1,421 8% (19)% Total revenues 3,317 3,239 3,454 2% (6)% Operating expenses 2,902 2,853 3,054 2% (7)% Segment profit 415 386 400 8% (4)% Profit margin 12.5% 11.9% 11.6% Backlog $ 4,598 $ 5,360 $ 5,224 (14)% 3% 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 stage and represent a significant portion of Bell’s revenues from the U.S. Government. Bell Revenues and Operating Expenses Factors contributing to the 2017 year-over-year revenue change are provided below: (In millions) 2017 versus 2016 Volume and mix $ 57 Other 21 Total change $ 78 Bell’s revenues increased $78 million, 2%, in 2017, compared with 2016, primarily due to an $89 million increase in commercial revenues, largely due to higher deliveries as Bell delivered 132 commercial aircraft in 2017, compared with 114 aircraft in 2016. Military deliveries were largely unchanged in 2017 compared with 2016, as we delivered 22 V-22 aircraft in both years and 38 H-1 aircraft in 2017, compared with 35 H-1 aircraft in 2016.