FORM 10-K

28 Finance Portfolio Quality The following table reflects information about the Finance segment’s credit performance related to finance receivables. (Dollars in millions) December 30, 2017 December 31, 2016 Finance receivables* $ 850 $ 946 Nonaccrual finance receivables 61 87 Ratio of nonaccrual finance receivables to finance receivables 7.18% 9.20% 60+ days contractual delinquency $ 34 $ 40 60+ days contractual delinquency as a percentage of finance receivables 4.00% 4.23% * Excludes finance receivables held for sale of $30 million at December 31, 2016. Liquidity and Capital Resources 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. 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: (Dollars in millions) December 30, 2017 December 31, 2016 Manufacturing group Cash and equivalents $ 1,079 $ 1,137 Debt 3,088 2,777 Shareholders’ equity 5,647 5,574 Capital (debt plus shareholders’ equity) 8,735 8,351 Net debt (net of cash and equivalents) to capital 26% 23% Debt to capital 35% 33% Finance group Cash and equivalents $ 183 $ 161 Debt 824 903 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 believe that we will have sufficient cash to meet our future needs, based on our existing cash balances, the cash we expect to generate from our manufacturing operations and other available funding alternatives, as appropriate. Textron has a senior unsecured revolving credit facility that expires in September 2021 for an aggregate principal amount of $1.0 billion, of which up to $100 million is available for the issuance of letters of credit. At December 30, 2017, there were no amounts borrowed against the facility and there were $11 million of letters of credit issued against it. 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. During 2017, we issued $1.0 billion of public debt under this registration statement, which consisted of $350 million in 3.65% Notes due March 2027, $300 million in 3.375% Notes due March 2028, and $350 million of Floating Rate Notes due November 2020.