FORM 10-K

31 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: (In millions) 2017 2016 2015 Reclassification adjustments from investing activities: Cash received from customers $ 241 $ 248 $ 284 Finance receivable originations for Manufacturing group inventory sales (174) (173) (194) Other (10) (31) (1) Total reclassification adjustments from investing activities 57 44 89 Reclassification adjustments from financing activities: Dividends received by Manufacturing group from Finance group — (29) (63) Total reclassification adjustments to cash flow from operating activities $ 57 $ 15 $ 26 Under a Support Agreement between Textron and TFC, Textron is required to maintain a controlling interest in TFC. The agreement, as amended in December 2015, also requires Textron to ensure that TFC maintains fixed charge coverage of no less than 125% and consolidated shareholder’s equity of no less than $125 million. There were no cash contributions required to be paid to TFC in 2017, 2016 and 2015 to maintain compliance with the support agreement. Contractual Obligations Manufacturing Group The following table summarizes the known contractual obligations, as defined by reporting regulations, of our Manufacturing group as of December 30, 2017: Payments Due by Period (In millions) Total Year 1 Years 2-3 Years 4-5 More Than 5 Years Debt $ 3,108 $ 14 $ 820 $ 514 $ 1,760 Purchase obligations not reflected in balance sheet 2,360 2,111 232 17 — Interest on borrowings 775 133 252 156 234 Pension benefits for unfunded plans 404 27 51 47 279 Postretirement benefits other than pensions 289 31 55 46 157 Other long-term liabilities 476 111 125 72 168 Operating leases 397 80 115 65 137 Total Manufacturing group $ 7,809 $ 2,507 $ 1,650 $ 917 $ 2,735 Pension and Postretirement Benefits We maintain defined benefit pension plans and postretirement benefit plans other than pensions as described in Note 11 to the Consolidated Financial Statements. Included in the above table are discounted estimated benefit payments we expect to make related to unfunded pension and other postretirement benefit plans. Actual benefit payments are dependent on a number of factors, including mortality assumptions, expected retirement age, rate of compensation increases and medical trend rates, which are subject to change in future years. Our policy for funding pension plans is to make contributions annually, consistent with applicable laws and regulations; however, future contributions to our pension plans are not included in the above table. In 2018, we expect to make approximately $27 million of contributions to our funded pension plans and the Retirement Account Plan. Based on our current assumptions, which may change with changes in market conditions, our current contribution for each of the years from 2019 through 2022 are estimated to be in the range of approximately $50 million to $55 million under the plan provisions in place at this time.