FORM 10-K

41 Consolidated Statements of Cash Flows For each of the years in the three-year period ended December 30, 2017 Consolidated (In millions) 2017 2016 2015 Cash flows from operating activities Net income $ 307 $ 962 $ 697 Less: Income (loss) from discontinued operations 1 119 (1) Income from continuing operations 306 843 698 Adjustments to reconcile income from continuing operations to net cash provided by operating activities: Non-cash items: Depreciation and amortization 447 449 461 Asset impairments 47 40 7 Deferred income taxes 346 48 4 Other, net 90 92 99 Changes in assets and liabilities: Accounts receivable, net (236) (33) (14) Inventories 412 (352) (239) Other assets (27) 72 (36) Accounts payable (156) 215 43 Accrued and other liabilities (113) (281) (155) Income taxes, net 78 (189) 71 Pension, net (277) 25 69 Captive finance receivables, net 67 75 90 Other operating activities, net (4) 10 (4) Net cash provided by operating activities of continuing operations 980 1,014 1,094 Net cash used in operating activities of discontinued operations (27) (2) (4) Net cash provided by operating activities 953 1,012 1,090 Cash flows from investing activities Capital expenditures (423) (446) (420) Net cash used in acquisitions (331) (186) (81) Finance receivables repaid 32 44 67 Other investing activities, net 60 65 46 Net cash used in investing activities (662) (523) (388) Cash flows from financing activities Proceeds from long-term debt 1,036 525 61 Principal payments on long-term debt and nonrecourse debt (841) (457) (356) Purchases of Textron common stock (582) (241) (219) Proceeds from exercise of stock options 52 36 32 Dividends paid (21) (22) (22) Other financing activities, net (4) (9) — Net cash used in financing activities (360) (168) (504) Effect of exchange rate changes on cash and equivalents 33 (28) (15) Net increase (decrease) in cash and equivalents (36) 293 183 Cash and equivalents at beginning of year 1,298 1,005 822 Cash and equivalents at end of year $ 1,262 $ 1,298 $ 1,005 See Notes to the Consolidated Financial Statements.