Note 15. Revenues

Disaggregation of Revenues

Our revenues disaggregated by major product type for the three and nine months ended September 29, 2018 are presented below:

(In millions)		Three Months Ended		Nine Months Ended
Aircraft	$	756	$	2,267
Aftermarket parts and services		377		1,152

Textron Aviation		1,133		3,419

Military aircraft and support programs		505		1,525
Commercial helicopters, parts and services		265		828

Bell		770		2,353

Unmanned systems		154		485
Marine and land systems		87		248
Simulation, training and other		111		386

Textron Systems		352		1,119

Fuel systems and functional components		522		1,804
Specialized vehicles		408		1,231
Tools and test equipment		—		248

Industrial		930		3,283

Finance		15		48

Total revenues	$	3,200	$	10,222

Our revenues by customer type and geographic location for the three and nine months ended September 29, 2018 are presented below:

(In millions)		Textron Aviation		Bell		Textron Systems		Industrial		Finance		Total
Three months ended
Customer type:
Commercial	$	1,081	$	258	$	92	$	923	$	15	$	2,369
U.S. Government		52		512		260		7		—		831

Total revenues	$	1,133	$	770	$	352	$	930	$	15	$	3,200

Geographic location:
United States	$	740	$	392	$	293	$	435	$	4	$	1,864
International		393		378		59		495		11		1,336

Total revenues	$	1,133	$	770	$	352	$	930	$	15	$	3,200

Nine months ended

Customer type:
Commercial	$	3,245	$	801	$	326	$	3,262	$	48	$	7,682
U.S. Government		174		1,552		793		21		—		2,540

Total revenues	$	3,419	$	2,353	$	1,119	$	3,283	$	48	$	10,222

Geographic location:
United States	$	2,319	$	1,444	$	877	$	1,521	$	18	$	6,179
International		1,100		909		242		1,762		30		4,043

Total revenues	$	3,419	$	2,353	$	1,119	$	3,283	$	48	$	10,222

Remaining Performance Obligations

Our remaining performance obligations, which is the equivalent of our backlog, represent the expected transaction price allocated to our contracts that we expect to recognize as revenue in future periods when we perform under the contracts. These remaining obligations include amounts that have been formally appropriated under contracts with the U.S. Government, and exclude unexercised contract options and potential orders under ordering-type contracts such as Indefinite Delivery, Indefinite Quantity contracts. At September 29, 2018, we had $8.7 billion in remaining performance obligations of which we expect to recognize revenues of approximately 62% through 2019, an additional 22% through 2021, and the balance thereafter.

Contract assets and liabilities

Assets and liabilities related to our contracts with customers are reported on a contract-by-contract basis at the end of each reporting period. At September 29, 2018, contract assets and liabilities totaled $408 million and $1.1 billion, respectively. Upon adoption of ASC 606 on December 31, 2017, contract assets and liabilities related to our contracts with customers were $429 million and $1.0 billion, respectively. During the third quarter and first nine months of 2018, we recognized $56 million and $755 million, respectively, in revenues that were included in the contract liability balance at the adoption date.

Reconciliation of ASC 606 to Prior Accounting Standards

The amount by which each financial statement line item is affected in 2018 as a result of applying the new accounting standard as discussed in Note 2 is presented below:

	September 29, 2018
(In millions)		As Reported		Effect of the adoption of ASC 606		Under Prior Accounting
Consolidated Balance Sheets
Accounts receivable, net	$	1,026	$	187	$	1,213
Inventories		4,030		207		4,237
Other current assets		706		(418)		288
Property, plant and equipment, net		2,593		6		2,599
Other assets		1,868		40		1,908
Total Manufacturing group assets		13,582		22		13,604
Total assets		14,669		22		14,691
Other current liabilities		2,310		147		2,457
Total Manufacturing group liabilities		8,225		147		8,372
Total liabilities		9,126		147		9,273
Retained earnings		6,419		(125)		6,294
Total shareholders’ equity		5,543		(125)		5,418

	Three Months Ended September 29, 2018						Nine Months Ended September 29, 2018
(In millions, except per share amounts)		As Reported		Effect of the adoption of ASC 606		Under Prior Accounting		As Reported		Effect of the adoption of ASC 606		Under Prior Accounting
Consolidated Statements of Operations
Manufacturing revenues	$	3,185	$	21	$	3,206	$	10,174	$	(225)	$	9,949
Total revenues		3,200		21		3,221		10,222		(225)		9,997
Cost of sales		2,687		25		2,712		8,489		(178)		8,311
Income from continuing operations before income taxes		628		(4)		624		1,106		(47)		1,059
Income tax expense		65		(1)		64		130		(12)		118
Income from continuing operations		563		(3)		560		976		(35)		941
Net income		563		(3)		560		976		(35)		941
Basic earnings per share - continuing operations	$	2.29	$	(0.01)	$	2.28	$	3.85	$	(0.14)	$	3.71
Diluted earnings per share - continuing operations		2.26		(0.01)		2.25		3.80		(0.14)		3.66

Consolidated Statements of Comprehensive Income

Other comprehensive income	$	46	$	(3)	$	43	$	78	$	(35)	$	43
Comprehensive income		609		(3)		606		1,054		(35)		1,019

	Nine Months Ended September 29, 2018

(In millions)		As Reported		Effect of the adoption of ASC 606		Under Prior Accounting

Consolidated Statements of Cash flows

Net income	$	976	$	(35)	$	941
Income from continuing operations		976		(35)		941
Deferred income taxes		25		(12)		13
Accounts receivable, net		56		16		72
Inventories		(190)		(29)		(219)
Other assets		(28)		(12)		(40)
Other liabilities		(80)		72		(8)
Net cash provided by operating activities of continuing operations		697		—		697