Fellow Shareholders,

Successfully executing on our commitments

Our financial results reflect the successful execution of our efforts to realize new opportunities for growth, improve our operational efficiency and fulfill our commitments to customers, despite continued challenges in a number of the markets in which we compete. At Textron Aviation, higher jet deliveries helped to lift revenues to $4.8 billion in 2015 from $4.6 billion in 2014, while the continued successful integration of our Beechcraft and Cessna businesses helped to drive profits to $400 million, a 71 percent increase over the previous year. The business celebrated Federal Aviation Administration (FAA) certification and subsequent first deliveries of the Citation Latitude and the new Pro Line Fusion-equipped Beechcraft King Air 350i and 250 turboprop aircraft.

TOTAL REVENUES BY SEGMENT

While the commercial helicopter market continued to be challenging for Bell Helicopter, its long-term growth outlook remains strong with new commercial products and upgrades on the horizon to be supported by expanded global sales efforts. Successful first flight of the new Bell 525 Relentless­—the first-ever commercial fly-by-wire helicopter— was a major milestone for the business in 2015. On the military side, Bell Helicopter secured several notable contracts, both domestically and internationally, for the H-1 and V-22 programs.

Our Textron Systems segment won a number of U.S. and international military contracts, including additional craft for the U.S. Navy’s Ship to Shore Connector program and a contract for 55 COMMANDO Select vehicles to the Afghan National Army that were delivered in 2015.

Our Industrial segment delivered solid financial performance with continued expansion of our margin rates. By introducing new products and leveraging the strength of our recent acquisitions, our businesses grew and extended their product reach into new markets.

In our Finance segment, Textron Financial completed another successful year of responding to our customers’ needs with attractive financing options in support of Textron aircraft product sales.

Successfully launching new products and winning customers

Bringing new products to our markets creates excitement among customers, which results in new orders and sales. A prime example was Bell Helicopter’s introduction of the Bell 407GXP long light single aircraft at Heli-Expo in March, which resulted in the largest single order—up to 200 from one customer—in Bell’s history and one of the largest in the rotorcraft industry. Similarly, Bell Helicopter continued to collect customer letters of intent to purchase two new products under development: the Bell 505 Jet Ranger X short light single helicopter, scheduled to be certified and delivered in 2016, and the Bell 525 Relentless super-medium commercial helicopter, expected to achieve certification in 2017.

The success of the V-22 Osprey tiltrotor, which has amassed more than 300,000 flight hours, continues to drive new orders. Japan became the V-22’s first international customer with an agreement to purchase five aircraft, while the U.S. Navy announced its plans to procure 44 V-22s for its Carrier Onboard Delivery program. Building on the success of the V-22, our V-280 development program continues to make progress. In addition to starting initial assembly of the aircraft, our teams developed a simulator that allows potential customers to experience this next-generation tiltrotor at military tradeshows and other venues. The V-280 demonstrator aircraft is preparing for first flight in 2017 as part of the U.S. Department of Defense’s Future Vertical Lift/Joint Multi-Role technology demonstration program.

In August, customers began taking delivery of the new Citation Latitude. This is the fifth Citation jet to be certified during an 18-month period, demonstrating the rapid pace of Textron Aviation’s product development program. Textron Aviation continues to invest in larger business jets as the Citation Longitude prepares for its first flight in 2016 and is expected to enter into service in 2017. Rounding out the Citation family of jets in the large-cabin segment is the Hemisphere, targeting first flight in 2019. Textron Aviation also announced the development of a new, clean-sheet single engine turboprop aircraft that is expected to have a range of more than 1,500 nautical miles and speeds higher than 280 knots.

As production continued on the first two craft as part of the Ship to Shore Connector program at Textron Systems Marine & Land Systems, the U.S. Navy ordered an additional two units as part of an $84 million contract option. The first two units are scheduled for completion in 2017 and 2018. Our Aerosonde Small Unmanned Aircraft System fee-for-service program performed well and continued to grow. Four new sites were added to our U.S. Department of Defense contract, while flight hours per month increased at all of our sites around the world and surpassed a total of 120,000 flight hours.

TRU Simulation + Training won significant new contracts and regulatory approvals as it continued to establish strong relationships with customers and grow its business globally. Among the notable successes was a contract with Lufthansa Flight Training for an Airbus A350 FFS X Level D full motion flight simulator, representing TRU’s first venture to meet the flight training solution needs for this new generation of wide body aircraft. Also, TRU Flight Training Iceland, a joint venture with Icelandair, earned FAA qualification of its Boeing 757 Level D Full Flight Simulator, the first with regulatory approval from the FAA and the European Aviation Safety Agency.

Building on the technology of its Dixie Chopper business, Jacobsen launched a new line of zero-turn mowers to expand its business beyond golf to reach professional landscapers. Textron Specialized Vehicles updated its popular E-Z-GO RXV golf car to include new styling and greater comfort and amenities, and introduced a new Cushman Hauler 72-volt electric utility vehicle and the Gasoline Hauler 4x4. Greenlee Communications launched its AirScout for technicians to more easily survey a home or business for Wi-Fi performance. In June, Kautex began production of the first all-plastic pressurized fuel tank for hybrid vehicles. These tanks use patented plastic reinforcements between the tank’s bottom and top, as opposed to metal straps, to reduce weight and costs. The design is a first in the industry.

Building on our acquisitions

In 2015, we made strategic acquisitions to continue expanding our businesses’ range of products and services. In January, Textron Specialized Vehicles acquired Douglas Equipment, an aviation ground support equipment (GSE) business in the United Kingdom. This acquisition built on the acquisition in the previous year of TUG Technologies, strengthening our presence in this industry and complementing our aviation businesses. In February, Textron Aviation acquired an aircraft interiors business, giving us the capabilities to design and build interior components for our Citation and King Air aircraft to ensure that we’re giving our customers the highest quality features and to improve on-time manufacturing performance. 2015 marked the first full year of the Beechcraft and Cessna integration, and the business continued to successfully generate operational efficiencies that benefit our company as well as our customers.

Growing our presence around the world to serve customers

As we grow globally, we’ve enhanced our capacity to engage with customers before, during and after the sale. Over the past year, we’ve opened sales offices and training facilities in new locations and enhanced our service to customers where we already have a presence. Bell Helicopter opened regional sales offices in Tokyo and Mexico City and partnered with Textron Systems to open an office in Abu Dhabi. Our ProFlight business, acquired in 2014 by TRU Simulation + Training to meet the needs of our customers for advanced pilot and maintenance training, opened a second training facility in Tampa. Meanwhile, TRU is better serving the needs of avionics technicians and aircraft mechanics with the opening in October of a new Aviation Maintenance Training Academy on Textron Aviation’s Mid-Continent campus in Wichita. Over the past year, Textron Aviation’s 21 company-operated service centers have received certifications to expand their capabilities and service Beechcraft, Cessna and Hawker customers. This represents another way we are building and growing our relationships with customers. In addition, the company tripled the size of its Paris Service Center at Paris-Le Bourget Airport.

On course for profitable growth

Our solid financial results in 2015 were based on following through on our strategy: developing new products, expanding our markets, enhancing our sales channels and strategically acquiring new businesses. As we enter 2016, we are continuing to make the investments in our products, processes and people that will drive growth for the year ahead and beyond.