Non-GAAP Financial Measures
(Dollars in millions, except per share amounts)

We supplement the reporting of our financial information determined under U.S. generally accepted accounting principles (GAAP) with certain non-GAAP financial measures. These non-GAAP financial measures exclude certain significant items that may not be indicative of, or are unrelated to, results from our ongoing business operations. We believe that these non-GAAP measures may be useful for period-over-period comparisons of underlying business trends and our ongoing business performance, however, they should be used in conjunction with GAAP measures. Our non-GAAP measures should not be considered in isolation or as a substitute for the related GAAP measures, and other companies may define similarly named measures differently. We encourage investors to review our financial statements and publicly-filed reports in the entirety and not to rely on any single financial measure. We utilize the following definitions for the non-GAAP financial measures included in this release:

Adjusted income from continuing operations and adjusted diluted earnings per share
Adjusted income from continuing operations and adjusted diluted earnings per share both exclude Special charges, net of income taxes, the income tax impact from the enactment of the Tax Cuts and Jobs Act (the "Tax Act") and a significant multi-year income tax settlement. We consider items recorded in Special charges, net of income taxes, such as enterprise-wide restructuring and acquisition-related restructuring, integration and transaction costs, to be of a non-recurring nature that is not indicative of ongoing operations. In addition, both the impact from the Tax Act and the income tax settlement are not considered to be indicative of ongoing operations, since they represent significant one-time adjustments.

Manufacturing cash flow before pension contributions
Manufacturing cash flow before pension contributions adjusts net cash from operating activities of continuing operations (GAAP) for the following:

• Excludes dividends received from Textron Financial Corporation (TFC) and capital contributions to TFC provided under the Support Agreement and debt agreements as these cash flows are not representative of manufacturing operations;
• Deducts capital expenditures and includes proceeds from the sale of property, plant and equipment to arrive at the net capital investment required to support ongoing manufacturing operations;
• Adds back pension contributions as we consider our pension obligations to be debt-like liabilities. Additionally, these contributions can fluctuate significantly from period to period and we believe that they are not representative of cash used by our manufacturing operations during the period.

While we believe this measure provides a focus on cash generated from manufacturing operations, before pension contributions, and may be used as an additional relevant measure of liquidity, it does not necessarily provide the amount available for discretionary expenditures since we have certain non-discretionary obligations that are not deducted from the measure.

Income (Loss) from Continuing Operations and Diluted Earnings Per Share (EPS) GAAP to Non-GAAP Reconciliation:
				Three Months Ended											Twelve Months Ended
				December 30, 2017						December 31, 2016					December 30, 2017					December 31, 2016
Income (loss) from continuing operations - GAAP				$		(106	)			$		215			$		306			$		843
Restructuring, net of taxes of $16 million, $3 million, $31 million and $45 million, respectively						32						5					59					78
Arctic Cat restructuring, integration and transaction costs, net of taxes of $2 million and $13 million, respectively						5						-					27					-
	Total Special charges, net of income taxes					37						5					86					78
Income tax expense resulting from the Tax Cuts and Jobs Act						266						-					266					-
Income tax settlement						-						-										(206	)
Adjusted income from continuing operations - Non-GAAP				$		197				$		220			$		658			$		715
Earnings per share:
Income (loss) from continuing operations - GAAP (a)				$		(0.40	)			$		0.78			$		1.14			$		3.09
Restructuring, net of taxes						0.12						0.02					0.22					0.29
Arctic Cat restructuring, integration and transaction costs, net of taxes						0.02						-					0.10					-
	Total Special charges, net of income taxes					0.14						0.02					0.32					0.29
Income tax expense resulting from the Tax Cuts and Jobs Act						1.00						-					0.99					-
Income tax settlement						-						-					-					(0.76	)
Adjusted income from continuing operations - Non-GAAP (b)				$		0.74				$		0.80			$		2.45			$		2.62

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