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Item 1. Financial Statements

2023-07-25 compared with 2023-04-25 · 243 added, 127 removed, 711 unchanged (34% of the section changed)

Financial Statements

RAYTHEON TECHNOLOGIES CORPORATION

RTX CORPORATION

AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS

Quarter Ended March 31,

Quarter Ended June 30, Six Months Ended June 30,

(dollars in millions, except per share amounts) 2023 2022 2023 2022

30 unchanged sentences

See accompanying Notes to Condensed Consolidated Financial Statements

RAYTHEON TECHNOLOGIES CORPORATION

RTX CORPORATION

AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

Quarter Ended March 31,

Quarter Ended June 30, Six Months Ended June 30,

(dollars in millions) 2023 2022 2023 2022

11 unchanged sentences

See accompanying Notes to Condensed Consolidated Financial Statements

RAYTHEON TECHNOLOGIES CORPORATION

RTX CORPORATION

AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEET

(dollars in millions) March 31, 2023 December 31, 2022

(dollars in millions) June 30, 2023 December 31, 2022

Current Assets

41 unchanged sentences

See accompanying Notes to Condensed Consolidated Financial Statements

RAYTHEON TECHNOLOGIES CORPORATION

RTX CORPORATION

AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

Quarter Ended March 31,

Six Months Ended June 30,

(dollars in millions) 2023 2022

19 unchanged sentences

Increase in other intangible assets ( 314 ) ( 185 )

Payments from settlements of derivative contracts, net ( 13 ) ( 33 )

Receipts (payments) from settlements of derivative contracts, net 45 ( 151 )

Other investing activities, net 71 37

2 unchanged sentences

Issuance of long-term debt 2,974 —

Repayment of long-term debt ( 3 ) ( 2 )

Change in commercial paper, net (Note 8) 470 —

11 unchanged sentences

See accompanying Notes to Condensed Consolidated Financial Statements

RAYTHEON TECHNOLOGIES CORPORATION

RTX CORPORATION

AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

Quarter Ended March 31,

Quarter Ended June 30, Six Months Ended June 30,

(dollars in millions, except per share amounts;

31 unchanged sentences

Disposition of noncontrolling interest, net — ( 2 ) ( 3 ) ( 13 )

Capital contributions — 6 — 6

Ending balance 1,576 1,549 1,576 1,549

Equity at March 31

Equity at June 30

$ 74,056 $ 71,990 $ 74,056 $ 71,990

4 unchanged sentences

See accompanying Notes to Condensed Consolidated Financial Statements

RAYTHEON TECHNOLOGIES CORPORATION

RTX CORPORATION

AND SUBSIDIARIES

1 unchanged sentence

Basis of Presentation

The Condensed Consolidated Financial Statements at March 31, 2023 and for the quarters ended March 31, 2023 and 2022 are unaudited, and in the opinion of management include adjustments of a normal recurring nature necessary for a fair statement of the results for the interim periods.

The Condensed Consolidated Financial Statements at June 30, 2023 and for the quarters and six months ended June 30, 2023 and 2022 are unaudited, and in the opinion of management include adjustments of a normal recurring nature necessary for a fair statement of the results for the interim periods.

The results reported in these Condensed Consolidated Financial Statements should not necessarily be taken as indicative of results that may be expected for the entire year.

1 unchanged sentence

We reclassified certain immaterial prior period amounts within the Condensed Consolidated Statement of Cash Flows to conform to our current period presentation.

Effective July 17, 2023, we changed our legal name from Raytheon Technologies Corporation to RTX Corporation.

Raytheon Intelligence & Space (RIS) and Raytheon Missiles & Defense (RMD) follow a 4-4-5 fiscal calendar while Collins Aerospace (Collins) and Pratt & Whitney use a quarter calendar end.

Throughout this Quarterly Report on Form 10-Q, when we refer to the quarters ended March 31, 2023 and 2022 with respect to RIS or RMD, we are referring to their April 2, 2023 and April 3, 2022 fiscal quarter ends, respectively.

Unless the context otherwise requires, the terms “we,” “our,” “us,” “the Company,” “Raytheon Technologies,” and “RTC” mean Raytheon Technologies Corporation and its subsidiaries.

The Company recently announced its intention to streamline the structure of its core businesses into three principal business segments:

Throughout this Quarterly Report on Form 10-Q, when we refer to the quarters ended June 30, 2023 and 2022 with respect to RIS or RMD, we are referring to their July 2, 2023 and July 3, 2022 fiscal quarter ends, respectively.

Unless the context otherwise requires, the terms “we,” “our,” “us,” “the Company,” and “RTX” mean RTX Corporation and its subsidiaries.

Effective July 1, 2023, we streamlined the structure of our core businesses from four principal business segments to three principal business segments:

Collins Aerospace, Pratt & Whitney, and Raytheon.

The Company plans to implement the reorganization beginning in July 2023.

All segment information included in this Form 10-Q is reflective of the existing four segments of Collins, Pratt & Whitney, RIS, and RMD in accordance with the management structure in place as of March 31, 2023.

All segment information included in this Form 10-Q is reflective of the four segments of Collins, Pratt & Whitney, RIS, and RMD in accordance with the management structure in place as of June 30, 2023.

See “Note 20:

Subsequent Events” for additional information.

Russia Sanctions.

5 unchanged sentences

These measures have adversely affected, and could continue to adversely affect, the Company and/or our supply chain, business partners, or customers.

As a result of these sanctions on Russia and export controls, in the first quarter of 2022, we recorded pretax charges of $ 290 million, $ 210 million net of tax, and the impact of noncontrolling interest, within our Collins and Pratt & Whitney businesses primarily related to increased estimates for credit losses on both our accounts receivables and contract assets, inventory reserves and purchase order obligations, impairment of customer financing assets for products under lease, impairment of contract fulfillment costs that are no longer recoverable, and a loss on the exit of our investment in a Russia-based joint venture.

As a result of these sanctions on Russia and export controls, in the first quarter of 2022, we recorded pretax charges of $ 290 million, $ 210 million net of tax, and the impact of noncontrolling interest, within our Collins and Pratt & Whitney businesses primarily related to increased estimates for credit losses on both our accounts receivable and contract assets, inventory reserves and purchase order obligations, impairment of customer financing assets for products under lease, impairment of contract fulfillment costs that are no longer recoverable, and a loss on the exit of our investment in a Russia-based joint venture.

We will continue to monitor future developments, including additional sanctions and other measures, that could adversely affect the Company and/or our supply chain, business partners, or customers.

1 unchanged sentence

The COVID-19 pandemic caused continuing negative effects on the global economy, our business and operations, the labor market, supply chains, inflation, and the industries in which we operate.

Commercial air travel continues to recover to varying degrees.

While we believe that the long-term outlook for the aerospace industry remains positive due to the fundamental drivers of air travel demand, uncertainty continues with respect to when commercial air traffic capacity will fully return to and/or exceed pre-pandemic levels.

We believe the long-term outlook for the aerospace industry remains positive due to the fundamental drivers of air travel demand, and expect to fully return to and/or exceed pre-pandemic levels as we exit 2023.

Our expectations regarding the negative effects of the COVID-19 pandemic and ongoing recovery and their potential financial impact are based on available information and assumptions that we believe are reasonable at this time;

1 unchanged sentence

Acquisitions, Dispositions, Goodwill and Intangible Assets

Changes in our goodwill balances for the quarter ended March 31, 2023 were as follows:

(dollars in millions) Balance as of December 31, 2022 Acquisitions and Divestitures Foreign Currency Translation and Other Balance as of March 31, 2023

Changes in our goodwill balances for the six months ended June 30, 2023 were as follows:

(dollars in millions) Balance as of December 31, 2022 Acquisitions and Divestitures Foreign Currency Translation and Other Balance as of June 30, 2023

Collins Aerospace $ 30,719 $ — $ 282 $ 31,001

7 unchanged sentences

Identifiable intangible assets are comprised of the following:

March 31, 2023 December 31, 2022

June 30, 2023 December 31, 2022

(dollars in millions) Gross Amount Accumulated Amortization Gross Amount Accumulated Amortization

7 unchanged sentences

Total $ 48,537 $ ( 12,303 ) $ 48,065 $ ( 11,242 )

Amortization of intangible assets for the quarters ended March 31, 2023 and 2022 was $ 509 million and $ 487 million, respectively.

Amortization of intangible assets for the quarters and six months ended June 30, 2023 and 2022 was $ 510 million and $ 1,019 million and $ 467 million and $ 954 million, respectively.

The following is the expected amortization of intangible assets for the remainder of 2023 through 2028:

1 unchanged sentence

Amortization expense $ 973 $ 2,203 $ 2,089 $ 2,007 $ 1,891 $ 1,776

On July 20, 2023, we entered into a definitive agreement to sell our actuation systems portfolio within our Collins segment for approximately $ 1.8 billion in cash.

The closing of the transaction is subject to regulatory approvals and other customary closing conditions.

Earnings Per Share

Quarter Ended March 31,

Quarter Ended June 30, Six Months Ended June 30,

(dollars and shares in millions, except per share amounts) 2023 2022 2023 2022

16 unchanged sentences

In addition, the computation of diluted EPS excludes the effect of the potential release or exercise of stock awards when the awards’ assumed proceeds exceed the average market price of the common shares during the period.

For the quarters ended March 31, 2023 and 2022, the number of stock awards excluded from the computation was 4.1 million and 7.5 million, respectively.

For both the quarter and six months ended June 30, 2023, the number of stock awards excluded from the computation was 4.0 million.

For the quarter and six months ended June 30, 2022, the number of stock awards excluded from the computation was 3.4 million and 5.4 million, respectively.

Changes in Contract Estimates at Completion

4 unchanged sentences

The risks and opportunities relate to management’s judgment about the ability and cost to achieve the schedule, consideration of customer-directed delays or reductions in scheduled deliveries, technical requirements, customer activity levels, such as flight hours or aircraft landings, and related variable consideration.

Management must make assumptions and estimates regarding contract revenue and costs, including estimates of labor productivity and availability, the complexity and scope of the work to be performed, the availability and cost of materials including any impact from rising costs or inflation, the length of time to complete the performance obligation, execution by our subcontractors, the availability and timing of funding from our customer, overhead cost rates, and current and past maintenance cost and frequency driven by estimated aircraft and engine utilization and estimated useful lives of components, among others.

Management must make assumptions and estimates regarding contract revenue and costs, including estimates of labor productivity and availability, the complexity and scope of the work to be performed, the availability and cost of materials including any impact from changing costs or inflation, the length of time to complete the performance obligation, execution by our subcontractors, the availability and timing of funding from our customer, overhead cost rates, and current and past maintenance cost and frequency driven by estimated aircraft and engine utilization and estimated useful lives of components, among others.

In particular, fixed-price development programs involve significant management judgment, as development contracts by nature have elements that have not been done before and thus, are highly subject to future unexpected cost changes.

3 unchanged sentences

Changes in estimates of net sales, cost of sales and the related impact to operating profit on contracts recognized over time are recognized on a cumulative catch-up basis, which recognizes the cumulative effect of the profit changes on current and prior periods based on a performance obligation’s percentage of completion in the current period.

A significant change in one or more of these estimates could affect the profitability of one or more of our performance obligations.

A significant change in one or

more of these estimates could affect the profitability of one or more of our performance obligations.

Our EAC adjustments also include the establishment of and changes to loss provisions for our contracts accounted for on a percentage of completion basis.

Net EAC adjustments had the following impact on our operating results:

Quarter Ended March 31,

Quarter Ended June 30, Six Months Ended June 30,

(dollars in millions, except per share amounts) 2023 2022 2023 2022

2 unchanged sentences

Income from continuing operations attributable to common shareowners (1)

( 24 ) ( 32 ) ( 122 ) ( 4 )

Diluted earnings per share from continuing operations attributable to common shareowners (1)

4 unchanged sentences

Accounts receivable, net consisted of the following:

(dollars in millions) March 31, 2023 December 31, 2022

(dollars in millions) June 30, 2023 December 31, 2022

Accounts receivable $ 10,289 $ 9,560

6 unchanged sentences

Total contract assets and contract liabilities were as follows:

(dollars in millions) March 31, 2023 December 31, 2022

(dollars in millions) June 30, 2023 December 31, 2022

Contract assets $ 12,970 $ 11,534

1 unchanged sentence

Net contract liabilities $ ( 2,192 ) $ ( 3,064 )

Contract assets increased $ 1,195 million during the quarter ended March 31, 2023 primarily due to sales in excess of billings on certain contracts at RMD, Pratt & Whitney, and RIS.

Contract liabilities increased $ 272 million during the quarter ended March 31, 2023 primarily due to billings in excess of sales on certain contracts at Pratt & Whitney and RMD.

We recognized revenue of $ 1.9 billion during the quarter ended March 31, 2023, related to contract liabilities as of January 1, 2023 and $ 1.8 billion during the quarter ended March 31, 2022, related to contract liabilities as of January 1, 2022.

As of March 31, 2023, our Contract liabilities include approximately $ 395 million of advance payments received from a Middle East customer on contracts for which we no longer believe we will be able to execute on or obtain required regulatory approvals.

Contract assets increased $ 1,436 million during the six months ended June 30, 2023 primarily due to sales in excess of billings on certain contracts at RMD and Pratt & Whitney, partially offset by a decrease in contract assets driven by a customer insolvency charge at Pratt & Whitney.

Contract liabilities increased $ 564 million during the six months ended June 30, 2023 primarily due to billings in excess of sales on certain contracts at Pratt & Whitney.

We recognized revenue of $ 1.5 billion and $ 3.4 billion during the quarter and six months ended June 30, 2023, respectively, related to contract liabilities as of January 1, 2023 and $ 1.2 billion and $ 3.0 billion during the quarter and six months ended June 30, 2022, respectively, related to contract liabilities as of January 1, 2022.

As of June 30, 2023, our Contract liabilities include approximately $ 405 million of advance payments received from a Middle East customer on contracts for which we no longer believe we will be able to execute on or obtain required regulatory approvals.

These advance payments may become refundable to the customer if the contracts are ultimately terminated.

Contract assets include an allowance for credit losses of $ 330 million and $ 318 million as of March 31, 2023 and December 31, 2022, respectively.

Contract assets include an allowance for expected credit losses of $ 256 million and $ 318 million as of June 30, 2023 and December 31, 2022, respectively.

Inventory, net

Inventory, net consisted of the following:

(dollars in millions) March 31, 2023 December 31, 2022

(dollars in millions) June 30, 2023 December 31, 2022

Raw materials $ 3,931 $ 3,477

3 unchanged sentences

Borrowings and Lines of Credit

As of March 31, 2023, we had revolving credit agreements with various banks permitting aggregate borrowings of up to $ 7.0 billion, consisting of a $ 5.0 billion revolving credit agreement, which expires in April 2025, and a $ 2.0 billion revolving

credit agreement, which expires in September 2023.

As of March 31, 2023, there were no borrowings outstanding under these agreements.

As of June 30, 2023, we had revolving credit agreements with various banks permitting aggregate borrowings of up to $ 7.0 billion, consisting of a $ 5.0 billion revolving credit agreement, which expires in April 2025, and a $ 2.0 billion revolving credit agreement, which expires in September 2023.

As of June 30, 2023, there were no borrowings outstanding under these agreements.

From time to time, we use commercial paper borrowings for general corporate purposes, including the funding of potential acquisitions, pension contributions, debt refinancing, dividend payments, and repurchases of our common stock.

The commercial paper notes have original maturities of not more than 364 days from the date of issuance.

As of March 31, 2023, our maximum commercial paper borrowing limit was $ 5.0 billion as the commercial paper is backed by our $ 5.0 billion revolving credit agreement.

We had $ 100 million and $ 524 million of commercial paper outstanding at March 31, 2023 and December 31, 2022, respectively, which is reflected in Short-term borrowings in our Condensed Consolidated Balance Sheet.

At March 31, 2023 and December 31, 2022, short-term commercial paper borrowings outstanding had a weighted-average interest rate of 4.3 % and 4.4 %, respectively.

During the quarter ended March 31, 2023, we had no new commercial paper borrowings with maturities greater than 90 days.

During the quarter ended March 31, 2023, we made $ 100 million in repayments of commercial paper with maturities greater than 90 days.

During the quarter ended March 31, 2022, we had no commercial paper borrowings or repayments with original maturities more than 90 days from the date of issuance.

There were no repayments of long-term debt during the quarters ended March 31, 2023 and 2022, and there were no issuances of long-term debt during the quarter ended March 31, 2022.

We had the following issuances of long-term debt during the quarter ended March 31, 2023:

As of June 30, 2023, our maximum commercial paper borrowing limit was $ 5.0 billion as the commercial paper is backed by our $ 5.0 billion revolving credit agreement.

We had $ 1.0 billion and $ 0.5 billion of commercial paper borrowings outstanding at June 30, 2023 and December 31, 2022, respectively, which is reflected in Short-term borrowings in our Condensed Consolidated Balance Sheet.

At June 30, 2023 and December 31, 2022, short-term commercial paper borrowings outstanding had a weighted-average interest rate of 5.5 % and 4.4 %, respectively.

During the six months ended June 30, 2023, we had no new commercial paper borrowings with maturities greater than 90 days.

During the six months ended June 30, 2023, we made $ 200 million in repayments of commercial paper with maturities greater than 90 days.

During the six months ended June 30, 2022, we had no commercial paper borrowings or repayments with original maturities more than 90 days from the date of issuance.

We had the following issuances of long-term debt during the six months ended June 30, 2023:

Issuance Date Description of Notes Aggregate Principal Balance (in millions)

3 unchanged sentences

Long-term debt consisted of the following:

(dollars in millions) March 31, 2023 December 31, 2022

(dollars in millions) June 30, 2023 December 31, 2022

3.650 % notes due 2023 (1)

46 unchanged sentences

(1) We may redeem these notes, in whole or in part, at our option pursuant to their terms prior to the applicable maturity date.

The average maturity of our long-term debt at March 31, 2023 is approximately 14 years.

The average maturity of our long-term debt at June 30, 2023 is approximately 14 years.

Employee Benefit Plans

2 unchanged sentences

Contributions to our plans were as follows:

Quarter Ended March 31,

Quarter Ended June 30, Six Months Ended June 30,

(dollars in millions) 2023 2022 2023 2022

6 unchanged sentences

Benefits for service after December 31, 2022 are based on a cash balance formula.

This plan change resulted in lower pension service cost beginning January 1, 2023.

The amounts recognized in the Condensed Consolidated Balance Sheet consist of:

(dollars in millions) March 31, 2023 December 31, 2022

(dollars in millions) June 30, 2023 December 31, 2022

Noncurrent pension assets (included in Other assets) $ 3,770 $ 3,301

2 unchanged sentences

The amounts recognized in Future pension and postretirement benefit obligations consist of:

(dollars in millions) March 31, 2023 December 31, 2022

(dollars in millions) June 30, 2023 December 31, 2022

Noncurrent pension liabilities $ 3,914 $ 4,133

4 unchanged sentences

Pension Benefits

Quarter Ended March 31,

Quarter Ended June 30,

(dollars in millions) 2023 2022 2023 2022

9 unchanged sentences

Total net periodic benefit (income) expense $ ( 390 ) $ ( 354 ) $ — $ —

Pension Benefits

Six Months Ended June 30,

(dollars in millions) 2023 2022 2023 2022

Operating expense

$ 111 $ 236 $ 2 $ 4

Non-operating expense

Interest cost 1,253 762 24 14

Expected return on plan assets ( 1,875 ) ( 1,778 ) ( 10 ) ( 11 )

Amortization of prior service cost (credit)

( 79 ) ( 83 ) — —

Recognized actuarial net loss (gain)

( 190 ) 154 ( 16 ) ( 6 )

Net settlement, curtailment and special termination benefit loss 2 ( 6 ) — —

Non-service pension (income) expense ( 889 ) ( 951 ) ( 2 ) ( 3 )

Total net periodic benefit (income) expense $ ( 778 ) $ ( 715 ) $ — $ 1

We have set aside assets in separate trusts, which we expect to be used to pay for certain nonqualified defined benefit and defined contribution plan obligations in excess of qualified plan limits.

1 unchanged sentence

The fair value of marketable securities held in trusts was as follows:

(dollars in millions) March 31, 2023 December 31, 2022

(dollars in millions) June 30, 2023 December 31, 2022

Marketable securities held in trusts $ 719 $ 774

Our effective tax rate was 16.8 % and 9.3 % i n the quarters ended March 31, 2023 and 2022, respectively.

The increase in the effective tax rate for the quarter ended March 31, 2023 as compared to the quarter ended March 31, 2022 is primarily driven by a higher forecasted annualized effective tax rate for 2023 principally due to a lower forecasted Foreign Derived Intangible Income (FDII) benefit in addition to a lower tax benefit from stock based compensation in the current quarter.

We conduct business globally and, as a result, Raytheon Technologies or one or more of our subsidiaries files income tax returns in the U.S.

Our effective tax rate for the quarter and six months ended June 30, 2023 was 13.5 % and 15.3 % , respectively, as compared to 10.7 % and 10.1 % for the quarter and six months ended June 30, 2022, respectively.

The increase in the 2023 effective tax rates for both the quarter and year to date periods as compared to respective prior year periods is primarily driven by a higher forecasted annualized effective tax rate for 2023 principally due to a lower forecasted Foreign Derived Intangible Income (FDII) benefit.

In addition, the effective tax rate for the six months ended June 30, 2023 reflects a lower tax benefit from stock based compensation as compared to the six months ended June 30, 2022.

We conduct business globally and, as a result, RTX or one or more of our subsidiaries files income tax returns in the U.S.

federal jurisdiction and various state and foreign jurisdictions.

3 unchanged sentences

income tax examinations for years before 2013.

The Examination Divisions of the Internal Revenue Service (IRS) are currently auditing Raytheon Technologies (formerly United Technologies Corporation) tax years 2017 and 2018, pre-merger Raytheon Company tax years 2017, 2018, and 2019 as well as certain refund claims of Raytheon Company for tax years 2014, 2015, and 2016 filed prior to the Raytheon merger, and pre-acquisition Rockwell Collins fiscal tax years 2016, 2017, and 2018.

The examination phases of these audits are expected to close in 2023.

It is reasonably possible that the expected closure of the examination phase of the Raytheon Technologies 2017 and 2018 tax audit will result in a net income benefit in the range of $ 185 million to $ 225 million in 2023.

This range includes the effects of adjusting interest accruals and certain tax related indemnity receivables related to the separation and distributions

of Carrier Global Corporation (Carrier) and Otis Worldwide Corporation (Otis).

The Examination Division of the Internal Revenue Service (IRS) is currently auditing RTX (formerly United Technologies Corporation) tax years 2017 and 2018, pre-acquisition Rockwell Collins tax years 2016, 2017, and 2018, and pre-merger Raytheon Company tax years 2017, 2018, and 2019 as well as certain refund claims of Raytheon Company for tax years 2014, 2015, and 2016 filed prior to the Raytheon merger.

The examination phase of these audits is expected to close in 2023.

The Company currently believes that it is reasonably possible that the closure of the RTX 2017 and 2018 audit and Rockwell Collins years 2016, 2017, and 2018 audit will result in a net income benefit in the range of $ 225 million to $ 315 million.

This range includes the effects of adjusting interest accruals and certain tax related indemnity receivables related to the separation and distributions of Carrier Global Corporation (Carrier) and Otis Worldwide Corporation (Otis).

The tax components of this range are included in the revaluation range included below.

Given the current examination status of the Raytheon Company audit, there is currently insufficient information to estimate the potential net income impact of that audit.

In the ordinary course of business, there is inherent uncertainty in quantifying our income tax positions.

6 unchanged sentences

We have used derivative instruments, including swaps, forward contracts, and options, to manage certain foreign currency, interest rate, and commodity price exposures.

The present value of aggregate notional principal of our outstanding foreign currency hedges was $ 11.6 billion and $ 11.2 billion at March 31, 2023 and December 31, 2022, respectively.

At March 31, 2023, all derivative contracts accounted for as cash flow hedges will m ature by February 2030.

The present value of aggregate notional principal of our outstanding foreign currency hedges was $ 12.7 billion and $ 11.2 billion at June 30, 2023 and December 31, 2022, respectively.

At June 30, 2023, all derivative contracts accounted for as cash flow hedges will m ature by February 2030.

The following table summarizes the fair value and presentation in the Condensed Consolidated Balance Sheet for derivative instruments:

(dollars in millions) Balance Sheet Location March 31, 2023 December 31, 2022

(dollars in millions) Balance Sheet Location June 30, 2023 December 31, 2022

Derivatives designated as hedging instruments:

4 unchanged sentences

Other accrued liabilities 28 39

The effect of cash flow hedging relationships on Accumulated other comprehensive income (loss) and on the Condensed Consolidated Statement of Operations in the quarters ended March 31, 2023 and 2022 are presented in “Note 16:

The effect of cash flow hedging relationships on Accumulated other comprehensive income (loss) and on the Condensed Consolidated Statement of Operations in the quarters and six months ended June 30, 2023 and 2022 are presented in “Note 16:

Accumulated Other Comprehensive Loss.” The amounts of gain or loss are attributable to foreign exchange contract activity and are primarily recorded as a component of Products sales when reclassified from Accumulated other comprehensive loss.

1 unchanged sentence

Accordingly, the hedged items and derivatives designated as hedging instruments are highly effective.

As of March 31, 2023, our € 500 million principal value of euro-denominated long-term debt qualifies as a net investment hedge against our investments in European businesses, which is deemed to be effective.

The effect of derivatives not designated as hedging instruments is included within Other income, net, on the Condensed Consolidated Statement of Operations and is not material.

As of June 30, 2023, our € 500 million principal value of euro-denominated long-term debt qualifies as a net investment hedge against our investments in European businesses, which is deemed to be effective.

The effect of derivatives not designated as hedging instruments is included within Other income, net, on the Condensed Consolidated Statement of Operations and is not significant.

Fair Value Measurements

The following tables provide the valuation hierarchy classification of assets and liabilities that are carried at fair value and measured on a recurring basis in our Condensed Consolidated Balance Sheet:

March 31, 2023

June 30, 2023

(dollars in millions) Total Level 1 Level 2 Level 3

11 unchanged sentences

Our derivative assets and liabilities include foreign exchange contracts that are measured at fair value using internal models based on observable market inputs such as forward rates, interest rates, our own credit risk, and our counterparties’ credit risks.

As of March 31, 2023, there has not been any significant impact to the fair value of our derivative liabilities due to our own credit risk.

As of June 30, 2023, there has not been any significant impact to the fair value of our derivative liabilities due to our own credit risk.

Similarly, there has not been any significant adverse impact to our derivative assets based on our evaluation of our counterparties’ credit risks.

The following table provides carrying amounts and fair values of financial instruments that are not carried at fair value in our Condensed Consolidated Balance Sheet:

March 31, 2023 December 31, 2022

June 30, 2023 December 31, 2022

(dollars in millions) Carrying

3 unchanged sentences

The following tables provides the valuation hierarchy classification of assets and liabilities that are not carried at fair value in our Condensed Consolidated Balance Sheet:

March 31, 2023

June 30, 2023

(dollars in millions) Total Level 1 Level 2 Level 3

12 unchanged sentences

IAE and IAE LLC retain limited equity with the primary economics of the programs passed to the participants.

As such, we have determined that IAE and IAE LLC are variable interest entities with

Pratt & Whitney as the primary beneficiary.

As such, we have determined that IAE and IAE LLC are variable interest entities with Pratt & Whitney as the primary beneficiary.

IAE and IAE LLC have, therefore, been consolidated.

The carrying amounts and classification of assets and liabilities for variable interest entities in our Condensed Consolidated Balance Sheet are as follows:

(dollars in millions) March 31, 2023 December 31, 2022

(dollars in millions) June 30, 2023 December 31, 2022

Current assets $ 7,895 $ 7,609

6 unchanged sentences

These instruments expire on various dates through 2036.

Additional guarantees of project performance for which there is no stated value also remain outstanding.

Additional guarantees of project performance for which there is no stated value also remain

A portion of our third party guarantees are subject to indemnification for our benefit for any liabilities that could arise.

As of March 31, 2023 and December 31, 2022, the following financial guarantees were outstanding:

March 31, 2023 December 31, 2022

As of June 30, 2023 and December 31, 2022, the following financial guarantees were outstanding:

June 30, 2023 December 31, 2022

(dollars in millions) Maximum Potential Payment Carrying Amount of Liability Maximum Potential Payment Carrying Amount of Liability

3 unchanged sentences

The estimated fair market values of the guaranteed assets equal or exceed the value of the related guarantees, net of existing reserves.

Collaboration partners’ share of these financing guarantees were $ 140 million at both March 31, 2023 and December 31, 2022.

Collaboration partners’ share of these financing guarantees were $ 140 million at both June 30, 2023 and December 31, 2022.

We also have obligations arising from sales of certain businesses and assets, including those from representations and warranties and related indemnities for environmental, health and safety, tax, and employment matters.

The maximum potential payment related to these obligations is not a specified amount as a number of the obligations do not contain financial caps.

The carrying amount of liabilities related to these obligations was $ 96 million and $ 97 million at March 31, 2023 and December 31, 2022, respectively.

The carrying amount of liabilities related to these obligations was $ 95 million and $ 97 million at June 30, 2023 and December 31, 2022, respectively.

These primarily relate to environmental liabilities, which are included in our total environmental liabilities as further discussed in “Note 15:

6 unchanged sentences

Adjustments are made to accruals as claims data and historical experience warrant.

The changes in the carrying amount of service and product warranties and product performance guarantees for the quarters ended March 31, 2023 and 2022 were as follows:

The changes in the carrying amount of service and product warranties and product performance guarantees for the six months ended June 30, 2023 and 2022 were as follows:

(dollars in millions) 2023 2022

3 unchanged sentences

Other 6 ( 11 )

Balance as of March 31 $ 1,093 $ 1,154

Balance as of June 30 $ 1,079 $ 1,143

Product and service guarantees incurred in connection with long term production contracts and certain aftermarket arrangements are generally accounted for within the contract estimates at completion.

Commitments and Contingencies

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We do not expect any additional liability to have a material adverse effect on our results of operations, financial condition, or liquidity.

As of March 31, 2023 and December 31, 2022, we had $ 795 million and $ 798 million, respectively, reserved for environmental remediation.

As of June 30, 2023 and December 31, 2022, we had $ 773 million and $ 798 million, respectively, reserved for environmental remediation.

Commercial Aerospace Financing and Other Commitments.

We had commercial aerospace financing commitments and other contractual commitments of approximately $ 15.0 billion and $ 15.3 billion as of March 31, 2023 and December 31, 2022, respectively, on a gross basis before reduction for our collaboration partners’ share.

We had commercial aerospace financing commitments and other contractual commitments of approximately $ 14.8 billion and $ 15.3 billion as of June 30, 2023 and December 31, 2022, respectively, on a gross basis before reduction for our collaboration partners’ share.

Aircraft financing commitments, in the form of debt or lease financing, are provided to certain commercial aerospace customers.

The extent to which the financing commitments will be utilized is not currently known, since customers may be able to obtain more favorable terms from other financing sources.

The extent to which the financing

commitments will be utilized is not currently known, since customers may be able to obtain more favorable terms from other financing sources.

We may also arrange for third-party investors to assume a portion of these commitments.

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We enter into these agreements to assist certain affiliates in obtaining financing on more favorable terms, making bids on contracts and performing their contractual obligations.

The stated values of these letters of credit agreements and surety bonds totaled $ 3.2 billion as of March 31, 2023.

The stated values of these letters of credit agreements and surety bonds totaled $ 3.2 billion as of June 30, 2023.

Offset Obligations.

We have entered into industrial cooperation agreements, sometimes in the form of either offset agreements or ICIP agreements, as a condition to obtaining orders for our products and services from certain customers in foreign countries.

At March 31, 2023, the aggregate amount of our offset agreements, both agreed to and anticipated to be agreed to, had an outstanding notional value of approximately $ 12.6 billion.

At June 30, 2023, the aggregate amount of our offset agreements, both agreed to and anticipated to be agreed to, had an outstanding notional value of approximately $ 12.8 billion.

These agreements are designed to return economic value to the foreign country by requiring us to engage in activities supporting local defense or commercial industries, promoting a balance of trade, developing in-country technology capabilities, or addressing other local development priorities.

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Government Oversight.

In the ordinary course of business, the Company and its subsidiaries and our properties are subject to regulatory and governmental examinations, information gathering requests, inquiries, investigations, and threatened legal

actions and proceedings.

For example, we are now, and believe that, in light of the current U.S.

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government could void any contracts found to be tainted by fraud.

Like many defense contractors, we have received audit reports recommending the reduction of certain contract prices because, for example, cost or pricing data or cost accounting practices used to price and negotiate those contracts may not have conformed to government regulations.

Like many defense contractors, we have received audit reports recommending the reduction of certain contract prices because, for example, cost or pricing data or cost accounting

practices used to price and negotiate those contracts may not have conformed to government regulations.

Some of these audit reports recommend that certain payments be repaid, delayed, or withheld, and may involve substantial amounts.

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Cost Accounting Standards Claims

As previously disclosed, in April 2019, a Divisional Administrative Contracting Officer (DACO) of the United States DCMA asserted a claim against Pratt & Whitney to recover alleged overpayments of approximately $ 1.73 billion plus interest ($ 888 million at March 31, 2023).

The claim is based on Pratt & Whitney’s alleged noncompliance with Cost Accounting Standards (CAS) from January 1, 2007 to March 31, 2019, due to its method of allocating independent research and development costs to government contracts.

Pratt & Whitney believes that the claim is without merit and filed an appeal to the ASBCA on June 7, 2019.

As previously disclosed, in December 2013, a DCMA DACO asserted a claim against Pratt & Whitney to recover alleged overpayments of approximately $ 177 million plus interest ($ 138 million at March 31, 2023).

As previously disclosed, in December 2013, a DCMA DACO asserted a claim against Pratt & Whitney to recover alleged overpayments of approximately $ 177 million plus interest ($ 143 million at June 30, 2023).

The claim is based on Pratt & Whitney’s alleged noncompliance with CAS from January 1, 2005 to December 31, 2012, due to its method of determining the cost of collaborator parts used in the calculation of material overhead costs for government contracts.

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On November 22, 2021, the ASBCA issued its written decision sustaining in part and denying in part Pratt & Whitney’s appeal.

The ASBCA rejected the DCMA’s asserted measure of the cost of collaborator parts, and ruled substantially in Pratt & Whitney’s favor on other liability

The ASBCA rejected the DCMA’s asserted measure of the cost of collaborator parts, and ruled substantially in Pratt & Whitney’s favor on other liability issues.

The ASBCA remanded the appeal to the parties for resolution of damages issues, which could require further proceedings at the ASBCA.

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In December 2018, a DCMA DACO issued a second claim against Pratt & Whitney that similarly alleges that its method of determining the cost of collaborator parts does not comply with the CAS for calendar years 2013 through 2017.

This second claim, which asserts the same measure of the cost of collaborator parts rejected by the ASBCA’s recent decision, demands payment of $ 269 million plus interest ($ 102 million at March 31, 2023).

This second claim, which asserts the same measure of the cost of collaborator parts rejected by the ASBCA’s recent decision, demands payment of $ 269 million plus interest ($ 109 million at June 30, 2023).

Pratt & Whitney appealed this second claim to the ASBCA in January 2019.

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A putative securities class action lawsuit was filed in the United States District Court for the District of Arizona against the Company and certain of its executives alleging that the defendants violated federal securities laws by making material misstatements in regulatory filings regarding internal controls over financial reporting in RMD.

That lawsuit was recently dismissed with prejudice.

No appeal was filed so the case is concluded.

Three shareholder derivative lawsuits were also filed in the United States District Court for the District of Delaware against the former Raytheon Company Board of Directors, the Company and certain of its executives, each alleging that defendants violated federal securities laws and breached their fiduciary duties by engaging in improper accounting practices, failing to implement sufficient internal financial and compliance controls, and making a series of false and misleading statements in regulatory filings.

We believe that each of these lawsuits lacks merit.

Those shareholder derivative lawsuits were consolidated and remain pending.

We continue to believe that the consolidated action lacks merit.

Darnis, et al.

and Related Matter

As previously disclosed, on August 12, 2020, several former employees of United Technologies Corporation (UTC) or its subsidiaries filed a putative class action complaint in the United States District Court for the District of Connecticut against the Company, Otis, Carrier, the former members of the UTC Board of Directors, and the members of the Carrier and Otis Boards of

Directors (Geraud Darnis, et al.

Raytheon Technologies Corporation, et al.).

The complaint challenged the method by which UTC equity awards were converted to Company, Otis, and Carrier equity awards following the separation of UTC into three independent, publicly-traded companies on April 3, 2020.

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We continue to believe that this matter will not have a material adverse effect on our results of operations, financial condition, or liquidity.

On December 6, 2022, a shareholder derivative lawsuit was filed in the Delaware Court of Chancery against the Company and certain current and former members of its Board of Directors, alleging that defendants breached their fiduciary duties in May 2020 by amending the method by which UTC equity awards were converted to certain Company equity awards following the separation of UTC into three independent, publicly-traded companies.

awards were converted to certain Company equity awards following the separation of UTC into three independent, publicly-traded companies.

We believe that the lawsuit lacks merit.

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No current or former Collins employees were named in the indictment.

We have been advised that the Company is a target of the DOJ investigation, and we continue to cooperate with the investigation.

No criminal charge has been filed against the Company or its affiliates.

After the criminal charges against the individuals were filed, numerous civil class action antitrust lawsuits have been filed against Pratt & Whitney and other corporate and individual defendants in the United States District Court for the District of Connecticut.

On April 28, 2023, during a jury trial, the Court entered a judgment of acquittal in favor of the former Pratt & Whitney employee and all other defendants, finding that the DOJ did not prove the charges set forth in the indictment.

The judgment of acquittal cannot be appealed and is a final resolution of the criminal indictment.

On June 29, 2023, the DOJ advised the Company in writing that it no longer regards the Company, its divisions and affiliates, and any current or former employees of the Company and its divisions and affiliates, as targets of the DOJ investigation.

While we will continue to cooperate with any ongoing investigation, we believe in light of the DOJ’s June 29th letter that no criminal charges will be filed against the Company, its divisions or affiliates, or any current or former employees.

After the criminal charges against the individuals were first filed, numerous civil class action antitrust lawsuits were filed against Pratt & Whitney and other corporate and individual defendants in the United States District Court for the District of Connecticut.

The allegations in each of the civil lawsuits track the factual assertions in the criminal indictment and generally allege that Pratt & Whitney and the other defendants agreed to restrict the hiring and recruiting of certain engineers and skilled laborers in a manner that violated federal antitrust laws.

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If no amount within this range is a better estimate than any other, then we accrue the minimum amount.

Pratt & Whitney has determined that a rare condition in powdered metal used to manufacture certain engine parts will require accelerated fleet inspection.

This does not impact engines currently being produced.

As a result, the business anticipates that a significant portion of the PW1100G-JM fleet, which powers the A320neo, will require engine removals and inspections within the next nine to twelve months, including approximately 200 accelerated removals by mid-September of this year.

The financial impact associated with these removals and inspections is subject to a wide range of factors.

The Company is performing additional engineering analysis and fleet management planning that will further inform those factors which includes evaluating the timing and results of required inspections, workscope and impact on our customers.

These removals and inspections may have the effect of increasing cost estimates in our long-term contracts.

Potential cost growth related to this matter could have a material effect on the Company’s results of operations for the periods in which it is recognized.

In the ordinary course of business, the Company and its subsidiaries are also routinely defendants in, parties to or otherwise subject to many pending and threatened legal actions, claims, disputes, and proceedings.

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Accumulated Other Comprehensive Loss

A summary of the changes in each component of Accumulated other comprehensive loss, net of tax for the quarters ended March 31, 2023 and 2022 is provided below:

A summary of the changes in each component of Accumulated other comprehensive loss, net of tax for the quarters and six months ended June 30, 2023 and 2022 is provided below:

(dollars in millions) Foreign Currency Translation Defined Benefit Pension and Postretirement Plans Unrealized Hedging Gains (Losses) Accumulated Other Comprehensive Income (Loss)

Quarter Ended March 31, 2023

Quarter Ended June 30, 2023

Balance at March 31, 2023 $ ( 882 ) $ ( 890 ) $ ( 217 ) $ ( 1,989 )

Other comprehensive income (loss) before reclassifications, net 404 ( 40 ) 260 624

Amounts reclassified, pre-tax — ( 143 ) 25 ( 118 )

Tax benefit (expense) 2 38 ( 59 ) ( 19 )

Balance at June 30, 2023 $ ( 476 ) $ ( 1,035 ) $ 9 $ ( 1,502 )

Six Months Ended June 30, 2023

Balance at December 31, 2022 $ ( 1,005 ) $ ( 782 ) $ ( 231 ) $ ( 2,018 )

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Tax benefit (expense) 3 76 ( 57 ) 22

Balance at March 31, 2023 $ ( 882 ) $ ( 890 ) $ ( 217 ) $ ( 1,989 )

Balance at June 30, 2023 $ ( 476 ) $ ( 1,035 ) $ 9 $ ( 1,502 )

(dollars in millions) Foreign Currency Translation Defined Benefit Pension and Postretirement Plans Unrealized Hedging Gains (Losses) Accumulated Other Comprehensive Income (Loss)

Quarter Ended March 31, 2022

Quarter Ended June 30, 2022

Balance at March 31, 2022 $ ( 194 ) $ ( 1,811 ) $ ( 110 ) $ ( 2,115 )

Other comprehensive income (loss) before reclassifications, net ( 708 ) 14 ( 199 ) ( 893 )

Amounts reclassified, pre-tax — 33 17 50

Tax benefit (expense) ( 6 ) ( 8 ) 41 27

Balance at June 30, 2022 $ ( 908 ) $ ( 1,772 ) $ ( 251 ) $ ( 2,931 )

Six Months Ended June 30, 2022

Balance at December 31, 2021 $ 49 $ ( 1,828 ) $ ( 136 ) $ ( 1,915 )

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Tax benefit (expense) ( 9 ) ( 12 ) 30 9

Balance at March 31, 2022 $ ( 194 ) $ ( 1,811 ) $ ( 110 ) $ ( 2,115 )

Balance at June 30, 2022 $ ( 908 ) $ ( 1,772 ) $ ( 251 ) $ ( 2,931 )

Segment Financial Data

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The segments are generally based on the management structure of the businesses and the grouping of similar operating companies, where each management organization has general operating autonomy over diversified products and services.

The Company recently announced its intention to streamline the structure of its core businesses into three principal business segments:

Effective July 1, 2023, we streamlined the structure of our core businesses from four principal business segments to three principal business segments:

Collins Aerospace, Pratt & Whitney, and Raytheon.

The Company plans to implement the reorganization beginning in July 2023.

See “Note 20:

Subsequent Events” for additional information.

We present a FAS/CAS operating adjustment outside of segment results, which represents the difference between the service cost component of our pension and PRB expense under the Financial Accounting Standards (FAS) requirements of U.S.

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These pricing arrangements may result in margins different than what the purchasing segment realizes on the ultimate third-party sale.

Results for the quarters ended March 31, 2023 and 2022 are as follows:

Results for the quarters ended June 30, 2023 and 2022 are as follows:

Net Sales Operating Profit Operating Profit Margins

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Beginning in 2023, LTAMDS results are included in the RMD segment.

Results for the six months ended June 30, 2023 and 2022 are as follows:

Net Sales Operating Profit Operating Profit Margins

(dollars in millions) 2023 2022 2023 2022 2023 2022

Collins Aerospace $ 11,431 $ 9,835 $ 1,615 $ 986 14.1 % 10.0 %

Pratt & Whitney 10,931 9,498 645 453 5.9 % 4.8 %

Raytheon Intelligence & Space 7,220 7,142 615 693 8.5 % 9.7 %

Raytheon Missiles & Defense 7,671 7,085 743 735 9.7 % 10.4 %

Total segment 37,253 33,560 3,618 2,867 9.7 % 8.5 %

Eliminations and other (1)

( 1,724 ) ( 1,530 ) ( 47 ) ( 81 )

Corporate expenses and other unallocated items (2)

— — ( 102 ) ( 178 )

FAS/CAS operating adjustment — — 623 757

Acquisition accounting adjustments — — ( 982 ) ( 932 )

Consolidated $ 35,529 $ 32,030 $ 3,110 $ 2,433 8.8 % 7.6 %

(1) Includes the operating results of certain smaller non-reportable business segments.

(2) 2022 included the net expenses related to the U.S.

Army’s LTAMDS project.

Beginning in 2023, LTAMDS results are included in the RMD segment.

We disaggregate our contracts from customers by geographic region based on customer location, by customer and by sales type.

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We believe these categories best depict how the nature, amount, timing and uncertainty of our revenue and cash flows are affected by economic factors.

Segment sales disaggregated by geographic region for the quarters ended March 31, 2023 and 2022 are as follows:

Segment sales disaggregated by geographic region for the quarters ended June 30, 2023 and 2022 are as follows:

(dollars in millions) Collins Aerospace Pratt & Whitney Raytheon Intelligence & Space Raytheon Missiles & Defense Other Total Collins Aerospace Pratt & Whitney Raytheon Intelligence & Space Raytheon Missiles & Defense Other Total

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Business segment sales $ 5,850 $ 5,701 $ 3,655 $ 4,000 $ ( 891 ) $ 18,315 $ 5,011 $ 4,969 $ 3,570 $ 3,558 $ ( 794 ) $ 16,314

Segment sales disaggregated by type of customer for the quarters ended March 31, 2023 and 2022 are as follows:

Segment sales disaggregated by geographic region for the six months ended June 30, 2023 and 2022 are as follows:

United States $ 5,433 $ 5,478 $ 5,673 $ 5,186 $ 5 $ 21,775 $ 4,707 $ 4,874 $ 5,718 $ 4,612 $ 4 $ 19,915

Europe 2,964 2,465 217 630 — 6,276 2,584 1,936 210 520 — 5,250

Asia Pacific 1,124 1,877 427 731 — 4,159 952 1,698 353 662 — 3,665

Middle East and North Africa 332 214 80 988 — 1,614 231 190 143 1,134 — 1,698

Other 706 896 60 43 — 1,705 598 800 74 30 — 1,502

Consolidated net sales 10,559 10,930 6,457 7,578 5 35,529 9,072 9,498 6,498 6,958 4 32,030

Inter-segment sales 872 1 763 93 ( 1,729 ) — 763 — 644 127 ( 1,534 ) —

Business segment sales $ 11,431 $ 10,931 $ 7,220 $ 7,671 $ ( 1,724 ) $ 35,529 $ 9,835 $ 9,498 $ 7,142 $ 7,085 $ ( 1,530 ) $ 32,030

Segment sales disaggregated by type of customer for the quarters ended June 30, 2023 and 2022 are as follows:

Sales to the U.S.

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(1) Excludes foreign military sales through the U.S.

Segment sales disaggregated by sales type for the quarters ended March 31, 2023 and 2022 are as follows:

Segment sales disaggregated by type of customer for the six months ended June 30, 2023 and 2022 are as follows:

Sales to the U.S.

government (1)

$ 2,244 $ 2,535 $ 5,551 $ 5,180 $ 5 $ 15,515 $ 2,074 $ 2,591 $ 5,617 $ 4,611 $ 4 $ 14,897

Foreign military sales through the U.S.

government 94 684 305 1,420 — 2,503 107 501 309 1,440 — 2,357

Foreign government direct commercial sales 499 220 407 967 — 2,093 514 219 416 905 — 2,054

Commercial aerospace and other commercial sales 7,722 7,491 194 11 — 15,418 6,377 6,187 156 2 — 12,722

Consolidated net sales 10,559 10,930 6,457 7,578 5 35,529 9,072 9,498 6,498 6,958 4 32,030

Inter-segment sales 872 1 763 93 ( 1,729 ) — 763 — 644 127 ( 1,534 ) —

Business segment sales $ 11,431 $ 10,931 $ 7,220 $ 7,671 $ ( 1,724 ) $ 35,529 $ 9,835 $ 9,498 $ 7,142 $ 7,085 $ ( 1,530 ) $ 32,030

(1) Excludes foreign military sales through the U.S.

Segment sales disaggregated by sales type for the quarters ended June 30, 2023 and 2022 are as follows:

Products $ 4,162 $ 3,199 $ 2,503 $ 3,546 $ 1 $ 13,411 $ 3,577 $ 2,982 $ 2,564 $ 3,135 $ — $ 12,258

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Business segment sales $ 5,850 $ 5,701 $ 3,655 $ 4,000 $ ( 891 ) $ 18,315 $ 5,011 $ 4,969 $ 3,570 $ 3,558 $ ( 794 ) $ 16,314

RIS and RMD segment sales disaggregated by contract type for the quarters ended March 31, 2023 and 2022 are as follows:

Segment sales disaggregated by sales type for the six months ended June 30, 2023 and 2022 are as follows:

Products $ 8,162 $ 6,251 $ 5,013 $ 6,767 $ 5 $ 26,198 $ 7,059 $ 5,615 $ 5,168 $ 6,274 $ 4 $ 24,120

Services 2,397 4,679 1,444 811 — 9,331 2,013 3,883 1,330 684 — 7,910

Consolidated net sales $ 10,559 $ 10,930 $ 6,457 $ 7,578 $ 5 $ 35,529 $ 9,072 $ 9,498 $ 6,498 $ 6,958 $ 4 $ 32,030

Inter-segment sales 872 1 763 93 ( 1,729 ) — 763 — 644 127 ( 1,534 ) —

Business segment sales $ 11,431 $ 10,931 $ 7,220 $ 7,671 $ ( 1,724 ) $ 35,529 $ 9,835 $ 9,498 $ 7,142 $ 7,085 $ ( 1,530 ) $ 32,030

RIS and RMD segment sales disaggregated by contract type for the quarters ended June 30, 2023 and 2022 are as follows:

(dollars in millions) Raytheon Intelligence & Space Raytheon Missiles & Defense Raytheon Intelligence & Space Raytheon Missiles & Defense

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Business segment sales $ 3,655 $ 4,000 $ 3,570 $ 3,558

RIS and RMD segment sales disaggregated by contract type for the six months ended June 30, 2023 and 2022 are as follows:

(dollars in millions) Raytheon Intelligence & Space Raytheon Missiles & Defense Raytheon Intelligence & Space Raytheon Missiles & Defense

Fixed-price $ 2,755 $ 4,353 $ 2,693 $ 4,118

Cost-type 3,702 3,225 3,805 2,840

Consolidated net sales 6,457 7,578 6,498 6,958

Inter-segments sales 763 93 644 127

Business segment sales $ 7,220 $ 7,671 $ 7,142 $ 7,085

Remaining Performance Obligations (RPO)

RPO represent the aggregate amount of total contract transaction price that is unsatisfied or partially unsatisfied.

Total RPO was $ 180 billion as of March 31, 2023.

Of the total RPO as of March 31, 2023, we expect approximately 25 % will be recognized as revenue over the next 12 months.

Total RPO was $ 185 billion as of June 30, 2023.

Of the total RPO as of June 30, 2023, we expect approximately 30 % will be recognized as revenue over the next 12 months.

Approximately 45 % of our RPO relates to long-term commercial aerospace maintenance contracts at Pratt & Whitney, which are generally expected to be realized over a span of up to 15 years.

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The adoption of this standard did not have an impact on our disclosures as we have determined impact of supplier finance programs is not material.

Other new pronouncements issued but not effective until after March 31, 2023 are not expected to have a material impact on our results of operations, financial condition, or liquidity.

With respect to the unaudited condensed consolidated financial information of Raytheon Technologies for the quarters ended March 31, 2023 and 2022, PricewaterhouseCoopers LLP (PwC) reported that it has applied limited procedures in accordance with professional standards for a review of such information.

However, its report dated April 25, 2023, appearing below, states that the firm did not audit and does not express an opinion on that unaudited condensed consolidated financial information.

Other new pronouncements issued but not effective until after June 30, 2023 are not expected to have a material impact on our results of operations, financial condition, or liquidity.

Subsequent Events

Segment Realignment.

Effective July 1, 2023, the Company streamlined the structure of its core businesses from four principal business segments into three principal business segments as follows:

• Collins Aerospace.

Collins is a leading global provider of technologically advanced aerospace and defense products and aftermarket service solutions for aircraft manufacturers, airlines, and regional, business and general aviation, as well as for defense and commercial space operations;

• Pratt & Whitney .

Pratt & Whitney is among the world’s leading suppliers of aircraft engines for commercial, defense, business jet and general aviation customers;

Raytheon is a leading provider of advanced air and missile defense systems, effectors, hypersonics, sensors and radars, cybersecurity services, and integrated space solutions for government and commercial customers.

As a result of the segment realignment, the RIS and RMD segments have been eliminated as business segments effective July 1, 2023.

Definitive Agreement.

Acquisitions, Dispositions, Goodwill and Intangible Assets” for information related to a definitive agreement executed by the Company on July 20, 2023.

With respect to the unaudited condensed consolidated financial information of RTX for the quarters and six months ended June 30, 2023 and 2022, PricewaterhouseCoopers LLP (PwC) reported that it has applied limited procedures in accordance with professional standards for a review of such information.

However, its report dated July 25, 2023, appearing below, states that the firm did not audit and does not express an opinion on that unaudited condensed consolidated financial information.

PwC has not carried out any significant or additional audit tests beyond those that would have been necessary if their report had not been included.

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Report of Independent Registered Public Accounting Firm

To the Shareowners and Board of Directors of Raytheon Technologies Corporation

To the Shareowners and Board of Directors of RTX Corporation

Results of Review of Interim Financial Information

We have reviewed the accompanying condensed consolidated balance sheet of Raytheon Technologies Corporation and its subsidiaries (the “Company”) as of March 31, 2023, and the related condensed consolidated statements of operations, of comprehensive income, of changes in equity, and of cash flows for the three-month periods ended March 31, 2023 and 2022, including the related notes (collectively referred to as the “interim financial information”).

We have reviewed the accompanying condensed consolidated balance sheet of RTX Corporation and its subsidiaries (the “Company”) as of June 30, 2023, and the related condensed consolidated statements of operations, of comprehensive income, and of changes in equity, for the three-month and six-month periods ended June 30, 2023 and 2022, and the condensed consolidated statement of cash flows for the six-month periods ended June 30, 2023 and 2022, including the related notes (collectively referred to as the “interim financial information”).

Based on our reviews, we are not aware of any material modifications that should be made to the accompanying interim financial information for it to be in conformity with accounting principles generally accepted in the United States of America.

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Boston, Massachusetts

April 25, 2023

July 25, 2023

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements