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Item 1. Financial Statements

2023-10-24 compared with 2023-07-25 · 299 added, 238 removed, 716 unchanged (43% of the section changed)

3 unchanged sentences

CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS

Quarter Ended June 30, Six Months Ended June 30,

Quarter Ended September 30, Nine Months Ended September 30,

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

9 unchanged sentences

Other income, net 3 46 116 91

Operating profit 1,458 1,353 3,110 2,433

Operating profit (loss) ( 1,396 ) 1,520 1,784 4,013

Non-operating expense (income), net:

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Total non-operating expense (income), net ( 74 ) ( 157 ) ( 317 ) ( 464 )

Income from continuing operations before income taxes 1,572 1,498 3,353 2,740

Income tax expense 213 160 513 276

Net income from continuing operations 1,359 1,338 2,840 2,464

Income (loss) from continuing operations before income taxes ( 1,322 ) 1,677 2,101 4,477

Income tax expense (benefit) ( 389 ) 282 194 618

Net income (loss) from continuing operations ( 933 ) 1,395 1,907 3,859

Noncontrolling interest in subsidiaries’ earnings from continuing operations 51 8 138 65

Net income from continuing operations attributable to common shareowners 1,327 1,304 2,753 2,407

Net income (loss) from continuing operations attributable to common shareowners ( 984 ) 1,387 1,769 3,794

Loss from discontinued operations attributable to common shareowners — — — ( 19 )

Net income attributable to common shareowners $ 1,327 $ 1,304 $ 2,753 $ 2,388

Net income (loss) attributable to common shareowners $ ( 984 ) $ 1,387 $ 1,769 $ 3,775

Earnings (loss) Per Share attributable to common shareowners - Basic:

Income from continuing operations $ 0.91 $ 0.88 $ 1.89 $ 1.62

Income (loss) from continuing operations $ ( 0.68 ) $ 0.94 $ 1.22 $ 2.57

Loss from discontinued operations — — — ( 0.02 )

Net income attributable to common shareowners $ 0.91 $ 0.88 $ 1.89 $ 1.61

Net income (loss) attributable to common shareowners $ ( 0.68 ) $ 0.94 $ 1.22 $ 2.55

Earnings (loss) Per Share attributable to common shareowners - Diluted:

Income from continuing operations $ 0.90 $ 0.88 $ 1.87 $ 1.61

Income (loss) from continuing operations $ ( 0.68 ) $ 0.94 $ 1.21 $ 2.55

Loss from discontinued operations — — — ( 0.01 )

Net income attributable to common shareowners $ 0.90 $ 0.88 $ 1.87 $ 1.60

Net income (loss) attributable to common shareowners $ ( 0.68 ) $ 0.94 $ 1.21 $ 2.54

See accompanying Notes to Condensed Consolidated Financial Statements

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AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

Quarter Ended June 30, Six Months Ended June 30,

CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (LOSS)

Quarter Ended September 30, Nine Months Ended September 30,

(dollars in millions) 2023 2022 2023 2022

Net income from continuing and discontinued operations $ 1,359 $ 1,338 $ 2,840 $ 2,445

Net income (loss) from continuing and discontinued operations $ ( 933 ) $ 1,395 $ 1,907 $ 3,840

Other comprehensive income (loss), before tax:

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Other comprehensive income (loss), before tax ( 668 ) ( 1,253 ) ( 174 ) ( 2,278 )

Income tax (expense) benefit related to items of other comprehensive income (loss) ( 19 ) 27 22 9

Income tax benefit related to items of other comprehensive income (loss) 54 62 76 71

Other comprehensive income (loss), net of tax ( 614 ) ( 1,191 ) ( 98 ) ( 2,207 )

Comprehensive income 1,846 522 3,356 1,429

Comprehensive income (loss) ( 1,547 ) 204 1,809 1,633

Comprehensive income attributable to noncontrolling interest 51 8 138 65

Comprehensive income attributable to common shareowners $ 1,814 $ 488 $ 3,269 $ 1,372

Comprehensive income (loss) attributable to common shareowners $ ( 1,598 ) $ 196 $ 1,671 $ 1,568

See accompanying Notes to Condensed Consolidated Financial Statements

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CONDENSED CONSOLIDATED BALANCE SHEET

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

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

Current Assets

44 unchanged sentences

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

Six Months Ended June 30,

Nine Months Ended September 30,

(dollars in millions) 2023 2022

1 unchanged sentence

Net income from continuing operations $ 1,907 $ 3,859

Adjustments to reconcile net income from continuing operations to net cash flows (used in) provided by operating activities:

Adjustments to reconcile net income from continuing operations to net cash flows provided by operating activities:

Depreciation and amortization 3,152 3,060

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Other operating activities, net 219 ( 272 )

Net cash flows (used in) provided by operating activities from continuing operations ( 144 ) 1,762

Net cash flows provided by operating activities from continuing operations 3,172 2,540

Investing Activities:

Capital expenditures ( 1,610 ) ( 1,433 )

Investments in businesses — ( 66 )

Dispositions of businesses, net of cash transferred 6 94

Customer financing assets receipts (payments), net 42 ( 7 )

Customer financing assets receipts, net 41 25

Increase in other intangible assets ( 536 ) ( 318 )

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

Payments from settlements of derivative contracts, net ( 18 ) ( 259 )

Other investing activities, net 56 66

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Other financing activities, net ( 190 ) ( 329 )

Net cash flows provided by (used in) financing activities from continuing operations 468 ( 3,627 )

Net cash flows used in financing activities from continuing operations ( 1,909 ) ( 3,010 )

Effect of foreign exchange rate changes on cash and cash equivalents 4 ( 57 )

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CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

Quarter Ended June 30, Six Months Ended June 30,

Quarter Ended September 30, Nine Months Ended September 30,

(dollars in millions, except per share amounts;

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Beginning balance 52,489 50,271 52,269 50,265

Net income 1,327 1,304 2,753 2,388

Net income (loss) ( 984 ) 1,387 1,769 3,775

Dividends on common stock 5 5 ( 2,472 ) ( 2,337 )

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Ending balance 1,617 1,548 1,617 1,548

Equity at June 30

Equity at September 30

$ 71,213 $ 71,735 $ 71,213 $ 71,735

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Basis of Presentation

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 Condensed Consolidated Financial Statements at September 30, 2023 and for the quarters and nine months ended September 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.

The financial information included herein should be read in conjunction with the financial statements and notes in our 2022 Annual Report on Form 10-K.

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 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:

Raytheon follows 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 September 30, 2023 and 2022 with respect to Raytheon, we are referring to their October 1, 2023 and October 2, 2022 fiscal quarter ends, respectively.

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

Organizational Structure.

As previously announced, effective July 1, 2023, we streamlined the structure of our core businesses to three principal business segments:

Collins Aerospace, Pratt & Whitney, and Raytheon.

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.

All segment information included in this Form 10-Q is reflective of this new structure and prior period information has been recast to conform to our current period presentation.

In conjunction with the segment realignment, the Company revised its accounting policy with respect to the financial statement presentation of an immaterial amount of state income taxes allocable to U.S.

government contracts related to our legacy Raytheon Intelligence & Space (RIS) and Raytheon Missiles & Defense (RMD) segments.

Prior to July 1, 2023, these state income taxes were classified as Selling, general and administrative expenses.

Effective with the segment change, state income tax amounts previously reported within Selling, general and administrative expenses were reclassified to Income tax expense (benefit) within the Condensed Consolidated Statement of Operations, and prior period amounts have been reclassified to conform to our current period presentation.

Pratt & Whitney Powder Metal Matter.

Pratt & Whitney has determined that a rare condition in powder metal used to manufacture certain engine parts requires accelerated inspection of the PW1100G-JM (PW1100) Geared Turbofan (GTF) fleet, which powers the A320neo family of aircraft (A320neo) (herein referred to as the “Powder Metal Matter”).

See “Note 15:

Subsequent Events” for additional information.

Commitments and Contingencies” for additional information.

Russia Sanctions.

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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.

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

Coronavirus Disease 2019 (COVID-19) Pandemic.

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.

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.

We believe the long-term outlook for the aerospace industry remains positive due to the fundamental drivers of air travel demand.

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;

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Acquisitions, Dispositions, Goodwill, and Intangible Assets

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

Dispositions.

On July 20, 2023, we entered into a definitive agreement to sell our actuation and flight control business within our Collins segment for gross proceeds of approximately $ 1.8 billion.

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

Changes in our goodwill balances for the nine months ended September 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 September 30, 2023

Collins Aerospace $ 32,846 $ ( 3 ) $ 48 $ 32,891

Pratt & Whitney 1,563 — — 1,563

Raytheon Intelligence & Space 9,841 — — 9,841

Raytheon Missiles & Defense 11,700 — — 11,700

Raytheon 19,414 — ( 2 ) 19,412

Total Segments 53,823 ( 3 ) 46 53,866

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Total $ 53,840 $ ( 3 ) $ 46 $ 53,883

Effective July 1, 2023, we implemented a new organizational structure resulting in a change from four segments to three segments.

As a result, we reassigned goodwill and customer relationship intangibles to our new segment structure.

Goodwill was reassigned on a relative fair value basis and we tested goodwill related to the impacted reporting units immediately before and after the reassignment and determined that no impairment existed.

Intangible Assets.

Identifiable intangible assets are comprised of the following:

June 30, 2023 December 31, 2022

September 30, 2023 December 31, 2022

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

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Total $ 48,720 $ ( 12,855 ) $ 48,065 $ ( 11,242 )

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.

Amortization of intangible assets for the quarters and nine months ended September 30, 2023 and 2022 was $ 545 million and $ 1,564 million and $ 497 million and $ 1,451 million, respectively.

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

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Amortization expense $ 449 $ 2,195 $ 2,102 $ 2,025 $ 1,905 $ 1,803

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 June 30, Six Months Ended June 30,

Quarter Ended September 30, Nine Months Ended September 30,

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

Net income attributable to common shareowners:

Income from continuing operations $ 1,327 $ 1,304 $ 2,753 $ 2,407

Net income (loss) attributable to common shareowners:

Income (loss) from continuing operations $ ( 984 ) $ 1,387 $ 1,769 $ 3,794

Loss from discontinued operations — — — ( 19 )

Net income attributable to common shareowners $ 1,327 $ 1,304 $ 2,753 $ 2,388

Net income (loss) attributable to common shareowners $ ( 984 ) $ 1,387 $ 1,769 $ 3,775

Basic weighted average number of shares outstanding 1,448.1 1,470.1 1,455.7 1,478.7

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Earnings (Loss) Per Share attributable to common shareowners - Basic:

Income from continuing operations $ 0.91 $ 0.88 $ 1.89 $ 1.62

Income (loss) from continuing operations $ ( 0.68 ) $ 0.94 $ 1.22 $ 2.57

Loss from discontinued operations — — — ( 0.02 )

Net income attributable to common shareowners $ 0.91 $ 0.88 $ 1.89 $ 1.61

Net income (loss) attributable to common shareowners $ ( 0.68 ) $ 0.94 $ 1.22 $ 2.55

Earnings (Loss) Per Share attributable to common shareowners - Diluted:

Income from continuing operations $ 0.90 $ 0.88 $ 1.87 $ 1.61

Income (loss) from continuing operations $ ( 0.68 ) $ 0.94 $ 1.21 $ 2.55

Loss from discontinued operations — — — ( 0.01 )

Net income attributable to common shareowners $ 0.90 $ 0.88 $ 1.87 $ 1.60

Net income (loss) attributable to common shareowners $ ( 0.68 ) $ 0.94 $ 1.21 $ 2.54

The computation of diluted earnings per share (EPS) excludes the effect of the potential exercise of stock awards, including stock appreciation rights and stock options, when the average market price of the common stock is lower than the exercise price of the related stock awards during the period because the effect would be anti-dilutive.

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 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.

For the quarter and nine months ended September 30, 2023, the number of stock awards excluded from the computation was 20.5 million and 7.0 million, respectively.

For the quarter and nine months ended September 30, 2022, the number of stock awards excluded from the computation was 10.4 million and 7.1 million, respectively.

All outstanding stock awards are excluded in the computation of diluted EPS in the quarter ended September 30, 2023 because their effect was antidilutive due to the loss from continuing operations.

Changes in Contract Estimates at Completion

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If cash is paid to a customer to satisfy our offset obligations it is recorded as a reduction in the transaction price.

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.

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.

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 June 30, Six Months Ended June 30,

Quarter Ended September 30, Nine Months Ended September 30,

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

Total net sales $ ( 235 ) $ 72 $ ( 304 ) $ 150

Operating profit ( 30 ) ( 41 ) ( 154 ) ( 5 )

Income from continuing operations attributable to common shareowners (1)

Operating profit (loss) ( 279 ) 7 ( 433 ) 2

Income (loss) from continuing operations attributable to common shareowners (1)

( 220 ) 6 ( 342 ) 2

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

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

$ ( 0.15 ) $ — $ ( 0.23 ) $ —

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Accounts receivable, net consisted of the following:

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

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

Accounts receivable $ 10,422 $ 9,560

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Total contract assets and contract liabilities were as follows:

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

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

Contract assets $ 12,696 $ 11,534

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Net contract liabilities $ ( 2,552 ) $ ( 3,064 )

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.

Contract assets increased $ 1,162 million during the nine months ended September 30, 2023 primarily due to sales in excess of billings on certain contracts at Raytheon and Pratt & Whitney, partially offset by a decrease in contract assets driven by a customer insolvency charge recorded in the second quarter of 2023 and the EAC impacts related to the Powder Metal Matter, both at Pratt & Whitney.

Contract liabilities increased $ 650 million during the nine months ended September 30, 2023 primarily due to billings in excess of sales on certain contracts at Pratt & Whitney and Collins.

We recognized revenue of $ 0.9 billion and $ 4.4 billion during the quarter and nine months ended September 30, 2023, respectively, related to contract liabilities as of January 1, 2023 and $ 1.1 billion and $ 4.1 billion during the quarter and nine months ended September 30, 2022, respectively, related to contract liabilities as of January 1, 2022.

As of September 30, 2023, our Contract liabilities include approximately $ 390 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 expected credit losses of $ 256 million and $ 318 million as of June 30, 2023 and December 31, 2022, respectively.

Contract assets include an allowance for expected credit losses of $ 235 million and $ 318 million as of September 30, 2023 and December 31, 2022, respectively.

Inventory, net

Inventory, net consisted of the following:

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

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

Raw materials $ 3,894 $ 3,477

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Borrowings and Lines of Credit

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.

As of September 30, 2023, we had a revolving credit agreement with various banks permitting aggregate borrowings of up to $ 5.0 billion.

This agreement was renewed in August 2023 and expires in August 2028.

As of September 30, 2023, there were no borrowings outstanding under this agreement.

The Company’s $ 2.0 billion revolving credit agreement scheduled to expire September 2023, was terminated in August 2023, and there were no outstanding borrowings at the time of termination.

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 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:

As of September 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 September 30, 2023 and December 31, 2022, respectively, which is reflected in Short-term borrowings in our Condensed Consolidated Balance Sheet.

At September 30, 2023 and December 31, 2022, short-term commercial paper borrowings outstanding had a weighted-average interest rate of 5.6 % and 4.4 %, respectively.

During the nine months ended September 30, 2023, we had no new borrowings, and $ 200 million of repayments, of commercial paper with maturities greater than 90 days.

During the nine months ended September 30, 2022, we had $ 1.4 billion of proceeds from issuance, and no repayments, of commercial paper with maturities greater than 90 days.

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

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

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5.375 % notes due 2053

We made the following repayment of long-term debt during the nine months ended September 30, 2023:

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

August 16, 2023 3.650 % notes due 2023

Long-term debt consisted of the following:

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

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

3.650 % notes due 2023 (1)

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(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 June 30, 2023 is approximately 14 years.

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

Employee Benefit Plans

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Contributions to our plans were as follows:

Quarter Ended June 30, Six Months Ended June 30,

Quarter Ended September 30, Nine Months Ended September 30,

(dollars in millions) 2023 2022 2023 2022

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

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

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

Noncurrent pension assets (included in Other assets) $ 3,996 $ 3,301

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

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

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

Noncurrent pension liabilities $ 3,816 $ 4,133

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Pension Benefits

Quarter Ended June 30,

Quarter Ended September 30,

(dollars in millions) 2023 2022 2023 2022

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Amortization of prior service credit ( 39 ) ( 40 ) — —

Recognized actuarial net loss (gain) ( 95 ) 77 ( 8 ) ( 3 )

Recognized actuarial net (gain) loss ( 94 ) 76 ( 8 ) ( 3 )

Net settlement, curtailment, and special termination benefit (gain) loss 4 — — —

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Pension Benefits

Six Months Ended June 30,

Nine Months Ended September 30,

(dollars in millions) 2023 2022 2023 2022

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Expected return on plan assets ( 2,815 ) ( 2,661 ) ( 15 ) ( 16 )

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 ) — —

Amortization of prior service credit ( 118 ) ( 123 ) — —

Recognized actuarial net (gain) loss ( 284 ) 230 ( 24 ) ( 9 )

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

Non-service pension (income) expense ( 1,331 ) ( 1,418 ) ( 3 ) ( 4 )

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

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

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

Marketable securities held in trusts $ 737 $ 774

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.

On September 8, 2023, the Internal Revenue Service (IRS) issued Notice 2023-63 providing interim guidance regarding the capitalization and amortization of research and experimental expenditures for U.S.

tax purposes that became effective in 2022;

prior to 2022 research and experimental expenditures were generally deductible in the period incurred.

The IRS notice also provides that the Department of the Treasury and the IRS intend to issue proposed regulations consistent with the guidance set forth in the notice and that taxpayers may rely on the guidance in the notice prior to the issuance of the proposed regulations.

The Company’s initial analysis indicates the guidance provided in the notice will result in fewer costs being subject to capitalization, and as such, costs previously required to be capitalized will now be deductible in the year incurred.

Accordingly, the financial statements for the quarter and nine months ended September 30, 2023 include the estimated impacts of the interim guidance provided in the notice for both the 2022 and 2023 tax years.

The Company will continue to review the applicability of the notice to our businesses and will review the proposed regulations when issued and adjust the estimates as necessary.

Our effective tax rate for the quarter and nine months ended September 30, 2023 was 29.4 % and 9.2 %, respectively, as compared to 16.8 % and 13.8 % for the quarter and nine months ended September 30, 2022, respectively.

The change in our effective tax rate for the quarter and nine months ended September 30, 2023 primarily relates to a $ 2.9 billion charge related to the Powder Metal Matter.

We recorded a deferred income tax benefit related to this charge of $ 663 million.

The remaining change 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.

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

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income tax examinations for years before 2013.

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 Division of the Internal Revenue Service (IRS) is concluding the examination phase of 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.

The Company expects to dispute certain IRS proposed adjustments for each exam at the Appeals Division of the IRS.

The Company believes that it is reasonably possible that the closure of the audit examination phase for the RTX 2017 and 2018 and Rockwell Collins 2016, 2017, and 2018 tax years, as well as the expected expiration of U.S.

federal income tax statute of limitations for RTX’s 2019 tax year in the fourth quarter of 2023, will result in a net income benefit in the range of $ 275

million to $ 365 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.

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

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

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

At September 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 June 30, 2023 December 31, 2022

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

Derivatives designated as hedging instruments:

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Other accrued liabilities 43 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 and six months ended June 30, 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 nine months ended September 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.

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

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.

As of September 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.

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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:

June 30, 2023

September 30, 2023

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

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

As of September 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:

June 30, 2023 December 31, 2022

September 30, 2023 December 31, 2022

(dollars in millions) Carrying

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Long-term debt (excluding finance leases) 33,995 29,125 31,201 28,049

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:

June 30, 2023

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

September 30, 2023

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

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IAE and IAE LLC have, therefore, been consolidated.

Other collaborators participate in Pratt & Whitney’s program share interest in IAE and IAE LLC.

Pratt & Whitney’s net program share interest in

IAE and IAE LLC, after considering its sub-collaborator share, is 57 % and 51 %, respectively.

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) June 30, 2023 December 31, 2022

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

Current assets $ 8,516 $ 7,609

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These instruments expire on various dates through 2036.

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

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

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

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

June 30, 2023 December 31, 2022

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

September 30, 2023 December 31, 2022

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

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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 June 30, 2023 and December 31, 2022.

Collaboration partners’ share of these financing guarantees were $ 139 million and $ 140 million at September 30, 2023 and December 31, 2022, respectively.

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 $ 95 million and $ 97 million at June 30, 2023 and December 31, 2022, respectively.

The carrying amount of liabilities related to these obligations was $ 96 million and $ 97 million at September 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:

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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 six months ended June 30, 2023 and 2022 were as follows:

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

(dollars in millions) 2023 2022

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Other ( 21 ) ( 21 )

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

Balance as of September 30 $ 1,111 $ 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.

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

As of September 30, 2023 and December 31, 2022, we had $ 770 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 $ 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.

We had commercial aerospace financing commitments and other contractual commitments of approximately $ 14.5 billion and $ 15.3 billion as of September 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 June 30, 2023.

The stated values of these letters of credit agreements and surety bonds totaled $ 3.1 billion as of September 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 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.

At September 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 $ 12.4 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.

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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If the completed distributions of Carrier or Otis or certain internal business separation transactions were to fail to qualify for tax-free treatment, the Company could be subject to significant liabilities, and there could be material adverse impacts on the Company’s business, results of operations, financial condition, or liquidity in future reporting periods.

Pratt & Whitney Powder Metal Matter.

This determination was made pursuant to Pratt & Whitney’s safety management system.

On August 4, 2023, Pratt & Whitney issued a special instruction (SI), to operators of PW1100 GTF powered A320neo aircraft, which required accelerated inspections and engine removals covering an initial subset of operational engines, no later than September 15, 2023.

During the third quarter, through its safety management system, Pratt & Whitney continued its engineering and industrial assessment which resulted in an updated fleet management plan for the remaining PW1100 fleet.

This updated plan requires a repetitive inspection protocol for high pressure turbine disks as well as part life limits for high pressure turbine disks and high pressure compressor disks.

This fleet management plan is expected to be released in one or more service bulletins (SB) beginning in the fourth quarter of 2023, following alignment with regulators.

The actions set forth in the SI and SBs are expected to result in significant incremental shop visits through the end of 2026.

These incremental shop visits are above Pratt & Whitney's prior estimates as of June 30, 2023.

As a result, Pratt & Whitney expects a significant increase in aircraft on ground levels for the PW1100 powered A320neo fleet through 2026.

As a result of anticipated increased aircraft on ground levels and expected compensation to customers for this disruption, as well as incremental maintenance costs resulting from increased inspections and shop visits, RTX recorded a pre-tax operating

profit charge in the third quarter of 2023 of $ 2.9 billion, reflecting Pratt & Whitney’s net 51 % program share of the PW1100 program.

This reflects our current best estimate of expected customer compensation for the estimated duration of the disruption as well as the third quarter Estimate-at-Completion (EAC) adjustment impact of this matter to Pratt & Whitney’s long-term maintenance contracts.

The incremental costs to the business’s long-term maintenance contracts include the estimated cost of additional inspections, replacement of parts, and other related impacts.

The $ 2.9 billion charge is reflected in the Condensed Consolidated Statement of Operations as a reduction of sales of $ 5.4 billion which was partially offset by a net reduction of cost of sales of $ 2.5 billion primarily representing our partners’ 49 % share of this charge.

This resulted in a net increase in Other accrued liabilities of $ 2.8 billion, which principally relates to our 51 % share of an accrual for expected customer compensation.

While Pratt & Whitney continues to evaluate the impact of this powder metal issue on other engine models within its fleet, we do not currently believe there will be any significant financial impact with respect to these other engine models.

The financial impact of the powder metal issue is based on historical experience and is subject to various assumptions and judgments, most notably, the number and expected timing of shop visits, inspection results and scope of work to be performed, turnaround time, availability of new parts, available capacity at overhaul facilities and outcomes of negotiations with impacted customers.

While these assumptions reflect our best estimates at this time, they are subject to variability.

Potential changes to these assumptions and actual incurred costs could significantly affect the estimates inherent in our financial statements and could have a material effect on the Company’s results of operations for the periods in which they are recognized.

Legal Proceedings.

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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 ($ 934 million at June 30, 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 ($ 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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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 ($ 109 million at June 30, 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 ($ 116 million at September 30, 2023).

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

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In the first quarter of 2020, the DOJ advised Raytheon Company it had opened a parallel criminal investigation.

In the third quarter of 2020, Raytheon Company received an additional subpoena from the SEC, seeking information and documents as part of its ongoing investigation.

In the third quarter of 2020, Raytheon Company received an

additional subpoena from the SEC, seeking information and documents as part of its ongoing investigation.

The Company maintains a rigorous anti-corruption compliance program, and continues to cooperate fully with the SEC’s and DOJ’s inquiries, and to examine through our own investigation whether there were any improper payments or any such conduct that was in violation of Raytheon Company policy.

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Based on the information available to date, we do not believe the results of the DOJ investigation, or of any pending or potential civil litigation, will have a material adverse effect on our results of operations, financial condition, or liquidity.

Four shareholder lawsuits were filed against the Company after the DOJ investigation was first disclosed.

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.

Following the Company’s initial disclosure of the DOJ subpoena, 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.

Those shareholder derivative lawsuits were consolidated and remain pending.

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The complaint also claimed that the defendants are liable for breach of certain equity compensation plans and also asserted claims under certain provisions of the Employee Retirement Income Security Act of 1974 (ERISA).

On September 13, 2021, Plaintiffs filed an amended complaint which supersedes the initial complaint and continues to assert claims for breach of the equity compensation plans against the Company, Otis, and Carrier, but no longer asserts ERISA claims.

Further, no claim is made in the amended complaint against any current or former director of any of the three companies.

Plaintiffs seek money damages, attorneys’ fees, and other relief.

On September 13, 2021, Plaintiffs filed an amended complaint, which superseded the initial complaint, and continued to assert claims for breach of the equity compensation plans against the Company, Otis, and Carrier, but no longer asserted ERISA claims.

Further, no claim was made in the amended complaint against any current or former director of any of the three companies.

Plaintiffs sought money damages, attorneys’ fees, and other relief.

On September 30, 2022, in response to motions to dismiss filed by the Company, Otis and Carrier, the Court dismissed the class action in its entirety with prejudice.

On October 26, 2022, Plaintiffs filed an appeal to the United States Court of Appeals for the Second Circuit.

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

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

On October 26, 2022, Plaintiffs filed an appeal to the United States Court of Appeals for the Second Circuit, which affirmed the dismissal on August 3, 2023.

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.

We believe that the lawsuit lacks merit.

DOJ Grand Jury Investigation and Related Civil Litigation

The Company received a grand jury subpoena in late 2019, as part of a DOJ criminal investigation into purported agreements not to solicit or hire employees in violation of the federal antitrust laws.

While the investigation has focused on alleged hiring restrictions between and among Pratt & Whitney and certain of its suppliers of outsourced engineering services, the subpoena also included requests regarding Collins.

Since receipt of the subpoena, the Company has been cooperating with the DOJ investigation.

On December 15, 2021, a criminal indictment was filed in the United States District Court for the District of Connecticut, against a former Pratt & Whitney employee and other employees of certain outsourced engineering suppliers charging each of them with one count of violating the federal antitrust laws.

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

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.

Plaintiffs in each of the civil lawsuits seek to represent different purported classes of engineers and skilled laborers employed by Pratt & Whitney and other supplier-defendants since 2011.

Plaintiffs in each of the lawsuits seek treble damages in an undetermined amount, plus attorneys’ fees and costs of suit.

All of the lawsuits have been consolidated and a single amended class action complaint was filed.

Civil Litigation Related to Employee Hiring Practices

Pratt & Whitney is one of multiple defendants in a putative class action lawsuit pending in the United States District Court for the District of Connecticut alleging 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.

Plaintiffs seek to represent different purported classes of engineers and skilled laborers employed by Pratt & Whitney and other supplier-defendants since 2011, and are seeking to recover treble damages in an undetermined amount, plus attorneys’ fees and costs of suit.

We believe that the claims asserted lack merit.

Based on the information available to date, we do not believe that this matter will have a material adverse effect on our results of operations, financial condition, or liquidity.

Securities Suit Related to Powder Metal Disclosure

Following the Company’s disclosures of a rare condition in powder metal used to manufacture certain Pratt & Whitney engine parts, two putative federal securities class action lawsuits were filed in the United States District Court for the District of Connecticut against the Company and certain current and former executives of the Company.

The lawsuits allege that defendants violated federal securities laws by making material misstatements and omitting material facts relating to Pratt & Whitney’s Geared Turbofan engine fleet, including the impact of the powder metal issue on the fleet, in various regulatory filings.

Based on the information available to date, we do not believe that this matter will have a material adverse effect on our results of operations, financial condition, or liquidity.

Where appropriate, we have recorded loss contingency accruals for the above-referenced matters, and the amounts individually, or in the aggregate, are not material.

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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 and six months ended June 30, 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 nine months ended September 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 June 30, 2023

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

Quarter Ended September 30, 2023

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

Other comprehensive income (loss) before reclassifications, net ( 441 ) 37 ( 132 ) ( 536 )

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Tax benefit (expense) ( 3 ) 33 24 54

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

Six Months Ended June 30, 2023

Balance at September 30, 2023 $ ( 920 ) $ ( 1,106 ) $ ( 90 ) $ ( 2,116 )

Nine Months Ended September 30, 2023

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

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Tax benefit (expense) — 109 ( 33 ) 76

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

Balance at September 30, 2023 $ ( 920 ) $ ( 1,106 ) $ ( 90 ) $ ( 2,116 )

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

Quarter Ended June 30, 2022

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

Quarter Ended September 30, 2022

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

Other comprehensive income (loss) before reclassifications, net ( 1,050 ) 15 ( 285 ) ( 1,320 )

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Tax benefit (expense) 4 ( 6 ) 64 62

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

Six Months Ended June 30, 2022

Balance at September 30, 2022 $ ( 1,954 ) $ ( 1,730 ) $ ( 438 ) $ ( 4,122 )

Nine Months Ended September 30, 2022

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

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Tax benefit (expense) ( 5 ) ( 18 ) 94 71

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

Balance at September 30, 2022 $ ( 1,954 ) $ ( 1,730 ) $ ( 438 ) $ ( 4,122 )

Segment Financial Data

Our operations, for the periods presented herein, are classified into four principal segments:

Collins, Pratt & Whitney, RIS, and RMD.

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.

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.

See “Note 20:

Subsequent Events” for additional information.

Our 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.

As previously announced, effective July 1, 2023, we streamlined the structure of our core businesses to three principal business segments:

Collins Aerospace (Collins), Pratt & Whitney, and Raytheon.

All segment information is reflective of this new structure and prior period information has been recast to conform to our current period presentation.

Collins Aerospace 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.

Collins’ product lines include integrated avionics systems, aviation systems, communications systems, navigation systems, electric power generation, management and distribution systems, environmental control systems, flight control systems, air data and aircraft sensing systems, engine control systems, engine components, engine nacelle systems, including thrust reversers and mounting pylons, interior and exterior aircraft lighting, aircraft seating and cargo systems, evacuation systems, landing systems (including landing gear, wheels, and braking systems), hoists and winches, fire and ice detection and protection systems, actuation systems, and propeller systems.

Collins also designs, manufactures, and supports cabin interior, oxygen systems, food and beverage preparation, storage and galley systems, lavatory, and wastewater management systems.

Collins’ solutions support human space exploration with environmental control and power systems and extravehicular activity suits and support government and defense customer missions by providing connected battlespace systems, test and training range systems, crew escape systems, and simulation and training solutions.

Collins also provides connected aviation solutions and services through worldwide voice and data communication networks and air traffic management solutions.

Aftermarket services include spare parts, overhaul and repair, engineering and technical support, training and fleet management solutions, asset management services, and information management services.

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

Pratt & Whitney’s Commercial Engines and Military Engines businesses design, develop, produce, and maintain families of large engines for wide- and narrow-body and large regional aircraft for commercial customers and for fighter, bomber, tanker, and transport aircraft for military customers.

Pratt & Whitney’s small engine business, Pratt & Whitney Canada, is among the world’s leading suppliers of engines powering regional airlines, general and business aviation, as well as helicopters.

Pratt & Whitney also produces, sells, and services military and commercial auxiliary power units.

Pratt & Whitney provides fleet management services and aftermarket maintenance, repair, and overhaul services in all of these segments.

Raytheon is a leading provider of defensive and offensive threat detection, tracking and mitigation capabilities for U.S.

and foreign government and commercial customers.

Raytheon designs, develops, and provides advanced capabilities in integrated air and missile defense, smart weapons, missiles, advanced sensors and radars, offensive and defensive cybersecurity tools, interceptors, space-based systems, hypersonics, and missile defense across land, air, sea, and space.

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.

Generally Accepted Accounting Principles (GAAP) and our pension and PRB expense under U.S.

government Cost Accounting Standards (CAS) primarily related to our RIS and RMD segments.

government Cost Accounting Standards (CAS) primarily related to our Raytheon segment.

While the ultimate liability for pension and PRB costs under FAS and CAS is similar, the pattern of cost recognition is different.

Over time, we generally expect to recover the related RIS and RMD pension and PRB liabilities through the pricing of our products and services to the U.S.

Over time, we generally expect to recover the related Raytheon pension and PRB liabilities through the pricing of our products and services to the U.S.

Collins and Pratt & Whitney generally record pension and PRB expense on a FAS basis .

In connection with the segment realignment, prior period results were recast in order to maintain the segment cost recognition patterns described above.

Acquisition accounting adjustments include the amortization of acquired intangible assets related to acquisitions, the amortization of the property, plant and equipment fair value adjustment acquired through acquisitions, the amortization of customer contractual obligations related to loss making or below market contracts acquired, and goodwill impairment.

These adjustments are not considered part of management’s evaluation of segment results .

Total sales and operating profit by segment include inter-segment sales which are generally recorded at cost-plus a specified fee or at a negotiated fixed price.

Total sales and operating profit (loss) by segment include inter-segment sales which are generally recorded at cost-plus a specified fee or at a negotiated fixed price.

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 June 30, 2023 and 2022 are as follows:

Net Sales Operating Profit Operating Profit Margins

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

Net Sales Operating Profit (Loss) Operating Profit (Loss) Margins

(dollars in millions) 2023 2022 2023 2022 2023 2022

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Pratt & Whitney (2)

Raytheon Intelligence & Space 3,655 3,570 291 315 8.0 % 8.8 %

Raytheon Missiles & Defense 4,000 3,558 415 348 10.4 % 9.8 %

926 5,380 ( 2,482 ) 316 ( 268.0 ) % 5.9 %

Raytheon 6,472 6,308 560 686 8.7 % 10.9 %

Total segment 14,027 17,406 ( 1,019 ) 1,744 ( 7.3 ) % 10.0 %

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Consolidated $ 13,464 $ 16,951 $ ( 1,396 ) $ 1,520 ( 10.4 ) % 9.0 %

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

(1) Includes the operating results of certain smaller operations.

(2) 2023 includes the impacts of the Powder Metal Matter.

(3) 2022 included the net expenses related to the U.S.

Army’s Lower Tier Air and Missile Defense Sensor (LTAMDS) project.

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

Army’s Lower Tier Air and Missile Defense Sensor (LTAMDS) program.

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

Results for the nine months ended September 30, 2023 and 2022 are as follows:

Net Sales Operating Profit (Loss) Operating Profit (Loss) Margins

(dollars in millions) 2023 2022 2023 2022 2023 2022

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Pratt & Whitney (2)

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 %

11,857 14,878 ( 1,837 ) 769 ( 15.5 ) % 5.2 %

Raytheon 19,464 18,515 1,775 1,920 9.1 % 10.4 %

Total segment 50,454 50,214 2,637 4,662 5.2 % 9.3 %

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Consolidated $ 48,993 $ 48,981 $ 1,784 $ 4,013 3.6 % 8.2 %

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

(1) Includes the operating results of certain smaller operations.

(2) 2023 includes the impacts of the Powder Metal Matter.

(3) 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.

Army’s Lower Tier Air and Missile Defense Sensor (LTAMDS) program.

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

Total assets by segment are as follows:

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

Collins Aerospace (1)

$ 72,006 $ 70,404

Pratt & Whitney (1)

39,619 36,205

46,075 45,666

Total segment 157,700 152,275

Corporate, eliminations, and other 4,743 6,589

Consolidated $ 162,443 $ 158,864

(1) Total assets include acquired intangible assets and the property, plant, and equipment fair value adjustment.

Related amortization expense is included in Acquisition accounting adjustments.

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

Our geographic region based on customer location uses end user customer location where known or practical to determine, or in instances where the end user customer is not known or not practical to determine, we utilize “ship to” location as the customer location.

In addition, for our RIS and RMD segments, we disaggregate our contracts from customers by contract type.

In addition, for our Raytheon segment, we disaggregate our contracts from customers by contract type.

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 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

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

(dollars in millions) Collins Aerospace Pratt & Whitney Raytheon Other Total Collins Aerospace Pratt & Whitney Raytheon Other Total

United States $ 3,323 $ 2,849 $ 4,987 $ ( 4 ) $ 11,155 $ 2,988 $ 2,756 $ 4,635 $ 43 $ 10,422

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Middle East and North Africa 187 168 469 — 824 143 160 675 — 978

Other 361 433 29 19 — 842 305 413 38 18 — 774

Other regions 335 586 37 — 958 313 360 55 — 728

Powder Metal Matter — ( 5,401 ) — — ( 5,401 ) — — — — —

Consolidated net sales 6,099 926 6,442 ( 3 ) 13,464 5,258 5,378 6,271 44 16,951

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Business segment sales $ 6,629 $ 926 $ 6,472 $ ( 563 ) $ 13,464 $ 5,718 $ 5,380 $ 6,308 $ ( 455 ) $ 16,951

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

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

(dollars in millions) Collins Aerospace Pratt & Whitney Raytheon Other Total Collins Aerospace Pratt & Whitney Raytheon Other Total

United States $ 9,657 $ 8,327 $ 14,865 $ 81 $ 32,930 $ 8,775 $ 7,630 $ 13,802 $ 130 $ 30,337

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Middle East and North Africa 531 382 1,525 — 2,438 397 350 1,929 — 2,676

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

Other regions 1,050 1,482 131 — 2,663 918 1,160 151 1 2,230

Powder Metal Matter — ( 5,401 ) — — ( 5,401 ) — — — — —

Consolidated net sales 17,682 11,856 19,370 85 48,993 15,559 14,876 18,413 133 48,981

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Business segment sales $ 19,133 $ 11,857 $ 19,464 $ ( 1,461 ) $ 48,993 $ 16,821 $ 14,878 $ 18,515 $ ( 1,233 ) $ 48,981

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

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

(dollars in millions) Collins Aerospace Pratt & Whitney (2)

Raytheon Other Total Collins Aerospace Pratt & Whitney Raytheon Other Total

Sales to the U.S.

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

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

(2) Includes the reduction in sales from the Powder Metal Matter.

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

(dollars in millions) Collins Aerospace Pratt & Whitney (2)

Raytheon Other Total Collins Aerospace Pratt & Whitney Raytheon Other Total

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 June 30, 2023 and 2022 are as follows:

(2) Includes the reduction in sales from the Powder Metal Matter.

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

(dollars in millions) Collins Aerospace Pratt & Whitney (1)

Raytheon Other Total Collins Aerospace Pratt & Whitney Raytheon Other Total

Products $ 4,761 $ ( 1,486 ) $ 5,339 $ 1 $ 8,615 $ 4,194 $ 3,183 $ 5,336 $ 43 $ 12,756

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Business segment sales $ 6,629 $ 926 $ 6,472 $ ( 563 ) $ 13,464 $ 5,718 $ 5,380 $ 6,308 $ ( 455 ) $ 16,951

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

(1) Includes the reduction in sales from the Powder Metal Matter.

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

(dollars in millions) Collins Aerospace Pratt & Whitney (1)

Raytheon Other Total Collins Aerospace Pratt & Whitney Raytheon Other Total

Products $ 13,813 $ 4,765 $ 16,149 $ 86 $ 34,813 $ 12,309 $ 8,798 $ 15,640 $ 129 $ 36,876

3 unchanged sentences

Business segment sales $ 19,133 $ 11,857 $ 19,464 $ ( 1,461 ) $ 48,993 $ 16,821 $ 14,878 $ 18,515 $ ( 1,233 ) $ 48,981

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

(1) Includes the reduction in sales from the Powder Metal Matter.

Raytheon segment sales disaggregated by contract type for the quarters ended September 30, 2023 and 2022 are as follows:

(dollars in millions) 2023 2022

Fixed-price $ 2,997 $ 3,180

3 unchanged sentences

Business segment sales $ 6,472 $ 6,308

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

Raytheon segment sales disaggregated by contract type for the nine months ended September 30, 2023 and 2022 are as follows:

(dollars in millions) 2023 2022

Fixed-price $ 9,639 $ 9,369

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Consolidated net sales 19,370 18,413

Inter-segments sales 763 93 644 127

Inter-segment sales 94 102

Business segment sales $ 19,464 $ 18,515

1 unchanged sentence

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

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.

Total RPO was $ 190 billion as of September 30, 2023.

Of the total RPO as of September 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 June 30, 2023 are not expected to have a material impact on our results of operations, financial condition, or liquidity.

Other new pronouncements issued but not effective until after September 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.

Accelerated Share Repurchase.

On October 21, 2023, our Board of Directors authorized a share repurchase program for up to $ 11 billion of our common stock, replacing the previous program announced on December 12, 2022.

This $ 11 billion share repurchase authorization is inclusive of authority to enter into a $ 10 billion accelerated share repurchase program (ASR).

On October 24, 2023, we entered into a $ 10 billion bridge loan facility, the proceeds of which are expected to be used to fund the ASR, and on October 24, 2023, we announced our intention to enter into the ASR.

We expect to enter into ASR agreements in October 2023 which will provide for the repurchase of an aggregate of $ 10 billion of the Company’s common stock.

Under the ASR we expect to take delivery of the majority of the shares in the fourth quarter of 2023 with the expected final settlement of the transactions under the ASR agreements to occur no later than the third quarter of 2024.

We intend to repay the bridge loan with long-term debt.

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.

On October 18, 2023, we entered into a definitive agreement to sell our Cybersecurity, Intelligence and Services business within our Raytheon segment for a sales price of approximately $ 1.3 billion.

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

With respect to the unaudited condensed consolidated financial information of RTX for the quarters and nine months ended September 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 October 24, 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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Results of Review of 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”).

We have reviewed the accompanying condensed consolidated balance sheet of RTX Corporation and its subsidiaries (the “Company”) as of September 30, 2023, and the related condensed consolidated statements of operations, of comprehensive income (loss), and of changes in equity, for the three-month and nine-month periods ended September 30, 2023 and 2022, and the condensed consolidated statement of cash flows for the nine-month periods ended September 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

July 25, 2023

October 24, 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