3 unchanged sentences
Our business, operating results, financial condition, and liquidity may be adversely affected by changes in global economic conditions, international relations, and geopolitical events and actions, including inflation, credit market conditions, levels of consumer and business confidence, commodity (including energy) prices and supply, trade policies, exchange rates, changing policy positions or priorities, levels of government spending and deficits, the threat environment, political conditions, and actual or anticipated default on sovereign debt.
−Removed: The current global supply chain and labor market challenges and inflationary pressures have negatively affected, and we expect will continue to negatively affect, our performance as well as the performance of our suppliers and subcontractors.
+Added: The current global supply chain challenges and inflationary pressures have negatively affected, and we expect will continue to negatively affect, our performance as well as the performance of our suppliers and subcontractors.
+Added: High inflation levels have increased material and component prices, labor rates, and supplier costs.
In addition, due to the nature of our government and commercial aerospace businesses, and their respective customer and supplier contracts, we may be unable to increase our contract value or pricing to offset cost increases, in particular on our fixed price contracts.
23 unchanged sentences
government agencies to continue operating at prior-year levels.
−Removed: Further, if the U.S.
−Removed: government debt ceiling is not raised and the national debt reaches the statutory debt ceiling, the U.S.
−Removed: government could default on its debts.
+Added: government is currently operating under a CR to keep the government funded while Congress works to enact full year fiscal year 2024 (FY24) appropriation bills.
+Added: While we expect Congress to complete the full year FY24 appropriations bills before the current CR expire, if Congress is unable to complete the FY24 appropriation bills, (or pass another CR), then the U.S.
+Added: government would shut down during which federal agencies would cease all non-essential functions.
+Added: Our business, program performance, and results of operations could be impacted by the resulting disruptions to federal government offices, workers, and operations, including risks relating to the funding of certain programs, stop work orders, as well as delays in contract awards, new program starts, payments for work performed, and other actions.
+Added: We also may experience similar impacts in the event of an extended period of continuing resolutions.
+Added: Generally, the significance of these impacts will primarily be based on the length of the continuing resolution or shutdown.
+Added: Furthermore, under the Fiscal Responsibility Act of 2023, which imposes limits on discretionary spending for defense and non-defense programs in exchange for the lifting of the debt ceiling in June 2023, if Congress fails to enact all appropriation bills by April 30, 2024, then the budget caps will be reduced and corresponding automatic reductions to agency budget accounts will be enforced through sequestration.
As a result, U.S.
4 unchanged sentences
We face risks relating to our U.S.
−Removed: government contracts and the mix of our U.S.
−Removed: government contracts and programs.
+Added: government contracts and programs, including the mix of our U.S.
+Added: government contracts and programs, our performance, and our ability to control costs.
The termination of one or more of our U.S.
−Removed: government contracts, or the occurrence of performance delays, cost overruns (due to inflation or otherwise), product failures, shortages in materials, components or labor, or contract definitization delays, could negatively impact our competitive position, results of operations, financial condition and liquidity.
+Added: contracts, or the occurrence of performance delays, cost overruns (due to inflation or otherwise), product failures, shortages in materials, components, or labor, contract definitization delays, or other failures to perform to customer expectations and contract requirements, could negatively impact our reputation and competitive position, results of operations, financial condition, and liquidity.
government contracts generally permit the government to terminate the contract, in whole or in part, without prior notice, at the U.S.
government’s convenience or for default based on performance.
−Removed: If one of our contracts is terminated for convenience, we would generally be entitled to payments for our allowable costs and would receive some allowance for profit on the work performed.
+Added: If one of our contracts is terminated for convenience, we would generally be entitled to payments for our allowable costs incurred, termination costs, and would receive some allowance for profit on the work performed.
If one of our contracts is terminated for default, we would generally be entitled to payments for work accepted by the U.S.
A termination arising out of our default could expose us to liability and have a negative impact on our ability to obtain future contracts and orders.
−Removed: In addition, we are a subcontractor on some contracts, and the U.S.
+Added: In addition, we are a subcontractor on some programs, and the U.S.
government could terminate the prime contract for convenience or otherwise, without regard to our performance as a subcontractor.
1 unchanged sentence
Moreover, because the funding of U.S.
−Removed: government programs is subject to
−Removed: congressional appropriations made on a fiscal year basis even for multi-year programs, programs are often only partially funded initially and may not continue to be funded in future years.
+Added: government programs is subject to congressional appropriations made on a fiscal year basis even for multi-year programs, programs are often only partially funded initially and may not continue to be funded in future years.
Appropriation bills may be delayed, which may result in delays to funding, the collection of receivables, and our contract performance due to lack of authorized funds to procure related products and services.
13 unchanged sentences
government savings for cost underruns less than target costs and expenses for cost overruns exceeding target costs up to a negotiated ceiling price.
−Removed: We carry the entire burden of cost overruns exceeding the ceiling price amount under FPI contracts.
−Removed: Under cost reimbursable contracts, we are reimbursed for allowable costs and paid a fixed or performance-based fee, but we are generally not reimbursed for unauthorized costs exceeding a cost ceiling amount or costs not allowable under the contract or applicable regulations.
+Added: We carry the entire burden of cost overruns exceeding the ceiling price amount under FPI contracts, which may result in a cumulative adjustment in the period our estimates change.
+Added: Under cost reimbursable contracts, we are reimbursed for allowable costs and are typically paid a fixed or performance-based fee, but we are generally not reimbursed for unauthorized costs exceeding a cost ceiling amount or costs not allowable under the contract or applicable regulations.
+Added: Excess costs on cost reimbursable contracts could also result in lower profit rates.
+Added: We may incur unexpected costs for various reasons, including technical and manufacturing challenges, schedule delays, shortages in materials, components, or labor, internal and subcontractor performance, product quality issues, inability to achieve the benefits of our cost reduction, digital transformation, manufacturing, operating, and other strategic initiatives, inflation, and changing laws or regulations, natural disasters, and public health crises.
If we are unable to control costs or if our initial cost estimates are incorrect, our profitability could be negatively affected, particularly under fixed-price development contracts.
We may also experience cost underruns which would reduce contract value and related expected revenues, and we may be unable to expand the contract scope or secure additional work to offset the resulting lost revenues.
−Removed: While contracts for development programs with complex design and technical challenges are typically cost reimbursable, they can be FFP or FPI, which can significantly increase our risk of a potential negative profit adjustment, as development contracts by nature involve elements that have not been undertaken before and, thus, are highly subject to future unexpected cost growth.
+Added: While contracts for development programs with complex design and technical challenges are often cost reimbursable, they can be FFP or FPI, which can significantly increase our risk of a potential negative profit adjustment, as development contracts by nature involve elements that have not been undertaken before and, thus, are highly subject to future unexpected cost growth.
In addition, other contracts in backlog are for the transition from development to production, which includes starting and stabilizing a manufacturing and test line while the final design is still being validated.
−Removed: Moreover, over the past several years, the DoD has increased its use of Other Transaction Authority (OTA) contracts, under which it awards certain prototypes, research and production contracts without all of the procurement requirements that typically apply to DoD contracts, including justification of sole source awards.
−Removed: OTAs may use fixed-price contracting during all phases of the contract, or mandated contract cost sharing (e.g., one-third of program costs).
+Added: Moreover, over the past several years, the DoD has increased its use of Other Transaction Authority (OTA) agreements, under which it awards certain prototypes, research, and production contracts without all of the procurement requirements that typically apply to DoD contracts, including justification of sole source awards.
+Added: OTAs may use fixed-price contracting during all phases of the contract, or mandated contract cost sharing.
They may also require non-traditional subcontractor participation and impose other requirements that differ from our other DoD contracts.
−Removed: Our business may be negatively impacted if we are unable to perform on our OTA contracts, including any applicable non-traditional requirements.
+Added: Our business may be negatively impacted if we are unable to bid for OTA work and/or perform on our OTA agreements, including any applicable non-traditional requirements.
In addition, in order to support U.S.
2 unchanged sentences
government contracts also require us to comply with extensive and evolving procurement rules and regulations and subject us to potential U.S.
−Removed: government audits, investigations, and disputes.
+Added: government surveillance, audits, investigations,
+Added: and disputes.
We are also involved in programs that are classified by the U.S.
8 unchanged sentences
Dollars, while the majority of their non-U.S.
−Removed: costs are incurred in the applicable local currency.
+Added: operating costs are incurred in the applicable local currency.
Pratt & Whitney Canada is especially susceptible to fluctuations in exchange rates for this reason.
6 unchanged sentences
or that may be interpreted differently in foreign countries.
−Removed: In addition, in certain foreign countries, we engage foreign non-employee representatives and consultants for
−Removed: international sales and teaming with international subcontractors, partners and suppliers for international programs.
+Added: In addition, in certain foreign countries, we engage foreign non-employee representatives and consultants for international sales and teaming with international subcontractors, partners, and suppliers for international programs.
While we have robust policies and controls in place, these engagements expose us to various challenges including risks associated with the Foreign Corrupt Practices Act (FCPA) and local antibribery laws and regulations.
6 unchanged sentences
In addition, foreign companies may be subject to fewer restrictions on technology transfer than U.S.
−Removed: Our international contracts, particularly for sales of defense products and services, may include offset or industrial cooperation obligations requiring specific local purchases, manufacturing agreements, technology transfer agreements or financial support obligations, sometimes in the form of in-country industrial participation (ICIP) agreements.
+Added: Our international contracts, particularly for sales of defense products and services, may include offset or industrial cooperation obligations requiring specific local purchases, manufacturing agreements, technology transfer agreements, financial support obligations, or other local investments, sometimes in the form of in-country industrial participation (ICIP) agreements.
Approvals of offset or ICIP thresholds and requirements may be subjective and time-consuming and may delay contract awards.
Certain customers’ demands are increasing for greater offset or ICIP commitment levels, higher-value content, including the transfer of technologies and capabilities, and local production and economic development.
+Added: In addition, our ability to satisfy customer demands relating to the transfer of technologies and capabilities under ICIP arrangements and other international contracts may be limited by U.S.
+Added: government export controls.
As a result of the above factors, we could experience financial penalties and award and funding delays on international programs, our profitability on these programs could be negatively affected, and we could incur losses on these programs that could negatively impact our results of operations, financial condition, and liquidity.
Geopolitical factors and changes in policies and regulations could adversely affect our business.
−Removed: Our international sales and operations are sensitive to changes in foreign national priorities, foreign government budgets, and regional and local political and economic factors, including volatility in energy prices or supply, political or civil unrest, changes in threat environments and political relations, geopolitical uncertainties, and changes in U.S.
+Added: Our international sales and operations are sensitive to changes in foreign national priorities, foreign government budgets, and regional and local political and economic factors, including wars and armed conflicts, political or civil unrest, volatility in energy prices or supply, inflation, interest rates, changes in threat environments and political relations, geopolitical uncertainties, and changes in U.S.
foreign policy.
−Removed: Our international sales and operations are also sensitive to changes in foreign government laws, regulations and policies, including those related to tariffs, sanctions, embargoes, export and import controls and other trade restrictions.
−Removed: Events such as increased trade restrictions or retaliatory trade policies, renegotiation of existing trade agreements, or regime change can affect demand for our products and services, the competitive position of our products, our supply chain, and our ability to manufacture or sell products in certain countries.
−Removed: Further, operations in emerging market countries are subject to additional risks, including volatility in gross domestic product and rates of economic growth, government instability, cultural differences (such as employment and business practices), the imposition of exchange and capital controls, and risks associated with exporting components manufactured in those countries for incorporation into finished products completed in other countries.
+Added: Our international sales and operations are also sensitive to changes in U.S.
+Added: or foreign government laws, regulations, and policies, including those related to tariffs, sanctions, embargoes, export and import controls, other trade restrictions, and trade agreements.
+Added: Events such as increased trade restrictions, retaliatory trade policies, or regime change can affect demand for our products and services, the competitive position of our products, our supply chain, and our ability to manufacture or sell products in certain countries.
+Added: Further, operations in emerging market countries are subject to additional risks, including volatility in rates of economic growth, government instability, cultural differences (such as employment and business practices), the imposition of exchange and capital controls, and risks associated with exporting components manufactured in those countries for incorporation into finished products completed in other countries.
While these factors and their impact are difficult to predict, any one or more of them could have a material adverse effect on our competitive position, results of operations, financial condition, or liquidity.
3 unchanged sentences
We engage in both direct commercial sales, which generally require U.S.
−Removed: government licenses and approvals, as well as foreign military sales, which are government-to-government transactions initiated by, and carried out at the direction of, the U.S.
+Added: government licenses and approvals, as well as foreign military sales, which are government-to-government transactions
+Added: initiated by, and carried out at the direction of, the U.S.
Changes in budgets and spending levels, policies, or priorities, which are subject to geopolitical risks and threats, may impact our defense businesses, including the timing of and delays in U.S.
1 unchanged sentence
These risks and uncertainties may directly or indirectly impact our commercial businesses as well.
−Removed: Of note, China previously announced it may take measures against Raytheon Technologies Corporation (RTC) in connection with certain foreign military sales to Taiwan involving RTC products and services.
−Removed: In addition, China has indicated that it decided to sanction our Chairman and Chief Executive Officer Gregory Hayes, in connection with another potential foreign military sale to Taiwan involving RTC products and services.
−Removed: RTC is not aware of any specific sanctions against Mr.
−Removed: Hayes or RTC, or the nature or timing of any future potential sanctions or countermeasures.
−Removed: If China were to impose sanctions or take other regulatory action against RTC, our suppliers, affiliates or partners, it could potentially disrupt our business operations.
−Removed: The impact of potential sanctions or other actions by China cannot be determined at this time.
−Removed: From time to time, our businesses have sold, and are expected to sell in the future, additional defense products to Taiwan, and we are unable to determine the potential impact, if any, of any future sanctions or other actions by China in response to these sales.
+Added: Of note, in February 2023, China announced sanctions against Raytheon Missiles & Defense (RMD) (a former RTX Corporation (RTX) business segment, which became part of Raytheon as a result of the July 1, 2023 RTX segment realignment), and previously announced it may take measures against RTX, in connection with certain foreign military sales to Taiwan.
+Added: The Chinese sanctions against RMD included a fine equal to twice the value of the arms that RMD sold to Taiwan since September 2020.
+Added: In addition, in September 2022, China indicated that it decided to sanction our Chairman and Chief Executive Officer, Gregory Hayes, in connection with another foreign military sale to Taiwan involving RTX products and services.
+Added: If China were to enforce sanctions, impose additional sanctions, or take other regulatory action against RTX, our suppliers, affiliates, or partners, it could potentially disrupt our business operations.
+Added: The impact of the announced sanctions or other potential sanctions, or other actions by China is uncertain.
+Added: Our businesses have sold, and are expected to sell in the future, additional defense products to Taiwan from time to time in alignment with our U.S.
+Added: government policy, and we are unable to determine the potential impact, if any, of any future sanctions or other actions by China in response to these sales.
Moreover, the Chinese government has generally expanded its ability to restrict China-related import, export and investment activities, which may have an adverse impact on our ability to conduct business or sell our commercial aerospace products in China.
−Removed: In addition, in response to the Russian military’s invasion of Ukraine on February 24, 2022, the U.S.
−Removed: government and the governments of various jurisdictions in which we operate, including Canada, the United Kingdom, the European Union, and others, have
−Removed: imposed broad economic sanctions and export controls targeting specific industries, entities and individuals in Russia.
+Added: In addition, in response to Russia’s invasion of Ukraine, the U.S.
+Added: government and the governments of various jurisdictions in which we operate, have imposed broad economic sanctions and export controls targeting specific industries, entities, and individuals in Russia.
The Russian government has implemented similar counter-sanctions and export controls targeting specific industries, entities, and individuals in the U.S.
2 unchanged sentences
These measures have adversely affected and could continue to adversely affect the Company and/or our supply chain, business partners, or customers.
+Added: We continue to closely monitor developments in the war between Israel and Hamas that began on October 7, 2023, including potential impacts to RTX’s business, customers, suppliers, employees, and operations in Israel, the Middle East, and elsewhere.
+Added: At this time, impacts to RTX are minimal.
+Added: RTX’s commercial manufacturing facilities in Israel remain open and operational and have continued exporting products and importing critical items and raw materials.
+Added: The war has also not impacted our defense programs’ ability to receive components from Israel.
+Added: For some products, there could be future delivery delays because of the ongoing war.
+Added: The potential impacts to RTX are subject to change given the volatile nature of the situation.
Our financial performance is dependent on the condition of the aerospace industry.
−Removed: Our aerospace businesses constitute a substantial portion of our financial results, and the performance of those businesses is directly tied to economic conditions in the commercial aerospace industry, which is cyclical in nature.
−Removed: Capital spending and demand for aircraft engines, aerospace products and component aftermarket parts and services by commercial airlines, lessors, other aircraft operators and aircraft manufacturers are influenced by a wide variety of factors, including current and predicted traffic levels, load factors, aircraft fuel prices, labor issues, airline consolidation, bankruptcies and restructuring activities, competition, the retirement of older aircraft, regulatory changes, terrorism and related safety concerns, general economic conditions, tightening of credit in financial markets, corporate profitability, cost reduction efforts and remaining performance obligations levels.
−Removed: Any of these factors could reduce the sales and margins of our aerospace businesses.
+Added: Our commercial aerospace businesses constitute a substantial portion of our financial results, and the performance of those businesses is directly tied to economic conditions in the commercial aerospace industry, which is cyclical in nature.
+Added: Capital spending and demand for aircraft engines, aerospace products, and component aftermarket parts and services is limited to commercial airlines, lessors, other aircraft operators and aircraft manufacturers that are influenced by a wide variety of factors, including current and predicted traffic levels, load factors, aircraft fuel prices, labor issues, airline consolidation, bankruptcies and restructuring activities, competition, the retirement of older aircraft, corporate profitability and financial health, cost reduction efforts, tightening of credit in financial markets and the availability of aircraft leasing and financing alternatives, remaining performance obligations levels, the satisfaction of certification or other regulatory requirements for aircraft in various jurisdictions, regulatory changes, terrorism and related safety concerns, and general economic conditions.
+Added: Any of these factors affecting the industry could reduce the sales and margins of our aerospace businesses.
+Added: In addition, because we have significant business with Airbus and Boeing, our aerospace businesses could be adversely affected by challenges faced by these or other individual customers.
Other factors, including future terrorist actions, aviation safety concerns, pandemic health issues, or major natural disasters, could also dramatically reduce the demand for commercial air travel, which could negatively impact the sales and margins of our aerospace businesses.
1 unchanged sentence
At times, our aerospace businesses also enter into firm fixed-price or cost-share development contracts with customers, which may require us to bear cost overruns related to unforeseen technical and design challenges that arise during the development and early production stages of the program.
−Removed: Spare parts sales and aftermarket service trends are affected by similar factors, including usage, pricing, technological improvements, regulatory changes and the retirement of older aircraft.
+Added: Spare parts sales and aftermarket services, particularly under long-term aftermarket contracts are also affected by similar factors, including usage, pricing, technological improvements, regulatory changes, and the retirement of older aircraft.
Furthermore, because of the lengthy research and development cycle involved in bringing products in these business segments to market, we cannot predict the economic conditions that will exist when any new product is ready to enter into service.
−Removed: A reduction in spending in the commercial aviation industry could have a significant effect on the demand for our products, which could have a material adverse effect on our competitive position, results of operations, financial condition or liquidity.
+Added: A reduction in spending in the commercial
+Added: aviation industry could have a significant effect on the demand for our products, which could have a material adverse effect on our competitive position, results of operations, financial condition, or liquidity.
We design, manufacture, and service products that incorporate advanced technologies;
12 unchanged sentences
identification of emerging technological trends for our target end-customers;
−Removed: the level of customer interest in new technologies and products and customer acceptance of our products and technologies.
−Removed: For example, our customers manufacture or acquire end products and systems that incorporate certain of our products.
+Added: the level of customer interest in new technologies and products;
+Added: customer acceptance of our products and technologies;
+Added: and the level of competition as described below.
+Added: For example we are investing in artificial intelligence, among other advanced technologies, and we may be unable to successfully integrate the technology into our products and services or keep pace with this rapidly changing technology.
+Added: In addition, our customers manufacture or acquire end products and systems that incorporate certain of our products.
These end products and systems may also incorporate additional technologies manufactured by third parties and involve additional risks and uncertainties.
6 unchanged sentences
Due to the design complexity of our products, or those of our customers or third party manufacturers that incorporate our products into theirs or our customers’ products, we may experience delays in completing the development and introduction of new products, or we may experience the suspension of production after these products enter into service due to safety concerns.
−Removed: Delays and/or
−Removed: suspension of production could result in increased development costs or deflect resources from other projects.
+Added: Delays and/or suspension of production could result in increased development costs or deflect resources from other projects.
Any of the foregoing could have a material adverse effect on our competitive position, results of operations, financial condition, or liquidity.
−Removed: In particular, Pratt & Whitney is currently producing and delivering the Geared Turbofan engine to power various aircraft.
−Removed: The level of orders received for the Geared Turbofan family of engines, coupled with a requirement to achieve mature production levels in a very short time frame, require significant additional manufacturing and supply chain capacity.
−Removed: If any of our production ramp-up efforts are delayed, if suppliers cannot timely deliver or perform to our standards, and/or if we identify or experience issues with in-service engines, we may not meet customers’ delivery schedules, which could result in material additional costs, including liquidated damages or other liabilities that could be assessed under existing contracts.
+Added: In particular, Pratt & Whitney’s Geared Turbofan family of engines incorporates advanced technologies.
+Added: The level of orders received for the Geared Turbofan family of engines, coupled with a requirement to achieve mature production levels in a very short time frame, require significant manufacturing and supply chain capacity.
+Added: In addition, in July 2023 Pratt & Whitney 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, resulting in increased engine removals and inspections, shop visits, aircraft on ground levels, costs to the Company, and other negative impacts described in more detail below.
+Added: If any of our production or maintenance, repair, and overhaul ramp-up efforts are delayed, if suppliers cannot timely deliver or perform to our standards, if any other engine models are found to be materially impacted by the powder metal issue, and/or if we identify or experience other issues with in-service engines in the Geared Turbofan family of engines (or other engines), whether for manufacturing reasons or otherwise, we may not meet customer requirements, which could result in material additional costs, including liquidated damages or other liabilities.
Competition may reduce our revenues and limit our future opportunities.
7 unchanged sentences
Generally, a bid protest will delay the start of contract activities, delay earnings, and could result in the award decision being overturned and require a re-bid of the contract.
−Removed: Highly competitive activity within the commercial aerospace industry has included substantial discounts and other financial incentives, performance and operating cost guarantees, and participation in financing arrangements, in order to secure both new engine business and the aftermarket revenues associated with these products.
+Added: Highly competitive activity within the commercial aerospace industry has included substantial discounts and other financial incentives, performance and operating cost guarantees, and participation in financing arrangements, in order
+Added: to secure both new engine business and the aftermarket revenues associated with these products.
Further, our competitors, including our customers, may develop competing technologies which gain industry acceptance in advance of, or instead of, our products, or meet particular in-demand technological needs before us or with technology that is superior to our existing or new technologies.
−Removed: In addition, our competitors or customers might develop new technologies or offerings that might cause our existing technologies and offerings to become obsolete or otherwise decrease demand for our offerings.
+Added: This competition could cause our existing technologies and offerings to become obsolete or otherwise decrease demand for our offerings.
In addition, the possibility exists that competitors or customers will develop aftermarket services and parts for our products that attract customers and adversely impact our return on investment on new products.
2 unchanged sentences
Additionally, some customers, including the DoD, are increasingly turning to commercial contractors, rather than traditional defense contractors, for space-related technologies and for information technology and other support work.
+Added: Moreover, we are seeing increased government, particularly foreign, sponsorship of competitors on defense development programs.
If we are unable to continue to compete successfully against our current or future competitors in our core businesses, we may experience declines in revenues and industry segment share which could have a material adverse effect on our competitive position, results of operations, financial condition, or liquidity.
−Removed: The Coronavirus Disease 2019 ( COVID-19) pandemic has affected our business, and we continue to face risks associated with it.
−Removed: The COVID-19 pandemic continues to negatively affect the global economy, our business and operations, and the industries in which we operate.
−Removed: The pandemic and government, business and individual actions in response, including lockdowns, quarantines, border closings and other travel restrictions and requirements, remote working, facilities closures and reduced business and leisure travel, led to significant declines in demand for commercial air travel in 2020 and 2021 and, therefore, for our commercial aerospace products and services.
−Removed: While we have seen signs of ongoing recovery in the overall demand for commercial air travel and currently expect that recovery to continue, some commercial aviation segments have recovered less quickly than others, and it remains uncertain when commercial air traffic will fully return to and/or exceed pre-pandemic levels.
−Removed: The resulting financial impact is highly uncertain and subject to a wide range of factors and future developments.
−Removed: In addition, a resurgence of the pandemic (including COVID-19 variants), regional lockdowns or other negative developments associated with the pandemic could hinder or reverse the commercial air traffic recovery.
−Removed: Negative developments concerning the effect of the pandemic or additional variants, the efficacy and acceptance of vaccines, new or continued actions to contain the pandemic’s spread or treat its impact, and governmental, business and individual actions taken in response to the pandemic (lockdowns, quarantines, border closings and other travel restrictions and requirements, remote working, facilities closures, and reduced business and leisure travel patterns and work environments) could create significant business disruption for us and our suppliers, subcontractors and customers, exacerbate existing supply chain and labor shortages, redirect government funds and decrease defense budgets, and negatively affect global economic conditions.
−Removed: These factors could hinder or delay our production capabilities, impede our ability to perform on our obligations to our customers, result in increased costs to us and decreased demand for our products and services, and could negatively affect our performance on our customer
−Removed: contracts and our business, results of operations, financial condition and liquidity.
−Removed: The ultimate duration and financial impact of the COVID-19 pandemic remains unknown at this time.
OPERATIONAL RISKS
−Removed: We depend on the availability of materials and performance of our suppliers, and the impacts of global supply chain and labor market disruptions on our supply chain have negatively affected and will continue to negatively affect our business.
+Added: Our business and financial performance may be adversely affected by cyber-attacks on information technology infrastructure and products, as well as changes in cybersecurity regulations.
+Added: Our business may be impacted by disruptions to our own or third-party information technology (IT) infrastructure, which could result from, among other causes, cyberattacks on or failures of such infrastructure or compromises to its physical security.
+Added: The products and services that we provide our customers are also at risk of being adversely affected by cyber-attacks, including attempts to infiltrate them or sabotage or disable their use.
+Added: Like other companies, we regularly experience cyber-based attacks.
+Added: Cybersecurity threats are continuously evolving and include, but are not limited to, both attacks on our IT infrastructure and attacks on the IT infrastructure of our customers, suppliers, subcontractors and other third parties with whom we do business routinely, both on premises and in the cloud, attempting to gain unauthorized access to our confidential, proprietary, or otherwise protected information, classified information, or information relating to our employees, customers and other third parties, or to disrupt our systems or the systems of third parties.
+Added: Cybersecurity threats also include attacks targeting the security, confidentiality, integrity and/or availability of the hardware, software and information installed, stored or transmitted in our products, including after the purchase of those products and when they are incorporated into third-party products, facilities or infrastructure.
+Added: We are also exposed to the risk of insider threat attacks.
+Added: Any such attacks could disrupt our systems or those of third parties (including mission critical systems), impact business operations, result in unauthorized release of confidential, proprietary, or otherwise protected information, and corrupt our data or that of third parties.
+Added: The threats we face are continuous and evolving, and vary in degree of severity and sophistication.
+Added: These threats include advanced persistent threats from highly organized adversaries, including but not limited to cyber criminals, nation states and so-called hacktivists, particularly those adverse to the security interests of the U.S.
+Added: and its allies, which target us and other defense contractors.
+Added: These types of threats are related to the geopolitical environment and have, therefore, grown in number due to recent geopolitical conflicts.
+Added: In addition, as a result of the rapid pace of technological change, we and our customers, suppliers, subcontractors and other third parties with whom we conduct business continue to rely on legacy systems and software, which can be more vulnerable to cyber threats and attacks.
+Added: Moreover, we, like other companies, are seeing an unprecedented number of previously unknown vulnerabilities, for which there are no known mitigations, being revealed by new attacks.
+Added: Further, the sophistication, availability and use of artificial intelligence by threat actors present an increased level of risk.
+Added: Due to the evolving threat landscape, we have experienced and expect to continue to experience more frequent and increasingly advanced cyber-attacks.
+Added: In addition, changes in domestic and international cybersecurity-related laws and regulations have expanded cybersecurity-related compliance requirements, and cybersecurity regulatory enforcement activity has grown.
+Added: We expect the regulatory environment to continue to evolve, and staying apace with these regulatory changes could increase our operational and compliance expenditures and those of our suppliers, and lead to new or additional information technology and product development expenses.
+Added: We also face reputational, litigation and financial risks in relation to potential required disclosures and increased risk of enforcement.
+Added: We continue to make investments and adopt measures designed to enhance our protection, detection, response, and recovery capabilities, and to mitigate potential risks to our technology, products, services and operations from potential cybersecurity threats, as well as to comply with evolving regulations.
+Added: However, given the unpredictability, nature and scope of cyber-attacks, it is possible that we are unable to defend against all cyber-attacks, that potential vulnerabilities could go undetected and persist in the environment for an extended period, or that we may otherwise be unable to mitigate customer losses and other potential consequences of these attacks.
+Added: In addition, some products and services that we provide to customers, particularly those related to public security, may raise potential liabilities related to privacy and intellectual property.
+Added: In some cases, we must rely on the safeguards put in place by our customers, suppliers, subcontractors and other third parties to protect against and report cyber threats and attacks.
+Added: We could potentially be subject to production downtimes, operational delays, other detrimental impacts on our operations or
+Added: ability to provide products and services to our customers, the compromise of confidential information, intellectual property or otherwise protected information, misappropriation, destruction or corruption of data, security breaches, other manipulation or improper use of our or third-party systems, networks or products, financial losses from remedial actions, loss of business, or potential liability, penalties, fines and/or damage to our reputation.
+Added: Any of these could have a material adverse effect on our competitive position, results of operations, financial condition or liquidity.
+Added: Due to the evolving nature of such risks, the impact of any potential incident cannot be predicted.
+Added: Further, our insurance coverage, which may exclude losses from war or cyber operations, may not be adequate to cover all related costs and we may not otherwise be fully indemnified for them.
+Added: We are dependent on a global supply chain and subject to risks related to the availability of materials and the performance of our suppliers;
+Added: in recent years we have experienced supply chain disruptions that resulted in delays and increased costs and adversely affected our performance.
Our performance requires a variety of raw materials, supplier-provided parts, components, sub-systems, and contract manufacturing services, and we rely on U.S.
1 unchanged sentence
In some instances, we depend upon a single source of supply, manufacturing, services support, or assembly, or participate in commodity markets that may be subject to allocations of limited supplies by suppliers.
+Added: Emerging laws and increasing regulatory requirements aimed at global supply chains may impact our ability to access certain materials and components, and otherwise adversely affect our business, and we may not only be held responsible for our compliance, but for that of our suppliers.
In addition, our defense businesses are subject to specific procurement requirements that limit the types of materials they use.
−Removed: Our defense businesses also must require suppliers to comply with various DoD requirements, including cybersecurity requirements, any of which requirements may further limit the suppliers and subcontractors they may utilize.
+Added: Our defense businesses also must require suppliers to comply with various DoD requirements, any of which requirements may further limit the suppliers and subcontractors they may utilize.
Identifying and qualifying second- or third- source suppliers can be difficult, time-consuming, and may result in increased costs.
−Removed: In addition, global supply chain and labor markets are continuing to experience high levels of disruption, causing significant materials and parts shortages, as well as delivery delays, labor shortages, distribution issues, energy cost increases and price increases.
−Removed: Current geopolitical conditions, including sanctions and other trade restrictive activities and strained intercountry relations, are contributing to these issues.
−Removed: Certain of our suppliers and subcontractors have been unable to hire and retain sufficient qualified personnel for their performance.
−Removed: We and our suppliers and subcontractors have also experienced difficulties in procuring necessary raw materials and components, including microelectronics.
−Removed: All of the above have contributed to price increases.
−Removed: These issues have led to significant supplier and subcontractor performance failures and delays.
−Removed: As a result of these various problems, we have had difficulties receiving necessary materials, components, other supplies and third-party services timely or at all, which have negatively impacted production flow in our factories, hindered our ability to perform on our commitments to customers and negatively affected our results of operations, financial condition and liquidity.
+Added: In 2023, global supply chain disruptions impacted our ability to procure raw materials, microelectronics, and certain commodities.
+Added: These disruptions were driven by supply chain market constraints and macroeconomic conditions, including inflation and labor market shortages.
+Added: Current geopolitical conditions, including conflicts and other causes of strained intercountry relations, as well as sanctions and other trade restrictive activities, are contributing to these issues.
+Added: In addition, current high inflation levels have increased material and component prices, labor rates, and supplier costs, and put pressure on our margins.
+Added: Credit market conditions, including higher interest rates and the availability of credit, have impacted some of our suppliers and subcontractors as well.
+Added: As a result of these procurement issues, the production flow in our factories has been negatively impacted, which has, in turn, hindered our ability to perform on our commitments to customers and negatively affected our results of operations, financial condition, and liquidity.
Our supply costs have increased due to the above factors.
−Removed: Continuing high inflation has exacerbated these increases and increased our operating costs.
−Removed: In addition, we are largely dependent upon foreign sources for certain raw materials, such as cobalt, tantalum, chromium, rhenium, nickel and titanium.
−Removed: Moreover, some of our single-source components are sourced from foreign countries.
+Added: In addition, we are largely dependent upon foreign sources for certain raw materials, such as cobalt, tantalum, chromium, rhenium, nickel, and titanium, and we rely on foreign suppliers as single-source suppliers of some components.
Some raw materials and components have been in the past sourced from areas now under sanctions, such as Russia, or are currently sourced from areas which are at risk of sanctions or other trade restrictive actions, such as China.
−Removed: We work continuously to mitigate the effects of these supply chain issues and risks, including providing raw materials and technical support to our suppliers and subcontractors, as well as providing them with access to our contract labor networks to augment supplier and subcontractor workforces;
−Removed: seeking alternate supply sources;
−Removed: increasing our inventory of available materials and parts;
−Removed: pursuing various cost reductions such as long-term agreements;
−Removed: and leveraging our raw materials supply contracts to apply our negotiated rates to our suppliers’ purchases.
The timing of the impacts of these supply chain risks and issues and our ability to mitigate them are uncertain and difficult to predict.
−Removed: However, we expect the current supply chain, labor availability and price issues, and their negative impacts on our business, to continue.
+Added: However, we expect the current supply chain, inflation, and price issues, and their negative impacts on our business, to continue into 2024.
In particular, we expect to experience prolonged delays for certain critical component parts and sub-systems.
−Removed: Furthermore, the existing supply chain and labor market issues could be compounded by other events, such as an economic downturn;
+Added: Furthermore, the existing supply chain issues could be compounded by other events, such as an economic downturn;
supplier capacity constraints for other reasons;
2 unchanged sentences
price increases for various reasons;
−Removed: worsening shortages of raw materials or commodities;
−Removed: and energy supply constraints, including as a result of war or other geopolitical actions, natural disaster (including the effects of climate change), health pandemic or other business continuity events, or transport and distribution issues, any of which could further negatively impact our ability to meet our commitments to customers or increase our operating costs and therefore incrementally affect our results of operations, financial condition and liquidity.
−Removed: Due to the nature of our products and services, a product safety failure or other failure affecting our or our customers’ or suppliers’ products or systems could seriously harm our business.
+Added: and worsening shortages of raw materials or commodities, including as a result of war or other geopolitical actions, natural disaster (including the effects of climate change), health pandemic or other business continuity events, or transport and distribution issues, any of which could further negatively impact our ability to meet our commitments to customers or increase our operating costs and therefore incrementally affect our results of operations, financial condition, and liquidity.
+Added: Due to the nature of our products and services, a product safety failure, quality issue or other failure affecting our or our customers’ or suppliers’ products or systems could seriously harm our business.
Our products and services are highly sophisticated and specialized, involve complex advanced technologies, are often integrated with third-party products and services, and are utilized for specific purposes that require precision, reliability, and durability.
Many of our products and services include both hardware and software that involve industrial machinery and intricate aviation and defense systems, including commercial and military jet engines, power and control systems, and other aircraft parts, air and missile defense systems, and military sensors and command and control systems.
−Removed: Technical, mechanical and other failures may occur from time to time, whether as a result of manufacturing or design defect, operational process or production issue attributable to us, our customers, suppliers, third party integrators or others.
+Added: Technical, mechanical, quality, electronic, and other failures may occur from time to time, whether as a result of manufacturing or design defect, operational process, or production issue attributable to us, our customers, suppliers, partners, third party integrators, or others.
+Added: Product design changes and updates could also have associated cost and schedule impacts.
In addition, our products could fail as a result of cyber-attacks, such as those that seize control and result in misuse or unintended use of our products, or other intentional acts.
−Removed: The impact of a catastrophic product or system failure or similar event affecting our or our customers’ or suppliers’ products or services could be significant, and could result in injuries
−Removed: or death, property damage, loss of strategic capabilities, loss of intellectual property, loss of reputation, and other significant negative effects.
−Removed: A product or system failure could lead to negative publicity, a diversion of management attention and damage to our reputation that could reduce demand for our products and services.
−Removed: It could also result in product recalls and product liability and warranty claims (including claims related to the safety or reliability of our products) and related expenses, other service, repair and maintenance costs, significant damages and other costs, including fines and other remedies and regulatory and environmental liabilities.
+Added: The impact of a catastrophic product or system failure or similar event affecting our or our customers’ or suppliers’ products or services could
+Added: be significant, and could result in injuries or death, property damage, loss of strategic capabilities, loss of intellectual property, loss of reputation, and other significant negative effects.
+Added: A product or system failure, or perceived failure, could lead to negative publicity, a diversion of management attention, and damage to our reputation that could reduce demand for our products and services.
+Added: It could also result in product recalls and product liability and warranty claims (including claims related to the safety or reliability of our products) and related expenses, other service, repair and maintenance costs, labor and material costs, customer support costs, significant damages, and other costs, including fines and other remedies, and regulatory and environmental liabilities.
We may also incur increased costs, delayed payments, reputational harm, or lost equipment or services revenue in connection with a significant issue with a third party’s product with which our products are integrated.
1 unchanged sentence
Any of the foregoing could have a material adverse effect on our competitive position, results of operations, financial condition, or liquidity.
+Added: In particular, as previously disclosed, Pratt & Whitney has determined that a rare condition in powder metal used to manufacture certain engine parts requires accelerated inspection of the PW1100 GTF fleet, which powers the A320neo family of aircraft.
+Added: This determination and corresponding fleet actions have significantly increased both the incremental number of PW1100 GTF engines that will need to be removed and the incremental number of shop visits necessary to perform the inspections as compared to estimates prior to this determination.
+Added: Actual and future estimated aircraft on ground levels for the A320neo family of aircraft have therefore increased.
+Added: As a result, we have and will continue to incur significant customer support and mitigation costs and significant labor, material, and related costs.
+Added: This matter has caused reputational harm and has negatively impacted, and will continue to impact, our results of operations and financial condition.
+Added: The financial impact of the powder metal issue is based on historical experience and is subject to various assumptions and judgments, including, without limitation, the number and expected timing of shop visits, inspection results and scope of work to be performed, turnaround time, availability of parts, available capacity at overhaul facilities, and outcomes of negotiations with impacted customers, and these assumptions are subject to variability.
+Added: Potential changes to these assumptions could have a material effect on the Company’s results of operations for the periods in which it is recognized.
+Added: In addition, other engine models within Pratt & Whitney’s fleet contain parts manufactured with affected powder metal.
+Added: The negative impacts to our company arising from the Powder Metal matter could increase if any other engine models are found to be materially impacted by this rare condition.
We depend on the recruitment and retention of qualified personnel, and our failure to attract, train, and retain such personnel could seriously harm our business.
1 unchanged sentence
Our defense business in particular requires qualified personnel with security clearances due to our classified programs.
−Removed: In addition, we experienced personnel reductions when the COVID-19 pandemic caused significant declines in demand for our commercial aerospace products and services, but current demand for our products and services across our businesses has created a significant need for us to hire additional and replacement personnel.
Moreover, a significant percentage of our current workforce is nearing or eligible for retirement.
To the extent that we lose experienced personnel in the future, it is critical that we develop other employees, hire new qualified personnel, and successfully manage the transfer of knowledge.
−Removed: Current macroeconomic, industry and labor market conditions have exacerbated an already highly competitive market for hiring and retaining employees with relevant qualifications and experience.
−Removed: There is an ongoing labor shortage, particularly for highly qualified personnel including engineers, skilled laborers and security clearance holders.
−Removed: Labor market trends also include high attrition and wage inflation, and some candidates and new personnel may have different expectations from our current workforce.
−Removed: As a result of the above factors, we have experienced, and expect to continue to experience, significant difficulties in hiring and retaining personnel with relevant qualifications and experience, which has negatively impacted, and may continue to negatively impact, our results of operations, financial condition and liquidity.
−Removed: In addition, certain existing personnel may be required to receive various security clearances and substantial training in order to work on certain programs or perform certain tasks.
+Added: We have experienced, and continue to experience, challenges hiring highly qualified personnel including engineers, skilled laborers, and security clearance holders.
+Added: We expect these difficulties to continue in the future.
+Added: In addition, the cost of labor remains high.
+Added: Some candidates and new personnel may have job-related expectations that differ from our current workforce and are inconsistent with our corporate culture.
+Added: With respect to existing personnel, some may become required to receive various security clearances and substantial training in order to work on certain programs or perform certain tasks.
Necessary security clearances may be delayed, which may impact our ability to perform on our U.S.
1 unchanged sentence
We also may not be successful in training or developing qualified personnel with the requisite relevant skills or security clearances.
−Removed: Loss of key employees, increased attrition for various reasons, failure to adequately train newly hired employees, delays in receiving required security clearances, or delays in hiring key personnel could also seriously harm our business.
−Removed: Moreover, we believe that a critical element of our ability to successfully attract, train and retain qualified personnel is our corporate culture, which we believe fosters innovation, collaboration, diversity and inclusion, and a focus on execution, all in an environment of high ethical standards.
+Added: Moreover, some of our employees are covered by collective bargaining agreements.
+Added: Historically, we have been able to renegotiate expiring agreements without experiencing significant disruptions to business operations.
+Added: However, the U.S.
+Added: labor environment has experienced shifts, and if we have additional challenges renegotiating agreements or if our employees pursue new collective representation, then we could experience additional costs and/or be subject to work stoppages.
+Added: Any of the above factors could seriously harm our business.
+Added: Moreover, we believe that a critical element of our ability to successfully attract, train, and retain qualified personnel is our corporate culture, which we believe fosters innovation, collaboration, diversity, equity, and inclusion, and a focus on execution, all in an environment of high ethical standards.
Our global operations may present challenges in maintaining these important aspects of our corporate culture, and a failure to maintain our corporate culture could negatively impact us.
1 unchanged sentence
To the extent any of our key personnel were to behave in a way that is inconsistent with our values, including with respect to product safety or quality, legal or regulatory compliance, financial reporting, or people management, we could experience a materially adverse impact to our reputation and our operating results.
−Removed: In addition, failure or perceived failure to meet increasing stakeholder expectations on environmental, social and governance (ESG) matters could harm our reputation and impact demand for our products and services.
−Removed: Our business and financial performance may be adversely affected by cyber-attacks on information technology infrastructure and products.
−Removed: Our business may be impacted by disruptions to our own or third-party information technology (IT) infrastructure, which could result from, among other causes, cyber-attacks on or failures of such infrastructure or compromises to its physical security.
−Removed: We also encounter attempts to infiltrate our products and services and sabotage or disable their use by our customers.
−Removed: Cybersecurity threats are evolving and include, but are not limited to, both attacks on our IT infrastructure and attacks on the IT infrastructure of our customers, suppliers, subcontractors and other third parties with whom we do business routinely, both on premises and in the cloud, attempting to gain unauthorized access to our confidential or other proprietary information, classified information, or information relating to our employees, customers and other third parties, or to disrupt our systems or the systems of third parties.
−Removed: Cybersecurity threats also include attacks targeting the security, integrity and/or availability of the hardware, software and information installed, stored or transmitted in our products, including after the purchase of those products and when they are incorporated into third-party products, facilities or infrastructure.
−Removed: We are also exposed to the risk of insider threat attacks.
−Removed: Any such attacks could disrupt our systems or those of third parties (including
−Removed: mission critical systems), impact business operations, result in unauthorized release of confidential or otherwise protected information, and corrupt our data or that of third parties.
−Removed: We have experienced cyber-based attacks, and due to the evolving threat landscape, may continue to experience them going forward, potentially with more frequency.
−Removed: The threats we face are continuous and evolving, and vary from attacks common to most industries to more advanced and persistent, highly organized adversaries, including nation states, which target us and other defense contractors.
−Removed: We continue to make investments and adopt measures designed to enhance our protection, detection, response, and recovery capabilities, and to mitigate potential risks to our technology, products, services and operations from potential cybersecurity threats.
−Removed: However, given the unpredictability, nature and scope of cyber-attacks, it is possible that we are unable to defend against all cyber attacks, that potential vulnerabilities could go undetected and persist in the environment for an extended period, or that we may otherwise be unable to mitigate customer losses and other potential consequences of these attacks.
−Removed: In addition, some products and services that we provide to customers, particularly those related to public security, may raise potential liabilities related to privacy and intellectual property.
−Removed: In some cases we must rely on the safeguards put in place by our customers, suppliers, subcontractors and other third parties to protect against and report cyber threats.
−Removed: We could potentially be subject to production downtimes, operational delays, other detrimental impacts on our operations or ability to provide products and services to our customers, the compromise of confidential information, intellectual property or otherwise protected information, misappropriation, destruction or corruption of data, security breaches, other manipulation or improper use of our or third-party systems, networks or products, financial losses from remedial actions, loss of business, or potential liability, penalties, fines and/or damage to our reputation.
−Removed: Any of these could have a material adverse effect on our competitive position, results of operations, financial condition or liquidity.
−Removed: Some of these risks may be heightened due to the Company and its suppliers and other third parties operating with a significant number of employees working remotely.
−Removed: Due to the evolving nature of such risks, the impact of any potential incident cannot be predicted.
−Removed: Further, our insurance coverage may not be adequate to cover all related costs and we may not otherwise be fully indemnified for them.
+Added: In addition, failure or
+Added: perceived failure to meet increasing stakeholder expectations on environmental, social, and governance (ESG) matters could harm our reputation and impact demand for our products and services.
Exports and imports of certain of our products are subject to various export control, sanctions, and import regulations and may require authorization from regulatory agencies of the U.S.
11 unchanged sentences
Munitions Import List, and we are required to obtain licenses and authorizations from the appropriate U.S.
−Removed: government agencies before selling these products outside of the U.S.
+Added: government agencies before exporting these products out of the U.S.
or importing these products into the U.S.
−Removed: foreign policy or foreign policy of other licensing jurisdictions may affect the licensing process or otherwise prevent us from engaging in business dealings with certain individuals, entities or countries.
−Removed: Any failure by us, our customers or our suppliers to comply with these laws and regulations could result in civil or criminal penalties, fines, seizure of our products, adverse publicity, restrictions on our ability to export or import our products, or the suspension or debarment from doing business with the U.S.
+Added: foreign policy or the foreign policy of other licensing jurisdictions may affect the licensing process or otherwise prevent us from engaging in business dealings with certain individuals, entities, or countries.
+Added: Any failure by us, our customers, or our suppliers to comply with these laws and regulations could result in civil or criminal penalties, fines, seizure of our products, adverse publicity, restrictions on our ability to engage in export or import transactions, or the suspension or debarment from doing business with the U.S.
Moreover, any changes in export control, sanctions, or import regulations may further restrict the export or import of our products or services, and the possibility of such changes requires constant monitoring to ensure we remain compliant.
−Removed: Our ability to obtain required licenses and authorizations on a timely basis or at all is subject to risks and uncertainties, including changing U.S.
−Removed: government laws, regulations or foreign policies, delays in Congressional action, or geopolitical and other factors.
+Added: Our ability to obtain required licenses and authorizations on a timely basis, or at all, is subject to risks and uncertainties, including changing laws, regulations, or foreign policies, delays in Congressional action, or geopolitical and other factors.
If we are not successful in obtaining or maintaining the necessary licenses or authorizations in a timely manner, our sales relating to those approvals may be prevented or delayed, and revenue and profit previously recognized may be reversed.
2 unchanged sentences
We could encounter threats to our physical security, including our facilities and personnel, and threats from workplace violence, civil unrest, terrorism, or similar acts, any of which could disrupt our business.
−Removed: In addition, our business, and the businesses of our suppliers, subcontractors and service providers and customers, could be disrupted by public health crises, such as pandemics and epidemics (including the COVID-19 pandemic), damaging weather or other acts of nature, cyber-attacks on IT infrastructure and products or other events outside of our control.
−Removed: Any such business disruption could subject us to production downtimes, operational delays, other detrimental impacts on our operations or ability to provide products and services to our customers, financial losses from remedial actions, the diversion of management’s attention and resources, or loss of business, any of which could have a material adverse effect on our competitive position, results of operations, financial condition or liquidity.
+Added: In addition, our business, and the businesses of our suppliers, subcontractors, service providers, and customers, could be disrupted by public health crises, such as pandemics and epidemics (including a resurgence of the Coronavirus Disease 2019 (COVID-19) pandemic), and governmental, business, and individual actions taken in response, damaging weather or other acts of nature, cyber-attacks on IT infrastructure and products, or other events outside of our control.
+Added: Any such business disruption could subject us to production downtimes, operational delays, supply chain challenges, other detrimental impacts on our operations or ability to provide products and services to our customers, decreased demand for our products, decreased defense budgets, financial losses from remedial actions, the diversion of management’s attention and resources, or loss of business, any of which could have a material adverse effect on our competitive position, results of operations, financial condition, or liquidity.
The impact of any such business disruption is difficult to predict.
12 unchanged sentences
Moreover, our efforts to protect intellectual property and proprietary rights may not be sufficient.
−Removed: We cannot be sure that our pending patent applications will result in the issuance of patents to us, that patents issued to or licensed by us in the past or in the future will not be challenged or circumvented by competitors, or that these patents will be found to be valid or sufficiently broad to preclude our competitors from introducing technologies similar to those covered by our patents and patent applications.
+Added: We cannot be sure that our pending patent applications will result in the issuance of patents to us, that patents issued to or licensed by us in the past or in the future will not be challenged or circumvented by competitors, or that these patents will be found to be valid or
+Added: sufficiently broad to preclude our competitors from introducing technologies similar to those covered by our patents and patent applications.
Our ability to protect and enforce our intellectual property rights may be limited in certain countries outside the U.S.
13 unchanged sentences
For instance, if we or one of our business units were charged with wrongdoing in connection with a U.S.
−Removed: government investigation (including fraud, or violation of certain environmental or export laws, as further described below), the U.S.
+Added: government investigation (including fraud, or violation of certain environmental, FCPA, and other anti-bribery and anti-corruption laws, or export laws, as further described below), the U.S.
government could suspend us from bidding on or receiving awards of new U.S.
13 unchanged sentences
government, including DCMA claims to recover payments for alleged noncompliance with cost accounting standards.
−Removed: In some cases, the Department of Justice (DOJ) has convened grand juries to
−Removed: investigate possible irregularities in our costs.
+Added: In some cases, the Department of Justice (DOJ) has conducted investigations or convened grand juries to investigate possible irregularities in our costs.
Any costs found to be improperly allocated to a specific contract will not be reimbursed by the U.S.
5 unchanged sentences
We are subject to a variety of litigation and legal compliance risks.
−Removed: These risks relate to, among other things, product safety and reliability, personal injuries, intellectual property rights, contract-related claims, government contracts, taxes, environmental matters, export control, employment matters, competition laws and laws governing improper business practices.
+Added: These risks relate to, among other things, product safety and reliability, personal injuries, intellectual property rights, contract-related claims, government contracts, taxes, environmental matters, export control, sanctions, employment matters, securities laws, competition laws, and laws governing improper business practices.
We or one of our businesses could be charged with wrongdoing as a result of such matters.
7 unchanged sentences
Uncertainty relating to laws or regulations may also affect how we conduct our operations and structure our investments and could limit our ability to enforce our rights.
−Removed: We use hazardous substances and generate hazardous wastes in our operations.
+Added: We use hazardous substances and generate hazardous wastes in certain of our operations.
As a result, we are subject to potentially material liabilities related to personal injuries or property damage that may be caused by hazardous substance releases and exposures.
−Removed: Personal injury lawsuits may involve individual and purported class actions alleging that contaminants originating from our current or former products or operating facilities caused or contributed to medical conditions, including cancers incurred by employees, former employees, third-parties’ employees or residents in the area, and environmental damage or diminution of real estate values.
+Added: Personal injury lawsuits may involve individual and purported class actions alleging that contaminants originating from our current or former products or operating facilities caused or contributed to medical conditions, including cancers or other illnesses incurred by employees, former employees, third-parties’ employees, or residents in the area, and environmental damage or diminution of real estate values.
For example, we are investigating and remediating contamination related to past practices at a number of properties and, in some cases, have been named as a defendant in related “toxic tort” claims.
13 unchanged sentences
In addition, new laws, regulations, or governmental policies, sudden changes in the interpretation and enforcement of existing laws and regulations, the discovery of previously unknown contamination, or the imposition of new clean-up standards could require us to incur additional costs in the future that would have a negative effect on our results of operations, financial condition, and liquidity.
−Removed: In addition, the FCPA and other anti-bribery and -corruption laws generally prohibit companies and their intermediaries from making improper payments to U.S.
+Added: In addition, the FCPA and other anti-bribery and anti-corruption laws generally prohibit companies and their intermediaries from making improper payments to U.S.
officials for the purpose of obtaining or retaining business.
4 unchanged sentences
Certain of our customer relationships outside of the U.S.
−Removed: are with governmental entities and are, therefore, subject to the FCPA and other anti-bribery and -corruption laws, including the anti-bribery and -corruption laws of non-U.S.
−Removed: Our policies mandate compliance with these anti-bribery and -corruption laws.
+Added: are with governmental entities and are, therefore, subject to the FCPA and other anti-bribery and anti-corruption laws, including the anti-bribery and anti-corruption laws of non-U.S.
+Added: Our policies mandate compliance with these anti-bribery and anti-corruption laws.
Despite meaningful measures that we undertake to ensure lawful conduct, which include training and internal control policies, these measures may not always prevent violations of the FCPA or similar laws.
−Removed: We have been subject to regulatory investigations for alleged violations of anti-bribery and -corruption laws, and could be subject to such investigations in the future, which could result in criminal and civil penalties, disgorgement, further changes or enhancements to our procedures, policies and controls, personnel changes or other remedial actions.
+Added: We have been subject to regulatory investigations for alleged violations of anti-bribery and anti-corruption laws, and could be subject to such investigations in the future, which could result in criminal and civil penalties, disgorgement, further changes or enhancements to our procedures, policies and controls, personnel changes, or other remedial actions.
Violations of these laws, or allegations of such violations, could disrupt our operations, cause reputational harm, involve significant management attention, and result in a material adverse effect on our competitive position, results of operations, financial condition, or liquidity.
Cybersecurity and data security and protection laws and regulations are evolving and present increasing compliance challenges, which may increase our costs, affect our competitiveness, cause reputational harm, and expose us to substantial fines or other penalties.
−Removed: Our business and financial performance may be adversely affected by climate change, including changes in regulations, customer demand, technologies and extreme weather.
+Added: Our business and financial performance may be adversely affected by climate change, including regulations, customer demand, technologies, and extreme weather.
Our business may be impacted by climate change and governmental and industry actions taken in response, which present short, medium, and long-term risks to our business and financial condition.
−Removed: Changes in environmental and climate-related laws or regulations, including regulations on greenhouse gas emissions, carbon pricing, energy taxes, product efficiency standards, mandatory disclosure obligations and U.S.
+Added: Current and emerging environmental and climate-related laws, regulations, or other policies, including regulations on greenhouse gas emissions, carbon pricing, energy taxes, product efficiency standards, mandatory disclosure obligations, and U.S.
government procurement requirements, could increase our operational and compliance expenditures and those of our suppliers, including increased energy and raw materials costs, and costs associated with manufacturing changes, and lead to new or additional investments in product designs and facility upgrades.
−Removed: In addition, we continue to see ever-increasing demands for offerings focused on addressing climate change, transitioning to lower emission technologies, including low to no carbon products and services, the use of alternative energy sources and other sustainable aviation technologies, and climate adaptation products and services.
−Removed: Customers, shareholders and institutional investors continue to increase their focus on ESG, including our environmental sustainability practices and commitments with respect to our operations, products and suppliers.
−Removed: As a result, we anticipate that we will need to make additional investments in new technologies and capabilities and devote additional management and other resources in response to the foregoing.
−Removed: We may not realize, on a timely basis or at all, the anticipated benefits of these investments and actions for a variety of reasons, including technological challenges, evolving government and customer requirements and our ability to anticipate them and develop in-demand technologies on a timely basis, and other risks related to the development of advanced technologies described above.
+Added: In addition, we continue to see ever-increasing demands for offerings focused on addressing climate change, transitioning to lower emission technologies, including low to no carbon products and services, the use of alternative energy sources, and other sustainable aviation technologies, and climate monitoring and adaptation products and services.
+Added: Customers, shareholders, and institutional investors are focused on ESG, including our environmental sustainability practices and commitments with respect to our operations, products, and suppliers.
+Added: As a result, we continue to make additional investments in new technologies and capabilities, and devote management and other resources in response to the foregoing.
+Added: We may not realize, on a timely basis or at all, the anticipated benefits of these investments and
+Added: actions for a variety of reasons, including technological challenges, evolving government and customer requirements, and our ability to anticipate them and develop in-demand technologies on a timely basis, and other risks related to the development of advanced technologies described above.
In addition, certain technologies will be dependent upon government action, such as investments in infrastructure, creating appropriate market incentives, and making certain raw materials available for development of certain technologies.
9 unchanged sentences
FINANCIAL, TAX, AND INSURANCE RELATED RISKS
+Added: Our debt levels and related debt service obligations could negatively impact our intended capital allocation, and we may be unable to obtain debt at competitive rates, on commercially reasonable terms, or in sufficient amounts.
+Added: We have outstanding debt and other financial obligations, and we depend, in part, upon the issuance of debt to fund our business requirements.
+Added: In connection with the accelerated share repurchase (ASR) transactions, we incurred $10 billion of long-term debt.
+Added: The increased indebtedness of RTX in connection with the ASR transactions may have various negative impacts on our business.
+Added: These include shifting significant cash flow from operations to debt principal and interest payments and ASR transactions costs, which will reduce funds we have available for other purposes, such as acquisitions, research and development, and other reinvestments in our businesses, and dividends and common stock repurchases.
+Added: It could also reduce our flexibility in planning for, or reacting to, changes in our business and market conditions.
+Added: It exposes us to interest rate and credit market risk at the time of refinancing outstanding debt, as well as these same risks on our commercial paper obligations, which are issued at variable rates.
+Added: In addition, if we require additional funding in order to fund outstanding financing commitments or meet other business requirements, a number of factors could cause us to incur increased borrowing costs and to have greater difficulty accessing public and private markets for debt, any of which may adversely affect our ability to fund our business requirements.
+Added: These factors include disruptions or declines in the global capital markets and/or a decline in our financial performance, outlook, or credit ratings.
+Added: As previously disclosed, in August 2023, S&P Global downgraded our credit rating from A-/negative to BBB+/stable, and our credit rating with Moody’s Investors Service remained at Baa1/stable.
+Added: Subsequently, in October 2023, both S&P Global and Moody’s Investors Service outlook changed from stable to negative when we entered into the ASR transactions.
+Added: Further downgrades of our credit ratings may result, if we are unable to meet operating expectations and our cash flow expectations, or to the extent that we are unable to reduce our outstanding debt according to planned timeframes.
We use estimates in accounting for many of our programs, and changes in our estimates could adversely affect our future financial results.
12 unchanged sentences
Cost estimates may also include the estimated cost of satisfying our industrial cooperation agreements, sometimes in the form of either offset obligations or ICIP agreements, required under certain contracts.
+Added: as previously disclosed, Pratt & Whitney has determined that a rare condition in powder metal used to manufacture certain engine parts requires accelerated inspection of the PW1100 GTF fleet, which powers the A320neo family of aircraft.
+Added: This determination and corresponding fleet actions have significantly increased both the incremental number of PW1100 GTF engines that will need to be removed and the incremental number of shop visits necessary to perform the inspections as compared to estimates prior to this determination.
+Added: Actual and future estimated aircraft on ground levels for the A320neo family of aircraft have therefore increased.
+Added: The financial impact of the powder metal issue is based on historical experience and is subject to various assumptions and judgments, including, without limitation, the number and expected timing of shop visits, inspection results and scope of work to be performed, turnaround time, availability of parts, available capacity at overhaul facilities, and outcomes of negotiations with impacted customers, and these assumptions are subject to variability.
Because of the significance of management’s judgments and estimation processes described above, it is likely that materially different amounts could be recorded if we used different assumptions or if the underlying circumstances were to change.
−Removed: underlying assumptions, circumstances or estimates may adversely affect our future results of operations and financial condition.
+Added: Changes in underlying assumptions, circumstances, or estimates may adversely affect our future results of operations and financial condition.
Significant changes in key estimates and assumptions with respect to our retirement plans, such as discount rate, expected return on plan assets (EROA), and other actuarial factors, could affect our future earnings, equity, and pension contributions.
2 unchanged sentences
They may change significantly due to changes in economic, legislative, regulatory, and/or demographic experience or circumstances.
−Removed: Changes in our assumptions or actual experience that differs from these assumptions could impact our pension and postretirement net periodic benefit (income) expense, the plans’ funded status, and/or the required cash contributions to such plans, which could negatively impact our results of operations, financial condition or liquidity.
+Added: Changes in our assumptions or actual experience that differs from these assumptions, as well as management changes to retirement plans, could impact our pension and postretirement net periodic benefit (income) expense, the plans’ funded status, and/or the required cash contributions to such plans, which could negatively impact our results of operations, financial condition, or liquidity.
Our plan assets are invested in accordance with our investment management objectives and are subject to market volatility and other conditions.
9 unchanged sentences
The global and diverse nature of our operations means that these risks will continue to exist and additional examinations, proceedings, and contingencies will arise from time to time.
−Removed: Our competitive position, results of operation, financial condition or liquidity may be affected by the outcome of examinations, proceedings and other contingencies that cannot be predicted with certainty.
+Added: Our results of operations, financial condition, or liquidity could be negatively impacted by any of the above factors, the outcome of any one of which cannot be predicted with certainty.
Goodwill and other intangible assets represent a significant portion of our assets, and any impairment of these assets could negatively impact our results of operations and financial condition.
5 unchanged sentences
Future determinations of significant impairments of goodwill or indefinite-lived intangible assets as a result of an impairment test or accelerated amortization of finite-lived intangible assets could have a negative impact on our results of operations and financial condition.
−Removed: We may be unable to obtain debt at competitive rates, on commercially reasonable terms or in sufficient amounts.
−Removed: We depend, in part, upon the issuance of debt to fund our business requirements.
−Removed: If we require additional funding in order to meet our business requirements, a number of factors could cause us to incur increased borrowing costs and to have greater difficulty accessing public and private markets for debt.
−Removed: These factors include disruptions or declines in the global capital markets and/or a decline in our financial performance, outlook or credit ratings.
−Removed: The occurrence of any or all of these events may adversely affect our ability to fund our business requirements.
Quarterly cash dividends and share repurchases are subject to uncertainties and may affect our common stock price .
Quarterly cash dividends and share repurchases under our share repurchase program generally constitute components of our capital allocation strategy, which we fund through a combination of operating free cash flow, borrowings, and proceeds from divestitures.
−Removed: However, we are not required to declare dividends or make any share repurchases under our share repurchase program.
+Added: However, we are not required to declare dividends or make any share repurchases under our share repurchase program, other than with respect to the final settlement pursuant to the ASR transactions.
Dividends and share repurchases may be discontinued, accelerated, suspended, or delayed at any time without prior notice.
−Removed: Even if not discontinued, the amount of such dividends and repurchases may be changed, and the amount, timing and frequency of such dividends and repurchases may vary from historical practice or from the company’s stated expectations.
+Added: Even if not discontinued, the amount of such dividends and repurchases may be changed, and the amount, timing, and frequency of such dividends and repurchases may
+Added: vary from historical practice or from the company’s stated expectations.
Decisions with respect to dividends and share repurchases are subject to the discretion of our Board of Directors and are based on a variety of factors.
Important factors that could cause us to discontinue, limit, suspend, increase, or delay our quarterly cash dividends or share repurchases include market conditions, the price of our common stock, the nature and timing of other investment opportunities, changes in our business strategy, the terms of our financing arrangements, our outlook as to the ability to obtain financing at attractive rates, the impact on our credit ratings, the availability of domestic cash, and overall business expectations.
−Removed: The reduction or elimination of our cash dividend, or suspension or elimination of our share repurchase
−Removed: program could adversely affect the market price of our common stock.
+Added: The reduction or elimination of our cash dividend, or suspension or elimination of our share repurchase program could adversely affect the market price of our common stock.
Additionally, there can be no assurance that any share repurchases will enhance shareowner value because the market price of our common stock may decline below the levels at which we repurchased shares of common stock, and short-term stock price fluctuations could reduce the program’s effectiveness.
+Added: “Market for Registrants Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities” in this Form 10-K for a description of our share repurchase program and past share repurchases, including our ASR transactions.
We face certain significant risk exposures and potential liabilities that may not be adequately covered by indemnity or insurance.
10 unchanged sentences
In order to operate more effectively and efficiently, from time to time we undertake strategic and other operational initiatives.
−Removed: For example, we are undergoing a significant, multi-year digital transformation initiative to improve our business and reduce costs.
+Added: For example, we are undergoing a significant, multi-year digital transformation initiative to improve our business, modernize operations, and reduce costs.
Under this initiative, we are leveraging digital capabilities throughout the way in which we conduct our business and provide our products and services to customers, including how we design, build, and maintain our products and services.
2 unchanged sentences
Other initiatives include the pursuit of advanced technologies and new business acquisitions and subsequent integrations.
+Added: For example, we are investing in the integration of artificial intelligence technologies into our processes and business operations.
+Added: Moreover, effective July 1, 2023, we realigned our current business segment structure from four to three business segments.
We also implement restructuring plans from time to time.
−Removed: For example, we recently announced our plans to reorganize our current business segment structure from four to three business segments in the second half of 2023.
Restructuring activities include or may result in workforce reductions, global facility reductions, procurement cost reduction activities, legal entity and operational reorganizations, and other cost reduction initiatives.
5 unchanged sentences
Any of the above factors may impair our ability to achieve anticipated benefits, or otherwise harm our business, or have a material adverse effect on our competitive position, results of operations, financial condition, or liquidity.
−Removed: We may be unable to successfully complete the integration of the legacy businesses of United Technologies Corporation (UTC) and Raytheon Company and realize the anticipated benefits of the Raytheon merger.
−Removed: The ultimate success of the Raytheon merger continues to depend, in part, on our ability to successfully combine and integrate UTC and Raytheon Company’s legacy businesses, and realize the anticipated benefits, including synergies, cost savings, innovation and technological opportunities (including technology-driven revenue synergies) and operational efficiencies from the Raytheon merger in a manner that does not materially disrupt existing customer, supplier and employee relations and does not result in decreased revenues due to losses of, or decreases in orders by, customers.
−Removed: We continue to be exposed to risks associated with our ability to identify and achieve revenue synergy opportunities among the legacy businesses.
−Removed: In addition, we may be unable to consolidate all of the corporate and administrative infrastructures and eliminate all of the duplicative operations which we intend, and continue to be at risk for unanticipated issues in integrating information technology, communications and other systems.
−Removed: Any one of these challenges could result in delays, increased costs, decreases in the amount of expected revenues, reduced expected cash generation, and diversion of management’s time and energy, which could materially affect our financial condition, results of operations and liquidity.
−Removed: If we fail to manage potential future acquisitions, investments, divestitures, joint ventures and other transactions successfully, these activities could adversely affect our future financial results.
−Removed: In pursuing our business strategies, we continually review, evaluate and consider potential investments, acquisitions, divestitures, joint ventures and other teaming and
−Removed: collaborative arrangements.
+Added: Failure to successfully manage potential future acquisitions, investments, divestitures, joint ventures, and other transactions, and other risks associated with these activities could adversely affect our future financial results.
+Added: In pursuing our business strategies, we continually review, evaluate, and consider potential investments, acquisitions, divestitures, joint ventures, and other teaming and collaborative arrangements.
We undertake to identify opportunities that will complement our existing products and services or customer base, as well as expand our offerings and business opportunities into new areas that naturally extend from our core capabilities.
−Removed: In evaluating such transactions, we are required to make difficult judgments regarding the value of business opportunities, technologies and other assets, and the risks and cost of potential liabilities.
+Added: In evaluating such transactions, we are required to make difficult judgments
+Added: regarding the value of business opportunities, technologies and other assets, and the risks and cost of potential liabilities.
Further, these transactions involve certain other risks and uncertainties including:
(1) the risks involved with entering new markets; (2) the difficulty in integrating newly-acquired businesses and managing or monitoring other collaborative business arrangements; (3) the complexity of separating a portion of our business to enable a divestiture;
−Removed: (4) challenges and failures in achieving strategic objectives and other expected benefits, which may result in certain liabilities to us for guarantees and other commitments; (5) unidentified issues not discovered in RTC’s due diligence; (6) the diversion of our attention and resources from our operations and other initiatives;
+Added: (4) challenges and failures in achieving strategic objectives and other expected benefits, which may result in certain liabilities to us for guarantees and other commitments; (5) the risk that regulatory authorities may deny our proposed transactions, or may impose on those transactions conditions that undermine the strategic rationale, reduce the financial benefit of, or jeopardize the consummation of those transactions;
+Added: (6) unidentified issues not discovered in RTX’s due diligence; (7) the diversion of our attention and resources from our operations and other initiatives;
(8) the potential impairment of acquired assets; (9) the performance of underlying products, capabilities, or technologies; and (10) the potential loss of key employees and customers of acquired businesses.
In addition, future transactions may impact our deployment of capital, including dividends, stock repurchases, pension contributions, and investments.
+Added: In particular, if we are unable to complete the pending divestitures of Collins’ actuation and flight controls business and/or Raytheon’s Cybersecurity, Intelligence and Services business within our expected timeframes or at all, we may be unable to reduce our outstanding debt according to planned timeframes.
If either distribution of the stock of Carrier or Otis, together with certain related transactions, were to fail to qualify as a transaction that is generally tax-free, including as a result of subsequent acquisitions of our stock (including pursuant to the Raytheon merger), we could be subject to significant tax liabilities.
−Removed: On April 3, 2020, UTC completed the Separation Transactions.
−Removed: UTC distributed all of the outstanding shares of Carrier common stock and all of the outstanding shares of Otis common stock to UTC shareowners who held shares of UTC common stock as of the close of business on March 19, 2020, the record date for the distributions (the Distributions) effective at 12:01 a.m., Eastern Time, on April 3, 2020.We received (1) a private letter ruling from the Internal Revenue Service (IRS) regarding certain U.S.
+Added: On April 3, 2020, United Technologies Corporation (UTC) completed the separation of UTC’s business into three independent, publicly traded companies (UTC, Carrier Global Corporation (Carrier) and Otis Worldwide Corporation (Otis)) (the Separation Transactions).
+Added: UTC distributed all of the outstanding shares of Carrier common stock and all of the outstanding shares of Otis common stock to UTC shareowners who held shares of UTC common stock as of the close of business on March 19, 2020, the record date for the distributions (the Distributions) effective at 12:01 a.m., Eastern Time, on April 3, 2020.
+Added: We received (1) a private letter ruling from the Internal Revenue Service (IRS) regarding certain U.S.
federal income tax matters relating to the Separation Transactions and Distributions and (2) an opinion of outside counsel regarding the qualification of certain elements of the Distributions under Section 355 of the Code.
12 unchanged sentences
The amount of any such taxes for which we would be responsible may be significant, and if we were unable to obtain indemnification payments from Carrier or Otis to which we are entitled under the tax matters agreement and/or other agreements entered into in connection with the Separation Transactions and the Distributions, we would incur significant losses.
−Removed: UNRESOLVED STAFF COMMENTS
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.