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Item 1. Financial Statements

2024-04-23 compared with 2023-10-24 · 240 added, 399 removed, 616 unchanged (51% of the section changed)

3 unchanged sentences

CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS

Quarter Ended September 30, Nine Months Ended September 30,

Quarter Ended March 31,

(dollars in millions, except per share amounts) 2024 2023

9 unchanged sentences

Other income, net 372 88

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

Operating profit 1,870 1,687

Non-operating expense (income), net:

2 unchanged sentences

Total non-operating expense (income), net 19 ( 129 )

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

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

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

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

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

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

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

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

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

Loss from discontinued operations — — — ( 0.02 )

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

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

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

Loss from discontinued operations — — — ( 0.01 )

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

Income before income taxes 1,851 1,816

Income tax expense 108 335

Net income 1,743 1,481

Noncontrolling interest in subsidiaries’ earnings 34 55

Net income attributable to common shareowners $ 1,709 $ 1,426

Earnings Per Share attributable to common shareowners:

Basic $ 1.29 $ 0.98

Diluted 1.28 0.97

See accompanying Notes to Condensed Consolidated Financial Statements

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AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (LOSS)

Quarter Ended September 30, Nine Months Ended September 30,

CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

Quarter Ended March 31,

(dollars in millions) 2024 2023

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

Net income $ 1,743 $ 1,481

Other comprehensive income (loss), before tax:

5 unchanged sentences

Other comprehensive income (loss), net of tax ( 216 ) 29

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

Comprehensive income 1,527 1,510

Comprehensive income attributable to noncontrolling interest 34 55

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

Comprehensive income attributable to common shareowners $ 1,493 $ 1,455

See accompanying Notes to Condensed Consolidated Financial Statements

2 unchanged sentences

CONDENSED CONSOLIDATED BALANCE SHEET

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

(dollars in millions) March 31, 2024 December 31, 2023

Current Assets

44 unchanged sentences

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

Nine Months Ended September 30,

Quarter Ended March 31,

(dollars in millions) 2024 2023

Operating Activities:

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

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

Net income $ 1,743 $ 1,481

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

Depreciation and amortization 1,059 1,034

2 unchanged sentences

Net periodic pension and other postretirement income ( 338 ) ( 388 )

Gain on sale of Cybersecurity, Intelligence and Services business, net of transaction costs

Accounts receivable 431 ( 962 )

5 unchanged sentences

Other operating activities, net ( 15 ) ( 68 )

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

Net cash flows provided by (used in) operating activities 342 ( 863 )

Investing Activities:

Capital expenditures ( 467 ) ( 520 )

Investments in businesses — ( 66 )

Dispositions of businesses, net of cash transferred 1,283 —

Customer financing assets receipts, net 41 25

Increase in other intangible assets ( 163 ) ( 154 )

1 unchanged sentence

Other investing activities, net 41 108

Net cash flows used in investing activities from continuing operations ( 2,061 ) ( 1,891 )

Net cash flows provided by (used in) investing activities 693 ( 579 )

Financing Activities:

Issuance of long-term debt 2,974 —

Proceeds from long-term debt — 2,971

Repayment of long-term debt ( 950 ) —

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Other financing activities, net ( 210 ) ( 118 )

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

Net cash flows (used in) provided by financing activities ( 2,007 ) 1,096

Effect of foreign exchange rate changes on cash and cash equivalents ( 8 ) 1

8 unchanged sentences

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

Quarter Ended September 30, Nine Months Ended September 30,

Quarter Ended March 31,

(dollars in millions, except per share amounts;

3 unchanged sentences

Common stock plans activity 53 92

Purchase of subsidiary shares from noncontrolling interest, net — — ( 1 ) ( 13 )

Ending balance 37,108 38,031

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Beginning balance 52,154 52,269

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

Net income attributable to common shareholders 1,709 1,426

Dividends on common stock ( 769 ) ( 790 )

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Dividends attributable to noncontrolling interest ( 31 ) ( 44 )

Purchase of subsidiary shares from noncontrolling interest, net — — — ( 19 )

Disposition of noncontrolling interest, net — ( 3 )

Capital contributions — — — 6

Ending balance 1,615 1,552

Equity at September 30

Equity at March 31

$ 62,100 $ 74,347

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Basis of Presentation

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

The Condensed Consolidated Financial Statements at March 31, 2024 and for the quarters ended March 31, 2024 and 2023 are unaudited, and in the opinion of management include adjustments of a normal recurring nature necessary for a fair statement of the results for the interim periods.

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

The financial information included herein should be read in conjunction with the financial statements and notes in our 2023 Annual Report on Form 10-K.

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

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

Raytheon follows a 4-4-5 fiscal calendar while Collins Aerospace (Collins) and Pratt & Whitney use a quarter calendar end.

Throughout this Quarterly Report on Form 10-Q, when we refer to the quarters ended September 30, 2023 and 2022 with respect to Raytheon, we are referring to their October 1, 2023 and October 2, 2022 fiscal quarter ends, respectively.

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

Organizational Structure.

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

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

Collins Aerospace, Pratt & Whitney, and Raytheon.

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

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

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

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

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

Prior period information has been recast to conform to our current period presentation.

Raytheon follows a 4-4-5 fiscal calendar while Collins Aerospace (Collins) and Pratt & Whitney use a quarter calendar end.

Throughout this Quarterly Report on Form 10-Q, when we refer to the quarters ended March 31, 2024 and 2023 with respect to Raytheon, we are referring to their March 31, 2024 and April 2, 2023 fiscal quarter ends, respectively.

Pratt & Whitney Powder Metal Matter.

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

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 PW1100G-JM (PW1100) Geared Turbofan (GTF) fleet, which powers the A320neo family of aircraft (A320neo) (herein referred to as the “Powder Metal Matter”).

See “Note 16:

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Russia Sanctions.

In response to the Russian military’s invasion of Ukraine on February 24, 2022, the U.S.

government and the governments of various jurisdictions in which we operate, including Canada, the United Kingdom, the European Union, and others, 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.

and other jurisdictions in which we operate, including certain members of the Company’s management team and Board of Directors.

These government measures, among other limitations, restrict transactions involving various Russian banks and financial institutions and impose enhanced export controls limiting transfers of various goods, software, and technologies to and from Russia, including broadened export controls specifically targeting the aerospace sector.

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

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

In response to Russia’s invasion of Ukraine, the U.S.

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.

As a result of the Canadian government’s imposition of sanctions in February 2024, which included U.S.- and German-based Russian-owned entities from which we source titanium for use in our Canadian operations, we recorded charges of $ 175 million in the first quarter of 2024 within our Collins segment.

These charges are primarily related to the recognition of unfavorable purchase commitments and an impairment of contract fulfillment costs that are no longer recoverable as a result of initiating alternative titanium sources.

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

Coronavirus Disease 2019 (COVID-19) Pandemic.

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

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

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

however, the actual financial impact is highly uncertain and subject to a wide range of factors and future developments.

Acquisitions, Dispositions, Goodwill, and Intangible Assets

Acquisitions and Dispositions

Dispositions.

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

On March 29, 2024, we completed the sale of our Cybersecurity, Intelligence and Services (CIS) business within our Raytheon segment for proceeds of approximately $ 1.3 billion in cash, resulting in an aggregate pre-tax gain, net of transaction and other related costs, of $ 0.4 billion ($ 0.2 billion after tax), primarily recognized in Other income, net within the Condensed Consolidated Statement of Operations.

As previously disclosed, on July 20, 2023, we entered into a definitive agreement to sell the actuation and flight control business within our Collins segment to Safran S.A.

for gross proceeds of approximately $ 1.8 billion.

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

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

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

On November 16, 2023, the Italian government notified RTX that it has denied Safran’s proposed acquisition of the portion of the Collins business conducted by Microtecnica S.r.l.

RTX and Safran have both appealed that decision to the relevant regional court in Italy, and continue to evaluate additional options in response to the Italian government’s decision.

Goodwill and Intangible Assets

Changes in our goodwill balances for the quarter ended March 31, 2024 were as follows:

(dollars in millions) Balance as of December 31, 2023 Acquisitions and Divestitures Foreign Currency Translation and Other Balance as of March 31, 2024

Collins Aerospace $ 33,135 $ — $ ( 57 ) $ 33,078

4 unchanged sentences

Total $ 53,699 $ — $ ( 55 ) $ 53,644

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

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

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

Intangible Assets.

Identifiable intangible assets are comprised of the following:

September 30, 2023 December 31, 2022

March 31, 2024 December 31, 2023

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

7 unchanged sentences

Total $ 48,827 $ ( 13,867 ) $ 48,757 $ ( 13,358 )

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

Amortization of intangible assets for the quarters ended March 31, 2024 and 2023 was $ 526 million and $ 509 million, respectively.

The following is the expected amortization of intangible assets for the remainder of 2024 through 2029:

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Earnings Per Share

Quarter Ended September 30, Nine Months Ended September 30,

Quarter Ended March 31,

(dollars and shares in millions, except per share amounts) 2024 2023

Net income (loss) attributable to common shareowners:

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

Loss from discontinued operations — — — ( 19 )

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

Net income attributable to common shareowners $ 1,709 $ 1,426

Basic weighted average number of shares outstanding 1,329.4 1,462.2

1 unchanged sentence

Diluted weighted average number of shares outstanding 1,337.3 1,474.2

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

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

Loss from discontinued operations — — — ( 0.02 )

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

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

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

Loss from discontinued operations — — — ( 0.01 )

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

Earnings Per Share attributable to common shareowners:

Basic $ 1.29 $ 0.98

Diluted 1.28 0.97

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

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

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

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

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

For the quarters ended March 31, 2024 and 2023, the number of stock awards excluded from the computation was 15.3 million and 4.1 million, respectively.

Changes in Contract Estimates at Completion

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For significant contracts, we review our EACs more frequently.

Due to the nature of the work required to be performed on many of the Company’s performance obligations, the estimation of total revenue and cost at completion is complex, subject to many variables, and requires significant judgment by management on a contract by contract basis.

Due to the nature of the work required to be performed on many of the Company’s performance obligations, the estimation of total revenue and cost at completion is complex, subject to many inputs, and requires significant judgment by management on a contract by contract basis.

As part of this process, management reviews information including, but not limited to, any outstanding key contract matters, progress towards completion and the related program schedule, identified risks and opportunities, and the related changes in estimates of revenues and costs.

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

Changes in estimates of net sales, cost of sales, and the related impact to operating profit on contracts recognized over time are recognized on a cumulative catch-up basis, which recognizes the cumulative effect of the profit changes on current and prior

periods based on a performance obligation’s percentage of completion in the current period.

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

1 unchanged sentence

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

Quarter Ended September 30, Nine Months Ended September 30,

Quarter Ended March 31,

(dollars in millions, except per share amounts) 2024 2023

Total net sales $ ( 18 ) $ ( 40 )

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

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

Operating profit ( 162 ) ( 124 )

Income attributable to common shareowners (1)

( 128 ) ( 98 )

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

Diluted earnings per share attributable to common shareowners (1)

$ ( 0.10 ) $ ( 0.07 )

3 unchanged sentences

Accounts receivable, net consisted of the following:

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

(dollars in millions) March 31, 2024 December 31, 2023

Accounts receivable $ 10,600 $ 11,154

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Contract Assets and Liabilities

Contract assets reflect revenue recognized and performance obligations satisfied in advance of customer billing.

Contract assets reflect revenue recognized and performance obligations satisfied in advance of customer billings.

Contract liabilities relate to payments received in advance of the satisfaction of performance under the contract.

1 unchanged sentence

Total contract assets and contract liabilities were as follows:

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

(dollars in millions) March 31, 2024 December 31, 2023

Contract assets $ 13,104 $ 12,139

1 unchanged sentence

Net contract liabilities $ ( 4,015 ) $ ( 5,044 )

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

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

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

As of September 30, 2023, our Contract liabilities include approximately $ 390 million of advance payments received from a Middle East customer on contracts for which we no longer believe we will be able to execute on or obtain required regulatory approvals.

Contract assets increased $ 965 million during the quarter ended March 31, 2024 primarily due to sales in excess of billings on certain contracts at Pratt & Whitney and Raytheon.

We recognized revenue of $ 2.6 billion during the quarter ended March 31, 2024, related to contract liabilities as of January 1, 2024 and $ 1.9 billion during the quarter ended March 31, 2023, related to contract liabilities as of January 1, 2023.

As of March 31, 2024, our Contract liabilities include approximately $ 405 million of advance payments received from a Middle East customer on contracts for which we no longer believe we will be able to execute on or obtain required regulatory approvals.

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

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

Contract assets are net of an allowance for expected credit losses of $ 194 million and $ 197 million as of March 31, 2024 and December 31, 2023, respectively.

Inventory, net

Inventory, net consisted of the following:

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

(dollars in millions) March 31, 2024 December 31, 2023

Raw materials $ 4,126 $ 3,911

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Borrowings and Lines of Credit

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

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

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

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

As of March 31, 2024, we had a revolving credit agreement with various banks permitting aggregate borrowings of up to $ 5.0 billion, which expires in August 2028.

As of March 31, 2024, there were no borrowings outstanding under this agreement.

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

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

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

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

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

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

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

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

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

As of March 31, 2024, our maximum commercial paper borrowing limit was $ 5.0 billion as the commercial paper is backed by our $ 5.0 billion revolving credit agreement.

At March 31, 2024 and December 31, 2023, we had no commercial paper borrowings outstanding.

During the quarter ended March 31, 2024, we had no new borrowings, and no repayments, of commercial paper with maturities greater than 90 days.

During the quarter ended March 31, 2023, we had no new borrowings, and $ 100 million in repayments, of commercial paper with maturities greater than 90 days.

There were no issuances of long-term debt during the quarter ended March 31, 2024.

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

Date Description of Notes Aggregate Principal Balance (in millions)

February 27, 2023 5.000 % notes due 2026

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5.375 % notes due 2053

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

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

August 16, 2023 3.650 % notes due 2023

There were no repayments of long-term debt during the quarter ended March 31, 2023.

We made the following repayment of long-term debt during the quarter ended March 31, 2024:

Date Description of Notes Aggregate Principal Balance (in millions)

March 15, 2024 3.200 % notes due 2024

In April 2024, we repaid $ 500 million of the 3 Month Secured Overnight Financing Rate (SOFR) plus 1.225 % term loan due 2025 .

Long-term debt consisted of the following:

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

(dollars in millions) March 31, 2024 December 31, 2023

3.200 % notes due 2024 (1)

3.150 % notes due 2024 (1)

3 Month SOFR plus 1.225 % term loan due 2025

3.950 % notes due 2025 (1)

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2.650 % notes due 2026 (1)

3 Month SOFR plus 1.225 % term loan due 2026

5.750 % notes due 2026 (1)

34 unchanged sentences

2.820 % notes due 2051 (1)

3.030 % notes due 2052 (1)

5.375 % notes due 2053 (1)

6.400 % notes due 2054 (1)

Other (including finance leases)

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

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

The average maturity of our long-term debt at March 31, 2024 is approximately 13 years.

Employee Benefit Plans

2 unchanged sentences

Contributions to our plans were as follows:

Quarter Ended September 30, Nine Months Ended September 30,

Quarter Ended March 31,

(dollars in millions) 2024 2023

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Defined contribution plans 395 372

In December 2020, we approved a change to the Raytheon Company domestic defined benefit pension plans for non-union participants to cease future benefit accruals based on an employee’s years of service and compensation under the historical formula effective December 31, 2022.

The plan change does not impact participants’ historical benefit accruals.

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

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

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

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

(dollars in millions) March 31, 2024 December 31, 2023

Noncurrent pension assets (included in Other assets) $ 1,600 $ 1,296

2 unchanged sentences

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

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

(dollars in millions) March 31, 2024 December 31, 2023

Noncurrent pension liabilities $ 1,679 $ 1,737

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Future pension and postretirement benefit obligations $ 2,320 $ 2,385

The components of net periodic benefit (income) expense for our defined pension and PRB plans were as follows:

The components of net periodic (income) expense for our defined pension and PRB plans were as follows:

Pension Benefits

Quarter Ended September 30,

Quarter Ended March 31,

(dollars in millions) 2024 2023 2024 2023

8 unchanged sentences

Non-service pension income ( 386 ) ( 443 ) — ( 1 )

Total net periodic benefit (income) expense $ ( 386 ) $ ( 349 ) $ — $ 1

Pension Benefits

Nine Months Ended September 30,

(dollars in millions) 2023 2022 2023 2022

Operating expense

$ 167 $ 354 $ 3 $ 6

Non-operating expense

Interest cost 1,880 1,142 36 21

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

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

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

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

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

Total net periodic benefit (income) expense $ ( 1,164 ) $ ( 1,064 ) $ — $ 2

Total net periodic (income) expense $ ( 339 ) $ ( 388 ) $ 1 $ —

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

1 unchanged sentence

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

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

(dollars in millions) March 31, 2024 December 31, 2023

Marketable securities held in trusts $ 705 $ 745

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

tax purposes that became effective in 2022;

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

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

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

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

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

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

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

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

The remaining change is primarily driven by a higher forecasted annualized effective tax rate for 2023 principally due to a lower forecasted Foreign Derived Intangible Income (FDII) benefit.

Our effective tax rate for the quarter ended March 31, 2024 was 5.8 %, as compared to 18.4 % for the quarter ended March 31, 2023.

The lower effective tax rate for the quarter ended March 31, 2024 compared to the quarter ended March 31, 2023 is primarily driven by the $ 275 million tax benefit recognized as a result of the conclusion of the examination phases of the RTX and Rockwell Collins audits, partially offset by the tax costs related to the sale of the CIS business of $ 143 million.

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

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income tax examinations for years before 2014.

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

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

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

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

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

million to $ 365 million.

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

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

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

The Company filed protests with respect to certain IRS proposed adjustments for each exam and will dispute these adjustments at the Appeals Division of the IRS.

The timing of any resolution at the Appeals Division is uncertain.

As a result of the conclusion of the examination phases for RTX and Rockwell Collins during the quarter ended March 31, 2024, the Company recognized a net income benefit of $ 285 million in the quarter, of which $ 275 million is within income tax expense.

The net income benefit recognized includes the effects of adjusting interest accruals and certain tax related indemnity receivables.

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

We assess our income tax positions and record tax benefits for all years subject to examination based upon management’s evaluation of the facts, circumstances, and information available at the reporting date.

It is reasonably possible that a net reduction within the range of $ 350 million to $ 475 million of unrecognized tax benefits may occur within the next 12 months as a result of the revaluation of uncertain tax positions arising from developments in examinations, in appeals, or in the courts, or the closure of tax statutes.

It is reasonably possible that over the next 12 months the amount of unrecognized tax benefits may change within a range of a net reduction of $ 50 million to a net increase of $ 75 million as a result of the revaluation of uncertain tax positions arising from developments in examinations, in appeals, or in the courts, or the closure of tax statutes.

Financial Instruments

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

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

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

The present value of aggregate notional principal of our outstanding foreign currency hedges was $ 14.9 billion and $ 15.8 billion at March 31, 2024 and December 31, 2023, respectively.

At March 31, 2024, all derivative contracts accounted for as cash flow hedges will m ature by March 2036.

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

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

(dollars in millions) Balance Sheet Location March 31, 2024 December 31, 2023

Derivatives designated as hedging instruments:

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Other accrued liabilities 46 37

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

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

The effect of cash flow hedging relationships on Accumulated other comprehensive loss and on the Condensed Consolidated Statement of Operations in the quarters ended March 31, 2024 and 2023 are presented in “Note 17:

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

The Company utilizes the critical terms match method in assessing derivatives for hedge effectiveness.

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

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

As of March 31, 2024, our € 500 million principal value of euro-denominated long-term debt qualifies as a net investment hedge against our investments in European businesses, which is deemed to be effective.

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

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

September 30, 2023

March 31, 2024

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

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

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

As of March 31, 2024, there has not been any significant impact to the fair value of our derivative liabilities due to our own credit risk.

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

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

September 30, 2023 December 31, 2022

March 31, 2024 December 31, 2023

(dollars in millions) Carrying

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

September 30, 2023

March 31, 2024

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

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Long-term debt (excluding finance leases) 41,598 — 37,559 4,039

The fair value of our Short-term borrowings approximates the carrying value due to their short-term nature, with commercial paper classified as level 2 and other short-term borrowings classified as level 3 within the fair value hierarchy.

The fair value of our Short-term borrowings approximates the carrying value due to their short-term nature and is classified as level 3 within the fair value hierarchy.

Variable Interest Entities

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

Pratt & Whitney’s net program share interest in

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

Pratt & Whitney’s net program share interest in IAE and IAE LLC, after considering its sub-collaborator share, is 57 % and 51 %, respectively.

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

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

(dollars in millions) March 31, 2024 December 31, 2023

Current assets $ 9,200 $ 9,309

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These instruments expire on various dates through 2032.

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

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

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

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

September 30, 2023 December 31, 2022

As of March 31, 2024 and December 31, 2023, the following financial guarantees were outstanding:

March 31, 2024 December 31, 2023

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

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

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

Collaboration partners’ share of these financing guarantees were $ 134 million and $ 135 million at March 31, 2024 and December 31, 2023, respectively.

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

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

The carrying amount of liabilities related to these obligations was $ 96 million and $ 97 million at September 30, 2023 and December 31, 2022, respectively.

The carrying amount of liabilities related to these obligations were $ 94 million and $ 97 million at March 31, 2024 and December 31, 2023, respectively.

These primarily relate to environmental liabilities, which are included in our total environmental liabilities as further discussed in “Note 16:

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

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

The changes in the carrying amount of service and product warranties and product performance guarantees for the quarters ended March 31, 2024 and 2023 were as follows:

(dollars in millions) 2024 2023

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Other ( 1 ) ( 1 )

Balance as of September 30 $ 1,111 $ 1,143

Balance as of March 31 $ 1,084 $ 1,093

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

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

As of September 30, 2023 and December 31, 2022, we had $ 770 million and $ 798 million, respectively, reserved for environmental remediation.

As of March 31, 2024 and December 31, 2023, we had $ 770 million and $ 760 million, respectively, reserved for environmental remediation.

Commercial Aerospace Financing and Other Commitments.

We had commercial aerospace financing commitments and other contractual commitments of approximately $ 14.5 billion and $ 15.3 billion as of September 30, 2023 and December 31, 2022, respectively, on a gross basis before reduction for our collaboration partners’ share.

We had commercial aerospace financing commitments and other contractual commitments of approximately $ 14.5 billion and $ 14.6 billion as of March 31, 2024 and December 31, 2023, respectively, on a gross basis before reduction for our collaboration partners’ share.

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

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

The extent to which the financing

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

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

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

The stated values of these letters of credit agreements and surety bonds totaled $ 3.1 billion as of September 30, 2023.

Offset Obligations.

The stated values of these letters of credit agreements and surety bonds totaled $ 3.3 billion as of March 31, 2024.

Offset / Industrial Participation Obligations.

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

At September 30, 2023, the aggregate amount of our offset agreements, both agreed to and anticipated to be agreed to, had an outstanding notional value of approximately $ 12.4 billion.

At March 31, 2024, the aggregate amount of these agreements, both agreed to and anticipated to be agreed to, had an outstanding notional value of approximately $ 12.5 billion.

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

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Government Oversight.

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

actions and proceedings.

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

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

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

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

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

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

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Pratt & Whitney Powder Metal Matter.

Pratt & Whitney has determined that a rare condition in powder metal used to manufacture certain engine parts requires accelerated inspection of the PW1100 GTF fleet, which powers the A320neo.

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

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

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

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

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

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

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

During the third quarter of 2023, through its safety management system, Pratt & Whitney continued its engineering and industrial assessment which resulted in an updated fleet management plan for the remaining PW1100 fleet.

This updated plan requires a combination of part inspections and retirements for some high pressure turbine and high pressure compressor parts made from affected raw material.

Guidance to affected operators was released via service bulletins (SB) and SI in November 2023, and this guidance has been reflected in airworthiness directives issued by the Federal Aviation Administration (FAA).

Consistent with previous information, the actions are expected to result in significant incremental shop visits through the end of 2026.

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

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

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

As a result of anticipated increased aircraft on ground levels and expected compensation to customers for this disruption, as well as incremental maintenance costs resulting from increased inspections and shop visits, Pratt & Whitney recorded a pre-tax operating profit charge in the third quarter of 2023 of $ 2.9 billion, reflecting Pratt & Whitney’s net 51 % program share of the PW1100 program.

This amount reflected our best estimate of expected customer compensation for the estimated duration of the disruption as well as the EAC adjustment impact of this matter to Pratt & Whitney’s long-term maintenance contracts.

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

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

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

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

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

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

The charge recorded in the third quarter of 2023 resulted in a net increase in Other accrued liabilities of $ 2.8 billion, which principally related to our 51 % share of an accrual for expected customer compensation.

At March 31, 2024 and December 31, 2023, we had Other accrued liabilities of $ 2.7 billion and $ 2.8 billion, respectively, related to the Powder Metal Matter.

The change in the accrual during the quarter ended March 31, 2024 was primarily due to customer payments and credits issued.

Other engine models within Pratt & Whitney’s fleet contain parts manufactured with affected powder metal, and while Pratt & Whitney continues to evaluate the impact of this powder metal issue on other engine models within its fleet, we do not currently believe there will be any significant financial impact with respect to these other engine models.

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

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

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

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Cost Accounting Standards Claims

As previously disclosed, in April 2019, a Divisional Administrative Contracting Officer (DACO) of the United States DCMA asserted a claim against Pratt & Whitney to recover alleged overpayments of approximately $ 1.73 billion plus interest ($ 982 million at September 30, 2023).

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

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

As previously disclosed, in December 2013, a DCMA DACO asserted a claim against Pratt & Whitney to recover alleged overpayments of approximately $ 177 million plus interest ($ 149 million at September 30, 2023).

As previously disclosed, in December 2013, a DCMA DACO asserted a claim against Pratt & Whitney to recover alleged overpayments of approximately $ 177 million plus interest ($ 162 million at March 31, 2024).

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

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

This second claim, which asserts the same measure of the cost of collaborator parts rejected by the ASBCA’s recent decision, demands payment of $ 269 million plus interest ($ 116 million at September 30, 2023).

This second claim, which asserts the same measure of the cost of collaborator parts rejected by the ASBCA’s November 22, 2021 decision, demands payment of $ 269 million plus interest ($ 131 million at March 31, 2024).

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

Although subject to further litigation at the ASBCA and potentially further appellate proceedings, we continue to believe that the November 22, 2021 decision in the first claim will apply with equal legal effect to the second claim.

Accordingly, we believe that the amounts demanded by the DCMA as set forth in the two claims are without legal basis and that any damages owed to the U.S.

government for the two claims will not have a material adverse effect on our results of operations, financial condition, or liquidity.

In December 2023, a DCMA DACO issued a third claim against Pratt & Whitney that similarly alleges that its method of determining the cost of collaborator parts does not comply with the CAS for calendar years 2018 through 2022.

This third claim, which asserts the same measure of the cost of collaborator parts rejected by the ASBCA’s prior decision, demands payment of $ 277 million plus interest ($ 59 million at March 31, 2024).

Pratt & Whitney appealed this third claim to the ASBCA at the end of December 2023.

Accordingly, we believe that the amounts demanded by the DCMA as set forth in the three claims are without legal basis and that any damages owed to the U.S.

government for the three claims will not have a material adverse effect on our results of operations, financial condition, or liquidity.

Thales-Raytheon Systems and Related Matters

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

In the third quarter of 2020, Raytheon Company received an

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

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

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

At this time, the Company is unable to predict the outcome of the SEC’s or DOJ’s inquiries.

Based on the information available to date, however, we cannot reasonably estimate the range of any potential loss or impact to the business that may result, but do not believe that the results of these inquiries will have a material adverse effect on our results of operations, financial condition, or liquidity.

DOJ Investigation, Contract Pricing Disputes, and Related Civil Litigation

As previously disclosed, on October 8, 2020, the Company received a criminal subpoena from the DOJ seeking information and documents in connection with an investigation relating to financial accounting, internal controls over financial reporting, and cost reporting regarding Raytheon Company’s Missiles & Defense (RMD) business since 2009.

The investigation involves multi-year contracts subject to governmental regulation, including potential civil defective pricing claims for three RMD contracts entered into between 2011 and 2013.

As part of the same investigation, on March 24, 2021, the Company received a second criminal subpoena from the DOJ seeking documents relating to a different RMD contract entered into in 2017.

Although the investigation of these issues remains ongoing, information indicating that such conduct has occurred with respect to certain contracts has been identified.

However, at this time, the Company is unable to predict the outcome of the SEC’s or DOJ’s inquiries.

Further, based on the information available to date, we cannot reasonably estimate the range of potential loss or impact to the business that may result, but do not believe that the results of these inquiries will have a material adverse effect on our results of operations, financial condition, or liquidity.

DOJ Investigation and Contract Pricing Disputes

The investigation involves multi-year contracts subject to governmental regulation, including potential civil defective pricing claims for certain Raytheon contracts entered into between 2011 and 2013.

As part of the same investigation, on March 24, 2021, the Company received a second criminal subpoena from the DOJ seeking documents relating to a certain Raytheon contract entered into in 2017.

We are cooperating fully with, and will continue to review the issues raised by, the DOJ’s ongoing investigation.

We continue to make substantial progress in our internal review of the issues raised by the DOJ investigation.

Although we believe we have defenses to the potential claims, the Company has determined that there is a probable risk of liability for damages, interest, and potential penalties, and has accrued approximately $ 300 million for this matter .

We are currently unable to estimate an incremental loss, if any, which may result when the DOJ investigation is complete.

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

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

Those shareholder derivative lawsuits were consolidated and remain pending.

We continue to believe that the consolidated action lacks merit.

Darnis, et al.

and Related Matter

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

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

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

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

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

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

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

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

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

UTC Equity Conversion Litigation

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

We believe that the lawsuit lacks merit.

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

Civil Litigation Related to Employee Hiring Practices

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

Securities Suit Related to Powder Metal Disclosure

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

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

In April 2024, a shareholder derivative lawsuit was filed in the Delaware Court of Chancery against the Company and certain current and former officers and directors of the Company alleging that defendants breached their fiduciary duties by failing to implement and enforce a reasonable oversight mechanism for compliance with antitrust laws.

We believe that the lawsuit lacks merit.

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

Powder Metal Disclosure Litigation and SEC Investigation

Following the Company’s disclosures of a rare condition in powder metal used to manufacture certain Pratt & Whitney engine parts, two sets of civil actions were filed against RTX.

First, two putative federal securities class action lawsuits were filed in the United States District Court for the District of Connecticut against the Company and certain current and former executives of the Company.

The lawsuits were consolidated and remain pending.

Second, multiple shareholder derivative lawsuits were filed against current and former Officers and Directors of the Company, all of which have now been consolidated into a single action which is pending in the United States District Court for the District of Delaware.

The operative complaint in the consolidated action alleges that the defendants caused the Company to make materially false and misleading statements relating to Pratt & Whitney’s Geared Turbofan engines, and failed to maintain an adequate system of oversight, disclosure controls and procedures, and internal controls over financial reporting.

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

On November 7, 2023 and January 30, 2024, the Company received subpoenas from the SEC seeking engineering, operational, organizational, accounting, and financial documents in connection with an investigation relating to the Company’s disclosures in 2023 of issues arising from Pratt & Whitney’s use of powder metal in manufacturing various engine parts, its identification of certain risks associated with those manufacturing processes, and corrective actions identified by Pratt & Whitney to mitigate

The Company is cooperating with the SEC and is responding to the subpoenas.

At this time, we are unable to predict the timing or outcome of this SEC investigation.

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

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We do not believe that these matters will have a material adverse effect upon our results of operations, financial condition, or liquidity.

Common Stock - Share Repurchases.

On October 24, 2023, we entered into accelerated share repurchase (ASR) agreements with certain financial institution counterparties to repurchase shares of our common stock for an aggregate purchase price of $ 10 billion.

Pursuant to the ASR agreements, we made aggregate payments of $ 10 billion on October 26, 2023, and received initial deliveries of approximately 108.4 million shares of our common stock at a price of $ 78.38 per share, representing approximately 85% of the shares expected to be repurchased.

The aggregate purchase price was recorded as a reduction to Shareowners’ equity, consisting of a $ 8.5 billion increase in Treasury stock and a $ 1.5 billion decrease in Common stock.

The final number of shares to be repurchased will be based on the average of the daily volume-weighted average prices of our common stock during the term of the ASR agreements, less a discount and subject to adjustments pursuant to the terms and conditions of the ASR agreements.

Upon final settlement of the ASR, under certain circumstances, each of the counterparties may be required to deliver additional shares of common stock, or we may be required to deliver shares of common stock or to make a cash payment to the counterparties, at our election.

The final settlement of each transaction under the ASR agreements is scheduled to occur no later than the third quarter of 2024 and in each case may be accelerated at the option of the applicable counterparty.

Accumulated Other Comprehensive Loss.

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

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

Quarter Ended September 30, 2023

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

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

Amounts reclassified, pre-tax — ( 141 ) 9 ( 132 )

Tax benefit (expense) ( 3 ) 33 24 54

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

Nine Months Ended September 30, 2023

A summary of the changes in each component of Accumulated other comprehensive loss, net of tax for the quarters ended March 31, 2024 and 2023 is provided below:

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

Quarter Ended March 31, 2024

Balance at December 31, 2023 $ ( 440 ) $ ( 2,026 ) $ 47 $ ( 2,419 )

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Tax benefit (expense) ( 1 ) 12 18 29

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

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

Quarter Ended September 30, 2022

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

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

Amounts reclassified, pre-tax — 33 34 67

Tax benefit (expense) 4 ( 6 ) 64 62

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

Nine Months Ended September 30, 2022

Balance at March 31, 2024 $ ( 562 ) $ ( 2,065 ) $ ( 8 ) $ ( 2,635 )

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

Quarter Ended March 31, 2023

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

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Tax benefit (expense) 1 38 2 41

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

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

Segment Financial Data

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

Collins, Pratt & Whitney, and Raytheon.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

and foreign government and commercial customers.

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

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

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

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

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

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

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

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

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

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

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

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

(dollars in millions) 2023 2022 2023 2022 2023 2022

Collins Aerospace $ 6,629 $ 5,718 $ 903 $ 742 13.6 % 13.0 %

Pratt & Whitney (2)

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

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

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

Eliminations and other (1)

( 563 ) ( 455 ) ( 69 ) ( 13 )

Corporate expenses and other unallocated items (3)

— — ( 63 ) ( 77 )

FAS/CAS operating adjustment — — 272 348

Acquisition accounting adjustments — — ( 517 ) ( 482 )

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

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

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

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

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

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

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

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

Results for the quarters ended March 31, 2024 and 2023 are as follows:

Net Sales Operating Profit Operating Profit Margins

(dollars in millions) 2024 2023 2024 2023 2024 2023

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6,659 6,292 996 571 15.0 % 9.1 %

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

Total segment 19,788 17,642 2,257 1,883 11.4 % 10.7 %

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Corporate expenses and other unallocated items — — ( 96 ) ( 43 )

— — ( 165 ) ( 255 )

FAS/CAS operating adjustment — — 214 289

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

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

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

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

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

Total assets by segment are as follows:

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

Collins Aerospace (1)

$ 72,006 $ 70,404

Pratt & Whitney (1)

39,619 36,205

46,075 45,666

Total segment 157,700 152,275

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

Consolidated $ 162,443 $ 158,864

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

Related amortization expense is included in Acquisition accounting adjustments.

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

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

(2) Operating Profit includes a $0.4 billion gain, net of transaction and other related costs, related to the sale of our CIS business.

Acquisitions and Dispositions” for additional information.

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

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

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

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

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

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

Segment sales disaggregated by geographic region based on customer location for the quarters ended March 31, 2024 and 2023 are as follows:

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

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Other regions 361 444 30 — 835 349 463 51 — 863

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

Consolidated net sales 6,169 6,456 6,630 50 19,305 5,679 5,229 6,261 45 17,214

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Business segment sales $ 6,673 $ 6,456 $ 6,659 $ ( 483 ) $ 19,305 $ 6,120 $ 5,230 $ 6,292 $ ( 428 ) $ 17,214

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

Segment sales disaggregated by type of customer for the quarters ended March 31, 2024 and 2023 are as follows:

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

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

Europe 4,580 3,998 1,209 3 9,790 3,875 3,010 1,026 2 7,913

Asia Pacific 1,864 3,068 1,640 1 6,573 1,594 2,726 1,505 — 5,825

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

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

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

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

Inter-segment sales 1,451 1 94 ( 1,546 ) — 1,262 2 102 ( 1,366 ) —

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

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

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

Raytheon Other Total Collins Aerospace Pratt & Whitney Raytheon Other Total

Sales to the U.S.

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

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

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

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

Raytheon Other Total Collins Aerospace Pratt & Whitney Raytheon Other Total

Sales to the U.S.

government (1)

$ 4,670 $ 3,774 $ 14,670 $ 79 $ 23,193 $ 4,785 $ 3,915 $ 13,624 $ 128 $ 22,452

Foreign military sales through the U.S.

government 226 1,158 2,436 — 3,820 271 796 2,565 — 3,632

Foreign government direct commercial sales 793 347 1,970 3 3,113 784 335 1,996 3 3,118

Commercial aerospace and other commercial sales 11,993 6,577 294 3 18,867 9,719 9,830 228 2 19,779

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

Inter-segment sales 1,451 1 94 ( 1,546 ) — 1,262 2 102 ( 1,366 ) —

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

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

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

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

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

Raytheon Other Total Collins Aerospace Pratt & Whitney Raytheon Other Total

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

Services 1,338 2,412 1,103 ( 4 ) 4,849 1,064 2,195 935 1 4,195

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

Inter-segment sales 530 — 30 ( 560 ) — 460 2 37 ( 499 ) —

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

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

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

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

Raytheon Other Total Collins Aerospace Pratt & Whitney Raytheon Other Total

Segment sales disaggregated by sales type for the quarters ended March 31, 2024 and 2023 are as follows:

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

Products $ 4,833 $ 3,957 $ 5,467 $ 46 $ 14,303 $ 4,450 $ 3,052 $ 5,242 $ 43 $ 12,787

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Business segment sales $ 6,673 $ 6,456 $ 6,659 $ ( 483 ) $ 19,305 $ 6,120 $ 5,230 $ 6,292 $ ( 428 ) $ 17,214

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

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

(dollars in millions) 2023 2022

Fixed-price $ 2,997 $ 3,180

Cost-type 3,445 3,091

Consolidated net sales 6,442 6,271

Inter-segment sales 30 37

Business segment sales $ 6,472 $ 6,308

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

Raytheon segment sales disaggregated by contract type for the quarters ended March 31, 2024 and 2023 are as follows:

(dollars in millions) 2024 2023

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Remaining Performance Obligations (RPO)

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

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

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

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

Total RPO was $ 202 billion as of March 31, 2024.

Of the total RPO as of March 31, 2024, we expect approximately 25 % will be recognized as revenue over the next 12 months.

Approximately 45 % of our RPO relates to long-term commercial aerospace maintenance contracts at Pratt & Whitney, which are generally expected to be realized over a span of up to 20 years.

Accounting Pronouncements

In September 2022, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2022-04, Liabilities – Supplier Finance Programs (Subtopic 405-50):

Disclosure of Supplier Finance Program Obligations, which requires that a buyer in a supplier finance program disclose the key terms of supplier finance programs, the amount of obligations outstanding at the end of the reporting period that the entity has confirmed as valid to the finance provider, where these obligations are recorded in the balance sheet, and a roll forward of the obligations.

The new standard is effective for fiscal years beginning after December 15, 2022, on a retrospective basis, including interim periods within those fiscal years.

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

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

Subsequent Events

Accelerated Share Repurchase.

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

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

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

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

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

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

Definitive Agreement.

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

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

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

However, its report dated October 24, 2023, appearing below, states that the firm did not audit and does not express an opinion on that unaudited condensed consolidated financial information.

In March 2024, the SEC issued the final rule under SEC Release No.

33-11275 and 34-99678, The Enhancement and Standardization of Climate-Related Disclosures for Investors, requiring public companies to provide certain climate-related information in their registration statements and annual reports.

The final rules will require information about a company’s climate-related risks that have materially impacted or are reasonably likely to have a material impact on its business strategy, results of operations, or financial condition, and the actual and potential material impacts of any identified climate-related risks on the company’s strategy, business model and outlook, as well as relating to assessment, management, oversight and mitigation of such material risks, material climate-related targets and goals, and material greenhouse gas emissions.

Additionally, certain disclosures related to severe weather events and other natural conditions will be required in the audited financial statements.

The first phase of the final rule is effective for fiscal years beginning in 2025.

Disclosure for prior periods is only required if it was previously disclosed in an SEC filing.

On April 4, 2024, the SEC voluntarily stayed implementation of the final rule to facilitate the orderly judicial resolution of pending legal challenges to the rule.

We are currently evaluating the impact on our disclosures of adopting this new pronouncement.

In December 2023, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2023-09, Income Taxes (Topic 740):

Improvements to Income Tax Disclosures, to enhance income tax reporting disclosures and require disclosure of specific categories in the tabular rate reconciliation.

The new standard is effective for fiscal years beginning after December 15, 2024, on a prospective basis.

Early adoption and retrospective application are permitted.

We are currently evaluating the impact on our disclosures of adopting this new pronouncement.

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures, which expands the segment reporting disclosures and requires disclosure of segment expenses that are regularly provided to the chief operating decision maker (CODM) and included within each reported measure of segment profit or loss, amounts and description of its composition for other segment items, and interim disclosure of a reportable segment’s profit or loss and assets.

Additionally, the amendments require the disclosure of the title and position of the CODM and an explanation of how the CODM uses the reported measure(s) of segment profit or loss in assessing performance and deciding how to allocate resources.

The new standard is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, on a retrospective basis.

Early adoption is permitted.

We are currently evaluating the impact on our disclosures of adopting this new pronouncement.

Other new pronouncements issued but not effective until after March 31, 2024 are not expected to have a material impact on our results of operations, financial condition, or liquidity.

With respect to the unaudited condensed consolidated financial information of RTX for the quarters ended March 31, 2024 and 2023, PricewaterhouseCoopers LLP (PwC) reported that it has applied limited procedures in accordance with professional standards for a review of such information.

However, its report dated April 23, 2024, appearing below, states that the firm did not audit and does not express an opinion on that unaudited condensed consolidated financial information.

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

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Results of Review of Interim Financial Information

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

We have reviewed the accompanying condensed consolidated balance sheet of RTX Corporation and its subsidiaries (the “Company”) as of March 31, 2024, and the related condensed consolidated statements of operations, of comprehensive income, of changes in equity, and of cash flows for the three-month periods ended March 31, 2024 and 2023, including the related notes (collectively referred to as the “interim financial information”).

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

We have previously audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the consolidated balance sheet of the Company as of December 31, 2022, and the related consolidated statements of operations, of comprehensive income (loss), of changes in equity, and of cash flows for the year then ended (not presented herein), and in our report dated February 6, 2023, we expressed an unqualified opinion on those consolidated financial statements.

We have previously audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the consolidated balance sheet of the Company as of December 31, 2023, and the related consolidated statements of operations, of comprehensive income, of changes in equity, and of cash flows for the year then ended (not presented herein), and in our report dated February 5, 2024, we expressed an unqualified opinion on those consolidated financial statements.

In our opinion, the information set forth in the accompanying condensed consolidated balance sheet as of December 31, 2023, is fairly stated, in all material respects, in relation to the consolidated balance sheet from which it has been derived.

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Boston, Massachusetts

October 24, 2023

April 23, 2024

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

What changed 10-Q

Item 1. Financial Statements