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Our business may be adversely affected by changes in global economic, capital market, and political conditions.
−Removed: Our business, operating results, financial condition, and liquidity may be adversely affected by changes in global economic conditions, international relations, and geopolitical events and actions, including inflation, credit market conditions, levels of consumer and business confidence, commodity (including energy) prices and supply, trade policies, exchange rates, changing policy positions or priorities, levels of government spending and deficits, the threat environment, political conditions, and actual or anticipated default on sovereign debt.
−Removed: The current global supply chain challenges and inflationary pressures have negatively affected, and we expect will continue to negatively affect, our performance as well as the performance of our suppliers and subcontractors.
−Removed: High inflation levels have increased material and component prices, labor rates, and supplier costs.
+Added: Our business, operating results, financial condition, and liquidity may be adversely affected by changes in global economic conditions, international relations, and geopolitical events and actions, including inflation, credit market conditions, levels of consumer and business confidence, commodity (including energy) prices and supply, trade policies (including tariffs), exchange rates, levels of government spending and deficits, the threat environment, political conditions, and actual or anticipated default on sovereign debt.
+Added: Supply chain challenges and inflationary pressures continue to negatively affect our performance and the performance of our suppliers and subcontractors.
+Added: Inflation has increased material and component prices, labor rates, and supplier costs.
In addition, due to the nature of our government and commercial aerospace businesses, and their respective customer and supplier contracts, we may be unable to increase our contract value or pricing to offset cost increases, in particular on our fixed price contracts.
Our operating profits and margins under our contracts could be adversely affected by these factors.
−Removed: Similarly, interest rate increases have created financial market volatility and could further negatively impact financial markets, lead to an economic downturn or recession, and tighten the availability of, and increase the cost of, capital for the Company, which could have an adverse effect on our operating results, financial condition, and liquidity.
+Added: In addition, high interest rates can increase the cost of borrowing and tighten the availability of capital for the Company, which could have an adverse effect on our operating results, financial condition, and liquidity.
Tightening of credit in financial markets also could adversely affect the ability of our customers and suppliers to obtain financing for significant purchases and operations, could result in a decrease in, or cancellation of, orders for our products and services, could impact the ability of our customers to make payments, and could increase the risk of supplier financial distress.
−Removed: Our global business is also adversely affected by decreases in the general level of economic activity, such as decreases in business and consumer spending, air travel, the financial strength of airlines and business jet operators, and government procurement.
+Added: Moreover, volatility in interest rates and financial markets can lead to economic uncertainty, an economic downturn or recession and impact the demand for our products and services as well as impact our supply chain.
+Added: Our global business is also adversely affected by decreases in the general level of economic activity, such as decreases in business and consumer spending, air travel, the financial strength and performance of airframers, airlines and business jet operators, and government procurement.
In addition, geopolitical risks could affect government priorities, budgets, and policies, such as U.S.
−Removed: approvals of our foreign defense sales as well as sanctions and other trade-restrictive activities, which could impact sales of defense and other products and services.
+Added: approvals of our foreign defense sales as well as sanctions, imposition of tariffs, and other trade-restrictive activities, which could impact sales of defense and other products and services.
Changes in U.S.
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government programs, primarily defense-related programs with the U.S.
−Removed: Department of Defense (DoD), and a broad range of programs with the U.S.
−Removed: Intelligence Community and other departments and agencies.
+Added: Department of Defense (DoD), and a broad range of programs with other departments and agencies.
Changes in U.S.
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government budgetary issues and related legislation, and the U.S.
−Removed: government has been unable to complete its budget process before the end of its fiscal year, resulting in both governmental shutdowns and continuing resolutions (CRs) providing only enough funds for U.S.
+Added: government has been unable to complete its budget process before the end of its fiscal year, resulting in both governmental shutdowns and continuing resolutions providing only enough funds for U.S.
government agencies to continue operating at prior-year levels.
−Removed: government is currently operating under a CR to keep the government funded while Congress works to enact full year fiscal year 2024 (FY24) appropriation bills.
−Removed: While we expect Congress to complete the full year FY24 appropriations bills before the current CR expire, if Congress is unable to complete the FY24 appropriation bills, (or pass another CR), then the U.S.
−Removed: government would shut down during which federal agencies would cease all non-essential functions.
+Added: government is currently operating under a continuing resolution to keep the government funded while Congress works to enact full year fiscal year 2025 (FY25) appropriation bills.
+Added: It is currently uncertain whether Congress will be able to enact FY25 appropriation bills and, if such bills are passed, the spending levels and priorities for defense and other areas.
+Added: If Congress is unable to complete the FY25 appropriation bills, (or pass another continuing resolution), then the U.S.
+Added: government would shut down, during which time federal agencies would cease all non-essential functions.
Our business, program performance, and results of operations could be impacted by the resulting disruptions to federal government offices, workers, and operations, including risks relating to the funding of certain programs, stop work orders, as well as delays in contract awards, new program starts, payments for work performed, and other actions.
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The termination of one or more of our U.S.
−Removed: contracts, or the occurrence of performance delays, cost overruns (due to inflation or otherwise), product failures, shortages in materials, components, or labor, contract definitization delays, or other failures to perform to customer expectations and contract requirements, could negatively impact our reputation and competitive position, results of operations, financial condition, and liquidity.
−Removed: government contracts generally permit the government to terminate the contract, in whole or in part, without prior notice, at the U.S.
+Added: government contracts, or the occurrence of performance delays, cost overruns (due to inflation or otherwise), product failures, shortages in materials, components, or labor, contract definitization delays, or other failures to perform to customer expectations and contract requirements, could negatively impact our reputation and competitive position, results of operations, financial condition, and liquidity.
+Added: government contracts with prime contractors generally permit the government to terminate the contract, in whole or in part, without prior notice, at the U.S.
government’s convenience or for default based on performance.
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Additionally, as our customers demand more mature and proven solutions, we may be required to invest in development prior to contract award with no guarantee of award.
+Added: Our profitability could be negatively affected based on the mix of our U.S.
+Added: government contracts and programs and the costs incurred of performing the work, especially if we are unable to control costs or if our initial cost estimates are incorrect, particularly under fixed-price development contracts.
government contracts are typically either fixed-priced contracts or cost reimbursement contracts.
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Excess costs on cost reimbursable contracts could also result in lower profit rates.
−Removed: We may incur unexpected costs for various reasons, including technical and manufacturing challenges, schedule delays, shortages in materials, components, or labor, internal and subcontractor performance, product quality issues, inability to achieve the benefits of our cost reduction, digital transformation, manufacturing, operating, and other strategic initiatives, inflation, and changing laws or regulations, natural disasters, and public health crises.
−Removed: If we are unable to control costs or if our initial cost estimates are incorrect, our profitability could be negatively affected, particularly under fixed-price development contracts.
+Added: We may incur unexpected costs for various reasons, including technical and manufacturing challenges, schedule delays, the timeliness and availability of materials, components, or labor, the inaccuracy of initial contract cost estimates, internal and subcontractor performance or product quality issues, inability to achieve the benefits of our expected cost reduction, digital transformation, manufacturing, operating, and other strategic initiatives, inflation, inability to pass on tariff costs, and changing laws or regulations, natural disasters, and public health crises.
We may also experience cost underruns which would reduce contract value and related expected revenues, and we may be unable to expand the contract scope or secure additional work to offset the resulting lost revenues.
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In addition, in order to support U.S.
−Removed: government priorities, we may begin performance prior to completing contract negotiations for an undefinitized contract action with a not-to-exceed price.
+Added: government priorities, we may begin performance on an undefinitized contract action with a not-to-exceed price before completing contract
+Added: negotiations on the terms, specifications, or price between the parties.
+Added: government has the ability to unilaterally definitize contracts, which would obligate us to perform under terms and conditions imposed by the U.S.
+Added: government, affecting our ability to negotiate mutually agreeable contract terms.
Uncertainties in final contract price, specifications and terms, or loss of negotiating leverage associated with particularly long delays in contract definitization may negatively affect our profitability.
−Removed: government contracts also require us to comply with extensive and evolving procurement rules and regulations and subject us to potential U.S.
−Removed: government surveillance, audits, investigations,
−Removed: and disputes.
+Added: government contracts also require us to comply with extensive and evolving procurement laws, rules and regulations and subject us to potential U.S.
+Added: government surveillance, audits, investigations, and disputes.
We are also involved in programs that are classified by the U.S.
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operating unit financial statements.
−Removed: Our international sales and operations are also subject to risks associated with local government laws, regulations, and policies, including with respect to investments, taxation, exchange controls, capital controls, employment regulations, and repatriation of earnings.
+Added: Our international sales and operations are also subject to risks associated with local government laws, regulations, and policies, including with respect to investments, taxation, exchange controls, capital controls, employment regulations, repatriation of earnings, and tariffs.
Differing legal systems, customs, and contract laws and regulations pose additional risk.
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In addition, foreign companies may be subject to fewer restrictions on technology transfer than U.S.
−Removed: Our international contracts, particularly for sales of defense products and services, may include offset or industrial cooperation obligations requiring specific local purchases, manufacturing agreements, technology transfer agreements, financial support obligations, or other local investments, sometimes in the form of in-country industrial participation (ICIP) agreements.
+Added: Our international contracts, particularly for sales of defense products and services, may include offset obligations or industrial cooperation obligations requiring specific local purchases, manufacturing agreements, technology transfer agreements, financial support obligations, or other local investments, sometimes in the form of in-country industrial participation (ICIP) agreements.
Approvals of offset or ICIP thresholds and requirements may be subjective and time-consuming and may delay contract awards.
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Geopolitical factors and changes in policies and regulations could adversely affect our business.
−Removed: Our international sales and operations are sensitive to changes in foreign national priorities, foreign government budgets, and regional and local political and economic factors, including wars and armed conflicts, political or civil unrest, volatility in energy prices or supply, inflation, interest rates, changes in threat environments and political relations, geopolitical uncertainties, and changes in U.S.
−Removed: foreign policy.
+Added: Our international sales and operations are sensitive to changes in foreign national priorities, foreign government budgets, and regional and local political and economic factors, including wars and armed conflicts, political or civil unrest, volatility in energy prices or supply, inflation, interest rates, changes in threat environments and political relations, and geopolitical uncertainties.
Our international sales and operations are also sensitive to changes in U.S.
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Further, operations in emerging market countries are subject to additional risks, including volatility in rates of economic growth, government instability, cultural differences (such as employment and business practices), the imposition of exchange and capital controls, and risks associated with exporting components manufactured in those countries for incorporation into finished products completed in other countries.
−Removed: While these factors and their impact are difficult to predict, any one or more of them could have a material adverse effect on our competitive position, results of operations, financial condition, or liquidity.
−Removed: In addition, given the role of our defense businesses in the support of the national security interests of the U.
+Added: While these factors and their impact are difficult to predict, any one or more of
+Added: them could have a material adverse effect on our competitive position, results of operations, financial condition, or liquidity.
+Added: In addition, given the role of our defense businesses in the support of the national security interests of the U.S.
and its allies, we are subject to risks and uncertainties relating to policies of the U.S.
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We engage in both direct commercial sales, which generally require U.S.
−Removed: government licenses and approvals, as well as foreign military sales, which are government-to-government transactions
−Removed: initiated by, and carried out at the direction of, the U.S.
+Added: government licenses and approvals, as well as foreign military sales, which are government-to-government transactions initiated by, and carried out at the direction of, the U.S.
Changes in budgets and spending levels, policies, or priorities, which are subject to geopolitical risks and threats, may impact our defense businesses, including the timing of and delays in U.S.
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These risks and uncertainties may directly or indirectly impact our commercial businesses as well.
−Removed: Of note, in February 2023, China announced sanctions against Raytheon Missiles & Defense (RMD) (a former RTX Corporation (RTX) business segment, which became part of Raytheon as a result of the July 1, 2023 RTX segment realignment), and previously announced it may take measures against RTX, in connection with certain foreign military sales to Taiwan.
+Added: In February 2023, China announced sanctions against Raytheon Missiles & Defense (RMD) (a former RTX Corporation (RTX) business segment, which became part of Raytheon as a result of the July 1, 2023 RTX segment realignment), and previously announced it may take measures against RTX, in connection with certain foreign military sales to Taiwan.
The Chinese sanctions against RMD included a fine equal to twice the value of the arms that RMD sold to Taiwan since September 2020.
−Removed: In addition, in September 2022, China indicated that it decided to sanction our Chairman and Chief Executive Officer, Gregory Hayes, in connection with another foreign military sale to Taiwan involving RTX products and services.
−Removed: If China were to enforce sanctions, impose additional sanctions, or take other regulatory action against RTX, our suppliers, affiliates, or partners, it could potentially disrupt our business operations.
−Removed: The impact of the announced sanctions or other potential sanctions, or other actions by China is uncertain.
−Removed: Our businesses have sold, and are expected to sell in the future, additional defense products to Taiwan from time to time in alignment with our U.S.
+Added: Since that time, China has announced additional sanctions against the Raytheon business and a Collins Aerospace (Collins) joint venture.
+Added: If China were to impose additional sanctions, enforce announced sanctions, or take other regulatory action against RTX, our suppliers, affiliates, or partners, it could potentially disrupt our business operations.
+Added: Any impact of these or other potential sanctions, or other actions by China, is uncertain.
+Added: Our businesses have sold, and are expected to sell in the future, additional defense products to Taiwan from time to time in alignment with U.S.
government policy, and we are unable to determine the potential impact, if any, of any future sanctions or other actions by China in response to these sales.
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These measures have adversely affected and could continue to adversely affect the Company and/or our supply chain, business partners, or customers.
−Removed: We continue to closely monitor developments in the war between Israel and Hamas that began on October 7, 2023, including potential impacts to RTX’s business, customers, suppliers, employees, and operations in Israel, the Middle East, and elsewhere.
−Removed: At this time, impacts to RTX are minimal.
+Added: We continue to closely monitor potential impacts to RTX’s business, customers, suppliers, employees, and operations in Israel, the Middle East, and the region at large due to the war in Gaza, including a recently-announced ceasefire, the related escalation of conflict and instability in the region, and the regime change in Syria.
RTX’s commercial manufacturing facilities in Israel remain open and operational and have continued exporting products and importing critical items and raw materials.
−Removed: The war has also not impacted our defense programs’ ability to receive components from Israel.
−Removed: For some products, there could be future delivery delays because of the ongoing war.
−Removed: The potential impacts to RTX are subject to change given the volatile nature of the situation.
+Added: RTX’s defense programs’ ability to receive components from Israel has not been impacted in any material respect, although we could experience future delivery delays of certain products if the ceasefire does not hold, or if further escalations arise.
+Added: The overall impacts to RTX from this situation have been minimal;
+Added: however, given the volatile nature of the situation, the potential impacts to RTX are subject to change.
Our financial performance is dependent on the condition of the aerospace industry.
Our commercial aerospace businesses constitute a substantial portion of our financial results, and the performance of those businesses is directly tied to economic conditions in the commercial aerospace industry, which is cyclical in nature.
−Removed: Capital spending and demand for aircraft engines, aerospace products, and component aftermarket parts and services is limited to commercial airlines, lessors, other aircraft operators and aircraft manufacturers that are influenced by a wide variety of factors, including current and predicted traffic levels, load factors, aircraft fuel prices, labor issues, airline consolidation, bankruptcies and restructuring activities, competition, the retirement of older aircraft, corporate profitability and financial health, cost reduction efforts, tightening of credit in financial markets and the availability of aircraft leasing and financing alternatives, remaining performance obligations levels, the satisfaction of certification or other regulatory requirements for aircraft in various jurisdictions, regulatory changes, terrorism and related safety concerns, and general economic conditions.
+Added: Capital spending and demand for aircraft engines, aerospace products, and component aftermarket parts and services is limited to commercial airlines, lessors, other aircraft operators, and aircraft manufacturers that are influenced by a wide variety of factors, including current and predicted traffic levels, load factors, aircraft fuel prices, labor issues, airline consolidation, bankruptcies and restructuring activities, competition, the retirement of older aircraft, corporate profitability and financial health, cost reduction efforts, tightening of credit in financial markets and the availability of aircraft leasing and financing alternatives, remaining performance obligations levels, the satisfaction of certification or other regulatory requirements for aircraft in various jurisdictions, regulatory changes, terrorism and related safety concerns, political stability, and general economic conditions.
Any of these factors affecting the industry could reduce the sales and margins of our aerospace businesses.
In addition, because we have significant business with Airbus and Boeing, our aerospace businesses could be adversely affected by challenges faced by these or other individual customers.
−Removed: Other factors, including future terrorist actions, aviation safety concerns, pandemic health issues, or major natural disasters, could also dramatically reduce the demand for commercial air travel, which could negatively impact the sales and margins of our aerospace businesses.
−Removed: Additionally, because a substantial portion of product deliveries to commercial aerospace customers are scheduled for delivery in the future, changes in economic conditions may cause customers to request that firm orders be rescheduled or canceled.
−Removed: At times, our aerospace businesses also enter into firm fixed-price or cost-share development contracts with customers, which may require us to bear cost overruns related to unforeseen technical and design challenges that arise during the development and early production stages of the program.
+Added: Other factors, including future terrorist actions, aviation safety concerns, public health issues, or major natural disasters, could also dramatically reduce the demand for commercial air travel, which could negatively impact the sales and margins of our aerospace businesses.
+Added: Additionally, because a substantial portion of product deliveries to commercial aerospace customers are scheduled for delivery in the future, changes in economic conditions may cause customers to request that firm
+Added: orders be rescheduled or canceled.
+Added: At times, our aerospace businesses also enter into FFP or cost-share development contracts with customers, which may require us to bear cost overruns related to unforeseen technical and design challenges that arise during the development and early production stages of a program.
Spare parts sales and aftermarket services, particularly under long-term aftermarket contracts are also affected by similar factors, including usage, pricing, technological improvements, regulatory changes, and the retirement of older aircraft.
Furthermore, because of the lengthy research and development cycle involved in bringing products in these business segments to market, we cannot predict the economic conditions that will exist when any new product is ready to enter into service.
−Removed: A reduction in spending in the commercial
−Removed: aviation industry could have a significant effect on the demand for our products, which could have a material adverse effect on our competitive position, results of operations, financial condition, or liquidity.
+Added: A reduction in spending in the commercial aviation industry could have a significant effect on the demand for our products, which could have a material adverse effect on our competitive position, results of operations, financial condition, or liquidity.
We design, manufacture, and service products that incorporate advanced technologies;
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We invest substantial amounts in research and development efforts to pursue advancements in a wide range of technologies, products, and services aimed at meeting the ever-evolving product, program, and service needs of our customers.
−Removed: Our ability to realize the anticipated benefits of our investments depends on a variety of factors, including meeting development, production, certification, and regulatory approval schedules;
+Added: Our ability to realize the anticipated benefits of our investments depends on a variety of factors, including the competitiveness of our offerings’ performance relative to our peers;
+Added: meeting development, production, certification, and regulatory approval schedules;
receiving regulatory approvals;
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the level of customer interest in new technologies and products;
−Removed: customer acceptance of our products and technologies;
−Removed: and the level of competition as described below.
−Removed: For example we are investing in artificial intelligence, among other advanced technologies, and we may be unable to successfully integrate the technology into our products and services or keep pace with this rapidly changing technology.
+Added: requirements to provide disclosure and company intellectual property rights for certain government procurement programs;
+Added: and customer acceptance of our products and technologies.
+Added: For example we are investing in artificial intelligence, among other advanced technologies, and our business may be adversely affected if we are unable to successfully integrate the technology into our internal business processes and products and services in a timely, cost-effective, compliant, and responsible manner.
+Added: The methods and processes we use to develop, deploy or otherwise use artificial intelligence systems may be found to not be in compliance with rapidly evolving regulatory standards thereby preventing or frustrating our use of the systems or creating liability for us.
+Added: These methods and processes may further perform in unexpected ways or be misused, jeopardizing RTX’s intellectual property or potentially resulting in unexpected loss or misappropriation of intellectual property.
+Added: Improper use of artificial intelligence could also lead to data breaches, undetected cyber-attacks, regulatory action, and reputational risks.
In addition, our customers manufacture or acquire end products and systems that incorporate certain of our products.
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The evolving nature of these standards, along with the long duration of development, production, and aftermarket support programs, creates uncertainty regarding program profitability, particularly with our aircraft engine products.
−Removed: Development efforts divert resources from other potential investments in our businesses, and these efforts may not lead to the development of new technologies or products on a timely basis or meet the needs of our customers as fully as competitive offerings.
+Added: Development efforts divert resources from other potential investments in our businesses, and these efforts may not lead to the development of new technologies or products on a timely basis or meet the needs of our customers as fully as alternative investments.
In addition, the industries for our products or products that incorporate our technologies may not develop or grow as we anticipate.
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Delays and/or suspension of production could result in increased development costs or deflect resources from other projects.
+Added: If we fail in our development projects or if our new products or technologies fail to achieve customer acceptance or competitors develop more capable technologies or offerings, we may be unsuccessful in obtaining new contracts or winning all or a portion of next generation programs, including in key areas such as advanced sensing solutions, next-generation aircraft engine technologies, advanced avionics solutions and hypersonics.
Any of the foregoing could have a material adverse effect on our competitive position, results of operations, financial condition, or liquidity.
−Removed: In particular, Pratt & Whitney’s Geared Turbofan family of engines incorporates advanced technologies.
−Removed: The level of orders received for the Geared Turbofan family of engines, coupled with a requirement to achieve mature production levels in a very short time frame, require significant manufacturing and supply chain capacity.
−Removed: In addition, in July 2023 Pratt & Whitney determined that a rare condition in powder metal used to manufacture certain engine parts requires accelerated inspection of the PW1100G-JM (PW1100) Geared Turbofan (GTF) fleet, which powers the A320neo family of aircraft, resulting in increased engine removals and inspections, shop visits, aircraft on ground levels, costs to the Company, and other negative impacts described in more detail below.
−Removed: If any of our production or maintenance, repair, and overhaul ramp-up efforts are delayed, if suppliers cannot timely deliver or perform to our standards, if any other engine models are found to be materially impacted by the powder metal issue, and/or if we identify or experience other issues with in-service engines in the Geared Turbofan family of engines (or other engines), whether for manufacturing reasons or otherwise, we may not meet customer requirements, which could result in material additional costs, including liquidated damages or other liabilities.
−Removed: Competition may reduce our revenues and limit our future opportunities.
−Removed: We operate in highly competitive industries and our competitors may have more extensive or more specialized engineering, manufacturing, marketing, and servicing capabilities than we do.
+Added: In particular, Pratt & Whitney’s Geared Turbofan (GTF) family of engines incorporates advanced technologies.
+Added: The level of orders received for the GTF family of engines, coupled with a requirement to achieve mature production levels in a very short time frame, have required significant growth in our manufacturing and supply chain capacity.
+Added: In addition, in July 2023 Pratt & Whitney determined that a rare condition in powder metal used to manufacture certain engine parts requires accelerated inspection of the PW1100G-JM (PW1100) GTF fleet, which powers the A320neo family of aircraft.
+Added: This issue has resulted in
+Added: increased engine removals and inspections, shop visits, aircraft on ground levels, costs to the Company, and other negative impacts described in more detail below.
+Added: If any of our production or maintenance, repair, and overhaul ramp-up efforts are delayed, if suppliers cannot timely deliver or perform to our standards, if any other engine models are found to be materially impacted by the powder metal issue, and/or if we identify or experience other issues, including durability issues, with in-service engines in the GTF family of engines (or other engines), whether for manufacturing reasons or otherwise, we may not meet customer requirements, which could result in material additional costs, including liquidated damages or other liabilities.
+Added: Competition may reduce our revenues and margins and limit our future opportunities.
+Added: We operate in highly competitive industries and our competitors may have more extensive or more specialized engineering, manufacturing, servicing, and marketing capabilities than we do.
Our contracts are typically awarded on a competitive basis.
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In addition, we may face customer-directed cost reduction targets that could have a material adverse effect on the profitability of our contracts if these targets are not achieved when required.
−Removed: We have also experienced highly competitive pricing, in which a bidder may anticipate making a substantial investment in a program in order to win the work.
Moreover, bid protests from unsuccessful bidders on new program awards are frequent with respect to DoD awards in particular.
Generally, a bid protest will delay the start of contract activities, delay earnings, and could result in the award decision being overturned and require a re-bid of the contract.
−Removed: Highly competitive activity within the commercial aerospace industry has included substantial discounts and other financial incentives, performance and operating cost guarantees, and participation in financing arrangements, in order
−Removed: to secure both new engine business and the aftermarket revenues associated with these products.
+Added: We have also experienced highly competitive pricing, in which a bidder may anticipate making a substantial investment in a program in order to win the work.
+Added: Highly competitive activity within the commercial aerospace industry has included substantial discounts and other financial incentives, performance and operating cost guarantees, and participation in financing arrangements, in order to secure both new engine business and the aftermarket revenues associated with these products.
+Added: If our competitors can offer lower cost services or products, or provide services or products more quickly, at equivalent or in some cases even reduced capabilities, we may lose business opportunities, which could adversely affect our future results.
+Added: Competitors may also be willing to accept more risk or lower profitability in competing for contracts than we are.
Further, our competitors, including our customers, may develop competing technologies which gain industry acceptance in advance of, or instead of, our products, or meet particular in-demand technological needs before us or with technology that is superior to our existing or new technologies.
This competition could cause our existing technologies and offerings to become obsolete or otherwise decrease demand for our offerings.
−Removed: In addition, the possibility exists that competitors or customers will develop aftermarket services and parts for our products that attract customers and adversely impact our return on investment on new products.
+Added: In addition, the possibility exists that competitors or customers will develop aftermarket services and parts for our products that attract customers and adversely impact our return on investment on original equipment manufacturer products.
We also anticipate companies continuing to enhance their competitive position against our defense businesses as a result of continued domestic and cross-border defense industry consolidation and the expansion of competitors’ capabilities throughout the supply chain through vertical integration.
−Removed: We are also facing heightened competition domestically and internationally from foreign and multinational firms.
−Removed: Additionally, some customers, including the DoD, are increasingly turning to commercial contractors, rather than traditional defense contractors, for space-related technologies and for information technology and other support work.
−Removed: Moreover, we are seeing increased government, particularly foreign, sponsorship of competitors on defense development programs.
+Added: We are also facing increased competition domestically and internationally from foreign and multinational firms.
+Added: Additionally, some customers, including the DoD, are increasingly turning to commercial contractors, rather than traditional defense contractors, for space and data science work, and we are also seeing increased activity from other non-traditional defense contractors and startups.
+Added: For example, the U.S.
+Added: government may award large competitive contracts to other suppliers to maintain a broad industrial base.
+Added: In addition, U.S.
+Added: government procurement policies and procedures and the application thereof are regularly changing.
+Added: Moreover, our potential international contract awards, particularly for sales of defense products and services, may be limited by our ability to agree to offset obligations or industrial cooperation obligations or enter into ICIP agreements, as discussed above.
+Added: For example, an increase in the use of contract structures that shift risk to the contractor (such as fixed-price development contracts and incentive-based fee arrangements), use of novel award fee criteria (such as the evaluation of environmental factors), evaluation of a bidder’s willingness to provide detailed competitively sensitive intellectual property (such as detailed RTX design, manufacturing and process information that would risk loss of competitively sensitive information), or requirements to transfer technology to domestic sources in connection with offset obligations, could adversely affect our profit rates, ability to preserve differentiated product offerings, maintain lower tier suppliers, or make it more difficult to win new contracts.
If we are unable to continue to compete successfully against our current or future competitors in our core businesses, we may experience declines in revenues and industry segment share which could have a material adverse effect on our competitive position, results of operations, financial condition, or liquidity.
OPERATIONAL RISKS
−Removed: Our business and financial performance may be adversely affected by cyber-attacks on information technology infrastructure and products, as well as changes in cybersecurity regulations.
−Removed: Our business may be impacted by disruptions to our own or third-party information technology (IT) infrastructure, which could result from, among other causes, cyberattacks on or failures of such infrastructure or compromises to its physical security.
−Removed: The products and services that we provide our customers are also at risk of being adversely affected by cyber-attacks, including attempts to infiltrate them or sabotage or disable their use.
+Added: Our business and financial performance may be adversely affected by cyber-attacks on information technology (IT) infrastructure and products, as well as changes in cybersecurity regulations.
+Added: Our business may be impacted by disruptions to our own or third-party IT infrastructure, and the products and services that we provide our customers are also at risk of being adversely affected by cyber-attacks.
Like other companies, we regularly experience cyber-based attacks.
−Removed: Cybersecurity threats are continuously evolving and include, but are not limited to, both attacks on our IT infrastructure and attacks on the IT infrastructure of our customers, suppliers, subcontractors and other third parties with whom we do business routinely, both on premises and in the cloud, attempting to gain unauthorized access to our confidential, proprietary, or otherwise protected information, classified information, or information relating to our employees, customers and other third parties, or to disrupt our systems or the systems of third parties.
−Removed: Cybersecurity threats also include attacks targeting the security, confidentiality, integrity and/or availability of the hardware, software and information installed, stored or transmitted in our products, including after the purchase of those products and when they are incorporated into third-party products, facilities or infrastructure.
+Added: Cybersecurity threats are continuously evolving and may have an impact on our customers, suppliers, subcontractors, and other third parties with whom we do business routinely, both on premises and in the cloud, attempting to gain unauthorized access to our confidential, proprietary, or otherwise protected information, classified information, or personal data or other information relating to our employees, customers, and other third parties, or to disrupt our systems or the systems of third parties.
+Added: Cybersecurity threats also include attacks targeting the security, confidentiality, integrity, and/or availability of the hardware, software, and information installed, stored, or transmitted in our products, including after the purchase of those products and when they are
+Added: incorporated into third-party products, facilities, or infrastructure.
We are also exposed to the risk of insider threat attacks.
−Removed: Any such attacks could disrupt our systems or those of third parties (including mission critical systems), impact business operations, result in unauthorized release of confidential, proprietary, or otherwise protected information, and corrupt our data or that of third parties.
+Added: Any such attacks could disrupt our systems or those of third parties (including mission and safety critical systems), impact business operations, result in unauthorized release of confidential, proprietary, or otherwise protected information, and corrupt our data or that of third parties.
The threats we face are continuous and evolving, and vary in degree of severity and sophistication.
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In addition, changes in domestic and international cybersecurity-related laws and regulations have expanded cybersecurity-related compliance requirements, and cybersecurity regulatory enforcement activity has grown.
−Removed: We expect the regulatory environment to continue to evolve, and staying apace with these regulatory changes could increase our operational and compliance expenditures and those of our suppliers, and lead to new or additional information technology and product development expenses.
+Added: We expect the regulatory environment to continue to evolve, and these regulatory changes could increase our operational and compliance expenditures and those of our suppliers, and lead to new or additional IT and product development expenses.
We also face reputational, litigation, and financial risks in relation to potential required disclosures and increased risk of enforcement.
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In some cases, we must rely on the safeguards put in place by our customers, suppliers, subcontractors, and other third parties to protect against and report cyber threats and attacks.
−Removed: We could potentially be subject to production downtimes, operational delays, other detrimental impacts on our operations or
−Removed: ability to provide products and services to our customers, the compromise of confidential information, intellectual property or otherwise protected information, misappropriation, destruction or corruption of data, security breaches, other manipulation or improper use of our or third-party systems, networks or products, financial losses from remedial actions, loss of business, or potential liability, penalties, fines and/or damage to our reputation.
+Added: We could potentially be subject to production downtimes, operational delays, other detrimental impacts on our operations, or ability to provide products and services to our customers, the compromise of confidential information, intellectual property or otherwise protected information, misappropriation, destruction, or corruption of data, security breaches, other manipulation or improper use of our or third-party systems, networks, or products, financial losses from remedial actions, loss of business, or potential liability, penalties, fines, and/or damage to our reputation.
Any of these could have a material adverse effect on our competitive position, results of operations, financial condition, or liquidity.
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Identifying and qualifying second- or third- source suppliers can be difficult, time-consuming, and may result in increased costs.
−Removed: In 2023, global supply chain disruptions impacted our ability to procure raw materials, microelectronics, and certain commodities.
+Added: In recent years, global supply chain disruptions have impacted our ability to procure raw materials, microelectronics, and certain commodities.
These disruptions were driven by supply chain market constraints and macroeconomic conditions, including inflation and labor market shortages.
−Removed: Current geopolitical conditions, including conflicts and other causes of strained intercountry relations, as well as sanctions and other trade restrictive activities, are contributing to these issues.
−Removed: In addition, current high inflation levels have increased material and component prices, labor rates, and supplier costs, and put pressure on our margins.
+Added: Current geopolitical conditions, including conflicts and other causes of strained intercountry relations, as well as sanctions and other trade restrictive activities, have contributed to these issues.
+Added: In addition, the inflationary environment has increased material and component prices, labor rates, and supplier costs, and negatively impacted costs.
Credit market conditions, including higher interest rates and the availability of credit, have impacted some of our suppliers and subcontractors as well.
−Removed: As a result of these procurement issues, the production flow in our factories has been negatively impacted, which has, in turn, hindered our ability to perform on our commitments to customers and negatively affected our results of operations, financial condition, and liquidity.
+Added: As a result of these procurement issues, the production flow in our factories has been negatively impacted, which has, in turn, hindered our ability to perform on our commitments to customers and negatively
+Added: affected our results of operations, financial condition, and liquidity.
Our supply costs have increased due to the above factors.
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The timing of the impacts of these supply chain risks and issues and our ability to mitigate them are uncertain and difficult to predict.
−Removed: However, we expect the current supply chain, inflation, and price issues, and their negative impacts on our business, to continue into 2024.
+Added: However, we expect the current supply chain, inflation, and price issues, and their negative impacts on our business, to continue.
In particular, we expect to experience prolonged delays for certain critical component parts and sub-systems.
Furthermore, the existing supply chain issues could be compounded by other events, such as an economic downturn;
+Added: changes in trade policies, such as tariffs;
supplier capacity constraints for other reasons;
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In addition, our products could fail as a result of cyber-attacks, such as those that seize control and result in misuse or unintended use of our products, or other intentional acts.
−Removed: The impact of a catastrophic product or system failure or similar event affecting our or our customers’ or suppliers’ products or services could
−Removed: be significant, and could result in injuries or death, property damage, loss of strategic capabilities, loss of intellectual property, loss of reputation, and other significant negative effects.
+Added: The impact of a catastrophic product or system failure or similar event affecting our or our customers’ or suppliers’ products or services could be significant, and could result in injuries or death, property damage, loss of strategic capabilities, loss of intellectual property, loss of reputation, and other significant negative effects.
A product or system failure, or perceived failure, could lead to negative publicity, a diversion of management attention, and damage to our reputation that could reduce demand for our products and services.
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Any of the foregoing could have a material adverse effect on our competitive position, results of operations, financial condition, or liquidity.
−Removed: In particular, as previously disclosed, Pratt & Whitney has determined that a rare condition in powder metal used to manufacture certain engine parts requires accelerated inspection of the PW1100 GTF fleet, which powers the A320neo family of aircraft.
−Removed: This determination and corresponding fleet actions have significantly increased both the incremental number of PW1100 GTF engines that will need to be removed and the incremental number of shop visits necessary to perform the inspections as compared to estimates prior to this determination.
−Removed: Actual and future estimated aircraft on ground levels for the A320neo family of aircraft have therefore increased.
+Added: In particular, in 2023, Pratt & Whitney determined that a rare condition in powder metal used to manufacture certain engine parts requires accelerated inspection of the PW1100 GTF fleet, which powers the A320neo family of aircraft.
+Added: This determination and corresponding fleet actions have resulted in, and are expected to continue to result in, an elevated level of aircraft on ground for the A320neo family of aircraft and significant incremental shop visits necessary to perform inspections on PW1100 GTF engines through the end of 2026.
As a result, we have and will continue to incur significant customer support and mitigation costs and significant labor, material, and related costs.
This matter has caused reputational harm and has negatively impacted, and will continue to impact, our results of operations and financial condition.
−Removed: The financial impact of the powder metal issue is based on historical experience and is subject to various assumptions and judgments, including, without limitation, the number and expected timing of shop visits, inspection results and scope of work to be performed, turnaround time, availability of parts, available capacity at overhaul facilities, and outcomes of negotiations with impacted customers, and these assumptions are subject to variability.
+Added: The expected financial impact of the powder metal issue is based on historical experience and is subject to various assumptions and judgments, including, without limitation, the number and expected timing of shop visits, inspection results and scope of work to be performed, turnaround time, availability of parts, available capacity at overhaul facilities, and outcomes of negotiations with impacted customers, and these assumptions are subject to variability.
Potential changes to these assumptions could have a material effect on the Company’s results of operations for the periods in which it is recognized.
In addition, other engine models within Pratt & Whitney’s fleet contain parts manufactured with affected powder metal.
−Removed: The negative impacts to our company arising from the Powder Metal matter could increase if any other engine models are found to be materially impacted by this rare condition.
+Added: The negative impacts arising from the Powder Metal Matter could increase if any other engine models are found to be materially impacted by this rare condition.
We depend on the recruitment and retention of qualified personnel, and our failure to attract, train, and retain such personnel could seriously harm our business.
−Removed: Due to the specialized nature of our business, our future performance is highly dependent upon the continued services of our key technical personnel and executive officers, and the hiring, development, and retention of qualified technical, engineering, manufacturing, marketing, sales, and management personnel for our operations.
+Added: Due to the specialized nature of our business, our future performance is highly
+Added: dependent upon the continued services of our key technical personnel and executive officers, and the hiring, development, and retention of qualified technical, engineering, manufacturing, marketing, sales, and management personnel for our operations.
Our defense business in particular requires qualified personnel with security clearances due to our classified programs.
−Removed: Moreover, a significant percentage of our current workforce is nearing or eligible for retirement.
−Removed: To the extent that we lose experienced personnel in the future, it is critical that we develop other employees, hire new qualified personnel, and successfully manage the transfer of knowledge.
+Added: As portions of our workforce continue to retire and we lose experienced personnel in the future, it is critical that we develop other employees, hire new qualified personnel, and successfully manage the transfer of critical skillsets and industry knowledge within our workforce.
We have experienced, and continue to experience, challenges hiring highly qualified personnel including engineers, skilled laborers, and security clearance holders.
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Any of the above factors could seriously harm our business.
−Removed: Moreover, we believe that a critical element of our ability to successfully attract, train, and retain qualified personnel is our corporate culture, which we believe fosters innovation, collaboration, diversity, equity, and inclusion, and a focus on execution, all in an environment of high ethical standards.
+Added: Moreover, we believe that a critical element of our ability to successfully attract, train, and retain qualified personnel is our corporate culture, which we believe fosters innovation, collaboration, and a focus on execution, all in an environment of high ethical standards.
Our global operations may present challenges in maintaining these important aspects of our corporate culture, and a failure to maintain our corporate culture could negatively impact us.
−Removed: Further, we rely on our key personnel to lead with integrity and to meet our high ethical standards that promote excellent performance and cultivate diversity, equity, and inclusion.
+Added: Further, we rely on our key personnel to lead with integrity and to meet our high ethical standards that promote excellent performance.
To the extent any of our key personnel were to behave in a way that is inconsistent with our values, including with respect to product safety or quality, legal or regulatory compliance, financial reporting, or people management, we could experience a materially adverse impact to our reputation and our operating results.
−Removed: In addition, failure or
−Removed: perceived failure to meet increasing stakeholder expectations on environmental, social, and governance (ESG) matters could harm our reputation and impact demand for our products and services.
+Added: In addition, failure or perceived failure to meet stakeholder expectations on environmental, social, and governance (ESG) matters could harm our reputation and impact demand for our products and services.
Exports and imports of certain of our products are subject to various export control, sanctions, and import regulations and may require authorization from regulatory agencies of the U.S.
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In the U.S., these laws and regulations include, among others, the Export Administration Regulations (EAR) administered by the U.S.
−Removed: Department of Commerce, the International Traffic in Arms Regulations (ITAR) administered by the U.S.
−Removed: Department of State, embargoes and sanctions regulations administered by the U.S.
+Added: Department of Commerce, the International Traffic in Arms Regulations (ITAR) and Arms Export Control Act (AECA) provisions administered by the U.S.
+Added: Department of State (DOS), embargoes and sanctions regulations administered by the U.S.
Department of the Treasury, and import regulations administered by the U.S.
Department of Homeland Security and the U.S.
−Removed: Department of Justice.
+Added: Department of Justice (DOJ).
Certain of our products, services, and technologies have military or strategic applications and are on the U.S.
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foreign policy or the foreign policy of other licensing jurisdictions may affect the licensing process or otherwise prevent us from engaging in business dealings with certain individuals, entities, or countries.
−Removed: Any failure by us, our customers, or our suppliers to comply with these laws and regulations could result in civil or criminal penalties, fines, seizure of our products, adverse publicity, restrictions on our ability to engage in export or import transactions, or the suspension or debarment from doing business with the U.S.
+Added: From time to time, we identify, investigate, remediate and voluntarily disclose violations or potential violations of the ITAR and EAR.
+Added: Any failure by us, our customers, or our suppliers to comply with the above-referenced laws and regulations, arising out of our voluntary disclosures or otherwise, could result in civil or criminal penalties, fines, seizure of our products, adverse publicity, restrictions on our ability to engage in export or import transactions, or the suspension or debarment from doing business with the U.S.
Moreover, any changes in export control, sanctions, or import regulations may further restrict the export or import of our products or services, and the possibility of such changes requires constant monitoring to ensure we remain compliant.
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Any restrictions on the export or import of our products or product lines could have a material adverse effect on our competitive position, results of operations, financial condition, or liquidity.
+Added: In addition, as previously disclosed, on August 29, 2024, the Company entered into a Consent Agreement (CA) with the DOS to resolve alleged civil violations of the AECA and the ITAR.
+Added: The CA, which has a three-year term, requires the Company to implement remedial compliance measures and to conduct an external audit of the Company’s ITAR compliance program.
+Added: CA also requires appointment of an external, independent Special Compliance Officer (SCO).
+Added: The Company appointed its SCO on September 27, 2024.
+Added: If we are unable to satisfy the requirements of the CA within three years as determined by the DOS, we may face a continuation of the CA, additional fines, or other adverse impacts.
+Added: In addition, during the term of the CA, the CA’s transaction-related requirements may impact our ability to execute potential future divestitures within expected timeframes or consistent with expected valuation metrics, which could delay or impair our ability to achieve the expected benefits from our strategic plan, or otherwise harm our competitive position, results of operations, financial condition, or liquidity.
Our business and financial performance may be adversely affected by threats to our physical security and other events outside our control.
We could encounter threats to our physical security, including our facilities and personnel, and threats from workplace violence, civil unrest, terrorism, or similar acts, any of which could disrupt our business.
−Removed: In addition, our business, and the businesses of our suppliers, subcontractors, service providers, and customers, could be disrupted by public health crises, such as pandemics and epidemics (including a resurgence of the Coronavirus Disease 2019 (COVID-19) pandemic), and governmental, business, and individual actions taken in response, damaging weather or other acts of nature, cyber-attacks on IT infrastructure and products, or other events outside of our control.
+Added: In addition, our business, and the businesses of our suppliers, subcontractors, service providers, and customers, could be disrupted by public health crises, such as pandemics and epidemics, and governmental, business, and individual actions taken in response, damaging weather or other acts of nature, physical attacks due to proximity to nation-state conflicts, cyber-attacks on IT infrastructure and products, or other events outside of our control.
Any such business disruption could subject us to production downtimes, operational delays, supply chain challenges, other detrimental impacts on our operations or ability to provide products and services to our customers, decreased demand for our products, decreased defense budgets, financial losses from remedial actions, the diversion of management’s attention and resources, or loss of business, any of which could have a material adverse effect on our competitive position, results of operations, financial condition, or liquidity.
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Moreover, our efforts to protect intellectual property and proprietary rights may not be sufficient.
−Removed: We cannot be sure that our pending patent applications will result in the issuance of patents to us, that patents issued to or licensed by us in the past or in the future will not be challenged or circumvented by competitors, or that these patents will be found to be valid or
−Removed: sufficiently broad to preclude our competitors from introducing technologies similar to those covered by our patents and patent applications.
+Added: We cannot be sure that our pending patent applications will result in the issuance of patents to us, that patents issued to or licensed by us in the past or in the future will not be challenged or circumvented by competitors, or that these patents will be found to be valid or sufficiently broad to preclude our competitors from introducing technologies similar to those covered by our patents and patent applications.
Our ability to protect and enforce our intellectual property rights may be limited in certain countries outside the U.S.
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Our competitive position also may be adversely impacted by limitations on our ability to obtain possession of, and ownership of, necessary licenses concerning data important to the development or provision of our products or service offerings, or by limitations on our ability to restrict the use by others of data related to our products or services.
−Removed: We may also be subject to disruptions, losses, and liability resulting from various cybersecurity attacks or information technology failures, as described above.
+Added: We may also be subject to disruptions, losses, and liability resulting from various cybersecurity attacks or IT failures, as described above.
Any of these events or factors could have a material adverse effect on our competitive position, subject us to judgments, penalties, and significant litigation costs, or temporarily or permanently disrupt our sales and marketing of the affected products or services.
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For instance, if we or one of our business units were charged with wrongdoing in connection with a U.S.
−Removed: government investigation (including fraud, or violation of certain environmental, FCPA, and other anti-bribery and anti-corruption laws, or export laws, as further described below), the U.S.
+Added: government investigation (including fraud, or violation of certain environmental, FCPA, and other anti-bribery and
+Added: anti-corruption laws, or export laws, as further described below), the U.S.
government could suspend us from bidding on or receiving awards of new U.S.
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government, including DCMA claims to recover payments for alleged noncompliance with cost accounting standards.
−Removed: In some cases, the Department of Justice (DOJ) has conducted investigations or convened grand juries to investigate possible irregularities in our costs.
+Added: In some cases, the DOJ has conducted investigations or convened grand juries to investigate possible irregularities in our costs.
+Added: As discussed below and as previously disclosed, in October 2024, the Company entered into certain deferred prosecution agreements and a civil settlement agreement with the DOJ to resolve investigations relating to pricing on certain government contracts.
Any costs found to be improperly allocated to a specific contract will not be reimbursed by the U.S.
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An adverse outcome of any audit or investigation could result in civil and criminal penalties and fines, which could negatively impact our results of operations, financial condition, and liquidity.
−Removed: In addition, if allegations of impropriety were made against us, we could suffer serious reputational harm, which could negatively affect our financial position, results of operations, and liquidity.
+Added: In addition, if allegations of impropriety were made against us, we could suffer serious reputational harm, which could negatively affect our results of operations, financial position, and liquidity.
+Added: A violation by Raytheon Company or the Company of any one of the deferred prosecution agreements or Securities and Exchange Commission (SEC) administrative order announced on October 16, 2024 could adversely affect our business.
+Added: As previously disclosed, on October 15, 2024, Raytheon Company entered into a deferred prosecution agreement (DPA) (DPA-1) with the DOJ and on October 16, 2024, the Company became subject to an administrative order issued by the SEC (the SEC Administrative Order) to resolve the previously disclosed criminal and civil government investigations into payments made by Raytheon Company and its joint venture, Thales-Raytheon Systems (TRS), since 2012 in connection with certain Middle East contracts.
+Added: On October 16, 2024, Raytheon also entered into a DPA (DPA-2) and a False Claims Act (FCA) settlement agreement with the DOJ to resolve previously disclosed criminal and civil government investigations into defective pricing claims for certain legacy Raytheon contracts entered into between 2011 and 2013 and in 2017.
+Added: The Company made a settlement payment, criminal and civil penalties, restitution, and disgorgement, as applicable, pursuant to DPA-1, DPA-2, the SEC Administrative Order and the FCA settlement agreement as described in “Note 17:
+Added: Commitments and Contingencies” within Item 8 of this Form 10-K.
+Added: Pursuant to DPA-1, among other terms, the DOJ will defer, for a period of three years, criminal prosecution of Raytheon Company related to Raytheon Company’s alleged conspiracy to violate the anti-bribery provisions of the FCPA and alleged conspiracy to violate the AECA by failing to make related disclosures of certain payments that qualified as fees, commissions and/or political contributions under Part 130 of ITAR.
+Added: Pursuant to DPA-2, among other terms, the DOJ will defer, for a period of three years, criminal prosecution of Raytheon Company related to two counts of major fraud against the United States by Raytheon Company involving two legacy contracts.
+Added: Under DPA-1, DPA-2, and the SEC Administrative Order, Raytheon Company and the Company are required to retain an independent compliance monitor satisfactory to the DOJ and the SEC (for a term ending three years from the date on which the monitor is engaged) and are required to undertake certain cooperation and disclosure obligations (for a term commencing on the effective date of DPA-1 and the SEC Administrative Order, as applicable, and ending three years from the date on which the monitor is engaged).
+Added: The compliance monitor will oversee Raytheon Company’s and the Company’s compliance with their respective obligations under DPA-1, DPA-2, and the SEC’s Administrative Order.
+Added: DPA-1 and DPA-2 further provide that, in the event the DOJ, in its sole discretion, determines during the deferred prosecution period that Raytheon Company or the Company has violated any provision of either DPA, Raytheon Company or the Company may be subject to prosecution for any federal criminal violations brought against Raytheon Company or the relevant Company in DPA-1 and DPA-2.
+Added: The SEC Administrative Order further provides that, in the event of a breach of the SEC Administrative Order, the SEC may vacate the Administrative Order and institute proceedings against the Company.
+Added: Any breach of DPA-1, DPA-2, or the SEC Administrative Order could subject Raytheon Company or the Company to criminal prosecutions and/or administrative proceedings, resulting in additional criminal and civil penalties and fines, extension of either DPA’s term(s), including the terms of the monitorship, increased future regulatory and legal scrutiny by U.S.
+Added: or foreign government agencies, additional reputational harm, additional compliance costs, suspension of export privileges and/
+Added: or suspension or debarment from U.S.
+Added: government contracting or subcontracting for a period of time, any of which could negatively affect our results of operations, financial position, and liquidity.
+Added: In addition, during the term of the DPAs, the DPAs’ transaction-related requirements may impact our ability to execute potential future divestitures within expected timeframes or consistent with expected valuation metrics, which could delay or impair our ability to achieve the expected benefits from our strategic plan, or otherwise harm our competitive position, results of operations, financial condition or liquidity.
We are subject to litigation, environmental, anti-corruption, and other legal and compliance risks.
We are subject to a variety of litigation and legal compliance risks.
−Removed: These risks relate to, among other things, product safety and reliability, personal injuries, intellectual property rights, contract-related claims, government contracts, taxes, environmental matters, export control, sanctions, employment matters, securities laws, competition laws, and laws governing improper business practices.
+Added: These risks relate to, among other things, product safety and reliability, personal injuries, intellectual property rights, contract-related claims, government contracts, taxes, environmental matters, the use of artificial intelligence, export control, sanctions, employment matters, securities laws, competition laws, and laws governing improper business practices.
We or one of our businesses could be charged with wrongdoing as a result of such matters.
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We use hazardous substances and generate hazardous wastes in certain of our operations.
−Removed: As a result, we are subject to potentially material liabilities related to personal injuries or property damage that may be caused by hazardous substance releases and exposures.
+Added: We also rely upon the use of chemical substances that are heavily regulated in connection with our products, manufacturing processes and operation of our facilities.
+Added: As a result, we are subject to potentially material liabilities related to potential non-compliance and both personal injuries or property damage that may be caused by hazardous substance releases and exposures.
Personal injury lawsuits may involve individual and purported class actions alleging that contaminants originating from our current or former products or operating facilities caused or contributed to medical conditions, including cancers or other illnesses incurred by employees, former employees, third-parties’ employees, or residents in the area, and environmental damage or diminution of real estate values.
1 unchanged sentence
We are also subject to laws and regulations that:
−Removed: (1) impose requirements for the proper management, treatment, storage, and disposal of hazardous substances and wastes;
+Added: (1) impose requirements for chemical substances and the proper management, treatment, storage, and disposal of hazardous substances and wastes;
(2) restrict air and water emissions from our operations (including U.S.
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Despite meaningful measures that we undertake to ensure lawful conduct, which include training and internal control policies, these measures may not always prevent violations of the FCPA or similar laws.
−Removed: We have been subject to regulatory investigations for alleged violations of anti-bribery and anti-corruption laws, and could be subject to such investigations in the future, which could result in criminal and civil penalties, disgorgement, further changes or enhancements to our procedures, policies and controls, personnel changes, or other remedial actions.
+Added: As discussed above and as previously disclosed, in October 2024, the Company entered into a DPA with the DOJ and consented to the entry of an SEC Administrative Order to resolve investigations related to conduct that, among other things, violated the FCPA.
+Added: We have been subject to regulatory investigations for alleged violations of anti-bribery and anti-corruption laws, and could be subject to such
+Added: investigations in the future, which could result in criminal and civil penalties, disgorgement, further changes or enhancements to our procedures, policies and controls, personnel changes, or other remedial actions.
Violations of these laws, or allegations of such violations, could disrupt our operations, cause reputational harm, involve significant management attention, and result in a material adverse effect on our competitive position, results of operations, financial condition, or liquidity.
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As a result, we continue to make additional investments in new technologies and capabilities, and devote management and other resources in response to the foregoing.
−Removed: We may not realize, on a timely basis or at all, the anticipated benefits of these investments and
−Removed: actions for a variety of reasons, including technological challenges, evolving government and customer requirements, and our ability to anticipate them and develop in-demand technologies on a timely basis, and other risks related to the development of advanced technologies described above.
+Added: We may not realize, on a timely basis or at all, the anticipated benefits of these investments and actions for a variety of reasons, including technological challenges, evolving government and customer requirements, and our ability to anticipate them and develop in-demand technologies on a timely basis, and other risks related to the development of advanced technologies described above.
In addition, certain technologies will be dependent upon government action, such as investments in infrastructure, creating appropriate market incentives, and making certain raw materials available for development of certain technologies.
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We have outstanding debt and other financial obligations, and we depend, in part, upon the issuance of debt to fund our business requirements.
−Removed: In connection with the accelerated share repurchase (ASR) transactions, we incurred $10 billion of long-term debt.
−Removed: The increased indebtedness of RTX in connection with the ASR transactions may have various negative impacts on our business.
−Removed: These include shifting significant cash flow from operations to debt principal and interest payments and ASR transactions costs, which will reduce funds we have available for other purposes, such as acquisitions, research and development, and other reinvestments in our businesses, and dividends and common stock repurchases.
+Added: The increased indebtedness of RTX in connection with the $10 billion accelerated share repurchase (ASR) transactions that began in October 2023 and completed at the end of September 2024 may have various negative impacts on our business.
+Added: These include shifting significant cash flow from operations to debt principal and interest payments, which will reduce funds we have available for other purposes, such as acquisitions, research and development, and other reinvestments in our businesses, and dividends and common stock repurchases.
It could also reduce our flexibility in planning for, or reacting to, changes in our business and market conditions.
It exposes us to interest rate and credit market risk at the time of refinancing outstanding debt, as well as these same risks on our commercial paper obligations, which are issued at variable rates.
−Removed: In addition, if we require additional funding in order to fund outstanding financing commitments or meet other business requirements, a number of factors could cause us to incur increased borrowing costs and to have greater difficulty accessing public and private markets for debt, any of which may adversely affect our ability to fund our business requirements.
+Added: In addition, if we require additional funding in order to fund outstanding financing commitments or meet other business requirements, a number of factors could cause us to incur increased borrowing costs and to have greater difficulty accessing
+Added: public and private markets for debt, any of which may adversely affect our ability to fund our business requirements.
These factors include disruptions or declines in the global capital markets and/or a decline in our financial performance, outlook, or credit ratings.
−Removed: As previously disclosed, in August 2023, S&P Global downgraded our credit rating from A-/negative to BBB+/stable, and our credit rating with Moody’s Investors Service remained at Baa1/stable.
−Removed: Subsequently, in October 2023, both S&P Global and Moody’s Investors Service outlook changed from stable to negative when we entered into the ASR transactions.
−Removed: Further downgrades of our credit ratings may result, if we are unable to meet operating expectations and our cash flow expectations, or to the extent that we are unable to reduce our outstanding debt according to planned timeframes.
+Added: Downgrades of our credit ratings may result, if we are unable to meet operating expectations and our cash flow expectations, or to the extent that we are unable to reduce our outstanding debt according to planned timeframes.
We use estimates in accounting for many of our programs, and changes in our estimates could adversely affect our future financial results.
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(2) the complexity and scope of the work to be performed;
−Removed: (3) the availability and cost of materials;
+Added: (3) the availability and cost of materials including any impact from changing costs or inflation;
(4) the length of time to complete the performance obligation;
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(7) overhead cost rates;
−Removed: and (8) current and past service cost and frequency driven by estimated aircraft and engine utilization and estimated useful lives of components, among other variables.
+Added: and (8) current and past maintenance cost and frequency driven by estimated aircraft and engine utilization and estimated useful lives of components, among other variables.
Cost estimates may also include the estimated cost of satisfying our industrial cooperation agreements, sometimes in the form of either offset obligations or ICIP agreements, required under certain contracts.
−Removed: as previously disclosed, Pratt & Whitney has determined that a rare condition in powder metal used to manufacture certain engine parts requires accelerated inspection of the PW1100 GTF fleet, which powers the A320neo family of aircraft.
−Removed: This determination and corresponding fleet actions have significantly increased both the incremental number of PW1100 GTF engines that will need to be removed and the incremental number of shop visits necessary to perform the inspections as compared to estimates prior to this determination.
+Added: In addition, in 2023 Pratt & Whitney determined that a rare condition in powder metal used to manufacture certain engine parts requires accelerated inspection of the PW1100 GTF fleet, which powers the A320neo family of aircraft.
+Added: This determination and corresponding fleet actions have resulted in, and are expected to continue to result in, significant incremental shop visits necessary to perform inspections on PW1100 GTF engines as compared to estimates prior to this determination.
Actual and future estimated aircraft on ground levels for the A320neo family of aircraft have therefore increased.
−Removed: The financial impact of the powder metal issue is based on historical experience and is subject to various assumptions and judgments, including, without limitation, the number and expected timing of shop visits, inspection results and scope of work to be performed, turnaround time, availability of parts, available capacity at overhaul facilities, and outcomes of negotiations with impacted customers, and these assumptions are subject to variability.
+Added: The expected financial impact of the powder metal issue is based on historical experience and is subject to various assumptions and judgments, including, without limitation, the number and expected timing of shop visits, inspection results and scope of work to be performed, turnaround time, availability of parts, available capacity at overhaul facilities, and outcomes of negotiations with impacted customers, and these assumptions are subject to variability.
Because of the significance of management’s judgments and estimation processes described above, it is likely that materially different amounts could be recorded if we used different assumptions or if the underlying circumstances were to change.
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They may change significantly due to changes in economic, legislative, regulatory, and/or demographic experience or circumstances.
−Removed: Changes in our assumptions or actual experience that differs from these assumptions, as well as management changes to retirement plans, could impact our pension and postretirement net periodic benefit (income) expense, the plans’ funded status, and/or the required cash contributions to such plans, which could negatively impact our results of operations, financial condition, or liquidity.
+Added: Changes in our assumptions or actual experience that differs from these assumptions, as well as management changes to retirement plans, could impact our pension and postretirement net periodic (income) expense, the plans’ funded status, and/or the required cash contributions to such plans, which could negatively impact our results of operations, financial condition, or liquidity.
Our plan assets are invested in accordance with our investment management objectives and are subject to market volatility and other conditions.
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Quarterly cash dividends and share repurchases under our share repurchase program generally constitute components of our capital allocation strategy, which we fund through a combination of operating free cash flow, borrowings, and proceeds from divestitures.
−Removed: However, we are not required to declare dividends or make any share repurchases under our share repurchase program, other than with respect to the final settlement pursuant to the ASR transactions.
+Added: However, we are not required to declare dividends or make any share repurchases under our share repurchase program.
Dividends and share repurchases may be discontinued, accelerated, suspended, or delayed at any time without prior notice.
−Removed: Even if not discontinued, the amount of such dividends and repurchases may be changed, and the amount, timing, and frequency of such dividends and repurchases may
−Removed: vary from historical practice or from the company’s stated expectations.
+Added: Even if not discontinued, the amount of such dividends and repurchases may be changed, and the amount, timing, and frequency of such dividends and repurchases may vary from historical practice or from the company’s stated expectations.
Decisions with respect to dividends and share repurchases are subject to the discretion of our Board of Directors and are based on a variety of factors.
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Additionally, there can be no assurance that any share repurchases will enhance shareowner value because the market price of our common stock may decline below the levels at which we repurchased shares of common stock, and short-term stock price fluctuations could reduce the program’s effectiveness.
−Removed: “Market for Registrants Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities” in this Form 10-K for a description of our share repurchase program and past share repurchases, including our ASR transactions.
+Added: “Market for Registrant’s Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities” in this Form 10-K for a description of our share repurchase program and past share repurchases.
We face certain significant risk exposures and potential liabilities that may not be adequately covered by indemnity or insurance.
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In addition, we may incur significant liabilities that are unique to our products and services.
−Removed: In some, but not all, circumstances, we may be entitled to indemnification from our customers through contractual provisions, and we may obtain limitations of liability and additional defenses for various reasons including the qualification of our products and services by the Department of Homeland Security (DHS) under the SAFETY Act provisions of the Homeland Security Act of 2002.
+Added: In some, but not all, circumstances, we may be entitled to indemnification from our customers through contractual provisions, and we may obtain limitations of liability and additional defenses for various reasons including the qualification of our products and services by the Department of Homeland Security under the SAFETY Act provisions of the Homeland Security Act of 2002.
The insurance coverage we maintain or indemnification to which we may be contractually or otherwise entitled may not be adequate to cover all claims or liabilities.
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In order to operate more effectively and efficiently, from time to time we undertake strategic and other operational initiatives.
−Removed: For example, we are undergoing a significant, multi-year digital transformation initiative to improve our business, modernize operations, and reduce costs.
−Removed: Under this initiative, we are leveraging digital capabilities throughout the way in which we conduct our business and provide our products and services to customers, including how we design, build, and maintain our products and services.
−Removed: We also continue to engage our Customer Oriented Results Excellence (CORE) operating system to drive continuing improvement into our processes and facilities.
−Removed: In addition, we continue to invest in structural cost reduction in our facilities, including aligning work to more efficient manufacturing centers, implementing advanced manufacturing capabilities including automation, and closing facilities that are not required to meet future capacity and work needs.
+Added: For example, we are undergoing significant, multi-year digital transformation initiatives to improve our business, modernize operations, and reduce costs.
+Added: Under these initiatives, we are leveraging digital capabilities throughout the way in which we conduct our business and provide our products and services to customers, including how we design, build, and maintain our products and services and operate our facilities.
+Added: We also continue to engage our Customer Oriented Results and Excellence (CORE) operating system to drive continuing improvement into our processes and facilities.
+Added: In addition, we continue to invest in structural cost reduction in our facilities, including aligning work to more efficient manufacturing centers, implementing advanced manufacturing capabilities including Industry 4.0 digital initiatives and automation, and closing facilities that are not required to meet future capacity and work needs.
Other initiatives include the pursuit of advanced technologies and new business acquisitions and subsequent integrations.
−Removed: For example, we are investing in the integration of artificial intelligence technologies into our processes and business operations.
−Removed: Moreover, effective July 1, 2023, we realigned our current business segment structure from four to three business segments.
−Removed: We also implement restructuring plans from time to time.
−Removed: Restructuring activities include or may result in workforce reductions, global facility reductions, procurement cost reduction activities, legal entity and operational reorganizations, and other cost reduction initiatives.
+Added: For example, we continue to invest in the integration of artificial intelligence technologies into our processes and business operations.
+Added: We realigned our business segment structure in 2023, and we also implement restructuring plans from time to time.
+Added: Restructuring activities include or may result in workforce reductions, global facility reductions, procurement cost reduction
+Added: activities, legal entity and operational reorganizations, and other cost reduction initiatives.
These strategic activities are complex and require the investment of resources including in personnel and systems.
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We undertake to identify opportunities that will complement our existing products and services or customer base, as well as expand our offerings and business opportunities into new areas that naturally extend from our core capabilities.
−Removed: In evaluating such transactions, we are required to make difficult judgments
−Removed: regarding the value of business opportunities, technologies and other assets, and the risks and cost of potential liabilities.
+Added: In evaluating such transactions, we are required to make difficult judgments regarding the value of business opportunities, technologies, and other assets, and the risks and cost of potential liabilities.
Further, these transactions involve certain other risks and uncertainties including:
(1) the risks involved with entering new markets; (2) the difficulty in integrating newly-acquired businesses and managing or monitoring other collaborative business arrangements; (3) the complexity of separating a portion of our business to enable a divestiture;
+Added: (4) continued financial involvement in divested businesses, such as through continued equity ownership, guarantees, retained assets or liabilities, transition services or other ongoing commercial commitments, indemnities, or other current or contingent financial or commercial commitments, following a divestiture;
(5) challenges and failures in achieving strategic objectives and other expected benefits, which may result in certain liabilities to us for guarantees and other commitments; (6) the risk that regulatory authorities may deny our proposed transactions, or may impose on those transactions conditions that undermine the strategic rationale, reduce the financial benefit of, or jeopardize the consummation of those transactions;
(7) unidentified issues not discovered in RTX’s due diligence; (8) the diversion of our attention and resources from our operations and other initiatives;
−Removed: (8) the potential impairment of acquired assets; (9) the performance of underlying products, capabilities, or technologies; and (10) the potential loss of key employees and customers of acquired businesses.
−Removed: In addition, future transactions may impact our deployment of capital, including dividends, stock repurchases, pension contributions, and investments.
−Removed: In particular, if we are unable to complete the pending divestitures of Collins’ actuation and flight controls business and/or Raytheon’s Cybersecurity, Intelligence and Services business within our expected timeframes or at all, we may be unable to reduce our outstanding debt according to planned timeframes.
+Added: (9) the potential impairment of acquired assets; (10) the performance of underlying products, capabilities, or technologies; and (11) the performance or potential loss of key employees and customers of acquired businesses.
+Added: In addition, future transactions may impact our deployment of capital, including dividends, share repurchases, pension contributions, and investments.
+Added: In particular, if we are unable to complete the pending divestiture of Collins’ actuation and flight controls business within our expected timeframe or at all, we may be unable to reduce our outstanding debt according to planned timeframes.
If either distribution of the stock of Carrier or Otis, together with certain related transactions, were to fail to qualify as a transaction that is generally tax-free, including as a result of subsequent acquisitions of our stock (including pursuant to the Raytheon merger), we could be subject to significant tax liabilities.
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jurisdictions and/or opinions of external tax advisors, in each case, regarding the tax treatment of certain Separation Transactions.
−Removed: Notwithstanding the receipt of such tax rulings and opinions, there can be no assurance that the relevant taxing authorities will not assert that the tax treatment of the relevant Separation Transactions differs from the conclusions reached therein.
+Added: Notwithstanding the receipt of such tax rulings and opinions, there can be no assurance that the relevant taxing authorities will not assert that the tax treatment of the relevant Separation
+Added: Transactions differs from the conclusions reached therein.
In the event the relevant taxing authorities prevail with any challenge in respect of any relevant Separation Transaction, we would be subject to significant tax liabilities, which may adversely affect an investment in us.
3 unchanged sentences
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.