What changed in this filing

/stocks — the workspaceLOADING

Item 8. Financial Statements and Supplementary Data

2025-02-03 compared with 2024-02-05 · 409 added, 367 removed, 1569 unchanged (33% of the section changed)

8 unchanged sentences

The effectiveness of RTX’s internal control over financial reporting, as of December 31, 2024, has been audited by PricewaterhouseCoopers LLP, an independent registered public accounting firm, as stated in their report which is included herein.

/s/ GREGORY J.

Chief Executive Officer

/s/ CHRISTOPHER T.

Christopher T.

President and Chief Executive Officer

MITCHILL, JR.

70 unchanged sentences

Total costs and expenses 74,068 65,445 61,690

Other income, net 86 120 423

Other income (expense), net ( 132 ) 86 120

Operating profit 6,538 3,561 5,504

1 unchanged sentence

Non-service pension income ( 1,518 ) ( 1,780 ) ( 1,889 )

Debt extinguishment costs — — 649

Interest expense, net 1,862 1,505 1,276

31 unchanged sentences

Foreign currency translation adjustments ( 506 ) 562 ( 1,048 )

Other comprehensive income (loss), before tax ( 689 ) 163 2,567

Income tax expense related to items of other comprehensive income 288 ( 266 ) ( 748 )

Other comprehensive income (loss), net of tax ( 401 ) ( 103 ) 1,819

Other comprehensive (loss) income, before tax ( 1,581 ) ( 689 ) 163

Income tax benefit (expense) related to items of other comprehensive income 245 288 ( 266 )

Other comprehensive loss, net of tax ( 1,336 ) ( 401 ) ( 103 )

Comprehensive income 3,677 2,979 5,205

60 unchanged sentences

Net income from continuing operations $ 5,013 $ 3,380 $ 5,327

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

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

Depreciation and amortization 4,364 4,211 4,108

2 unchanged sentences

Net periodic pension and other postretirement income ( 1,326 ) ( 1,555 ) ( 1,413 )

Debt extinguishment costs — — 649

Gain on sale of business, net of transaction costs (Note 2) ( 415 ) — —

Accounts receivable ( 175 ) ( 1,805 ) 437

13 unchanged sentences

Increase in other intangible assets ( 611 ) ( 751 ) ( 487 )

Receipts (payments) from settlements of derivative contracts, net 14 ( 205 ) ( 16 )

(Payments) receipts from settlements of derivative contracts, net ( 142 ) 14 ( 205 )

Other investing activities, net 65 12 94

5 unchanged sentences

Repayment of bridge loan — ( 10,000 ) —

Debt extinguishment costs — — ( 649 )

Change in commercial paper, net (Note 9) — ( 524 ) 518

2 unchanged sentences

Repurchase of common stock ( 444 ) ( 12,870 ) ( 2,803 )

Net transfers to discontinued operations — — ( 71 )

Other financing activities, net ( 452 ) ( 317 ) ( 415 )

Net cash flows used in financing activities from continuing operations ( 6,617 ) ( 4,527 ) ( 5,859 )

Discontinued Operations:

Net cash used in operating activities — — ( 71 )

Net cash used in investing activities — — —

Net cash provided by financing activities — — 71

Net cash used in discontinued operations — — —

Effect of foreign exchange rate changes on cash and cash equivalents from continuing operations ( 28 ) 18 ( 42 )

Net increase (decrease) in cash, cash equivalents and restricted cash 335 ( 1,562 ) ( 979 )

Net (decrease) increase in cash, cash equivalents and restricted cash ( 1,020 ) 335 ( 1,562 )

Cash, cash equivalents and restricted cash, beginning of year 6,626 6,291 7,853

20 unchanged sentences

Common stock repurchased ( 225 ) ( 11,490 ) ( 2,803 )

Share-based matching contributions under defined contribution plans 90 — —

Common stock contributed to defined benefit pension plans — 43 —

2 unchanged sentences

Balance at January 1 52,154 52,269 50,265

Net income 3,195 5,197 3,864

Net income attributable to common shareholders 4,774 3,195 5,197

Dividends on common stock ( 3,217 ) ( 3,239 ) ( 3,128 )

8 unchanged sentences

Balance at January 1 ( 2,419 ) ( 2,018 ) ( 1,915 )

Other comprehensive income (loss), net of tax ( 401 ) ( 103 ) 1,819

Other comprehensive loss, net of tax ( 1,336 ) ( 401 ) ( 103 )

Balance at December 31 ( 3,755 ) ( 2,419 ) ( 2,018 )

4 unchanged sentences

Dividends attributable to noncontrolling interest ( 123 ) ( 108 ) ( 132 )

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

Sale (purchase) of subsidiary shares from noncontrolling interest, net 33 — ( 19 )

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

5 unchanged sentences

Shares of common stock repurchased 2,116 141,712 29,935

Shares of common stock contributed to benefit plans 623 — —

Treasury shares reissued related to matching contributions under defined contribution plans 1,293 — —

Shares of common stock contributed to defined benefit pension plans — 623 —

Dividends declared per share of common stock $ 2.480 $ 2.320 $ 2.160

4 unchanged sentences

Actual results could differ from those estimates.

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

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

Organizational Structure.

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

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

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

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

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

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

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

Pratt & Whitney Powder Metal Matter.

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

References to “Raytheon Company” mean Raytheon Company, which became a wholly owned subsidiary of RTX on April 3, 2020 during an all-stock merger transaction between United Technologies Corporation and Raytheon Company (the surviving company of which is RTX Corporation).

We reclassified certain immaterial prior period amounts within the Income Taxes footnote to conform to our current period presentation.

Legal Matters.

As previously announced, in 2024 the Company resolved several outstanding legal matters, herein referred to as “Resolution of Certain Legal Matters.” The Company entered into a deferred prosecution agreement (DPA) (DPA-1) with the Department of Justice (DOJ) and the Company settled an administrative proceeding with the Securities and Exchange Commission (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), in connection with certain Middle East contracts since 2012 (Thales-Raytheon Systems and Related Matters).

The Company also entered into a DPA 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 Company contracts entered into between 2011 and 2013 and in 2017 (DOJ Investigation and Contract Pricing Disputes).

Under these DPAs and the SEC Administrative Order, Raytheon Company and the Company are required to retain, among other things, 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).

The compliance monitor will oversee Raytheon Company’s and the Company’s compliance with their respective obligations under the DPAs and the SEC Administrative Order.

The DPAs further provide that, in the event the DOJ, in its sole discretion, determines during the period of deferral of prosecution that Raytheon Company or the Company have violated any provision of either DPA, Raytheon Company or the Company may be subject to prosecution for any federal criminal violation, including the charges against Raytheon Company in the relevant DPA.

The SEC Administrative Order further provides that, in the event of a breach of the SEC Administrative Order, the SEC may vacate the SEC Administrative Order and institute proceedings against the Company.

In the event of any such determination or breach, the Company may face additional adverse impacts.

In addition, the Company resolved certain voluntarily disclosed export controls violations primarily identified in connection with the integration of Rockwell Collins and, to a lesser extent, Raytheon Company, including certain violations that were resolved pursuant to a Consent Agreement (CA) with the Department of State (DOS) (Trade Compliance Matters).

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 International Traffic in Arms Regulations (ITAR) compliance program.

The CA also requires appointment of an external, independent Special Compliance Officer (SCO).

The Company appointed its SCO on September 27, 2024.

As a result of the DPAs, SEC Administrative Order, FCA settlement agreement and CA, we recorded a combined pre-tax charge of $ 918 million during the second quarter of 2024, which included $ 269 million related to the DOJ Investigation and Contract Pricing Disputes (in addition to amounts previously accrued), $ 364 million related to Thales-Raytheon Systems and Related Matters (in addition to amounts previously accrued), and $ 285 million related to Trade Compliance Matters.

In the fourth quarter we made payments of $ 580 million related to the DOJ Investigation and Contract Pricing Dispute and $ 384 million related to Thales-Raytheon Systems and Related Matters.

See “Note 17:

7 unchanged sentences

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

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

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

(Collins) segment.

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

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

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

Coronavirus Disease 2019 (COVID-19) Pandemic.

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

However, we believe the long-term outlook for the aerospace industry remains positive due to the fundamental drivers of air travel demand, and we are not expecting significant additional direct COVID-19-related impacts on our business.

Our expectations regarding the effects of the COVID-19 pandemic are based on available information and assumptions that we believe are reasonable at this time;

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

Pratt & Whitney Powder Metal Matter.

In 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 (A320neo) (herein referred to as the “Powder Metal Matter”).

See “Note 17:

Commitments and Contingencies” for additional information.

Summary of Accounting Principles.

5 unchanged sentences

For classification of certain current assets and liabilities, the duration of our contracts or programs is utilized to define our operating cycle, which is generally longer than one year.

Included within our current assets and liabilities are Contract assets and liabilities related to our aftermarket and development arrangements, which can generally span up to twenty years.

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

Included within our current assets and liabilities are Contract assets and Contract liabilities related to our development and aftermarket arrangements, which can generally span up to twenty years.

Use of Estimates.

36 unchanged sentences

Investments in entities we do not control are included in Other assets on the Consolidated Balance Sheet.

For investments where we have significant influence, we apply the equity method of accounting, and as such, our share of the

net earnings or losses of the investee is recorded.

For investments where we have significant influence, we apply the equity method of accounting, and as such, our share of the net earnings or losses of the investee is recorded.

For investments where we do not have significant influence, we record them at cost under the measurement alternative and record adjustments for observable price changes.

Equity investment income and losses are included in Other income, net on the Consolidated Statement of Operations since the activities of the investee are closely aligned with our operations.

Equity investment income and losses are included in Other income (expense), net on the Consolidated Statement of Operations since the activities of the investee are closely aligned with our operations.

We evaluate our equity investments whenever events or changes in circumstance indicate that the carrying amounts of such investments may be impaired.

3 unchanged sentences

Customer financing assets (CFA) relate to our commercial aerospace businesses in which we provide financing to airline customers.

Our financing predominantly relates to products under lease, often provided through the customers’ aftermarket maintenance coverage, and to a lesser extent, notes and lease receivables.

Our financing predominantly relates to leased engines, often provided through the customers’ aftermarket maintenance coverage, and to a lesser extent, notes and lease receivables.

In certain limited circumstances, we pay deposits on behalf of our airline customers to secure production slots with the airframers, and such pre-delivery payments are included in Accounts receivable, net, if current, and Customer financing assets, if non-current, in our Consolidated Balance Sheet.

Any unfunded pre-delivery payments are included within our commercial aerospace financing commitments as further discussed in “Note 17:

Commitments and Contingencies.” Interest income from notes and financing leases and rental income from operating lease assets is generally included in Other income, net in the Consolidated Statement of Operations, while gains or losses on sales of operating lease assets are included in Products sales and Cost of sales.

Commitments and Contingencies.” Interest income from notes and financing leases and rental income from operating lease assets is generally included in Other income (expense), net in the Consolidated Statement of Operations, while gains or losses on sales of operating lease assets are included in Products sales and Cost of sales.

The current portion of these financing arrangements are aggregated in Accounts receivable, net and the non-current portion of these financing arrangements are aggregated in Customer financing assets in the Consolidated Balance Sheet.

4 unchanged sentences

As of December 31, 2024 and 2023, the reserves related to CFA were not material.

At December 31, 2023 and 2022, we did not have any significant balances that are considered to be delinquent, on non-accrual status, past due 90 days or more, or considered to be impaired.

At December 31, 2024 and 2023, we did not have any material balances that are considered to be delinquent, on non-accrual status, past due 90 days or more, or considered to be impaired.

Fixed Assets, Net.

2 unchanged sentences

For asset sales or retirements, the assets and related accumulated depreciation and amortization are eliminated from the accounts.

Gains and losses on sales of our Fixed assets, net, are generally recorded in operating income.

Gains and losses on sales of our Fixed assets, net, are generally recorded in Other income (expense), net.

Business Combinations.

19 unchanged sentences

Acquired intangible assets are recognized at fair value in purchase accounting.

Finite-lived intangible assets are amortized to Cost of sales and Selling, general, and administrative expenses over the applicable useful lives.

Finite-lived intangible assets are amortized primarily to Cost of sales over the applicable useful lives.

Exclusivity assets are commercial aerospace payments made to secure certain contractual rights to provide product on new aircraft platforms.

16 unchanged sentences

Leases are classified as either finance or operating, with classification affecting the pattern of expense recognition in the Consolidated Statement of Operations.

We enter into lease agreements for the use of real estate space, vehicles, information technology equipment, and certain other equipment under both operating and finance leases.

We enter into lease agreements for the use of real estate space, vehicles, information technology (IT) equipment, and certain other equipment under both operating and finance leases.

We determine if an arrangement contains a lease at inception.

32 unchanged sentences

Penalties, if incurred, would be recognized as a component of income tax expense.

State income tax amounts are generally included in income tax expense.

State income tax amounts are included in income tax expense.

We have elected to account for tax on Global Intangible Low-Taxed Income ( GILTI) as a period cost, as incurred.

4 unchanged sentences

For certain contracts that meet the foregoing requirements, primarily contracts that are directly with a foreign government, we are required to obtain certain regulatory approvals.

In these cases, we recognize revenue based on the likelihood of obtaining regulatory approvals based upon all known facts and circumstances.

In these cases, we recognize revenue when obtaining regulatory approvals is considered probable based on all known facts and circumstances.

A performance obligation is a promise in a contract with a customer to transfer a distinct good or service to the customer.

Some of our contracts with customers contain a single performance obligation, while others contain multiple performance obligations, most commonly when a contract contains multiple distinct units (such as engines or certain aerospace components), or spans multiple phases of the product life-cycle such as production, maintenance, and support.

Some of our contracts with customers contain a single performance obligation, while others contain multiple performance obligations, most commonly when a contract contains multiple distinct

units (such as engines or certain aerospace components), or spans multiple phases of the product life-cycle such as production, maintenance, and support.

A contract’s transaction price is allocated to each distinct performance obligation and recognized as revenue when, or as, the performance obligation is satisfied.

12 unchanged sentences

Revenue is recognized when control of the product transfers to the customer, generally upon product shipment.

Since billing also

typically occurs upon product shipment, we generally do not have Contract assets or Contract liabilities balances related to point-in-time sales.

Since billing also typically occurs upon product shipment, we generally do not have Contract assets or Contract liabilities balances related to point-in-time sales.

Performance obligations are satisfied over time if the customer receives the benefits as we perform work, if the customer controls the asset as it is being produced (continuous transfer of control), or if the product being produced for the customer has no alternative use and we have a contractual right to payment for performance to date.

23 unchanged sentences

These arrangements include the sale of spare parts with integral services to our customers, and are generally classified as Services sales, with the corresponding costs classified in Cost of sales - services, within the Consolidated Statement of Operations.

Revenue is primarily recognized on a percentage-of-completion basis using costs incurred to date relative to total estimated costs at completion to measure progress, as sufficient historical evidence indicates that the cost of performing services under the contract is incurred on an other-than-straight-line basis.

Revenue is primarily recognized on a percentage-of-completion basis using costs incurred to date

relative to total estimated costs at completion to measure progress, as sufficient historical evidence indicates that the cost of performing services under the contract is incurred on an other-than-straight-line basis.

For some of our long-term aftermarket contracts, we receive payment prior to delivery of products and services, resulting in a contract liability balance, while for others, we deliver products or services in advance of payment, resulting in a contract asset balance.

10 unchanged sentences

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

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

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

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

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

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

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

15 unchanged sentences

statutory tax rate of 21%, which approximates our tax rate on our EAC adjustments.

In addition to the amounts included in the table above, during the fourth quarter of 2024, as a result of obtaining critical licenses and further regulatory approvals, we restarted work under certain contracts with a Middle East customer and began recognizing revenue on these contracts.

As a result, Raytheon recognized a net operating profit benefit of $ 102 million primarily related to reserve and contract loss provision adjustments.

In addition to the amounts included in the table above, during the second quarter of 2024, Raytheon initiated the termination of a fixed price development contract with a foreign customer, herein referred to as “Raytheon Contract Termination,” and recognized a $ 575 million charge related to the impact of the termination.

The charge included the write-off of remaining contract assets and the estimated settlement with the customer.

The contract termination was completed and customer settlement occurred during the fourth quarter of 2024, in line with previously accrued amounts.

In our Collins and Pratt & Whitney businesses, we incur contract fulfillment costs for engineering and development of aerospace products directly related to existing or anticipated contracts with customers.

Such costs generate or enhance our ability to satisfy our performance obligations under these contracts.

We capitalize these costs as contract fulfillment costs to the extent the costs are recoverable from the associated contract margin and customer funding, and subsequently amortize the costs as the related performance obligations are satisfied.

We capitalize these costs as contract fulfillment costs to the extent the costs are recoverable from the associated contract margin and customer funding, and subsequently amortize the costs to Cost of sales as the related performance obligations are satisfied.

In instances where intellectual property does not transfer to the customer, we generally defer the customer funding of product engineering and development and recognize revenue when the related performance obligations are satisfied.

Capitalized contract fulfillment costs were $ 2.5 billion and $ 2.6 billion as of December 31, 2024 and 2023, respectively, and are classified in Other assets, current in our Consolidated Balance Sheet and are included in Other current assets in our Consolidated Statement of Cash Flows.

We regularly assess capitalized contract fulfillment costs for impairment.

In 2024, we recognized impairment charges of approximately $ 0.2 billion and $ 0.1 billion at Collins due to a contract cancellation and as a result of the impact of initiating alternative titanium sources, respectively.

See “Russia Sanctions” above for further information regarding initiating alternative titanium sources.

In view of the risks and costs associated with developing new engines and the large up-front investments required that often require returns generated over the full estimated life of the engine, Pratt & Whitney has entered into certain collaboration arrangements in which sales, costs, and risks are shared.

7 unchanged sentences

There are no individually significant collaborative arrangements, and none of the collaborators individually have more than a 25 % share in an individual program where Pratt & Whitney is the principal participant.

The following table illustrates the

Consolidated Statement of Operations classification and amounts attributable to transactions arising from the collaborative arrangements between participants for each period presented.

The following table illustrates the Consolidated Statement of Operations classification and amounts attributable to transactions arising from the collaborative arrangements between participants for each period presented.

(dollars in millions) 2024 2023 2022

1 unchanged sentence

Cost of sales - products $ 3,348 $ ( 181 ) $ 2,058

$ ( 181 ) $ 2,058 $ 1,534

Cost of sales - services 2,659 2,151 1,808

5 unchanged sentences

Remaining Performance Obligations (RPO).

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

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

Total RPO was $ 218 billion as of December 31, 2024.

9 unchanged sentences

Dollars at the exchange rates existing at the respective balance sheet dates, and income and expense items are translated at the average exchange rates during the respective periods.

The aggregate effects of translating the balance sheets of these subsidiaries are deferred as a separate component of Accumulated other comprehensive loss (AOCL) in Shareowners’ equity on our Consolidated Balance Sheet.

Foreign exchange transaction gains and losses are recorded in Other income, net on our Consolidated Statement of Operations.

The aggregate effects of translating the balance sheets of these subsidiaries are deferred as a separate component of Accumulated other comprehensive loss in Shareowners’ equity on our Consolidated Balance Sheet.

Foreign exchange transaction gains and losses are recorded in Other income (expense), net on our Consolidated Statement of Operations.

Derivatives and Hedging Activity.

15 unchanged sentences

To the extent the hedge accounting criteria are not met, the foreign currency forward contracts are utilized as economic hedges and changes in the fair value of these contracts are recorded currently in earnings in the period in which they occur.

receipts or payments related to the settlement of derivatives not designated as hedging instruments are recorded as investing cash flows within the Consolidated Statement of Cash Flows.

Cash receipts or payments related to the settlement of derivatives not designated as hedging instruments are recorded as investing cash flows within the Consolidated Statement of Cash Flows.

Additional information pertaining to foreign currency forward contracts and net investment hedging is included in “Note 13:

12 unchanged sentences

We also lease certain government-owned properties and generally are not liable for remediation of preexisting environmental contamination at these sites.

As a result, we generally do not provide for these costs in our Consolidated Financial Statements.

As a result, we generally do not provide for these costs in our Consolidated

Financial Statements.

See “Note 17:

26 unchanged sentences

We recognize government grants when there is reasonable assurance that the Company will comply with the conditions of the grant and the grant is received or is probable of receipt and the amount is determinable.

Government grants are recorded as a reduction to the related expense or

asset to which the grant relates or recorded in Other income, net in our Consolidated Statement of Operations.

Government grants are recorded as a reduction to the related expense or asset to which the grant relates or recorded in Other income (expense), net in our Consolidated Statement of Operations.

Government grant transactions are not material to our financial position, results of operations, or liquidity.

Accounting Pronouncements.

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

In November 2024, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2024-03, Disaggregation of Income Statement Expenses, which requires a tabular disclosure of the amounts of specified natural expense categories included in each relevant expense caption.

Additionally, the amendments require the disclosure of the total amount of selling expenses and, in annual reporting periods, an entity’s definition of selling expenses.

The new standard is effective for annual reporting periods beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027, on a prospective basis.

Early adoption is permitted.

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

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740):

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

3 unchanged sentences

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

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

amounts and description of its composition for other segment items, and interim disclosure of a reportable segment’s profit or loss and assets.

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

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

Early adoption is permitted.

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

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

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

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

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

We adopted this standard for the annual period ending December 31, 2024 on a retrospective basis.

We updated our segment disclosures to comply with the requirements.

See “Note 20:

Segment Financial Data.” The adoption of the standard did not have an impact on our financial position, results of operations, or liquidity.

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

1 unchanged sentence

Acquisitions.

Our investments in businesses, net of cash acquired, in 2022 and 2021 totaled $ 66 million and $ 1.1 billion, respectively.

Our investments in businesses in 2022 consisted of insignificant acquisitions.

Our investments in businesses in 2021 primarily consisted of the acquisitions discussed below.

In November 2021, we completed the acquisitions of FlightAware and SEAKR Engineering Inc., for a total of approximately $ 1.1 billion, net of cash received.

FlightAware is a leading digital aviation company providing global flight tracking solutions, predictive technology, analytics, and decision-making tools, and is reported in the Collins segment.

SEAKR Engineering Inc.

is a leading supplier of advanced space electronics and is reported in the Raytheon segment.

In connection with these acquisitions, we recorded $ 0.8 billion of goodwill and $ 0.3 billion of intangible assets.

Pro forma financial information and revenue from the date of acquisition have not been provided for these acquisitions as they are not material either individually or in the aggregate.

Our investments in businesses, net of cash acquired, in 2022 totaled $ 66 million and consisted of insignificant acquisitions.

Dispositions.

In 2023, 2022, and 2021 cash inflows related to dispositions of businesses were $ 6 million, $ 94 million, and $ 1.9 billion, respectively.

Our dispositions of businesses in 2023 and 2022 consisted of insignificant dispositions.

In 2024, 2023, and 2022 cash inflows related to dispositions of businesses were $ 1,795 million, $ 6 million, and $ 94 million, respectively.

Our dispositions of businesses in 2024 primarily consisted of the dispositions discussed below.

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

At December 31, 2023, the related assets of approximately $ 1.0 billion and liabilities of approximately $ 300 million have been accounted for as held for sale at fair value less cost to sell;

however the disposition does not qualify for presentation as discontinued operations.

These held for sale assets and liabilities, including approximately $ 700 million of goodwill and intangibles, are presented in Other assets, current and Other assets and Other accrued liabilities and Other long-term liabilities, respectively, on our Consolidated Balance Sheet, consistent with the nature of the assets and liabilities classification before held for sale criteria was met.

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

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

Our dispositions of businesses in 2023 and 2022 were insignificant.

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

On October 31, 2024, we completed the sale of our Goodrich Hoist & Winch business within our Collins segment for proceeds of approximately $ 0.5 billion in cash, resulting in a pre-tax gain, net of transaction and other related costs, of $ 0.1 billion, primarily recognized in Other income (expense), net within the Consolidated Statement of Operations.

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

for gross proceeds of approximately $ 1.8 billion.

During the fourth quarter of 2024, as a result of progress towards regulatory approvals, held for sale criteria was met.

As such, at December 31, 2024, the related assets of approximately $ 1.5 billion and liabilities of approximately $ 0.6 billion have been accounted for as held for sale at fair value less cost to sell.

Held for sale assets primarily include $ 0.7 billion of goodwill and intangible assets presented in Other assets and $ 0.3 billion of inventory presented in Other assets, current.

Held for sale liabilities primarily include $ 0.4 billion of contract liabilities and other accrued liabilities presented in Other accrued liabilities.

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

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

Microtecnica S.r.l.

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

In December 2021, we divested our global training and services business within our Raytheon segment for approximately $ 0.9 billion in cash and other consideration, resulting in an aggregate pre-tax gain, net of transaction costs, of $ 251 million ($ 135 million after tax), which includes a $ 12 million pre-tax gain recognized in Non-service pension income within the Consolidated Statement of Operations.

In January 2021, we sold our Forcepoint business for proceeds of $ 1.1 billion, net of cash transferred.

We did not recognize a pre-tax gain or loss within the Consolidated Statement of Operations related to the sale of Forcepoint.

The results of Forcepoint were included in Eliminations and other in our segment results.

This disposition does not qualify for presentation as discontinued operations.

GOODWILL AND INTANGIBLE ASSETS

2 unchanged sentences

Collins Aerospace (1)

Pratt & Whitney 1,563 — — 1,563

$ 33,135 $ ( 676 ) $ ( 236 ) $ 32,223

Pratt & Whitney 1,563 — — 1,563

Raytheon 18,984 — 2 18,986

Total Segments 53,682 ( 676 ) ( 234 ) 52,772

1 unchanged sentence

Total $ 53,699 $ ( 676 ) $ ( 234 ) $ 52,789

(1) The $ 430 million reduction in Acquisition and Divestitures reflects the reclassification of goodwill to held for sale assets as a result of our definitive agreement to sell our CIS business.

Acquisitions and Dispositions” for additional information.

(1) The reduction in Acquisitions and Divestitures includes the reclassification of goodwill to held for sale assets.

The Company reviews goodwill for impairment annually or more frequently if events or changes in circumstances indicate the asset might be impaired.

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

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

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

We completed our annual goodwill impairment testing as of October 1, 2024 and determined that no adjustments to the carrying value of goodwill were necessary.

11 unchanged sentences

Total $ 48,899 $ ( 15,456 ) $ 48,757 $ ( 13,358 )

We also completed our annual indefinite-lived intangible assets impairment testing as of October 1, 2023 and determined that no adjustments to the carrying value of these assets were necessary.

Amortization of intangible assets was $ 2,085 million, $ 1,957 million, and $ 2,439 million in 2023, 2022, and 2021, respectively.

We also completed our annual indefinite-lived intangible assets impairment testing using a qualitative approach as of October 1, 2024 and determined that no adjustments to the carrying value of these assets were necessary.

Amortization of intangible assets was $ 2.2 billion, $ 2.1 billion, and $ 2.0 billion in 2024, 2023, and 2022, respectively.

The following is the expected amortization of intangible assets for 2025 through 2029:

4 unchanged sentences

shares in millions) 2024 2023 2022

Net income attributable to common shareowners:

Net income (loss) attributable to common shareowners:

Income from continuing operations $ 4,774 $ 3,195 $ 5,216

25 unchanged sentences

Balance as of January 1

$ 316 $ 452 $ 475

Current period (recoveries) provision for expected credit losses, net ( 14 ) ( 92 ) 26

2 unchanged sentences

Balance as of December 31 $ 289 $ 316 $ 452

The activity in the allowance for expected credit losses was not material in 2021.

CONTRACT ASSETS AND LIABILITIES

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

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

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

We receive payments from customers based on the terms established in our contracts.

Total contract assets and contract liabilities as of December 31, 2023 and 2022 are as follows:

Total contract assets and contract liabilities as of December 31, 2024 and 2023 were as follows:

(dollars in millions) 2024 2023

2 unchanged sentences

Net contract liabilities $ ( 4,046 ) $ ( 5,044 )

Contract assets increased $ 605 million during 2023 primarily due to sales in excess of billings on certain contracts at Pratt & Whitney and Raytheon.

The above items were partially offset by a decrease in contract assets driven by a customer insolvency charge recorded in the second quarter of 2023 at Pratt & Whitney, the reclassification of certain Raytheon Contract assets to Other assets, current as a result of our definitive agreement to sell our CIS business (see “Note 2:

Acquisitions and Dispositions” for additional information), and the EAC impacts related to the Powder Metal Matter recorded in the third quarter of 2023 at Pratt & Whitney.

Contract liabilities increased $ 2,585 million during 2023 primarily due to billings in excess of sales on certain contracts at Pratt & Whitney and Raytheon and international advances at Raytheon.

Contract assets increased $ 2.4 billion during 2024 primarily due to sales in excess of billings on certain contracts at Pratt & Whitney and Raytheon, partially offset by an increase in the allowance for expected credit losses due to a customer bankruptcy recorded at Pratt & Whitney in the fourth quarter of 2024.

Contract liabilities increased $ 1.4 billion during 2024 primarily due to billings in excess of sales on certain contracts at Raytheon.

In 2024, 2023, and 2022, we recognized revenue of $ 7.2 billion, $ 5.3 billion, and $ 4.8 billion related to our Contract liabilities at January 1, 2024, January 1, 2023, and January 1, 2022, respectively.

As of December 31, 2023, our Contract liabilities include approximately $ 405 million of advance payments received from a Middle East customer on contracts for which we no longer believe we will be able to execute on or obtain required regulatory approvals.

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

Contract assets consisted of the following at December 31:

(dollars in millions) 2024 2023

Unbilled $ 26,481 $ 23,909

Revenue recognized in advance of customer billings $ 30,226 $ 26,481

Progress payments ( 15,656 ) ( 14,342 )

Total contract assets $ 14,570 $ 12,139

government has title to the assets related to unbilled amounts on U.S.

government contracts that provide progress payments.

Contract assets are net of an allowance for expected credit losses of $ 197 million and $ 318 million as of December 31, 2023 and 2022, respectively.

government contracts that provide progress payments, the U.S.

government has title to the asset related to unbilled amounts.

Contract assets are net of an allowance for expected credit losses of $ 491 million, $ 197 million, and $ 318 million as of December 31, 2024, 2023, and 2022, respectively.

The increase in allowance for expected credit losses in 2024 compared to 2023 was primarily related to an increase in reserves as a result of a customer bankruptcy recorded at Pratt & Whitney in the fourth quarter of 2024.

The allowance for expected credit losses activity was not significant in 2023 or 2022.

21 unchanged sentences

BORROWINGS AND LINES OF CREDIT

As of December 31, 2023, we had a revolving credit agreement with various banks permitting aggregate borrowings of up to $ 5.0 billion.

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

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

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

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

In addition, at December 31, 2023, approximately $ 0.7 billion was available under short-term lines of credit with local banks primarily at our international subsidiaries.

In addition, at December 31, 2024, approximately $ 0.7 billion was available under short-term lines of credit primarily with global banks at our international subsidiaries.

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

1 unchanged sentence

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

We had no commercial paper borrowings outstanding at December 31, 2023.

At December 31, 2022, we had $ 0.5 billion of commercial paper borrowings outstanding, which is reflected in Short-term borrowings in our Consolidated Balance Sheet.

During 2023, we had no new proceeds from issuance, and $ 200 million of repayments, of commercial paper with maturities greater than 90 days.

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

During 2024, we had no new borrowings or repayments of commercial paper with maturities greater than 90 days.

During 2023, we had no new borrowings and had $ 200 million in repayments of commercial paper with maturities greater than 90 days.

During 2022, we had $ 1.4 billion of proceeds from issuance, and $ 1.2 billion of repayments, of commercial paper with maturities greater than 90 days.

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

On October 24, 2023, we entered into a senior unsecured bridge credit agreement (Bridge Loan) with various banks permitting aggregate borrowings of up to $ 10.0 billion, to fund an accelerated share repurchase (ASR) and pay related fees and expenses.

The $ 10.0 billion Bridge Loan was paid in full and terminated in the fourth quarter of 2023 upon receipt of proceeds from the $ 4.0 billion term loan facilities and the $ 6.0 billion of long-term debt issuances, as described below, and cash on hand.

During 2022, we had insignificant issuances and repayments of long-term debt.

There were no issuances of long-term debt during 2024.

During 2023, we had the following issuances of long-term debt and proceeds from term loan borrowings:

11 unchanged sentences

(1) The net proceeds received from these debt issuances and term loans, along with cash on hand, were used to fund the repayment of the Bridge Loan, which was used to fund the ASR.

During 2023, we made the following repayments of long-term debt:

During 2024 and 2023, we made the following repayments of long-term debt:

Date Description of Notes Aggregate Principal Balance (in millions)

December 24, 2024 3 Month SOFR plus 1.225 % term loan due 2025

December 15, 2024 3.150 % notes due 2024

May 7, 2024 3 Month SOFR plus 1.225 % term loan due 2025

April 17, 2024 3 Month SOFR plus 1.225 % term loan due 2025

April 4, 2024 3 Month SOFR plus 1.225 % term loan due 2025

March 15, 2024 3.200 % notes due 2024

December 15, 2023 3.700 % notes due 2023

August 16, 2023 3.650 % notes due 2023

3 unchanged sentences

3.150 % notes due 2024 (1)

3.200 % notes due 2024 (1)

3.150 % notes due 2024 (1)

3 Month SOFR plus 1.225 % term loan due 2025

13 unchanged sentences

7.500 % notes due 2029 (1)

(dollars in millions) 2024 2023

2.150 % notes due 2030 (€ 500 million principal value) (1)

3 unchanged sentences

2.375 % notes due 2032 (1)

(dollars in millions) 2023 2022

5.150 % notes due 2033 (1)

39 unchanged sentences

We sponsor various employee savings plans.

Our contributions to employer sponsored defined contribution plans were $ 1,301 million, $ 1,037 million, and $ 962 million for 2023, 2022, and 2021, respectively.

Our contributions to employer sponsored defined contribution plans were $ 1.4 billion, $ 1.3 billion, and $ 1.0 billion for 2024, 2023, and 2022, respectively.

Our domestic employee savings plan uses an Employee Stock Ownership Plan (ESOP) for certain employer matching contributions.

External borrowings were used by the ESOP to fund a portion of its purchase of ESOP stock from us.

The external borrowings have been extinguished and only re-amortized loans remain between RTX and the ESOP Trust.

As ESOP debt service payments are made, common stock is released from an unreleased shares account.

ESOP debt may be prepaid or re-amortized to either increase or decrease the number of shares released so that the value of released shares equals the value of plan benefit.

We may also, at our option, contribute additional common stock or cash to the ESOP.

Shares of common stock are allocated to employees’ ESOP accounts at fair value on the date earned.

Cash dividends on common stock held by the ESOP are used for debt service payments.

Participants may choose to have their ESOP dividends reinvested or distributed in cash.

Common stock allocated to ESOP participants is included in the average number of common shares outstanding for both basic and diluted EPS.

At December 31, 2023, 24.2 million common shares had been allocated to employees, leaving 2.3 million unallocated common shares in the ESOP Trust, with a fair value of $ 191 million.

Prior to the third quarter of 2024, the ESOP held stock that was purchased using external borrowings.

As ESOP debt service payments were made, common stock was released from an unallocated ESOP account.

ESOP debt was either prepaid or re-amortized to either increase or decrease the number of shares released so that the value of released shares equaled the value of plan benefit.

It was also the Company’s option to contribute additional common stock or cash to the ESOP.

Shares of common stock were allocated to participants’ ESOP accounts at fair value on the date earned.

Cash dividends on unallocated common stock held by the ESOP were used for debt service payments.

Cash dividends on allocated shares are either reinvested or paid directly in cash to the participant, according to the participant’s election.

Participants chose to have their ESOP dividends reinvested or distributed to their accounts in cash.

Common stock allocated to ESOP participants was included in the average number of common shares outstanding for both basic and diluted EPS.

At December 31, 2024, all 23 million common shares related to this leveraged ESOP have been allocated to employees.

During the third quarter of 2024, remaining unallocated ESOP shares were fully allocated to participant accounts through matching contributions, and we began funding the ESOP match in shares on a non-leveraged basis.

Under the new non-leveraged basis, treasury shares are utilized to fund the matching contributions, and participants receive units from the ESOP in the amount of their matching contribution at fair value on the date earned.

Once shares are contributed to the participants’ ESOP accounts, they have a right to dividend payments and are included in the average number of common shares outstanding for both basic and diluted EPS.

In the fourth quarter of 2024, we expanded the funding of our matching contributions in shares under the ESOP to additional participants who previously received matching contributions in cash.

In 2024, we used the ESOP to make matching contributions of $ 353 million, which was equivalent to 3 million shares.

Pension and Postretirement Plans.

20 unchanged sentences

Interest cost 2,385 2,507

Actuarial loss (gain) 1,909 ( 15,466 ) 53 ( 294 )

Actuarial (gain) loss ( 2,013 ) 1,909

Total benefits paid (1)

2 unchanged sentences

Plan amendments 36 19

160 ( 516 ) 57 47

Business combinations and divestitures ( 23 ) —

Ending balance $ 46,322 $ 49,592

3 unchanged sentences

Employer contributions (1)

363 306 106 98

Total benefits paid (1)

1 unchanged sentence

Settlements ( 3 ) ( 2 )

152 ( 496 ) 56 52

Business combinations and divestitures — —

Ending balance $ 46,414 $ 48,945

(1) Includes benefit payments paid directly by the company.

(2) The amount included in Other primarily reflects the impact of foreign exchange translation, primarily for plans in the United Kingdom and Canada, and participant contributions.

(dollars in millions) 2024 2023 2024 2023

Funded Status:

3 unchanged sentences

Amounts Recognized in the Consolidated Balance Sheet Consist of:

Noncurrent assets $ 1,296 $ 3,301 $ — $ —

Non-current assets $ 1,819 $ 1,296 $ — $ —

Current liability ( 195 ) ( 206 ) ( 61 ) ( 64 )

Noncurrent liability ( 1,737 ) ( 4,133 ) ( 582 ) ( 611 )

Non-current liability ( 1,532 ) ( 1,737 ) ( 523 ) ( 582 )

Net amount recognized $ 92 $ ( 647 ) $ ( 584 ) $ ( 646 )

3 unchanged sentences

Net amount recognized $ 3,882 $ 3,065 $ ( 297 ) $ ( 328 )

(1) Includes benefit payments paid directly by the company.

(2) The amount included in Other primarily reflects the impact of foreign exchange translation, primarily for plans in the United Kingdom (U.K.) and Canada, and participant contributions.

The majority of our pension obligations relate to our U.S.

Internal Revenue Service (IRS) qualified pension plans, which comprise 86 % and 87 % of our pension PBO as of December 31, 2023 and 2022, respectively.

3 % of our pension PBO as of both December 31, 2023 and 2022, respectively, is attributable to our nonqualified domestic pension plans, which provide supplementary retirement benefits to certain employees in excess of the IRS qualified plan limits.

International plans comprise 11 % and 10 % of the pension PBO as of December 31, 2023 and 2022, respectively, and are considered defined benefit pension plans for accounting purposes.

In addition to the pension and PRB noncurrent liabilities shown above, Future pension and postretirement benefit obligations on the Consolidated Balance Sheet include other immaterial pension and PRB-related liabilities.

Internal Revenue Service (IRS) qualified pension plans, which comprise 86 % of our pension PBO as of both December 31, 2024 and 2023.

Our nonqualified domestic pension plans, which provide supplementary benefits to certain employees in excess of the IRS qualified plan limits, and our international plans comprise 3 % and 11 %, respectively, of our pension PBO as of both December 31, 2024 and 2023.

In addition to the pension and PRB non-current liabilities shown above, Future pension and postretirement benefit obligations on the Consolidated Balance Sheet includes other immaterial pension and PRB-related liabilities.

Information for pension plans with accumulated benefit obligations in excess of plan assets:

21 unchanged sentences

Total net periodic pension income $ ( 1,310 ) $ ( 1,554 ) $ ( 1,410 )

The components of the net periodic PRB (income) expense are as follows:

(dollars in millions) 2023 2022 2021

Operating expense

Service cost $ 3 $ 6 $ 7

Non-operating expense

Interest cost 50 29 24

Expected return on plan assets ( 20 ) ( 22 ) ( 21 )

Amortization of prior service credit ( 1 ) ( 2 ) ( 3 )

Recognized actuarial net gain ( 31 ) ( 11 ) ( 6 )

Net settlement, curtailment, and special termination benefits gain ( 2 ) ( 3 ) —

Non-service pension income ( 4 ) ( 9 ) ( 6 )

Total net periodic PRB (income) expense $ ( 1 ) $ ( 3 ) $ 1

Other changes in pension plan assets and benefit obligations recognized in other comprehensive loss in 2024 and 2023 are as follows:

5 unchanged sentences

Net settlement and curtailment ( 12 ) ( 3 )

Business combinations and divestitures 9 —

Total recognized in other comprehensive income (loss) 817 1,539

Net recognized in net periodic income and other comprehensive loss $ ( 493 ) $ ( 15 )

(1) The amount included in Other primarily reflects the impact of foreign exchange translation, primarily for plans in the U.K.

(1) The amount included in Other primarily reflects the impact of foreign exchange translation, primarily for plans in the United Kingdom and Canada.

The Actuarial loss arising in 2024 was primarily due to actual asset returns less than our expected return on assets, partially offset by an increase in discount rates during 2024.

The Actuarial loss arising in 2023 was primarily due to a decrease in discount rates during 2023, partially offset by actual asset returns greater than our expected return on assets.

The Actuarial gain arising in 2022 was primarily due to an increase in discount rates during 2022, partially offset by actual asset returns less than our expected return on assets.

Other changes in PRB assets and benefit obligations recognized in other comprehensive loss in 2023 and 2022 are as follows:

(dollars in millions) 2023 2022

Net actuarial loss (gain) arising during the period $ 36 $ ( 209 )

Amortization of actuarial gain 31 11

Amortization of prior service credit 1 2

Net settlement and curtailment 2 3

Total recognized in other comprehensive income (loss) 70 ( 193 )

Net recognized in net periodic expense (income) and other comprehensive loss $ 69 $ ( 196 )

The Actuarial loss arising in 2023 was primarily due to a decrease in discount rates during 2023, partially offset by actual asset returns greater than our expected return on assets on our funded plans.

The Actuarial gain arising in 2022 was primarily due to an increase in discount rates during 2022, partially offset by actual asset returns less than our expected return on assets on our funded plans.

The table below reflects the total benefit payments expected to be paid from the plans or from corporate assets.

(dollars in millions) Pension PRB

2024 $ 4,206 $ 103

2025 3,778 95

2026 3,726 90

2027 3,663 85

2028 3,607 80

The table below reflects the total benefit payments expected to be paid from the pension plans or from corporate assets.

(dollars in millions) Pension

2030-2034 17,158

13 unchanged sentences

The PBO discount rate is used for the service cost and interest cost measurements for non-significant plans.

Major assumptions used in determining the PRB benefit obligation and net periodic PRB (income) expense are presented in the following table as weighted-averages:

Benefit Obligation Net Periodic Benefit (Income) Expense

2023 2022 2023 2022 2021

Discount rate 5.1 % 5.5 % 5.5 % 2.8 % 2.4 %

Expected return on assets N/A N/A 6.8 % 5.7 % 5.7 %

Assumed health care cost trend rates used in determining the PRB benefit obligation and net periodic PRB (income) expense are as follows:

Health care cost trend rate assumed for next year 4.8 % 5.0 %

Ultimate health care cost trend rate 4.2 % 4.2 %

Year that the rate reaches the ultimate health care cost trend rate 2029 2029

The weighted-average discount rates used to measure pension and PRB liabilities are generally based on yield curves developed using high-quality corporate bonds as well as plan specific expected cash flows.

The weighted-average discount rates used to measure pension liabilities are generally based on yield curves developed using high-quality corporate bonds as well as plan specific expected cash flows.

For our significant plans, we utilize a full yield curve approach in the estimation of the service cost and interest cost components of net periodic benefit expense by applying the specific spot rates along the yield curve used in determination of the benefit obligation to the relevant discounted projected cash flows.

4 unchanged sentences

Globally, on average, investment strategies generally target a mix o f 26 % to 46 % of growth seeking assets and 54 % to 74 % of income generating and hedging assets using a wide set of diversified asset types, fund strategies, and investment managers.

The growth seeking allocation consists of global public equities in developed and emerging countries, private equity, real estate, and multi-asset class strategies.

The growth seeking allocation consists of global public equities in developed and emerging countries, private equity, and real estate.

Growth assets include an enhanced alpha strategy that invests in publicly traded equity and fixed income securities, derivatives, and foreign currency.

6 unchanged sentences

Under this objective the interest rate hedge is intended to increase as funded status improves.

The hedging programs incorporate a range of assets and investment tools, each with varying interest rate sensitivities.

investment portfolios are currently hedging approximatel y 80 % of the interest rate sensitivity of the pension plan liabilities, depending on the funded status of the plan.

hedging programs incorporate a range of assets and investment tools, each with varying interest rate sensitivities.

The investment portfolios are currently hedging approximatel y 80 % of the interest rate sensitivity of the pension plan liabilities, depending on the funded status of the plan.

The fair values of pension plan assets at December 31, 2024 and 2023 by asset category are as follows:

8 unchanged sentences

— 624 — — 624

Enhanced Global Equities (2)

Other Public Equities — — — 2,431 2,431

18 unchanged sentences

— 1,012 — — 1,012

Enhanced Global Equities (2)

( 53 ) 75 — — 22

Other Public Equities — — — 2,308 2,308

15 unchanged sentences

(1) Represents commingled funds that invest primarily in common stocks.

(2) Represents enhanced equity separate account and commingled fund portfolios.

A portion of the portfolio may include long-short market neutral and relative value strategies that invest in publicly traded, equity, and fixed income securities, as well as derivatives of equity and fixed income securities and foreign currency.

(2) Represents limited partnership investments with general partners that primarily invest in equity and debt.

15 unchanged sentences

Balance, December 31, 2022

Realized gains 76

Unrealized gains relating to instruments still held in the reporting period 64

Realized losses ( 69 )

Unrealized losses relating to instruments still held in the reporting period ( 134 )

Purchases, sales, and settlements, net 20

Transfers in/out, net ( 164 )

Balance, December 31, 2023

Realized losses ( 136 )

Unrealized losses relating to instruments still held in the reporting period ( 134 )

Unrealized gains relating to instruments still held in the reporting period 27

Purchases, sales, and settlements, net 123

Transfers in/out, net —

Balance, December 31, 2024

16 unchanged sentences

Marketable securities held in trusts $ 786 $ 745

We enter into lease agreements for the use of real estate space, vehicles, information technology equipment, and certain other equipment under both operating and finance leases.

We enter into lease agreements for the use of real estate space, vehicles, IT equipment, and certain other equipment, including engines, under both operating and finance leases.

The majority of our lease agreements are accounted for as operating leases.

3 unchanged sentences

Our commercial aerospace customers have varying forms of aftermarket maintenance coverage that often provide a level of support for leased engines as part of the revenue arrangement.

As such, leases where we are the lessor are not considered significant to our Consolidated Balance Sheet, Consolidated Statement of Operations, or Consolidated Statement of Cash Flows.

In 2023 and 2021, we entered into sale and leaseback transactions for the sale of new engines, and used leasepool engines and related maintenance, respectively.

As such, leases where we are the lessor are not

considered significant to our Consolidated Balance Sheet, Consolidated Statement of Operations, or Consolidated Statement of Cash Flows.

In 2024 and 2023, we entered into sale and leaseback transactions for the sale of new engines and related maintenance.

We subsequently leased back the engines sold for a limited timeframe, which are accounted for as operating leases.

The proceeds received in 2023 as a result of sales of new engines are classified primarily in Other operating activities, net within our Consolidated Statement of Cash Flows.

The proceeds received in 2021 as a result of sales of engines held in our leasepool are classified in Receipts from customer financing assets within Investing Activities in our Consolidated Statement of Cash Flows.

The proceeds received in 2024 and 2023 as a result of sales of new engines are classified primarily in Other operating activities, net within our Consolidated Statement of Cash Flows.

The net gains as a result of these transactions were not material.

12 unchanged sentences

Operating lease liabilities, current (included in Other accrued liabilities) $ 367 $ 348

Operating lease liabilities, noncurrent 1,412 1,586

Operating lease liabilities, non-current 1,632 1,412

Total operating lease liabilities $ 1,999 $ 1,760

The weighted-average remaining lease term related to our operating leases was 9 years as of December 31, 2023 and 2022.

The weighted-average remaining lease term related to our operating leases was 10 years and 9 years as of December 31, 2024 and 2023, respectively.

The weighted-average discount rate related to our operating leases was 4.3 % and 3.5 % as of December 31, 2024 and 2023, respectively.

28 unchanged sentences

A provision enacted in the Tax Cuts and Jobs Act of 2017 related to the capitalization of research and experimental expenditures for tax purposes became effective on January 1, 2022.

In September and December 2023, the Internal Revenue Service (IRS) issued interim guidance, retroactive to 2022, clarifying the capitalization requirements for certain types of research and experimental expenditures.

In September and December 2023, the IRS issued interim guidance, retroactive to 2022, clarifying the capitalization requirements for certain types of research and experimental expenditures.

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

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

Accordingly, the financial statements for the year ended December 31, 2023 include the estimated impacts of the interim guidance provided in the notices for both the 2022 and 2023 tax years including lower income tax payables, adjustments to deferred taxes, a higher income tax expense due to the diluted Foreign Derived Intangible Income (FDII) benefit resulting from lower taxable income, and reductions in revenue attributable to the decreased reimbursable state income taxes.

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

The Company’s analysis determined the guidance provided in the notices results in fewer costs being subject to capitalization, and as such, costs previously required to be capitalized are now deductible in the year incurred.

The Company will review the proposed regulations when issued and adjust the estimates as necessary.

Reconciliation of Effective Income Tax Rate.

6 unchanged sentences

Tax on international activities 6 0.1 ( 27 ) ( 0.7 ) ( 186 ) ( 3.1 )

Tax charges related to separation of Carrier and Otis and Raytheon merger — — — — ( 39 ) ( 0.8 )

Disposals of businesses 126 2.0 — — — —

research and development credit ( 188 ) ( 3.0 ) ( 168 ) ( 4.4 ) ( 164 ) ( 2.7 )

federal statute lapse ( 59 ) ( 1.5 ) — — — —

federal audit settlements and statute lapse ( 277 ) ( 4.5 ) ( 59 ) ( 1.5 ) — —

State income tax, net 187 3.0 17 0.4 59 1.0

Foreign Derived Intangible Income (FDII) ( 126 ) ( 2.0 ) ( 142 ) ( 3.7 ) ( 214 ) ( 3.5 )

corporate tax rate enactment — — — — 73 1.5

Non-deductible legal charges (1)

148 2.4 5 0.1 — —

Other 4 0.1 25 0.7 10 0.2

Effective income tax rate $ 1,181 19.1 % $ 456 11.9 % $ 790 12.9 %

(1) 2024 includes the impact of certain non-deductible legal charges related to the Resolution of Certain Legal Matters.

See “Note 17:

Commitments and Contingencies” for additional information.

The 2024 effective tax rate includes tax benefits of $ 275 million resulting from the conclusion of the examination phases of the U.S.

federal income tax audits for RTX 2017 and 2018 tax years and Rockwell Collins 2016, 2017, and 2018 tax years, $ 188 million associated with U.S.

research and development credits, $ 126 million related to the FDII benefit, and a $ 138 million deferred tax benefit associated with legal entity reorganizations.

In addition, the effective tax rate includes $ 224 million of tax expense associated with the 2024 dispositions.

Also included in the effective tax rate is a $ 212 million tax charge related to U.S.

federal income taxes now owed by the Company resulting from a favorable non-U.S.

tax ruling Otis received in 2024.

The ruling Otis received reduces U.S.

foreign tax credits previously claimed by the Company in pre-separation tax years.

The Company also recognized a $ 56 million tax

benefit in response to favorable U.S.

Tax Court rulings issued to unrelated taxpayers, but with similar facts as ours.

Both of these items are subject to a tax matters agreement entered into with Carrier and Otis in connection with the separations of those businesses in 2020.

Accordingly, the Company recorded a pre-tax benefit of $ 212 million for a portion of the indemnity owed by Otis to the Company for the reduction in foreign taxes in the pre-separation years and a pre-tax charge of $ 32 million for the indemnified amounts payable to Carrier and Otis associated with the $ 56 million tax benefit.

Additionally, the Company is indemnified by Otis for the associated interest related to the Otis non-US ruling.

The 2023 effective tax rate includes a benefit of $ 168 million associated with U.S.

3 unchanged sentences

research and development credits.

The increase in the FDII benefit from 2021 is primarily attributable to the capitalization of research or experimental expenditures for tax-purposes, enacted as part of the Tax Cuts and Jobs Act of 2017 effective beginning January 1, 2022.

The 2021 effective tax rate includes tax benefits of $ 244 million included in international activities associated with legal entity and operational reorganizations implemented in 2021, $ 172 million associated with U.S.

research and development credits and $ 121 million associated with FDII, and tax charges of $ 174 million associated with net state income taxes, $ 108 million associated with the disposition of the Forcepoint business and the global training and services business, and $ 73 million associated with the revaluation of deferred taxes resulting from the increase in the U.K.

corporate tax rate to 25% enacted in 2021.

Deferred Tax Assets and Liabilities.

15 unchanged sentences

Fixed assets 1,614 1,739

Inventory and contract balances 193 —

Other basis differences 627 238

1 unchanged sentence

Valuation allowances have been established primarily for tax credit carryforwards, tax loss carryforwards, and certain temporary differences to reduce the future income tax benefits to expected realizable amounts.

Prior to 2023, certain of the Company’s indefinite-lived non-US tax loss carryforwards were determined to have a remote possibility of realization and therefore were not reported in the table above.

In connection with the implementation of the Organisation for Economic Co-operation and Development (OECD) global minimum tax initiative known as Pillar Two, any existing deferred taxes not disclosed in the Company’s 2023 financial statements will not be available in the future to reduce tax otherwise due under Pillar Two.

Accordingly, beginning in 2023, the Company is disclosing in the above table the tax effects of these indefinite-lived non-US tax loss carryforwards offset with a full valuation allowance.

Changes to valuation allowances consisted of the following:

2 unchanged sentences

Additions charged to income tax expense 228 170 54

Reductions credited to goodwill, due to acquisitions — — ( 19 )

Reductions credited to income tax expense ( 239 ) ( 58 ) ( 82 )

2 unchanged sentences

Balance at December 31 $ 1,439 $ 1,465 $ 842

(1) 2023 includes the addition of the indefinite-lived tax loss carryforwards now disclosed in connection with OECD Pillar Two.

(1) 2023 includes the addition of the indefinite-lived tax loss carryforwards now disclosed in connection with Organisation for Economic Co-operation and Development (OECD) Pillar Two.

Tax Credit and Loss Carryforwards.

25 unchanged sentences

income tax examinations for years before 2014.

As a result of the expiration of the U.S.

federal income tax statute of limitations for RTX’s 2019 tax year, we recognized a net income benefit of $ 53 million in the fourth quarter of 2023, of which $ 59 million is within Income tax expense.

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

The examination phase of these audits is expected to close in the first half of 2024.

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

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

The Company believes that it is reasonably possible that the closure of the examination phase for the RTX 2017 and 2018 and Rockwell Collins 2016, 2017, and 2018 tax years will result in a net income benefit in the range of $ 225 million to $ 305 million.

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

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

The Company filed protests with respect to certain IRS proposed adjustments for RTX (formerly United Technologies Corporation) tax years 2017 and 2018, pre-acquisition Rockwell Collins tax years 2016, 2017, and 2018, and pre-merger Raytheon Company tax years 2017, 2018, and 2019 as well as certain refund claims of Raytheon Company for tax years 2014, 2015, and 2016 filed prior to the Raytheon merger.

The Company will dispute these adjustments at the Appeals Division of the IRS.

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

On January 15, 2025, the IRS notified the Company of its intent to close the examination of RTX’s 2020 tax year.

On January 7, 2025, the Appeals Committee of the Kingdom of Saudi Arabia (KSA) General Services Tax Committee (GSTC) issued an unfavorable decision to Raytheon Middle East Systems Company, Saudi Arabia branch (RAYMES Branch) with respect to income tax and withholding tax assessments for the years ended December 31, 2015 to December 31, 2019.

As a result of the unfavorable decision, RAYMES Branch has been assessed tax and delay fines of approximately $ 230 million due in 2025, with an estimated Net income charge of $ 30 million to $ 50 million.

The Company and RAYMES Branch continue to believe the position of the KSA tax authority is not supported by the facts in question or KSA tax law, and plan to pursue available options to seek reversal of GSTC’s decision.

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

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

It is reasonably possible that a net reduction within the range of $ 300 million to $ 450 million of unrecognized tax benefits may occur within the next 12 months as a result of the revaluation of uncertain tax positions arising from developments in examinations, in appeals, or in the courts, or the closure of tax statutes.

It is reasonably possible that over the next 12 months the amount of unrecognized tax benefits may change within a range of a net reduction of $ 200 million to a net increase of $ 25 million as a result of the revaluation of uncertain tax positions arising from developments in examinations, in appeals, or in the courts, or the closure of tax statutes.

FINANCIAL INSTRUMENTS

3 unchanged sentences

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

The present value of aggregate notional principal of our outstanding foreign currency hedges was $ 15.8 billion and $ 11.2 billion at December 31, 2023 and 2022, respectively.

At December 31, 2023, all derivative contracts accounted for as cash flow hedges will mature b y February 2034.

The present value of the aggregate notional principal of our outstanding foreign currency hedges was $ 17 billion and $ 16 billion at December 31, 2024 and 2023, respectively.

At December 31, 2024, all derivative contracts accounted for as cash flow hedges will mature b y May 2036.

Additional information pertaining to foreign exchange and hedging activities is included in “Note 1:

8 unchanged sentences

Other accrued liabilities 101 37

The effect of cash flow hedging relationships on Accumulated other comprehensive income (loss) and on the Consolidated Statement of Operations in 2023 and 2022 are presented in “Note 18:

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

The effect of cash flow hedging relationships on Accumulated other comprehensive loss and on the Consolidated Statement of Operations in 2024 and 2023 are presented in “Note 18:

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

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

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

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

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

As of December 31, 2024 and 2023, we had € 320 million and € 500 million, respectively, of our € 500 million principal value of euro-denominated long-term debt designated as a net investment hedge against our investments in European businesses, which is deemed to be effective.

These hedging gains and losses are recorded in other comprehensive income (loss) and will be reclassified to earnings when the hedged net investment is sold or liquidated.

During the fourth quarter of 2024, we de-designated € 180 million of our euro-denominated debt and recorded the effects within Other income (expense), net.

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

FAIR VALUE MEASUREMENTS

20 unchanged sentences

(dollars in millions) Carrying Amount Fair Value Carrying Amount Fair Value

Customer financing notes receivables $ 74 $ 63 $ 169 $ 161

Long-term debt (excluding finance leases) $ 40,991 $ 37,956 $ 43,546 $ 41,598

1 unchanged sentence

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

Customer financing notes receivable $ 63 $ — $ 63 $ —

Long-term debt (excluding finance leases) $ 37,956 $ — $ 35,180 $ 2,776

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

Customer financing notes receivable $ 161 $ — $ 161 $ —

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

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

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

VARIABLE INTEREST ENTITIES

8 unchanged sentences

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

The carrying amounts and classification of assets and liabilities for variable interest entities in our Consolidated Balance Sheet as of December 31, 2023 and 2022 are as follows:

The carrying amounts and

classification of assets and liabilities for variable interest entities in our Consolidated Balance Sheet as of December 31, 2024 and 2023 are as follows:

(dollars in millions) 2024 2023

Current assets $ 10,315 $ 9,309

Noncurrent assets 860 779

Non-current assets 1,060 860

Total assets $ 11,375 $ 10,169

Current liabilities $ 13,595 $ 13,020

Noncurrent liabilities 31 19

Non-current liabilities 140 31

Total liabilities $ 13,735 $ 13,051

1 unchanged sentence

These instruments expire on various dates through 2026.

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

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

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

9 unchanged sentences

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

The carrying amount of liabilities related to these obligations were $ 97 million at both December 31, 2023 and 2022.

The carrying amount of liabilities related to these obligations were $ 101 million and $ 97 million at December 31, 2024 and 2023, respectively.

These primarily relate to environmental liabilities, which are included in our total environmental liabilities as further discussed in “Note 17:

20 unchanged sentences

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

As of December 31, 2023 and 2022, we had $ 760 million and $ 798 million, respectively, reserved for environmental remediation.

As of both December 31, 2024 and 2023, we had $ 0.8 billion reserved for environmental remediation.

Additional information pertaining to environmental matters is included in “Note 1:

1 unchanged sentence

Commercial Aerospace Financing and Other Commitments.

We had commercial aerospace financing commitments and other contractual commitments of approximately $ 14.6 billion and $ 15.3 billion as of December 31, 2023 and 2022,

respectively, on a gross basis before reduction for our collaboration partners’ share.

We had commercial aerospace financing commitments and other contractual commitments of approximately $ 14.1 billion and $ 14.6 billion as of December 31, 2024 and 2023, respectively, on a gross basis before reduction for our collaboration partners’ share.

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

22 unchanged sentences

The stated values of these letters of credit agreements and surety bonds totaled $ 3.1 billion as of December 31, 2024.

Offset Obligations.

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

At December 31, 2023, the aggregate amount of our offset agreements, both agreed to and anticipated to be agreed to, had an outstanding notional value of approximately $ 12.3 billion.

Offset / Industrial Participation Obligations.

customers in foreign countries.

At December 31, 2024, the aggregate amount of these agreements, both agreed to and anticipated to be agreed to, had an outstanding notional value of approximately $ 12.6 billion.

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

9 unchanged sentences

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

government contracting

environment, we will continue to be the subject of one or more U.S.

government contracting and overall enforcement environment, we will continue to be the subject of one or more U.S.

government investigations.

3 unchanged sentences

the Defense Contract Audit Agency (DCAA), the Defense Contract Management Agency (DCMA), the Inspectors General of the U.S.

Department of Defense (DoD) and other departments and agencies, the Government Accountability Office (GAO), the Department of Justice (DOJ), and Congressional Committees.

Department of Defense (DoD) and other departments and agencies, the Government Accountability Office (GAO), the DOJ, and Congressional Committees.

Other areas of our business operations may also be subject to audit and investigation by these and other agencies.

1 unchanged sentence

Such investigations and audits may be initiated due to a number of reasons, including as a result of a whistleblower complaint.

Such investigations and audits could result in administrative, civil or criminal liabilities, including repayments, fines, treble or other damages, forfeitures, restitution, or penalties being imposed upon us, the suspension of government export licenses, or the suspension or debarment from future U.S.

Such investigations and audits could result in administrative, civil, or criminal liabilities, including the imposition of repayment obligations, fines, treble or other damages, forfeitures, disgorgement, restitution, or penalties, the suspension of government export licenses, and/or suspension or debarment from future U.S.

government contracting.

They could also result in deferred prosecution agreements, administrative orders, consent agreements, guilty plea agreements, and/or imposition of an independent compliance monitor.

government investigations often take years to complete.

government also reserves the right to debar a contractor from receiving new government contracts for fraudulent, criminal, or other seriously improper conduct.

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

In particular, as described above in “Note 1:

Basis of Presentation and Summary of Accounting Principles”, in 2024, the Company entered into a DPA with the DOJ and the Company settled an administrative proceeding with 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, TRS, since 2012 in connection with certain Middle East contracts.

The Company also entered into a DPA and an FCA settlement agreement with the DOJ to resolve previously disclosed criminal and civil government investigations into defective pricing claims for certain legacy Raytheon Company contracts entered into between 2011 and 2013 and in 2017.

The compliance monitor will oversee Raytheon Company’s and the Company’s compliance with their respective obligations under the DPAs and the SEC Administrative Order.

In 2024, the Company also resolved certain voluntarily disclosed export controls violations primarily identified in connection with the integration of Rockwell Collins and, to a lesser extent, Raytheon Company, including certain violations that were resolved pursuant to a CA with the DOS.

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.

The CA also requires appointment of an external, independent SCO.

The Company appointed its SCO on September 27, 2024.

As noted above, the U.S.

government reserves the right to suspend or debar a contractor from receiving new government contracts for fraudulent, criminal, or other seriously improper conduct.

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

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

3 unchanged sentences

If the litigation is resolved in the Company’s favor, any such payments will be returned to the Company with interest.

Our final allowable incurred costs for each year are also subject to audit and have, from time to time, resulted in disputes between us and the U.S.

Our final allowable incurred costs for each year are

also subject to audit and have, from time to time, resulted in disputes between us and the U.S.

government, with litigation resulting at the Court of Federal Claims (COFC) or the Armed Services Board of Contract Appeals (ASBCA), or their related courts of appeals.

2 unchanged sentences

Our compliance with such local government regulations or any applicable U.S.

government regulations (e.g., the Foreign Corrupt Practices Act (FCPA) and International Traffic in Arms Regulations (ITAR)) may also be investigated or audited.

government regulations (e.g., Arms Export Control Act (AECA), Export Administration Regulations (EAR), Foreign Corrupt Practices Act (FCPA), and ITAR) may also be investigated or audited.

In addition, we accrue for liabilities associated with those matters that are probable and can be reasonably estimated.

7 unchanged sentences

Pratt & Whitney Powder Metal Matter.

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

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.

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

2 unchanged sentences

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

Guidance to affected operators was released via service bulletins (SB) and SI in November 2023 and this guidance is expected to be reflected in one or more airworthiness directives issued by the Federal Aviation Administration (FAA).

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

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

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

Consistent with previous information, the actions are resulting in significant incremental shop visits.

As a result of this matter, Pratt & Whitney expects aircraft on ground levels for the PW1100 powered A320neo fleet to remain elevated through 2026.

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

This reflects our current best estimate of expected customer compensation for the estimated duration of the

disruption as well as the EAC adjustment impact of this matter to Pratt & Whitney’s long-term maintenance contracts.

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

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

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

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

There was no utilization of the accrual during the fourth quarter of 2023.

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

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

At December 31, 2024 and 2023, we had other accrued liabilities of $ 1.7 billion and $ 2.8 billion, respectively, primarily related to expected compensation to customers.

The decrease in the accrual during 2024 was primarily due to customer compensation in the form of credits issued and cash paid to customers during the period.

Other engine models within Pratt & Whitney’s fleet contain parts manufactured with affected powder metal, but we do not currently believe there will be any resultant significant financial impact with respect to these other engine models at this time.

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

7 unchanged sentences

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

On September 30, 2024, a DCMA DACO issued a second claim against Pratt & Whitney that similarly alleges that Pratt & Whitney was noncompliant with CAS due to its method of allocating independent research and development costs to government contracts from April 1, 2019 to December 31, 2023.

The second claim demands payment of $ 1.1 billion plus interest ($ 305 million at December 31, 2024 ) .

Pratt & Whitney believes the second claim is without merit and filed an appeal to the ASBCA on October 15, 2024.

As previously disclosed, in December 2013, a DCMA DACO asserted a claim against Pratt & Whitney to recover alleged overpayments of approximately $ 177 million plus interest ($ 183 million at December 31, 2024).

10 unchanged sentences

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

This second claim, which asserts the same measure of the cost of collaborator parts rejected by the ASBCA’s recent decision, demands payment of $ 269 million plus interest ($ 123 million at December 31, 2023).

This second claim, which asserts the same measure of the cost of collaborator parts rejected by the ASBCA’s November 22, 2021 decision, demands payment of $ 269 million plus interest ($ 156 million at December 31, 2024).

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

6 unchanged sentences

Thales-Raytheon Systems and Related Matters

As previously disclosed, in 2019, Raytheon Company received a subpoena from the Securities and Exchange Commission (SEC) seeking information in connection with an investigation into whether there were improper payments made by Raytheon

Company, our joint venture known as Thales-Raytheon Systems (TRS), or anyone acting on their behalf, in connection with TRS or Raytheon Company contracts in certain Middle East countries since 2014.

As previously disclosed, in 2019, Raytheon Company received a subpoena from the SEC seeking information in connection with an investigation into whether there were improper payments made by Raytheon Company, our joint venture known as Thales-Raytheon Systems (TRS), or anyone acting on their behalf, in connection with TRS or Raytheon Company contracts in certain Middle East countries since 2014.

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

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

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

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

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

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

DOJ Investigation, Contract Pricing Disputes, and Related Civil Litigation

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

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

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

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

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

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

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

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

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

Those shareholder derivative lawsuits were consolidated.

In December 2023, the consolidated action was further consolidated with certain newly filed derivative lawsuits related to the Powder Metal Matter, discussed below in “Powder Metal Disclosure Litigation and SEC Investigation”.

Plaintiffs in the consolidated action then filed an operative complaint that removed all claims and allegations connected to the Company’s disclosure of the aforementioned DOJ subpoena, removing from the case that theory of relief against the former Raytheon Company Board of Directors, the Company, and the executives originally named in the consolidated lawsuit.

The operative complaint now contains only allegations directed at certain former and current Directors and Officers of the Company related to the Powder Metal Matter, discussed below in “Powder Metal Disclosure Litigation and SEC Investigation”.

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

Following the government’s and the Company’s own internal investigations, the Company engaged in resolution discussions with the DOJ and the SEC, and during the quarter ended June 30, 2024, the Company reached agreements in principle with the DOJ and the SEC as to the principal elements of such resolutions, as previously disclosed on July 25, 2024.

On October 15, 2024, Raytheon Company entered into DPA-1 with the DOJ and on October 16, 2024, the Company settled an administrative proceeding with the SEC to resolve these matters.

Pursuant to DPA-1, the DOJ will defer, for a period of three years, criminal prosecution of Raytheon Company related to Raytheon Company’s conspiracy to violate the anti-bribery provisions of the FCPA and 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 the ITAR.

If Raytheon Company and the Company fully comply with all of their respective obligations under DPA-1 during its three-year term (commencing on the effective date of DPA-1 and ending three years from the date on which the monitor is engaged), the DOJ will move for dismissal with prejudice of the deferred charges against Raytheon Company.

DPA-1 provides for a criminal monetary penalty and forfeiture of $ 282 million.

In addition, the SEC’s Administrative Order

issued in connection with the administrative proceeding settlement alleged that Raytheon Company violated the anti-bribery, books and records, and internal controls provisions of the FCPA.

The order provides for a $ 102 million payment to the SEC that includes disgorgement, prejudgment interest on disgorgement, and a civil penalty.

Under DPA-1, the SEC’s Administrative Order, and DPA-2 discussed in “DOJ Investigation and Contract Pricing Disputes” below, Raytheon Company and the Company are required, among other things, 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’s Administrative Order, as applicable, and ending three years from the date on which the monitor is engaged).

The compliance monitor will oversee Raytheon Company’s and the Company’s compliance with their respective obligations under DPA-1, the SEC’s Administrative Order, and DPA-2 discussed in “DOJ Investigation and Contract Pricing Disputes” below.

During the fourth quarter of 2024, the Company paid $ 384 million in the aggregate for DPA-1 and the SEC's Administrative Order which was consistent with amounts accrued.

The Company does not believe that these matters will have a material adverse effect on our results of operations, financial condition, or liquidity.

DOJ Investigation and Contract Pricing Disputes

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

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

As previously disclosed on July 25, 2024, following the government’s and the Company’s own internal investigations, the Company engaged in resolution discussions with the DOJ, and during the second quarter of 2024, the Company reached an agreement in principle with the DOJ as to the principal elements of such resolution.

In addition, the Company cooperated with the DOJ with respect to a related civil defective pricing investigation under the FCA.

On October 16, 2024, Raytheon Company entered into DPA-2 and the FCA Settlement Agreement with the DOJ to resolve these matters.

Pursuant to DPA-2, 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.

If Raytheon Company and the Company fully comply with all of their respective obligations in DPA-2 during its three-year term (commencing on the effective date of DPA-1 and ending three years from the date on which the monitor is engaged), the DOJ will move for dismissal with prejudice of the deferred charges against Raytheon Company.

DPA-2 provides for a criminal penalty in the amount of $ 147 million, plus restitution, and the FCA Settlement Agreement provides for an FCA settlement payment in the amount of $ 433 million, which includes restitution that will satisfy the criminal restitution obligation when paid.

Under DPA-2 as well as DPA-1 and the SEC Administrative Order discussed in “Thales-Raytheon Systems and Related Matters” above, Raytheon Company and the Company are required, among other things, 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’s Administrative Order, as applicable, and ending three years from the date on which the monitor is engaged).

The compliance monitor will oversee Raytheon Company’s and the Company’s compliance with their respective obligations under DPA-2 as well as DPA-1 and the SEC Administrative Order discussed in “Thales-Raytheon Systems and Related Matters” above.

During the fourth quarter of 2024, the Company paid $ 580 million in the aggregate for DPA-2 and the FCA Settlement Agreement which was consistent with amounts accrued plus interest.

The Company does not believe that these matters will have a material adverse effect on our results of operations, financial condition, or liquidity.

Trade Compliance Matters

From time to time, we identify, investigate, remediate, and voluntarily disclose violations or potential violations of the ITAR and EAR to the relevant regulators.

In May 2024, the U.S.

Department of State’s (DOS) Office of Defense Trade Controls Compliance (DTCC) informed the Company of its intent to seek administrative penalties for alleged violations of the AECA and the ITAR.

The DTCC informed us that it considers certain of our voluntary disclosures, primarily identified in connection with the integration of Rockwell Collins and, to a lesser extent, Raytheon Company, filed since 2019 to reflect deficiencies warranting a civil penalty.

On August 29, 2024, the Company entered into a Consent Agreement (CA) with the DOS to resolve these matters.

The CA settles certain AECA and ITAR compliance matters with the DTCC and the Directorate of Defense Trade Controls.

The CA has a three-year term and provides for:

(i) a civil penalty of $ 200 million, $ 100 million of which is suspended on the condition that such amount is applied to DTCC-approved remedial compliance measures;

(ii) the appointment of an external Special Compliance Officer (SCO) to oversee compliance with the CA, the AECA, and the ITAR;

(iii) an external audit of the Company’s AECA and ITAR compliance program;

and (iv) implementation of additional remedial compliance measures related to AECA and ITAR compliance.

The $ 100 million portion of the settlement that is not subject to

suspension, which was accrued by the Company in the second quarter of 2024, will be paid in installments, with $ 34 million paid in September 2024, $ 33 million due by August 29, 2025, and $ 33 million due by August 29, 2026.

As previously disclosed, the Company has determined that there is a probable risk of liability for potential penalties related to other export compliance matters which have been voluntarily disclosed to the cognizant regulators, but which are not subject to the CA.

We have accrued $ 251 million in the aggregate as of December 31, 2024 for these matters and the matters being resolved pursuant to the CA.

We are currently unable to estimate the timing or outcome of the other voluntarily disclosed export compliance matters that are not subject to the CA.

However, the Company does not believe these matters will have a material adverse effect on our results of operations, financial condition, or liquidity.

UTC Equity Conversion Litigation

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

We believe that the lawsuit lacks merit.

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

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

On July 23, 2024, in response to a motion to dismiss filed by defendants, the Court dismissed the shareholder derivative lawsuit in its entirety with prejudice.

On August 22, 2024, the Plaintiff filed an appeal to the Delaware Supreme Court.

We continue to believe that the lawsuit lacks merit.

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

Civil Litigation Related to Employee Hiring Practices

Pratt & Whitney is one of multiple defendants in a putative class action lawsuit pending in the United States District Court for the District of Connecticut alleging that Pratt & Whitney and the other defendants agreed to restrict the hiring and recruiting of certain engineers and skilled laborers in a manner that violated federal antitrust laws.

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

We believe that the claims asserted lack merit.

Pratt & Whitney is one of multiple defendants in a class action lawsuit pending in the United States District Court for the District of Connecticut alleging that Pratt & Whitney and the other defendants agreed to restrict the hiring and recruiting of certain engineers and skilled laborers in a manner that violated federal antitrust laws.

As of December 2024, all defendants, including Pratt & Whitney, reached a settlement with class counsel.

The Court has preliminarily approved the settlement, and we expect the Court will grant final approval of the settlement in 2025.

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

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

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

Powder Metal Disclosure Litigation and SEC Investigation

1 unchanged sentence

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

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

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

The lawsuits were consolidated and remain pending.

Second, three shareholder derivative lawsuits were filed against current and former Officers and Directors of the Company, two in the United States District Court for the District of Delaware and one in the United States District Court for the District of Connecticut, which has since been transferred to the District of Delaware.

In addition, the complaint in the consolidated derivative action discussed above under “DOJ Investigation, Contract Pricing Disputes, and Related Civil Litigation” was amended to add allegations relating to the powder metal manufacturing matter.

The four lawsuits have been consolidated in the District of Delaware, and a single operative complaint has been filed.

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

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

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

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

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

On November 7, 2023, January 30, 2024, and May 21, 2024, the Company received subpoenas from the SEC seeking engineering, operational, organizational, accounting, and financial documents in connection with an investigation relating to the Company’s disclosures in 2023 of issues arising from Pratt & Whitney’s use of powder metal in manufacturing various engine parts, its identification of certain risks associated with those manufacturing processes, and corrective actions identified by Pratt & Whitney to mitigate those risks.

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

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

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

Where appropriate, we have recorded loss contingency accruals for the above-referenced matters.

Unless noted above, loss contingency accruals are immaterial individually or in the aggregate.

As described in “Note 16:

9 unchanged sentences

Common Stock - Share Repurchases.

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

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

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

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

The ASR agreements provided for the repurchase of our common stock based on the average of the daily volume-weighted average prices of our common stock during the term of such ASR agreements, less a discount and subject to adjustments pursuant to the terms and conditions of the ASR agreements.

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

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

We funded the payments with borrowings under a bridge credit agreement, which was repaid with the proceeds from term loan facilities, proceeds from issuances of long-term debt in the fourth quarter of 2023, and cash on hand.

Borrowings and Lines of Credit” for additional information.

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

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

The final settlement of each transaction under the ASR agreements

is scheduled to occur no later than the third quarter of 2024 and in each case may be accelerated at the option of the applicable counterparty.

The shares associated with the remaining portion of the aggregate purchase price have been settled over two tranches.

In July 2024, the first tranche was settled upon final delivery to us of 0.4 million shares of common stock.

In September 2024, with respect to the second tranche, we owed 2.2 million shares of common stock that we elected to cash settle for $ 261 million.

The cash payment required as a result of the second tranche settlement was due to the significant increase in the price of our common stock during the ASR term.

The final average price under the ASR was $ 94.28 per share.

Accumulated Other Comprehensive Loss.

A summary of the changes in each component of Accumulated other comprehensive (loss) income, net of tax is provided below:

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

A summary of the changes in each component of Accumulated other comprehensive loss, net of tax is provided below:

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

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

12 unchanged sentences

Amounts reclassified that relate to our defined benefit pension and postretirement plans include the amortization of prior service costs and actuarial net gains or losses recognized during each period presented.

These costs are recorded as components of net periodic pension income for each period presented.

These costs are recorded as components of net periodic benefit (income) expense for each period presented.

See “Note 10:

3 unchanged sentences

RTX’s long-term incentive plans authorize various types of market and performance-based incentive awards that may be granted to officers and key employees.

The RTX Corporation 2018 Long-Term Incentive Plan, as amended and restated (2018 LTIP) was approved by shareowners on April 26, 2021.

The RTX Corporation Long-Term Incentive Plan, as amended and restated (LTIP), was approved by shareowners on May 2, 2024.

A total of 231 million shares have been authorized for issuance pursuant to awards under the LTIP including shares assumed from predecessor plans and adjustments associated with the separation of Carrier and Otis.

1 unchanged sentence

The LTIP does not contain aggregate annual award limits, however, it sets an annual award limit per participant.

The 2018 LTIP will expire after all authorized shares have been awarded or April 26, 2031, whichever is sooner.

The LTIP will expire after all authorized shares have been awarded or on May 2, 2034, whichever is sooner.

Under the LTIP, the exercise price of awards is set on the grant date and may not be less than the fair market value per share on that date.

20 unchanged sentences

December 31, 2023 1,461 $ 81.72 31,155 $ 82.36 3,001 $ 87.33 9,730 $ 86.53

Granted 90 97.65 2,664 97.66 965 96.39 3,353 97.33

117 91.04 2,993 91.03 1,535 83.67 3,761 91.95

Exercised / earned (3)

( 322 ) 79.37 ( 8,089 ) 79.62 ( 1,762 ) 71.69 ( 4,166 ) 74.18

Cancelled ( 1 ) 83.58 ( 313 ) 90.12 ( 73 ) 94.58 ( 422 ) 90.08

2 unchanged sentences

(2) Weighted-average grant date fair value per share.

(3) Performance Share Units includes an adjustment for actual performance achieved on the 2021 award of 513 thousand units.

The weighted-average grant date fair value of stock options and stock appreciation rights granted during 2024, 2023, and 2022 was $ 21.72 , $ 24.66 , and $ 21.80 , respectively.

The weighted-average grant date fair value of performance share units, which vest upon achieving certain performance metrics, granted during 2023, 2022, and 2021 was $ 96.39 , $ 96.15 , and $ 73.75 , respectively.

The total fair value of awards vested during 2023, 2022, and 2021 was $ 273 million, $ 346 million, and $ 287 million, respectively.

The weighted-average grant date fair value of PSUs, which vest upon achieving certain performance metrics, granted during 2024, 2023, and 2022 was $ 93.48 , $ 96.39 , and $ 96.15 , respectively.

The total fair

value of awards vested during 2024, 2023, and 2022 was $ 447 million, $ 273 million, and $ 346 million, respectively.

The total intrinsic value (which is the amount by which the stock price exceeded the exercise price on the date of exercise) of stock options and stock appreciation rights exercised during 2024, 2023, and 2022 was $ 245 million, $ 46 million, and $ 110 million, respectively.

The total intrinsic value (which is the stock price at vesting multiplied by the number of underlying shares) of performance share units and other restricted awards vested was $ 263 million, $ 427 million, and $ 256 million during 2023, 2022, and 2021, respectively.

The total intrinsic value (which is the stock price at vesting multiplied by the number of underlying shares) of PSUs and other restricted awards vested was $ 506 million, $ 263 million, and $ 427 million during 2024, 2023, and 2022, respectively.

The following table summarizes information about equity awards outstanding that are vested and expected to vest as well as equity awards outstanding that are exercisable at December 31, 2024:

1 unchanged sentence

(shares in thousands;

aggregate intrinsic value in millions) Awards Average Price (1)

Aggregate Intrinsic Value Remaining Term (2)

Awards Average Price (1)

Aggregate Intrinsic Value Remaining Term (2)

aggregate intrinsic value in millions) Awards Average Price Aggregate Intrinsic Value Remaining Term (3)

Awards Average Price Aggregate Intrinsic Value Remaining Term (3)

Stock Options (1)

1,252 $ 83.16 $ 41 4.9 970 $ 80.04 $ 35 3.93

Stock Appreciation Rights (1)

25,624 84.09 811 5.32 18,325 80.22 650 4.19

Performance Share Units (2)

2,659 95.28 308 1.14

Restricted Stock and RSUs (2)

(1) Weighted-average exercise price per share.

8,581 94.35 993 1.58

(1) Average Price is weighted-average exercise price per share.

(2) Average Price is weighted-average grant date fair value per share.

(3) Weighted-average contractual remaining term in years.

16 unchanged sentences

SEGMENT FINANCIAL DATA

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

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

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

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

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

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

Collins Aerospace is a leading global provider of technologically advanced aerospace and defense products.

Collins’ solutions include aftermarket services for civil and military aircraft manufacturers, commercial airlines, and regional, business, and general aviation, as well as for defense and commercial space operations.

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

Collins designs, manufactures, and supplies electric power generation, management and distribution systems, environmental control systems, flight control systems, air data and aircraft sensing systems, engine control systems, engine components, engine nacelle systems, including thrust reversers and mounting pylons, interior and exterior aircraft lighting, aircraft cargo systems, evacuation systems, landing systems (including landing gear, wheels, and braking systems), communication, navigation, surveillance systems, fire and ice detection and protection systems, actuation systems, integrated avionics, and propeller systems.

2 unchanged sentences

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

Collins supports government and defense customer missions by providing systems solutions for connected battlespace, test and training range systems, crew escape systems, and simulation and training.

Collins supports government and defense

customer missions by providing systems solutions for connected battlespace, test and training range systems, crew escape systems, and simulation and training.

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

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

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

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

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

5 unchanged sentences

Raytheon also provides advanced naval sensors, command and control and weapons including classified naval radars, the Next Generation Jammer (NGJ), shipboard missiles including the Tomahawk and Standard Missile 6 (SM-6), air-to-air missiles such as the AIM-9X SIDEWINDER missile, and integrated systems such as the SPY-6 radar.

In addition, Raytheon provides advanced systems and products that span layered land and integrated air and missile defense, including the proven Patriot air and missile defense system, the Lower Tier Air and

Missile Defense Sensor (LTAMDS), the National Advanced Surface-to-Air Missile System (NASAMS), Javelin, Excalibur, Stinger, and High-Energy Lasers.

In addition, Raytheon provides advanced systems and products that span layered land and integrated air and missile defense, including the Patriot air and missile defense system, the Lower Tier Air and Missile Defense Sensor (LTAMDS), the National Advanced Surface-to-Air Missile System (NASAMS), Javelin, Excalibur, Stinger, and High-Energy Lasers.

Raytheon also provides technologically advanced sensors, satellites, and interceptors, including the AN/TPY-2 radar, and Standard Missile 3 (SM-3).

2 unchanged sentences

Segment Information.

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

RTX’s chief operating decision maker (CODM) is our President and Chief Executive Officer.

The CODM uses segment operating profit as a profitability measure to assess actual and forecasted segment performance to make decisions regarding incentive compensation and the allocation of capital and other investments.

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

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

5 unchanged sentences

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

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

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

1 unchanged sentence

Segment information for the years ended December 31 are as follows:

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

(dollars in millions) 2023 2022 2021 2023 2022 2021 2023 2022 2021

(dollars in millions) Net Sales Research and Development Other Segment Items (1)

Operating Profit (Loss) Operating Profit (Loss) Margins

Collins Aerospace $ 28,284 $ ( 1,408 ) $ ( 22,741 ) $ 4,135 14.6 %

Pratt & Whitney 28,066 ( 1,086 ) ( 24,965 ) 2,015 7.2 %

18,296 20,530 18,150 ( 1,455 ) 1,075 454 ( 8.0 ) % 5.2 % 2.5 %

Raytheon 26,713 ( 452 ) ( 23,667 ) 2,594 9.7 %

3 unchanged sentences

Corporate expenses and other unallocated items (3)

FAS/CAS operating adjustment — 833

Acquisition accounting adjustments — ( 2,058 )

Consolidated $ 80,738 $ 6,538 8.1 %

(1) Includes Cost of sales, Selling, General, and Administrative expenses, and Other income (expense), net.

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

(3) Includes a $ 0.9 billion charge in the second quarter of 2024 related to the Resolution of Certain Legal Matters.

Basis of Presentation and Summary of Accounting Principles” for additional information.

(dollars in millions) Net Sales Research and Development Other Segment Items (1)

Operating Profit (Loss) Operating Profit (Loss) Margins

Collins Aerospace $ 26,253 $ ( 1,317 ) $ ( 21,111 ) $ 3,825 14.6 %

Pratt & Whitney (3)

18,296 ( 1,001 ) ( 18,750 ) ( 1,455 ) ( 8.0 ) %

Raytheon 26,350 ( 500 ) ( 23,471 ) 2,379 9.0 %

Total segment 70,899 ( 2,818 ) ( 63,332 ) 4,749 6.7 %

Eliminations and other (2)

( 1,979 ) ( 42 )

Corporate expenses and other unallocated items — ( 275 )

FAS/CAS operating adjustment — 1,127

1 unchanged sentence

Consolidated $ 68,920 $ 3,561 5.2 %

(1) Includes Cost of sales, Selling, General, and Administrative expenses, and Other income (expense), net.

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

(3) Includes the impacts of the Powder Metal Matter.

(3) 2022 and 2021 included the net expenses related to the U.S.

(dollars in millions) Net Sales Research and Development Other Segment Items (1)

Operating Profit (Loss) Operating Profit (Loss) Margins

Collins Aerospace $ 23,052 $ ( 1,232 ) $ ( 19,004 ) $ 2,816 12.2 %

Pratt & Whitney 20,530 ( 889 ) ( 18,566 ) 1,075 5.2 %

Raytheon 25,176 ( 500 ) ( 22,228 ) 2,448 9.7 %

Total segment 68,758 ( 2,621 ) ( 59,798 ) 6,339 9.2 %

Eliminations and other (2)

( 1,684 ) ( 23 )

Corporate expenses and other unallocated items (3)

FAS/CAS operating adjustment — 1,399

Acquisition accounting adjustments — ( 1,893 )

Consolidated $ 67,074 $ 5,504 8.2 %

(1) Includes Cost of sales, Selling, General, and Administrative expenses, and Other income (expense), net.

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

(3) Includes the net expenses related to the U.S.

Army’s LTAMDS program.

41 unchanged sentences

Other regions 1,602 2,552 171 — 4,325

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

Consolidated net sales 25,929 28,064 26,570 175 80,738

7 unchanged sentences

Other regions 1,377 2,095 181 — 3,653

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

Consolidated net sales 24,294 18,296 26,220 110 68,920

11 unchanged sentences

Segment sales disaggregated by type of customer for the years ended December 31 are as follows:

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

Raytheon Other Total

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

Sales to the U.S.

5 unchanged sentences

Commercial aerospace and other commercial sales 17,453 19,738 214 5 37,410

16,523 11,133 407 6 28,069

Consolidated net sales 25,929 28,064 26,570 175 80,738

2 unchanged sentences

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

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

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

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

Raytheon Other Total

Sales to the U.S.

5 unchanged sentences

Commercial aerospace and other commercial sales (2)

16,523 11,133 407 6 28,069

Consolidated net sales 24,294 18,296 26,220 110 68,920

2 unchanged sentences

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

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

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

14 unchanged sentences

Segment sales disaggregated by sales type for the years ended December 31 are as follows:

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

Raytheon Other Total

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

Products $ 20,272 $ 16,316 $ 22,872 $ 152 $ 59,612

3 unchanged sentences

Business segment sales $ 28,284 $ 28,066 $ 26,713 $ ( 2,325 ) $ 80,738

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

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

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

Raytheon Other Total

Products $ 19,034 $ 8,579 $ 21,847 $ 111 $ 49,571

3 unchanged sentences

Business segment sales $ 26,253 $ 18,296 $ 26,350 $ ( 1,979 ) $ 68,920

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

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

13 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.

What changed 10-K

Item 8. Financial Statements and Supplementary Data