What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2026-02-06 compared with 2025-02-03 · 327 added, 397 removed, 1581 unchanged (31% of the section changed)

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Christopher T.

President and Chief Executive Officer

Chairman and Chief Executive Officer

MITCHILL, JR.

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Executive Vice President and Chief Financial Officer

Corporate Vice President and Controller

Senior Vice President and Controller

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

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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 makes 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 rising costs or inflation, the length of time to complete the performance obligation, execution by its subcontractors, the availability and timing of funding from the 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 its subcontractors, the availability and timing of funding from the 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.

Changes in estimates of net sales, cost of sales and the related impact to operating profit on contracts recognized over time are recognized on a cumulative catch-up basis, which recognizes the cumulative effect of the profit changes on current and prior periods based on a performance obligation’s percentage of completion in the current period.

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Total non-operating expense (income), net 567 344 ( 275 )

Income from continuing operations before income taxes 6,194 3,836 6,117

Income before income taxes 8,733 6,194 3,836

Income tax expense 1,664 1,181 456

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

Noncontrolling interest in subsidiaries’ earnings from continuing operations 239 185 111

Net income from continuing operations attributable to common shareowners 4,774 3,195 5,216

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

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

Earnings (loss) per share attributable to common shareowners - basic

Income from continuing operations attributable to common shareowners $ 3.58 $ 2.24 $ 3.54

Loss from discontinued operations — — ( 0.02 )

Net income attributable to common shareowners $ 3.58 $ 2.24 $ 3.52

Earnings (loss) per share attributable to common shareowners - diluted

Income from continuing operations attributable to common shareowners $ 3.55 $ 2.23 $ 3.51

Loss from discontinued operations — — ( 0.01 )

Net income 7,069 5,013 3,380

Noncontrolling interest in subsidiaries’ earnings 337 239 185

Net income attributable to common shareowners $ 6,732 $ 4,774 $ 3,195

Earnings Per Share attributable to common shareowners:

Basic $ 5.02 $ 3.58 $ 2.24

Diluted 4.96 3.55 2.23

Weighted average number of shares outstanding:

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(dollars in millions) 2025 2024 2023

Net income from continuing and discontinued operations $ 5,013 $ 3,380 $ 5,308

Net income $ 7,069 $ 5,013 $ 3,380

Pension and postretirement benefit plans adjustments

Net actuarial (loss) gain arising during period ( 645 ) ( 971 ) 1,291

Net actuarial loss arising during period ( 739 ) ( 645 ) ( 971 )

Prior service cost arising during period ( 100 ) ( 36 ) ( 19 )

Amortization of actuarial (gain) loss and prior service cost ( 174 ) ( 568 ) 129

Amortization of actuarial loss and prior service credit ( 142 ) ( 174 ) ( 568 )

Other 189 8 ( 51 )

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Foreign currency translation adjustments 1,436 ( 506 ) 562

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 )

Other comprehensive income (loss), before tax 928 ( 1,581 ) ( 689 )

Income tax benefit related to items of other comprehensive income 109 245 288

Other comprehensive income (loss), net of tax 1,037 ( 1,336 ) ( 401 )

Comprehensive income 8,106 3,677 2,979

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Accounts receivable, net 14,701 10,976

Contract assets 14,570 12,139

Contract assets, net 17,092 14,570

Inventory, net 13,364 12,768

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Retained earnings 56,718 53,589

Unearned ESOP shares — ( 15 )

Accumulated other comprehensive loss ( 2,718 ) ( 3,755 )

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Operating Activities:

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 from continuing operations:

Net income $ 7,069 $ 5,013 $ 3,380

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

Depreciation and amortization 4,378 4,364 4,211

Deferred income tax benefit ( 47 ) ( 402 ) ( 1,663 )

Deferred income tax provision (benefit) 789 ( 47 ) ( 402 )

Stock compensation cost 519 437 425

Net periodic pension and other postretirement income ( 1,011 ) ( 1,326 ) ( 1,555 )

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

Share-based 401(k) matching contributions 573 353 261

Gain on sale of Cybersecurity, Intelligence and Services (CIS) business, net of transaction costs (Note 2) — ( 415 ) —

Accounts receivable ( 3,235 ) ( 175 ) ( 1,805 )

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Other operating activities, net ( 476 ) ( 135 ) 48

Net cash flows provided by operating activities from continuing operations 7,159 7,883 7,168

Net cash flows provided by operating activities 10,567 7,159 7,883

Investing Activities:

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Receipts from customer financing assets 161 202 212

Investments in businesses — — ( 66 )

Dispositions of businesses, net of cash transferred 1,931 1,795 6

Increase in other intangible assets ( 492 ) ( 611 ) ( 751 )

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

Receipts (payments) from settlements of derivative contracts, net 118 ( 142 ) 14

Other investing activities, net ( 123 ) 65 12

Net cash flows used in investing activities from continuing operations ( 1,534 ) ( 3,039 ) ( 2,829 )

Net cash flows used in investing activities ( 1,265 ) ( 1,534 ) ( 3,039 )

Financing Activities:

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

Change in other short-term borrowings, net ( 4 ) 87 ( 29 )

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

Dividends paid ( 3,574 ) ( 3,217 ) ( 3,239 )

Repurchase of common stock ( 50 ) ( 444 ) ( 12,870 )

Other financing activities, net ( 433 ) ( 456 ) ( 230 )

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

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

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

Net cash flows used in financing activities ( 7,486 ) ( 6,617 ) ( 4,527 )

Effect of foreign exchange rate changes on cash and cash equivalents 48 ( 28 ) 18

Net increase (decrease) in cash, cash equivalents and restricted cash 1,864 ( 1,020 ) 335

Cash, cash equivalents and restricted cash, beginning of year 5,606 6,626 6,291

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Common stock plans activity 400 110 368

Share-based 401(k) matching contributions 292 269 242

Common stock repurchased — — ( 1,500 )

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Common stock repurchased ( 50 ) ( 225 ) ( 11,490 )

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

Share-based 401(k) matching contributions 281 90 —

Common stock contributed to defined benefit pension plans — — 43

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Balance at January 1 — ( 15 ) ( 28 )

Common Stock plans activity 15 13 10

Share-based 401(k) matching contributions — 15 13

Balance at December 31 — — ( 15 )

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Balance at January 1 ( 3,755 ) ( 2,419 ) ( 2,018 )

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

Other comprehensive income (loss), net of tax 1,037 ( 1,336 ) ( 401 )

Balance at December 31 ( 2,718 ) ( 3,755 ) ( 2,419 )

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Shares of common stock repurchased 396 2,116 141,712

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

Treasury shares reissued related to 401(k) matching contributions 4,004 1,293 —

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

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

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.

We reclassified certain immaterial prior period amounts within our Consolidated Statement of Cash Flows and Consolidated Statement of Changes in Equity related to our share-based 401(k) matching contributions 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:

As previously disclosed, in 2024 the Company resolved several outstanding legal matters, herein referred to as “Resolution of Certain Legal Matters.” See “Note 17:

Commitments and Contingencies” for additional information.

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

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.

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Accounts receivable are stated at the net amount expected to be collected.

Accounts receivable related to the commercial aerospace industry was approximately 79 % and 80 % of Accounts receivable, net at December 31, 2024 and 2023, respectively.

Accounts receivable related to the commercial aerospace industry was approximately 79 % of Accounts receivable, net at December 31, 2025 and 2024.

We are exposed to credit losses primarily on our accounts receivable and contract assets related to our sales of products and services to commercial customers.

The allowance for expected credit losses is established to provide for the expected lifetime credit losses by evaluating factors such as customer creditworthiness, historical payment and loss experiences, current economic conditions, including geographic and political risk, and the age and status of outstanding receivables.

The allowance for expected credit losses is established to provide for the expected lifetime credit

losses by evaluating factors such as customer creditworthiness, historical payment and loss experiences, current economic conditions, including geographic and political risk, and the age and status of outstanding receivables.

In certain circumstances, we may be able to develop reasonable and supportable forecasts over the contractual term of the financial asset.

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Accounts receivable, net as of December 31, 2025 and 2024 includes unbilled receivables of $ 411 million and $ 374 million, respectively, which primarily includes unbilled receivables with commercial aerospace customers.

Other unbilled receivables where payment is subject to factors beyond just the passage of time are included in Contract assets in the Consolidated Balance Sheet.

Other unbilled receivables where payment is subject to factors beyond just the passage of time are included in Contract assets, net in the Consolidated Balance Sheet.

Contract Assets and Liabilities.

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Manufacturing costs are allocated to current production contracts.

Equity Investments.

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 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 (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.

If a decline in the value of an equity method investment is determined to be other than temporary, a loss is recorded in earnings in the current period.

Our sales to and purchases from unconsolidated entities accounted for under the equity method, which are considered related parties, are not material.

Investments in entities we do not control are presented in Other assets in our Consolidated Balance Sheet.

For investments in which we have significant influence, we apply the equity method of accounting.

Under this method, we record our proportionate share of the investee’s net earnings or losses.

If we determine that a decline in the value of an equity‑method investment is other than temporary, we recognize an impairment loss in current‑period earnings.

Transactions with equity‑method investees, which are considered related parties, were not material for the periods presented.

We also make strategic investments in companies that we believe are advancing or developing new technologies applicable to our business.

These investments are primarily in early‑stage entities and may be in the form of convertible debt or equity investments.

Most of these investments are in equity securities without readily determinable fair values.

These securities are measured at cost with adjustments recorded for observable price changes under the measurement alternative.

We evaluate these investments for indicators of impairment each reporting period.

Income and losses from these investments are included in Other income (expense), net in our Consolidated Statement of Operations, as the activities of the investees are closely aligned with our operations.

Customer Financing Assets.

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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.

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:

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In evaluating our reporting units and indefinite-lived intangible assets for impairment, we may perform both qualitative and quantitative assessments.

For the quantitative assessments that are performed, fair value is primarily based on market-based valuation methods, income-based methods using a discounted cash flow model, relief from royalty methods, or a combination of such.

These assessments utilize significant assumptions including sales growth rates, projected operating profit, terminal growth rates, discount rates, royalty rates, and comparable multiples from publicly-traded companies in our industry.

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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 (IT) 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.

We determine if an arrangement contains a lease at inception.

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Lease expense is generally recognized on a straight-line basis over the lease term.

In limited instances we act as a lessor, primarily for commercial aerospace engines for a short term during maintenance events.

We act as a lessor, primarily for commercial aerospace engines for a short term during maintenance events.

The majority of these leases are classified as operating leases.

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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.

For those tax positions where it is more-likely-than-not that a tax benefit will be sustained, we have recorded the largest amount of tax benefit with a greater than 50% likelihood of being realized upon ultimate settlement with a taxing authority that has full knowledge of all relevant information.

For those tax positions where it is more-likely-than-not that a tax benefit will be sustained, we have recorded

the largest amount of tax benefit with a greater than 50% likelihood of being realized upon ultimate settlement with a taxing authority that has full knowledge of all relevant information.

For those income tax positions where it is not more-likely-than-not that a tax benefit will be sustained, no tax benefit has been recognized in the financial statements.

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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.

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Our contracts with the U.S.

government are typically subject to the Federal Acquisition Regulation (FAR) and are priced based on estimated or actual costs of producing goods or providing services.

government are typically subject to

the Federal Acquisition Regulation (FAR) and are priced based on estimated or actual costs of producing goods or providing services.

The FAR provides guidance on the types of costs that are allowable in establishing prices for goods and services provided under U.S.

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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.

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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.

Cost estimates may also include the estimated cost of satisfying our industrial cooperation agreements, sometimes in the form of either offset obligations or in-country industrial participation (ICIP) agreements, required under certain contracts.

Cost estimates may also include the estimated cost of satisfying our industrial cooperation agreements, sometimes in the form of either offset obligations or in-country industrial

participation (ICIP) agreements, required under certain contracts.

These obligations may or may not be distinct depending on their nature.

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Total net sales $ ( 208 ) $ ( 144 ) $ ( 452 )

Operating profit (loss) ( 473 ) ( 648 ) ( 37 )

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

Operating profit ( 386 ) ( 473 ) ( 648 )

Net income attributable to common shareowners (1)

( 305 ) ( 374 ) ( 512 )

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

Diluted earnings per share attributable to common shareowners (1)

$ ( 0.22 ) $ ( 0.28 ) $ ( 0.36 )

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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.

As a result, Raytheon recognized a net operating profit benefit of $ 0.1 billion 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 $ 0.6 billion 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.

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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.

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

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

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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) 2025 2024 2023

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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.

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

Derivatives and Hedging Activity.

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Derivatives used to hedge foreign currency denominated balance sheet items are reported directly in earnings along with offsetting transaction gains and losses on the items being hedged.

Derivatives are also used to hedge foreign currency translation risk arising from the net investment in certain foreign operations.

Derivatives used to hedge forecasted cash flows associated with foreign currency commitments or forecasted commodity purchases may be accounted for as cash flow hedges, as deemed appropriate.

Gains and losses on derivatives designated as cash flow hedges are recorded in other comprehensive income (loss) and reclassified to earnings as a component of products sales or expenses, as applicable, when the hedged transaction occurs.

Cash payments or receipts on derivatives designated as cash flow hedges are recorded in Other operating activities, net within the Consolidated Statement of Cash Flows.

To the extent that a previously-designated hedging transa ction is no longer an effective hedge, any ineffectiveness measured in the hedging relationship is recorded currently in earnings in the period it occurs.

Changes in the fair value of derivatives that are designated and qualify as a hedge of the net investment in foreign operations, to the extent they are included in the assessment of effectiveness, are recorded in Foreign currency translation adjustments within Other comprehensive income (loss) (OCI) and are deferred until disposal of the underlying investment.

Gains and losses representing components excluded from the assessment of effectiveness for net investment hedges are recognized on a straight-line basis in Other income (expense), net over the term of the hedges.

To the extent that a previously-designated hedging

transa ction for cash flow hedges or net investment hedges are no longer an effective hedge, any ineffectiveness measured in the hedging relationship is recorded currently in earnings in the period it occurs.

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.

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:

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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:

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Major assumptions include the discount rate and expected return on plan assets (EROA).

These gains or losses are recorded in other comprehensive income, net of tax effects, until they are amortized as a component of net periodic benefit (income) expense.

Other assumptions include actuarial and demographic assumptions including mortality rates, retirement age, and rate of increase in employee compensation levels.

These gains or losses are recorded in Other comprehensive loss, net of tax, until they are amortized as a component of net periodic benefit (income) expense.

A calculated “market-related value” of our plan assets is generally used to develop the amount of deferred asset gains or losses to be amortized.

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Accounting Pronouncements.

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.

In December 2025, the Financial Accounting Standards Board (FASB) issued Accounting Standard Update (ASU) 2025-10;

Accounting for Government Grants Received by Business Entities, which provides guidance on how companies should recognize, measure, and present government grants received.

The new standard is effective for annual and interim reporting periods beginning after December 15, 2028.

The standard allows for a modified prospective, modified retrospective, or retrospective transition.

Early adoption is permitted.

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

In September 2025, the FASB issued ASU 2025-06, Targeted Improvements to the Accounting for Internal-Use Software, which better aligns the accounting guidance to how software is developed by eliminating project stages from capitalization criteria.

The new standard is effective for annual reporting periods beginning after December 15, 2027 and interim periods within those annual reporting periods.

The standard allows for prospective, modified, or retrospective transition.

Early adoption is permitted.

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

In November 2024, the FASB issued 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.

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

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

Early adoption and retrospective application are permitted.

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

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

Improvements to Reportable Segment Disclosures, which expands the segment reporting disclosures and requires disclosure of segment expenses that are regularly provided to the chief operating decision maker (CODM) and included within each reported measure of segment profit or loss,

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

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

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.

We adopted this standard for the annual period ending December 31, 2025 on a prospective basis.

We updated our income tax disclosures to comply with the requirements.

See “Note 12:

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

Income Taxes.” 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, 2025 are not expected to have a material impact on our results of operations, financial condition, or liquidity.

ACQUISITIONS AND DISPOSITIONS

Acquisitions.

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

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.

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 July 21, 2025, we completed the sale of the actuation and flight control business within our Collins segment for gross proceeds of $ 1.8 billion.

Cash received of $ 1.6 billion, net of cash transferred, included amounts attributable to continuing service agreements supporting the buyer post-closing.

The sale resulted in a pre-tax gain of $ 0.2 billion, which was recorded in Other income (expense), net within the Consolidated Statement of Operations.

On October 6, 2025, we completed the sale of the Simmonds Precision Products business within our Collins segment for gross proceeds of approximately $ 0.8 billion, resulting in an aggregate pre-tax gain of $ 0.1 billion, recognized in Other income (expense), net within the Consolidated Statement of Operations.

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, 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.

This disposition does not qualify for presentation as discontinued operations.

GOODWILL AND INTANGIBLE ASSETS

2 unchanged sentences

Collins Aerospace $ 32,223 $ ( 255 ) $ 808 $ 32,776

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

Pratt & Whitney 1,563 — — 1,563

3 unchanged sentences

Total $ 52,789 $ ( 255 ) $ 809 $ 53,343

(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.

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shares in millions) 2025 2024 2023

Net income (loss) attributable to common shareowners:

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

Loss from discontinued operations — — ( 19 )

Net income attributable to common shareowners $ 6,732 $ 4,774 $ 3,195

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Diluted weighted average number of shares outstanding 1,356.4 1,343.6 1,435.4

Earnings (loss) per share attributable to common shareowners - basic

Income from continuing operations $ 3.58 $ 2.24 $ 3.54

Loss from discontinued operations — — ( 0.02 )

Net income attributable to common shareowners $ 3.58 $ 2.24 $ 3.52

Earnings (loss) per share attributable to common shareowners - diluted

Income from continuing operations $ 3.55 $ 2.23 $ 3.51

Loss from discontinued operations — — ( 0.01 )

Net income attributable to common shareowners $ 3.55 $ 2.23 $ 3.50

Earnings Per Share attributable to common shareowners:

Basic $ 5.02 $ 3.58 $ 2.24

Diluted 4.96 3.55 2.23

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

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$ 289 $ 316 $ 452

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

Write-offs charged against the allowance for expected credit losses ( 7 ) ( 42 ) ( 42 )

Current period provision, net of recoveries 64 ( 14 ) ( 92 )

Write-offs ( 12 ) ( 7 ) ( 42 )

Other, net ( 1 ) ( 6 ) ( 2 )

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(dollars in millions) 2025 2024

Contract assets $ 14,570 $ 12,139

Contract assets, net $ 17,092 $ 14,570

Contract liabilities ( 21,615 ) ( 18,616 )

Net contract liabilities $ ( 4,523 ) $ ( 4,046 )

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.

Contract assets, net increased $ 2.5 billion during 2025 primarily due to sales in excess of billings on certain contracts at Pratt & Whitney, partially offset by an increase in the allowance for expected credit losses due to a customer bankruptcy recorded at Pratt & Whitney in the second quarter of 2025.

Contract liabilities increased $ 3.0 billion during 2025 primarily due to billings in excess of sales on certain contracts at Pratt & Whitney and Raytheon.

In 2025, 2024, and 2023, we recognized revenue of $ 8.1 billion, $ 7.2 billion, and $ 5.3 billion related to our Contract liabilities at January 1, 2025, January 1, 2024, and January 1, 2023, respectively.

Contract assets consisted of the following at December 31:

Contract assets, net consisted of the following at December 31:

(dollars in millions) 2025 2024

1 unchanged sentence

Progress payments ( 17,931 ) ( 15,656 )

Total contract assets $ 14,570 $ 12,139

Total contract assets, net $ 17,092 $ 14,570

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.

The changes in the allowance for expected credit losses related to contract assets were as follows:

(dollars in millions) 2025 2024 2023

Balance as of January 1

$ 491 $ 197 $ 319

Current period provision, changes in estimates, and recoveries, net 185 294 210

Write-offs and other — — ( 332 )

Balance as of December 31 $ 676 $ 491 $ 197

INVENTORY, NET

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21,572 19,738

Other, including assets under construction 3,735 3,594

Assets under construction 3,865 3,735

Fixed assets, gross 35,335 32,783

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Leasehold improvements are amortized over the lesser of the remaining lease term or the estimated useful life of the improvement.

Depreciation expense related to Fixed assets, net is recorded predominantly utilizing the straight-line method and was $ 1.8 billion in 2024, 2023, and 2022.

Depreciation expense related to Fixed assets, net is recorded predominantly utilizing the straight-line method and was $ 1.9 billion in 2025 and $ 1.8 billion in 2024 and 2023.

BORROWINGS AND LINES OF CREDIT

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At December 31, 2025 and 2024, 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.

During 2025 and 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 $ 0.2 billion of repayments of commercial paper with maturities greater than 90 days.

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.

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:

Date Description of Notes Aggregate Principal Balance (in millions)

November 8, 2023 5.750 % notes due 2026 (1)

5.750 % notes due 2029 (1)

6.000 % notes due 2031 (1)

6.100 % notes due 2034 (1)

6.400 % notes due 2054 (1)

November 7, 2023 18 Month term loan at 3 Month Secured Overnight Financing Rate (SOFR) plus 1.225 % due 2025 (1)

3-Year term loan at 3 Month SOFR plus 1.225 % due 2026 (1)

February 27, 2023 5.000 % notes due 2026

5.150 % notes due 2033

5.375 % notes due 2053

(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.

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, the $ 6.0 billion of long-term debt issuances, and cash on hand.

During 2025 and 2024, we made the following repayments of long-term debt:

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December 17, 2025 3 Month SOFR plus 1.225 % Term Loan due 2026

August 18, 2025 3.950 % notes due 2025

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

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

December 15, 2024 3.150 % notes due 2024

3 unchanged sentences

March 15, 2024 3.200 % notes due 2024

December 15, 2023 3.700 % notes due 2023

August 16, 2023 3.650 % notes due 2023

Long-term debt consisted of the following as of December 31:

(dollars in millions) 2025 2024

3.200 % notes due 2024 (1)

3.150 % notes due 2024 (1)

3 Month SOFR plus 1.225 % term loan due 2025

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7.500 % notes due 2029 (1)

(dollars in millions) 2024 2023

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

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5.400 % notes due 2035 (1)

(dollars in millions) 2025 2024

6.050 % notes due 2036 (1)

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

The weighted-average interest rate related to total debt was 4.5 % and 4.6 % at December 31, 2024 and 2023, respectively.

The weighted-average interest rate related to total debt was 4.5 % at December 31, 2025 and 2024.

The average maturity of our long-term debt at December 31, 2025 is approximately 12 years.

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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.

In 2025 and 2024, we used the ESOP to make matching contributions of $ 0.6 billion and $ 0.4 billion, respectively, which was equivalent to 4 million and 3 million shares, respectively.

Pension and Postretirement Plans.

3 unchanged sentences

Our plans use a December 31 measurement date consistent with our fiscal year.

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

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

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

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

At December 31, 2023, we merged our remaining Raytheon Company domestic defined benefit pension plans into the RTX Consolidated Pension Plan.

This plan merger does not impact participants’ benefit formulas.

We made the following contributions to our pension and PRB plans’ trusts during the years ended December 31:

(dollars in millions) 2024 2023 2022

qualified defined benefit plans (1)

International defined benefit plans 31 60 69

PRB plans 30 28 25

(1) 2023 includes $ 50 million of RTX common stock contributions.

At December 31, 2023, we merged our remaining Raytheon Company domestic defined benefit pension plans into the RTX Consolidated Pension Plan (the Plan).

This plan merger did not impact participants’ benefit formulas.

In December 2025, we completed a buy-out conversion of a group annuity contract previously purchased by the Plan from The Prudential Insurance Company of America (Prudential) transferring approximately $ 2.3 billion of gross pension obligations from the Plan to Prudential.

In connection with the contract purchase, Fiduciary Counselors Inc.

acted as independent fiduciary for the Plan.

Upon completion of the buy-out conversion, Prudential assumed the obligation and administrative responsibility for retirement benefits owed to approximately 60,000 Plan retirees and beneficiaries, which represents approximately one-third of retirees and beneficiaries in the Plan.

The transaction resulted in no change to the amounts of benefits payable and did not diminish the Plan’s funded status.

In connection with the transaction, we recognized a one-time, non-cash pension settlement charge of $ 0.3 billion in the fourth quarter of 2025, recorded in Non-service pension income, within the Consolidated Statement of Operations.

(dollars in millions) 2025 2024

1 unchanged sentence

Beginning balance $ 46,322 $ 49,592

Service cost attributable to continuing operations 189 222

Service cost 169 189

Interest cost 2,343 2,385

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

Actuarial loss (gain) 1,253 ( 2,013 )

Total benefits paid (1)

11 unchanged sentences

Settlements ( 2,479 ) ( 3 )

Business combinations and divestitures — —

Ending balance $ 45,114 $ 46,414

8 unchanged sentences

Non-current assets $ 2,339 $ 1,819 $ — $ —

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

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

Current liabilities ( 169 ) ( 195 ) ( 59 ) ( 61 )

Non-current liabilities ( 1,510 ) ( 1,532 ) ( 501 ) ( 523 )

Net amount recognized $ 660 $ 92 $ ( 560 ) $ ( 584 )

5 unchanged sentences

Internal Revenue Service (IRS) qualified pension plans, which comprise 86 % of our pension PBO as of both December 31, 2025 and 2024.

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.

Our nonqualified domestic pension plans, which provide supplementary benefits to certain employees in excess of the IRS qualified plan limits, comprise 3 % of our pension PBO as of both December 31, 2025 and 2024.

Our international plans comprise 11 % of our pension PBO as of both December 31, 2025 and 2024.

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.

18 unchanged sentences

Amortization of prior service credit ( 140 ) ( 170 ) ( 158 )

Recognized actuarial net (gain) loss 20 ( 378 ) 305

Recognized actuarial net loss (gain) 21 20 ( 378 )

Net settlement, curtailment, and special termination benefits loss 275 13 6

3 unchanged sentences

(dollars in millions) 2025 2024

Net actuarial loss (gain) arising during the period $ 642 $ 935

Amortization of actuarial gain (loss) ( 20 ) 378

Net actuarial loss arising during the period $ 698 $ 642

Amortization of actuarial loss ( 21 ) ( 20 )

Current year prior service cost 100 36

1 unchanged sentence

Net settlement and curtailment ( 275 ) ( 12 )

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 )

Total recognized in other comprehensive loss 727 817

Net recognized in net periodic pension income and other comprehensive loss $ ( 287 ) $ ( 493 )

(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 2025 was primarily due to a decrease in discount rates during 2025, partially offset by actual asset returns greater than our expected return on assets.

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

1 unchanged sentence

2031-2035 16,229

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

Benefit Obligation Net Periodic Benefit (Income) Expense

Assumptions used in determining the pension benefit obligation and net periodic pension income are presented in the following table as weighted-averages:

Pension Benefit Obligation Net Periodic Pension Income

2025 2024 2025 2024 2023

11 unchanged sentences

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.

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 pension income by applying the specific spot rates along the yield curve used in determination of the benefit obligation to the relevant discounted projected cash flows.

In determining the EROA assumption, we consider the target asset allocation of plan assets, as well as economic and other indicators of future performance.

1 unchanged sentence

Return projections are validated using a simulation model that incorporates yield curves, credit spreads, and risk premiums to project long-term prospective returns.

Other assumptions include actuarial and demographic assumptions including mortality rates and retirement age.

The plans’ investment management objectives include providing the liquidity and asset levels needed to meet current and future benefit payments, while maintaining a prudent degree of portfolio diversification considering interest rate risk and market volatility.

1 unchanged sentence

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.

Investments in private equity are primarily via limited partnership interests in buy-out strategies with smaller allocations to distressed debt funds.

Investments in private equity are primarily via limited partnership interests in buy-out strategies.

The real estate strategy is principally concentrated in directly held U.S.

1 unchanged sentence

Within the income generating assets, the fixed income portfolio consists of mainly government and broadly diversified high quality corporate bonds.

The plans have continued their pension risk management techniques designed to reduce their interest rate risk.

The plans have continued pension risk management techniques designed to reduce their interest rate risk.

Specifically, the plans have incorporated liability hedging programs that include the adoption of a risk reduction objective as part of the long-term investment strategy.

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

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

The investment portfolios currently hedge approximatel y 80 % of the pension plan liabilities’ interest‑rate sensitivity, with the exact level varying based on the plan’s funded status.

The hedging assets portfolio also includes an enhanced alpha strategy that invests in equity, fixed income, derivatives, and foreign currency.

The fair values of pension plan assets at December 31, 2025 and 2024 by asset category are as follows:

47 unchanged sentences

(3) Represents investments in real estate including commingled funds and directly held properties.

(4) Represents global balanced risk commingled funds that invest in multiple asset classes including equity, fixed income, and some commodities.

“Other” also includes insurance contracts.

(4) Primarily represents insurance contracts.

(5) Represents short-term commercial paper, bonds, and other cash or cash-like instruments.

3 unchanged sentences

Derivatives in the plan are primarily used to manage risk and gain asset class exposure while still maintaining liquidity.

Derivative instruments mainly consist of equity futures, interest rate futures, interest rate swaps, and currency forward contracts.

Derivative instruments mainly consist of equity futures, interest rate futures, interest rate swaps, and currency forward

The fair market value of the plans’ derivatives through direct or separate account investments was approximately ($ 8 ) million and ($ 120 ) million as of December 31, 2025 and 2024, respectively.

1 unchanged sentence

We employ a broadly diversified investment manager structure that includes diversification by active and passive management, style, capitalization, country, sector, industry, and number of investment managers.

No individual investment represented more than 5 % of the plan assets as of December 31, 2024.

With the exception of certain cash investment vehicles, no individual investment represented more than 5% of the plan assets as of December 31, 2025.

The fair value measurement of plan assets using significant unobservable inputs (Level 3) changed due to the following:

2 unchanged sentences

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

Balance, December 31, 2024

Realized losses ( 136 )

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

Realized gains 4

Unrealized (losses) relating to instruments still held in the reporting period ( 66 )

Purchases, sales, and settlements, net ( 170 )

7 unchanged sentences

Valuation estimates are supplemented by third-party appraisals on an annual basis.

The fair market value of assets related to our PRB benefits was $ 314 million and $ 316 million as of December 31, 2024 and 2023, respectively.

These assets include $ 73 million and $ 93 million of which are invested in our domestic qualified pension plan trust at December 31, 2024 and 2023, respectively.

The remaining PRB investments are held within Voluntary Employees’ Beneficiary Association (VEBA) trusts.

The VEBA assets are generally invested in mutual funds and are valued primarily using quoted prices in active markets (Level 1).

There were no Level 3 investments in the VEBA trusts as of December 31, 2024 or 2023.

The fair market value of assets related to our PRB benefits was $ 0.3 billion as of December 31, 2025 and 2024, respectively.

The assets are primarily invested in mutual funds held within Voluntary Employees’ Beneficiary Association (VEBA) trusts and are valued using quoted prices in active markets (Level 1).

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

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Finance leases are not considered significant to our Consolidated Balance Sheet, Consolidated Statement of Operations, or Consolidated Statement of Cash Flows.

Leases under which we are the lessor are generally short-term leases that support our commercial aerospace customers during maintenance events.

Leases under which we are the lessor are generally short-term leases that support our commercial aerospace customers during engine maintenance events.

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.

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 2025, 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 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.

We subsequently lease back the engines sold for a limited timeframe and account for them as operating leases.

received 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.

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The weighted-average remaining lease term related to our operating leases was 9 years and 10 years as of December 31, 2025 and 2024, 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.

The weighted-average discount rate related to our operating leases was 4.3 % as of December 31, 2025 and 2024.

Income Before Income Taxes.

The sources of income from continuing operations before income taxes are:

The sources of income before income taxes are:

(dollars in millions) 2025 2024 2023

2 unchanged sentences

Foreign 3,607 3,178 2,898

Income from continuing operations before income taxes $ 6,194 $ 3,836 $ 6,117

Income before income taxes $ 8,733 $ 6,194 $ 3,836

(1) 2023 includes the impacts of the Powder Metal Matter.

The Company intends to repatriate certain undistributed earnings of its international subsidiaries that have been previously taxed in the U.S.

As such, we recorded the taxes associated with the future remittance of these earnings.

For the remainder of the Company’s undistributed international earnings, unless tax effective to repatriate, the Company will continue to permanently reinvest these earnings.

As of December 31, 2024, such undistributed earnings were approximately $ 23 billion, excluding other comprehensive income amounts.

It is not practicable to estimate the amount of tax that might be payable on the remaining amounts.

Provision for Income Taxes.

The income tax expense (benefit) for the years ended December 31 are as follows:

The income tax expense for the years ended December 31 are as follows:

(dollars in millions) 2025 2024 2023

11 unchanged sentences

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

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 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 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.

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

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, which resulted in fewer costs being subject to capitalization.

On July 4, 2025, “An Act to Provide for Reconciliation Pursuant to Title II of the H.

14” (the Act) was enacted.

The Act allows for the immediate deductibility of research and experimental expenditures performed in the United States and certain U.S.

These legislative changes have impacted our federal and state current and deferred income tax provisions in the above table.

Reconciliation of Effective Income Tax Rate.

The Company adopted ASU 2023-09, Income Taxes (Topic 740):

Improvements to Income Tax Disclosures, prospectively as of January 1, 2025.

Differences between effective income tax rates and the statutory U.S.

federal income tax rate are as follows:

(dollars in millions) Amount Rate

Statutory U.S.

Federal Income Tax Rate $ 1,834 21.0 %

State and Local Income Tax, net of federal income tax effect (1)

Foreign Tax Effects ( 17 ) ( 0.2 )

Effect of Cross-Border Tax Laws 96 1.1

Federal Research and development tax credit ( 182 ) ( 2.1 )

Nontaxable or Nondeductible Items 51 0.6

Worldwide Changes in Prior Year Unrecognized Tax Benefits (2)

( 83 ) ( 0.9 )

(dollars in millions) Amount Rate Amount Rate Amount Rate

( 203 ) ( 2.3 )

Effective income tax rate $ 1,664 19.1 %

(1) State and local taxes include current and deferred income taxes exclusive of changes in prior year uncertain tax positions.

(2) Includes Federal, State, and Foreign income tax effects related to prior year uncertain tax positions.

(3) Includes Federal income tax benefits related to legal entity reorganizations.

(dollars in millions) Amount Rate Amount Rate

Statutory U.S.

5 unchanged sentences

State income tax, net 187 3.0 17 0.4

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

Foreign Derived Intangible Income ( 126 ) ( 2.0 ) ( 142 ) ( 3.7 )

Non-deductible legal charges (1)

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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.

Although the 2025 and 2024 effective tax rates are the same, the 2025 effective rate reflects a lower U.S.

tax benefit associated with Foreign Derived Intangible Income resulting from the Act.

Both periods include tax benefits associated with certain legal entity reorganizations and the tax effects of dispositions.

The 2024 effective tax rate includes tax benefits of $ 0.3 billion 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.

Also included in the 2024 effective tax rate is a $ 0.2 billion tax charge related to U.S.

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

tax ruling Otis received in 2024.

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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.

This item is 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 $ 0.2 billion for a portion of the indemnity owed by Otis to the Company for the reduction in foreign taxes in the pre-separation years.

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.

research and development credits, $ 142 million related to the FDII benefit, and a federal tax benefit of $ 59 million associated with the expiration of the U.S.

federal income tax statute of limitations for RTX’s 2019 tax year.

The 2022 effective tax rate includes a benefit of $ 214 million related to the FDII benefit, $ 207 million associated with legal entity and operational reorganizations implemented in 2022, and $ 164 million associated with U.S.

research and development credits.

The 2023 effective tax rate includes a deferred tax benefit of $ 0.7 billion associated with the $ 2.9 billion Powder Metal Matter pre-tax charge.

Income Taxes Paid.

We made net income tax payments of $ 1.6 billion in 2025, further disaggregated as follows:

(dollars in millions) 2025

Total income taxes paid (net of refunds) $ 1,607

(1) Includes Internal Revenue Code Section 965 installment payments

(2) Foreign payments are spread across various jurisdictions, none of which are individually significant

Deferred Tax Assets and Liabilities.

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Insurance and employee benefits $ 865 $ 897

Inventory and contract balances — 571

Warranty provisions 226 221

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Powder Metal Matter 226 455

Tax loss carryforwards 1,055 905

Tax loss and other carryforwards 1,094 1,055

Tax credit carryforwards 963 800

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(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.

Tax Credit, Loss and Other Carryforwards.

At December 31, 2025, tax credit carryforwards, principally state and foreign, and tax loss carryforwards, principally state and foreign, were as follows:

(dollars in millions) Tax Credit Carryforwards Tax Loss Carryforwards

(dollars in millions) Tax Credit Carryforwards Tax Loss and Other Carryforwards

Expiration period:

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Total $ 963 $ 5,872

The Company intends to repatriate certain undistributed earnings of its international subsidiaries that have been previously taxed in the U.S.

As such, we recorded the taxes associated with the future remittance of these earnings.

For the remainder of the Company’s undistributed international earnings, unless tax effective to repatriate, the Company will continue to permanently reinvest these earnings.

It is not practicable to estimate the amount of tax that might be payable on the remaining amounts.

Unrecognized Tax Benefits.

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

At December 31, 2025, we had gross tax-effected unrecognized tax benefits of $ 1,227 million, of which $ 1,218 million, if recognized, would impact the effective tax rate.

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income tax examinations for years before 2014.

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.

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.

In connection with certain Internal Revenue Service (IRS) audits, the Company has previously 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 is in the process of disputing these adjustments at the Appeals Division of the IRS.

The Company expects resolution at the Appeals Division for the RTX and Rockwell tax years within the next twelve months.

The timing of any resolution at the Appeals Division for the Raytheon Company tax years is uncertain.

During the quarter ended March 31, 2025, the Company received an unfavorable decision from the Appeals Committee of the Kingdom of Saudi Arabia (KSA) General Secretariat of the Tax Committees (GSTC) assessing taxes and delay fines.

The Company appealed this decision and on December 2, 2025, the GSTC issued a final decision with respect to income tax and withholding tax assessments substantially reversing its prior assessment.

FINANCIAL INSTRUMENTS

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The present value of the aggregate notional principal of our outstanding foreign currency hedges was $ 26 billion and $ 17 billion at December 31, 2025 and 2024, 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:

Basis of Presentation and Summary of Accounting Principles.”

The following table summarizes the fair value and presentation in the Consolidated Balance Sheet for derivative instruments as of December 31:

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Other accrued liabilities 11 101

At December 31, 2025, all derivative contracts accounted for as cash flow hedges will mature b y May 2036.

Cash receipts or payments on derivatives designated as cash flow hedges are recorded in Other operating activities, net within the Consolidated Statement of Cash Flows.

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

Gains or losses attributable to cash flow hedging contract activity are primarily recorded as a component of Products sales when reclassified from Accumulated other comprehensive loss.

The Company enters into forward exchange contracts to partially hedge its net investment in certain foreign subsidiaries denominated in EUR and CAD.

The Company assesses the effectiveness of its net investment hedges using the spot method.

Cash receipts or payments on derivatives designated as net investment hedges are recorded as investing cash flows within the Consolidated Statement of Cash Flows.

As of December 31 2024, we had € 320 million of our € 500 million principal value of euro-denominated long-term debt designated as a net investment hedge against our investments in European businesses.

After March 31, 2025, this was no longer designated as a net investment hedge and subsequent effects are reflected within Other income (expense), net.

The effect of cash flow hedging relationships on Accumulated other comprehensive loss and on the Consolidated Statement of Operations in 2025 and 2024 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, 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.

Equity.” The hedged items and derivatives designated as hedging instruments are highly effective.

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

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.

FAIR VALUE MEASUREMENTS

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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, 2024 and 2023 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, 2025 and 2024 are as follows:

(dollars in millions) 2025 2024

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These instruments expire on various dates through 2062.

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

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

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

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

Collaboration partners’ share of these financing guarantees is $ 131 million and $ 135 million at December 31, 2024 and 2023, respectively.

Collaboration partners’ share of these financing guarantees was $ 0.1 billion at December 31, 2025 and 2024.

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

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

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

The carrying amount of liabilities related to these obligations were $ 0.1 billion at December 31, 2025 and 2024.

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

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We had commercial aerospace financing commitments and other contractual commitments of approximately $ 13 billion and $ 14 billion as of December 31, 2025 and 2024, 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.

Aircraft financing commitments, in the form of debt or

lease financing, are provided to certain commercial aerospace customers.

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

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The majority of financing commitments are collateralized arrangements.

We may also lease aircraft and subsequently sublease the aircraft to customers under long-term non-cancelable operating leases, or pay deposits on behalf of our customers to secure production slots with the airframers (pre-delivery payments).

We may also pay deposits on behalf of our customers to secure production slots with the airframers (pre-delivery payments).

Our financing commitments with customers are contingent upon maintenance of certain levels of financial condition by our customers.

Associated risks on these commitments are mitigated due to the fact that interest rates are variable during the commitment term and are set at the date of funding based on current market conditions, the fair value of the underlying collateral, and the credit worthiness of our customers.

As a result, the fair value of these financing commitments is expected to equal the amounts funded.

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Other Financing Arrangements.

We have entered into standby letters of credit and surety bonds with financial institutions to meet various bid, performance, warranty, retention, and advance payment obligations for us or our affiliates.

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

We have entered into standby letters of credit and surety bonds with financial institutions to meet various bid, performance, warranty, retention, guarantee, and advance payment obligations for us or our affiliates.

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

The stated values of these letters of credit agreements and surety bonds totaled $ 4.2 billion as of December 31, 2025.

Offset / Industrial Participation Obligations.

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

customers in foreign countries.

At December 31, 2025, the aggregate amount of these agreements, both agreed to and anticipated to be agreed to, had an outstanding notional value of approximately $ 13 billion.

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Agencies that oversee contract performance include:

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 DOJ, and Congressional Committees.

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

Department of War (DoW) (formerly referred to as the U.S.

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

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

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government investigations often take years to complete.

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.

In particular, in 2024 the Company entered into a deferred prosecution agreement (DPA) (DPA-1) with the 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 (DPA-2) and a False Claims Act (FCA) settlement agreement with the DOJ to resolve previously disclosed criminal and civil government investigations into defective pricing claims for certain legacy Raytheon 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 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 Raytheon Company and the Company engage an independent compliance monitor satisfactory to the DOJ and SEC).

A single independent compliance monitor was selected to oversee Raytheon Company’s and the Company’s compliance with their respective obligations under the DPAs and the SEC Administrative Order, and that monitor is expected to be in place by the end of the first quarter.

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

The Company appointed its SCO on September 27, 2024.

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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.

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Other than as specifically disclosed in this Form 10-K, we do not expect these audits, investigations or disputes to have a material effect on our results of operations, financial condition, or liquidity, either individually or in the aggregate.

Tax Treatment of Carrier and Otis Dispositions.

Management has determined that the distributions of Carrier and Otis on April 3, 2020, and certain related internal business separation transactions, qualified as tax-free under applicable law.

In making these determinations, we applied the tax law in the relevant jurisdictions to our facts and circumstances and obtained tax rulings from the relevant taxing authorities, tax opinions, and/or other external tax advice related to the concluded tax treatment.

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

Pratt & Whitney Powder Metal Matter.

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

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

September 15, 2023.

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

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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.

At December 31, 2025 and 2024, we had other accrued liabilities of $ 0.7 billion and $ 1.7 billion, respectively, related to expected compensation to customers.

The decrease in the accrual in 2025 and 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.

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The motion for reconsideration was denied on August 29, 2022.

On December 23, 2022, the DCMA filed an appeal to the United States Court of Appeals for the Federal Circuit.

We continue to believe that the ASBCA’s rejection of the DCMA’s asserted measure of the cost of collaborator parts is well supported in fact and law and likely will be sustained.

On December 23, 2022, the government filed an appeal to the United States Court of Appeals for the Federal Circuit (CAFC).

On December 5, 2025, the CAFC issued an opinion which dismissed in part the government’s appeal for lack of jurisdiction, reversed in part the ASBCA’s November 22, 2021 decision with respect to the enforceability of a provision within a 2006 agreement between DCMA and Pratt & Whitney, and remanded the case to the ASBCA for further proceedings.

We continue to believe that the

ASBCA’s rejection of the DCMA’s asserted measure of the cost of collaborator parts is well supported in fact and law.

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.

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Thales-Raytheon Systems and Related Matters

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 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.

As previously disclosed, on October 15, 2024, Raytheon Company entered into DPA-1 with the DOJ and on October 16, 2024, the Company became subject to an administrative order issued by the SEC (the SEC Administrative Order) to resolve the previously disclosed criminal and civil government investigations into payments made by Raytheon Company and its joint venture, TRS, since 2012 in connection with certain Middle East contracts.

Pursuant to DPA-1, among other terms, the DOJ will defer, for a period of three years , criminal prosecution of Raytheon Company related to one count of conspiracy to violate the anti-bribery provisions of the FCPA and one count of conspiracy to violate the AECA by failing to make related disclosures of certain payments that qualified as fees, commissions and/or political contributions under Part 130 of ITAR.

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.

Under DPA-1, the SEC Administrative Order, and DPA-2 discussed in “DOJ Investigation and Contract Pricing Disputes” below, Raytheon Company and the Company 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 Raytheon Company and the Company engage an independent compliance monitor satisfactory to the DOJ and SEC).

A single independent compliance monitor was selected to oversee Raytheon Company’s and the Company’s compliance with their respective obligations under DPA-1, the SEC Administrative Order, and DPA-2 discussed in “DOJ Investigation and Contract Pricing Disputes” below, and that monitor is expected to be in place by the end of the first quarter.

During the fourth quarter of 2024, the Company paid $ 384 million in the aggregate for DPA-1 and the SEC 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

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

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.

As previously disclosed, on October 16, 2024, Raytheon Company entered into DPA-2 and a 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.

Pursuant to DPA-2, among other terms, the DOJ will defer, for a period of three years , criminal prosecution of Raytheon Company related to two counts of major fraud against the United States by Raytheon Company involving two legacy contracts.

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.

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 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 Raytheon Company and the Company engage an independent compliance monitor satisfactory to the DOJ and SEC).

A single independent compliance monitor was selected to 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, and that monitor is expected to be in place by the end of the first quarter.

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.

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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.

In May 2024, the 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.

On August 29, 2024, the Company entered into a 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.

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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.

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 paid in August 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.

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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 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 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

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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, 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.

The lawsuits were consolidated, and on September 12, 2025, the Court granted the defendants’ motion to dismiss the consolidated case.

On October 14, 2025, plaintiffs filed a Notice of Appeal to the United States Court of Appeals for the Second Circuit.

Second, multiple shareholder derivative lawsuits have been filed against current and former officers and directors of the Company in the United States District Court for the District of Delaware.

The complaints in these actions allege 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, 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.

The Company has received subpoenas from the SEC seeking engineering, operational, organizational, accounting, and financial documents and witness testimony 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 continuing to cooperate with the SEC’s ongoing investigation.

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

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These matters are often based on alleged violations of contract, product liability, warranty, regulatory, environmental, health and safety, employment, intellectual property, tax, and other laws.

In some instances, claims for substantial monetary damages are asserted against the Company and its subsidiaries and could result in fines, penalties, compensatory or treble damages, or non-monetary relief.

In some instances, claims for substantial monetary damages are asserted against the Company and

its subsidiaries and could result in fines, penalties, compensatory or treble damages, or non-monetary relief.

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

Common Stock - Share Repurchases.

Accelerated Share Repurchases.

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

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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

(dollars in millions) Foreign Currency Translation (1)

Defined Benefit Pension and Postretirement Plans Unrealized Hedging (Losses) Gains Accumulated Other Comprehensive Loss

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

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Balance at December 31, 2025 $ 492 $ ( 3,304 ) $ 94 $ ( 2,718 )

(1) The amount of foreign currency translation recognized in Other Comprehensive Income (loss) (OCI) includes gains (losses) relating to net investment hedges, as further discussed in “Note 13:

Financial Instruments”.

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.

During the fourth quarter of 2025, an actuarial loss of $ 0.3 billion ($ 0.2 billion after tax) was recognized in connection with a settlement resulting from the annuity buy-out conversion.

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

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Employee Benefit Plans” for additional details.

All noncontrolling interests with redemption features, such as put options, that are not solely within our control (redeemable noncontrolling interests) are reported in the mezzanine section of the Consolidated Balance Sheet, between liabilities and equity, at the greater of redemption value or initial carrying value.

STOCK-BASED COMPENSATION

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

The RTX Corporation Long-Term Incentive Plan (LTIP), was last amended on October 29, 2025.

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.

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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.

Generally, stock appreciation rights and stock options have a term of ten years and a three-year vesting period, subject to limited exceptions.

Generally, stock appreciation rights (SARs) and stock options have a term of ten years and a three-year vesting period, subject to limited exceptions.

In the event of retirement, annual stock appreciation rights, stock options, and restricted stock units (RSUs) held for more than one year may become vested and exercisable, subject to certain terms and conditions.

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In the event of retirement, performance-based awards held for more than one year , remain eligible to vest based on actual performance relative to performance goals.

We have historically repurchased shares of our common stock in an amount at least equal to the number of shares issued under our equity compensation arrangements and will continue to evaluate this policy in conjunction with our overall share repurchase program.

We measure the cost of all share-based payments, including stock options and stock appreciation rights, at fair value on the grant date and recognize this cost in the Consolidated Statement of Operations, net of expected forfeitures, as follows:

We measure the cost of share-based payments for restricted share units, stock options, stock appreciation rights, and awards with market-based conditions at fair value on the grant date.

For awards that include performance conditions, compensation expense is recorded based on the estimated number of awards that are expected to vest at the end of the performance period.

The cost of all share-based payments are recognized in the Consolidated Statement of Operations, net of expected forfeitures, as follows:

(dollars in millions) 2025 2024 2023

Total compensation cost recognized $ 519 $ 437 $ 425

The associated future income tax benefit recognized was $ 85 million, $ 80 million, and $ 91 million for the years ended December 31, 2024, 2023, and 2022, respectively.

For the years ended December 31, 2024, 2023, and 2022, the amount of cash received from the exercise of stock options was $ 26 million, $ 22 million, and $ 20 million, respectively, with an associated tax benefit realized of $ 63 million, $ 27 million, and $ 32 million, respectively.

In addition, for the years ended December 31, 2024, 2023, and 2022, the associated tax benefit realized from the vesting of performance share units (PSUs), restricted stock awards, and RSUs was $ 106 million, $ 57 million, and $ 80 million, respectively.

The cash received and the related tax benefit realized on exercised stock options for 2025, 2024 and 2023 were not material.

Additionally, the future income tax benefit recognized and the tax benefits realized on vesting of performance share units (PSU’s), restricted stock awards and RSUs were not material for the respective periods.

At December 31, 2025, there was $ 340 million of total unrecognized compensation cost related to non-vested equity awards granted under long-term incentive plans.

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The weighted-average grant date fair value of stock options and stock appreciation rights granted during 2025, 2024, and 2023 was $ 36.37 , $ 21.72 , and $ 24.66 , 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 weighted-average grant date fair value of PSU’s, which vest upon achieving certain performance metrics, granted during 2025, 2024, and 2023 was $ 136.10 , $ 93.48 , and $ 96.39 , respectively.

The total fair value of awards vested during 2025, 2024, and 2023 was $ 437 million, $ 447 million, and $ 273 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 2025, 2024, and 2023 was $ 553 million, $ 245 million, and $ 46 million, 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 total intrinsic value (which is the stock price at vesting multiplied by the number of underlying shares) of PSU’s and other restricted awards vested was $ 520 million, $ 506 million, and $ 263 million during 2025, 2024, and 2023, 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, 2025:

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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.

Collins also designs, manufactures, and supports complete cabin interiors, including seating, oxygen systems, food and beverage preparation, storage and galley systems, lavatory, and wastewater management systems.

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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, and helicopters.

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

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

Pratt & Whitney designs, manufactures, and services large engines for widebody, narrowbody, and large regional aircraft for commercial customers and for fighter, bomber, tanker, and transport aircraft for military customers.

Pratt & Whitney also designs, manufactures, and services small engines powering regional airlines, general and business aviation, and

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

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

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

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Segment Information.

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

RTX’s chief operating decision maker (CODM) is our Chairman 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.

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Eliminations and other (2)

( 2,325 ) ( 48 )

Corporate expenses and other unallocated items — ( 248 )

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(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)

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

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

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

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

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

(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)

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Pratt & Whitney (3)

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

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

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

(3) Includes the net expenses related to the U.S.

Army’s LTAMDS program.

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

(3) Includes the impact of the Powder Metal Matter

Total Assets Capital Expenditures Depreciation & Amortization

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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

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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

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

(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.

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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

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(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

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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

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

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

The largest contributor to our Commercial aerospace and other commercial sales is Airbus.

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Business segment sales $ 30,196 $ 32,916 $ 28,043 $ ( 2,552 ) $ 88,603

(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

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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

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Business segment sales $ 26,253 $ 18,296 $ 26,350 $ ( 1,979 ) $ 68,920

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

Raytheon segment sales disaggregated by contract type for the years ended December 31 are as follows:

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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