RTX Corp 10-Q

Item 1. Financial Statements RTX CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (Unaudited) Quarter Ended March 31, (dollars in millions, except per share amounts) 2026 2025 Net Sales: Products sales $ 15,765 $ 14,591 Services sales 6,311 5,715 Total net sales 22,076 20,306 Costs and Expenses: Cost of sales - products 13,000 12,283 Cost of sales - services 4,482 3,907 Research and development 627 637 Selling, general, and administrative 1,476 1,448 Total costs and expenses 19,585 18,275 Other income, net 64 4 Operating profit 2,555 2,035 Non-operating expense (income), net: Non-service pension income ( 355 ) ( 366 ) Interest expense, net 390 443 Total non-operating expense, net 35 77 Income before income taxes 2,520 1,958 Income tax expense 363 333 Net income 2,157 1,625 Less: Noncontrolling interest in subsidiaries’ earnings 98 90 Net income attributable to common shareowners $ 2,059 $ 1,535 Earnings Per Share attributable to common shareowners: Basic $ 1.53 $ 1.15 Diluted 1.51 1.14 See accompanying Notes to Condensed Consolidated Financial Statements 4 Table of Content s RTX CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (Unaudited) Quarter Ended March 31, (dollars in millions) 2026 2025 Net income $ 2,157 $ 1,625 Other comprehensive (loss) income, before tax: Foreign currency translation adjustments ( 133 ) 499 Pension and postretirement benefit plans adjustments ( 27 ) ( 75 ) Change in unrealized cash flow hedging ( 85 ) 144 Other comprehensive (loss) income, before tax ( 245 ) 568 Income tax benefit (expense) related to items of other comprehensive (loss) income 18 ( 20 ) Other comprehensive (loss) income, net of tax ( 227 ) 548 Comprehensive income 1,930 2,173 Less: Comprehensive income attributable to noncontrolling interest 98 90 Comprehensive income attributable to common shareowners $ 1,832 $ 2,083 See accompanying Notes to Condensed Consolidated Financial Statements 5 Table of Content s RTX CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEET (Unaudited) (dollars in millions) March 31, 2026 December 31, 2025 Assets Current Assets Cash and cash equivalents $ 6,818 $ 7,435 Accounts receivable, net 12,945 14,701 Contract assets, net 18,070 17,092 Inventory, net 14,153 13,364 Other assets, current 8,023 7,740 Total current assets 60,009 60,332 Customer financing assets 2,041 2,132 Fixed assets 35,681 35,335 Accumulated depreciation ( 18,839 ) ( 18,467 ) Fixed assets, net 16,842 16,868 Operating lease right-of-use assets 1,773 1,887 Goodwill 53,276 53,343 Intangible assets, net 31,482 31,845 Other assets 5,008 4,672 Total assets $ 170,431 $ 171,079 Liabilities, Redeemable Noncontrolling Interest, and Equity Current Liabilities Short-term borrowings $ 226 $ 204 Accounts payable 15,979 15,895 Accrued employee compensation 2,004 3,308 Other accrued liabilities 14,217 14,350 Contract liabilities 21,940 21,615 Long-term debt currently due 4,213 3,412 Total current liabilities 58,579 58,784 Long-term debt 32,974 34,288 Operating lease liabilities, non-current 1,522 1,602 Future pension and postretirement benefit obligations 2,015 2,067 Other long-term liabilities 7,307 7,200 Total liabilities 102,397 103,941 Commitments and contingencies (Note 15) Redeemable noncontrolling interest 37 36 Shareowners’ Equity: Common stock 38,178 38,126 Treasury stock ( 26,814 ) ( 26,881 ) Retained earnings 57,861 56,718 Accumulated other comprehensive loss ( 2,945 ) ( 2,718 ) Total shareowners’ equity 66,280 65,245 Noncontrolling interest 1,717 1,857 Total equity 67,997 67,102 Total liabilities, redeemable noncontrolling interest, and equity $ 170,431 $ 171,079 See accompanying Notes to Condensed Consolidated Financial Statements 6 Table of Content s RTX CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (Unaudited) Quarter Ended March 31, (dollars in millions) 2026 2025 Operating Activities: Net income $ 2,157 $ 1,625 Adjustments to reconcile net income to net cash flows provided by operating activities: Depreciation and amortization 1,071 1,052 Deferred income tax provision 26 67 Stock compensation cost 132 111 Net periodic pension and other postretirement income ( 313 ) ( 324 ) Share-based 401(k) matching contributions 192 167 Change in: Accounts receivable 1,823 ( 372 ) Contract assets ( 979 ) ( 706 ) Inventory ( 813 ) ( 813 ) Other current assets ( 469 ) ( 125 ) Accounts payable and accrued liabilities ( 1,155 ) 397 Contract liabilities 94 373 Other operating activities, net 89 ( 147 ) Net cash flows provided by operating activities 1,855 1,305 Investing Activities: Capital expenditures ( 546 ) ( 513 ) Increase in other intangible assets ( 98 ) ( 104 ) Receipts (payments) from settlements of derivative contracts, net 72 ( 47 ) Other investing activities, net ( 36 ) ( 14 ) Net cash flows used in investing activities ( 608 ) ( 678 ) Financing Activities: Repayment of long-term debt ( 500 ) ( 9 ) Dividends paid ( 915 ) ( 840 ) Repurchase of common stock — ( 50 ) Other financing activities, net ( 425 ) ( 157 ) Net cash flows used in financing activities ( 1,840 ) ( 1,056 ) Effect of foreign exchange rate changes on cash and cash equivalents ( 6 ) 16 Net decrease in cash, cash equivalents, and restricted cash ( 599 ) ( 413 ) Cash, cash equivalents, and restricted cash, beginning of period 7,470 5,606 Cash, cash equivalents, and restricted cash, end of period 6,871 5,193 Less: Restricted cash, included in Other assets, current and Other assets 53 36 Cash and cash equivalents, end of period $ 6,818 $ 5,157 See accompanying Notes to Condensed Consolidated Financial Statements 7 Table of Content s RTX CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (Unaudited) Quarter Ended March 31, (dollars in millions, except per share amounts; shares in thousands) 2026 2025 Equity beginning balance $ 67,102 $ 61,923 Common Stock Beginning balance 38,126 37,434 Common stock plans activity ( 73 ) 7 Share-based 401(k) matching contributions 125 74 Ending balance 38,178 37,515 Treasury Stock Beginning balance ( 26,881 ) ( 27,112 ) Share-based 401(k) matching contributions 67 93 Common stock repurchased — ( 50 ) Ending balance ( 26,814 ) ( 27,069 ) Retained Earnings Beginning balance 56,718 53,589 Net income attributable to common shareholders 2,059 1,535 Dividends on common stock ( 877 ) ( 803 ) Dividends on ESOP common stock ( 38 ) ( 37 ) Other ( 1 ) ( 7 ) Ending balance 57,861 54,277 Accumulated Other Comprehensive Loss Beginning balance ( 2,718 ) ( 3,755 ) Other comprehensive (loss) income, net of tax ( 227 ) 548 Ending balance ( 2,945 ) ( 3,207 ) Noncontrolling Interest Beginning balance 1,857 1,767 Net income 98 90 Less: Redeemable noncontrolling interest net income — ( 2 ) Dividends attributable to noncontrolling interest ( 238 ) ( 64 ) Ending balance 1,717 1,791 Equity at March 31 $ 67,997 $ 63,307 Supplemental share information Shares of common stock issued under employee plans, net 3,437 2,903 Shares of common stock repurchased — 396 Treasury shares reissued related to 401(k) matching contributions 959 1,323 Dividends declared per share of common stock $ 0.680 $ 0.630 See accompanying Notes to Condensed Consolidated Financial Statements 8 Table of Content s RTX CORPORATION AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) Note 1: Basis of Presentation The Condensed Consolidated Financial Statements at March 31, 2026 and for the quarters ended March 31, 2026 and 2025 are unaudited, and in the opinion of management include adjustments of a normal recurring nature necessary for a fair statement of the results for the interim periods. The results reported in these Condensed Consolidated Financial Statements should not necessarily be taken as indicative of results that may be expected for the entire year. The financial information included herein should be read in conjunction with the financial statements and notes in our 2025 Annual Report on Form 10-K. Unless the context otherwise requires, the terms “we,” “our,” “us,” “the Company,” and “RTX” mean RTX Corporation and its subsidiaries. We operate in three segments: Collins Aerospace (Collins), Pratt & Whitney, and Raytheon. Raytheon follows a fiscal calendar, while Collins and Pratt & Whitney use calendar quarter ends. Throughout this Form 10-Q, references to the quarters ended March 31, 2026 and 2025 for Raytheon correspond to its fiscal quarter ends of March 29, 2026 and March 30, 2025, respectively. Note 2: Goodwill and Intangible Assets Goodwill. Changes in our goodwill balances for the quarter ended March 31, 2026 were as follows: (dollars in millions) Balance as of December 31, 2025 Acquisitions and Divestitures Foreign Currency Translation and Other Balance as of March 31, 2026 Collins Aerospace $ 32,776 $ — $ ( 68 ) $ 32,708 Pratt & Whitney 1,563 — — 1,563 Raytheon 18,987 — 1 18,988 Total Segments 53,326 — ( 67 ) 53,259 Eliminations and other 17 — — 17 Total $ 53,343 $ — $ ( 67 ) $ 53,276 Intangible Assets. Identifiable intangible assets are comprised of the following: March 31, 2026 December 31, 2025 (dollars in millions) Gross Amount Accumulated Amortization Gross Amount Accumulated Amortization Amortized: Collaboration assets $ 6,263 $ ( 2,456 ) $ 6,234 $ ( 2,374 ) Exclusivity assets 4,085 ( 269 ) 3,980 ( 258 ) Developed technology and other 1,195 ( 775 ) 1,192 ( 758 ) Customer relationships 29,327 ( 14,365 ) 29,338 ( 13,989 ) 40,870 ( 17,865 ) 40,744 ( 17,379 ) Indefinite-lived: Trademarks and other 8,477 — 8,480 — Total $ 49,347 $ ( 17,865 ) $ 49,224 $ ( 17,379 ) Amortization of intangible assets for the quarters ended March 31, 2026 and 2025 was $ 494 million and $ 501 million, respectively. The following is the expected amortization of intangible assets for the remainder of 2026 through 2031: (dollars in millions) Remaining 2026 2027 2028 2029 2030 2031 Amortization expense $ 1,468 $ 1,911 $ 1,793 $ 1,634 $ 1,602 $ 1,523 9 Table of Content s Note 3: Earnings Per Share Quarter Ended March 31, (dollars and shares in millions, except per share amounts) 2026 2025 Net income attributable to common shareowners $ 2,059 $ 1,535 Basic weighted average number of shares outstanding 1,348.0 1,337.1 Stock awards and equity units (share equivalent) 16.6 14.7 Diluted weighted average number of shares outstanding 1,364.6 1,351.8 Earnings Per Share attributable to common shareowners: Basic $ 1.53 $ 1.15 Diluted 1.51 1.14 The computation of diluted earnings per share (EPS) excludes the effect of the potential exercise of stock awards, including stock appreciation rights and stock options, when the average market price of the common stock is lower than the exercise price of the related stock awards during the period because the effect would be anti-dilutive. In addition, the computation of diluted EPS excludes the effect of the potential release or exercise of stock awards when the awards’ assumed proceeds exceed the average market price of the common shares during the period. For the quarters ended March 31, 2026 and 2025, the number of stock awards excluded from the computation was 2.2 million and 3.2 million, respectively. Note 4: Changes in Contract Estimates at Completion We review our Estimates at Completion (EACs) at least annually or when a change in circumstances warrants a modification to a previous estimate. For significant contracts, we review our EACs more frequently. Due to the nature of the work required to be performed on many of the Company’s performance obligations, the estimation of total revenue and cost at completion is complex, subject to many inputs, and requires significant judgment by management on a contract by contract basis. As part of this process, management reviews information including, but not limited to, any outstanding key contract matters, progress towards completion and the related program schedule, identified risks and opportunities, and the related changes in estimates of revenues and costs. The risks and opportunities relate to management’s judgment about the ability and cost to achieve the schedule, consideration of customer-directed delays or reductions in scheduled deliveries, technical requirements, customer activity levels, such as flight hours or aircraft landings, and related variable consideration. Management must make assumptions and estimates regarding contract revenues and costs, including estimates of labor productivity and availability, the complexity and scope of the work to be performed, the availability and cost of materials including any impact from changing costs or inflation, the length of time to complete the performance obligation, execution by our subcontractors, the availability and timing of funding from our customer, overhead cost rates, and current and past maintenance cost and frequency driven by estimated aircraft and engine utilization and estimated useful lives of components, among others. In particular, fixed-price development programs involve significant management judgment, as development contracts by nature have elements that have not been done before and thus, are highly subject to future unexpected cost changes. 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. If cash is paid to a customer to satisfy our offset obligations it is recorded as a reduction in the transaction price. Changes in estimates of net sales, cost of sales, and the related impact to operating profit on contracts recognized over time are recognized on a cumulative catch-up basis, which recognizes the cumulative effect of the profit changes on current and prior periods based on a performance obligation’s percentage-of-completion in the current period. A significant change in one or more of these estimates could affect the profitability of one or more of our performance obligations. Our EAC adjustments also include the establishment of, and changes to, loss provisions for our contracts accounted for on a percentage-of-completion basis. 10 Table of Content s Net EAC adjustments had the following impact on our operating results: Quarter Ended March 31, (dollars in millions, except per share amounts) 2026 2025 Total net sales $ ( 30 ) $ ( 46 ) Operating profit ( 162 ) ( 158 ) Net income attributable to common shareowners (1) ( 128 ) ( 125 ) Diluted earnings per share attributable to common shareowners (1) $ ( 0.09 ) $ ( 0.09 ) (1) Amounts reflect a U.S. statutory tax rate of 21%, which approximates our tax rate on our EAC adjustments. Note 5: Accounts Receivable, Net Accounts receivable, net consisted of the following: (dollars in millions) March 31, 2026 December 31, 2025 Accounts receivable $ 13,293 $ 15,041 Allowance for expected credit losses ( 348 ) ( 340 ) Total accounts receivable, net $ 12,945 $ 14,701 Note 6: Contract Assets and Liabilities Contract assets reflect revenue recognized and performance obligations satisfied in advance of customer billings. Contract liabilities relate to payments received in advance of the satisfaction of performance under the contract. We receive payments from customers based on the terms established in our contracts. Total contract assets and contract liabilities were as follows: (dollars in millions) March 31, 2026 December 31, 2025 Contract assets $ 18,467 $ 17,768 Allowance for expected credit losses ( 397 ) ( 676 ) Contract assets, net 18,070 17,092 Contract liabilities ( 21,940 ) ( 21,615 ) Net contract liabilities $ ( 3,870 ) $ ( 4,523 ) Contract assets, net increased $ 1.0 billion during the quarter ended March 31, 2026 primarily due to sales in excess of billings on certain contracts at Pratt & Whitney. The allowance for expected credit losses decreased $ 0.3 billion in the quarter ended March 31, 2026, primarily driven by a write-off related to unrecoverable contract assets reserved in a prior year. Contract liabilities increased $ 0.3 billion during the quarter ended March 31, 2026 primarily due to advances received and billings in excess of sales on certain contracts at Pratt & Whitney. We recognized revenue of $ 3.6 billion during the quarter ended March 31, 2026 related to contract liabilities outstanding as of January 1, 2026 and recognized revenue of $ 3.0 billion during the quarter ended March 31, 2025, related to contract liabilities outstanding as of January 1, 2025. Note 7: Inventory, net Inventory, net consisted of the following: (dollars in millions) March 31, 2026 December 31, 2025 Raw materials $ 4,976 $ 4,673 Work-in-process 4,945 4,554 Finished goods 4,232 4,137 Total inventory, net $ 14,153 $ 13,364 Note 8: Borrowings and Lines of Credit As of March 31, 2026, we had a revolving credit agreement with various banks permitting aggregate borrowings of up to $ 5.0 billion, which expires in August 2028. As of March 31, 2026, there were no borrowings outstanding under this agreement. From time to time, we use commercial paper borrowings for general corporate purposes, including short-term funding related to 11 Table of Content s potential acquisitions, pension contributions, debt refinancing, dividend payments, and repurchases of our common stock. The commercial paper notes have original maturities of not more than 364 days from the date of issuance. As of March 31, 2026, our maximum commercial paper borrowing limit was $ 5.0 billion as the commercial paper is backed by our $ 5.0 billion revolving credit agreement. At March 31, 2026 and December 31, 2025, we had no commercial paper borrowings outstanding. We made the following repayment of long-term debt during the quarter ended March 31, 2026: Date Description of Notes Aggregate Principal Balance (in millions) February 27, 2026 5.000 % notes due 2026 $ 500 Long-term debt consisted of the following: (dollars in millions) March 31, 2026 December 31, 2025 5.000 % notes due 2026 (1) $ — $ 500 2.650 % notes due 2026 (1) 719 719 3 Month SOFR plus 1.225 % term loan due 2026 900 900 5.750 % notes due 2026 (1) 1,250 1,250 3.125 % notes due 2027 (1) 1,100 1,100 3.500 % notes due 2027 (1) 1,300 1,300 7.200 % notes due 2027 (1) 382 382 7.100 % notes due 2027 135 135 6.700 % notes due 2028 285 285 7.000 % notes due 2028 (1) 185 185 4.125 % notes due 2028 (1) 3,000 3,000 5.750 % notes due 2029 (1) 500 500 7.500 % notes due 2029 (1) 414 414 2.150 % notes due 2030 (€ 500 million principal value) (1) 580 587 2.250 % notes due 2030 (1) 1,000 1,000 6.000 % notes due 2031 (1) 1,000 1,000 1.900 % notes due 2031 (1) 1,000 1,000 2.375 % notes due 2032 (1) 1,000 1,000 5.150 % notes due 2033 (1) 1,250 1,250 6.100 % notes due 2034 (1) 1,500 1,500 5.400 % notes due 2035 (1) 446 446 6.050 % notes due 2036 (1) 410 410 6.800 % notes due 2036 (1) 117 117 7.000 % notes due 2038 148 148 6.125 % notes due 2038 (1) 575 575 4.450 % notes due 2038 (1) 750 750 5.700 % notes due 2040 (1) 553 553 4.875 % notes due 2040 (1) 600 600 4.700 % notes due 2041 (1) 425 425 4.500 % notes due 2042 (1) 3,500 3,500 4.800 % notes due 2043 (1) 400 400 4.200 % notes due 2044 (1) 300 300 4.150 % notes due 2045 (1) 850 850 3.750 % notes due 2046 (1) 1,100 1,100 4.050 % notes due 2047 (1) 600 600 4.350 % notes due 2047 (1) 1,000 1,000 4.625 % notes due 2048 (1) 1,750 1,750 3.125 % notes due 2050 (1) 1,000 1,000 12 Table of Content s (dollars in millions) March 31, 2026 December 31, 2025 2.820 % notes due 2051 (1) 1,000 1,000 3.030 % notes due 2052 (1) 1,100 1,100 5.375 % notes due 2053 (1) 1,250 1,250 6.400 % notes due 2054 (1) 1,750 1,750 Other (including finance leases) 143 146 Total principal long-term debt 37,267 37,777 Other (fair market value adjustments, (discounts)/premiums, and debt issuance costs) ( 80 ) ( 77 ) Total long-term debt 37,187 37,700 Less: current portion 4,213 3,412 Long-term debt, net of current portion $ 32,974 $ 34,288 (1) We may redeem these notes, in whole or in part, at our option pursuant to their terms prior to the applicable maturity date. The average maturity of our long-term debt as of March 31, 2026 is approximately 12 years. Note 9: Employee Benefit Plans Pension and Postretirement Plans. We sponsor both funded and unfunded domestic and foreign defined benefit pension and postretirement benefit (PRB) plans and defined contribution plans. Contributions to our plans were as follows: Quarter Ended March 31, (dollars in millions) 2026 2025 Defined contribution plans $ 463 $ 401 The amounts recognized in the Condensed Consolidated Balance Sheet consist of: (dollars in millions) March 31, 2026 December 31, 2025 Non-current pension assets (included in Other assets) $ 2,635 $ 2,339 Current pension and PRB liabilities (included in Accrued employee compensation) 227 228 Future pension and postretirement benefit obligations 2,015 2,067 The amounts recognized in Future pension and postretirement benefit obligations consist of: (dollars in millions) March 31, 2026 December 31, 2025 Non-current pension liabilities $ 1,459 $ 1,510 Non-current PRB liabilities 486 501 Other pension and PRB related items 70 56 Future pension and postretirement benefit obligations $ 2,015 $ 2,067 13 Table of Content s The components of net periodic income for our defined pension plans were as follows: Quarter Ended March 31, (dollars in millions) 2026 2025 Operating expense Service cost $ 41 $ 42 Non-operating expense Interest cost 505 583 Expected return on plan assets ( 836 ) ( 917 ) Amortization of prior service credit ( 32 ) ( 39 ) Recognized actuarial net loss 11 5 Net settlement, curtailment, and special termination benefit gain ( 4 ) — Non-service pension income ( 356 ) ( 368 ) Total net periodic pension income $ ( 315 ) $ ( 326 ) 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. These assets are included in Other assets in our Condensed Consolidated Balance Sheet. The fair value of marketable securities held in trusts was as follows: (dollars in millions) March 31, 2026 December 31, 2025 Marketable securities held in trusts $ 694 $ 750 Note 10: Income Taxes Our effective tax rate for the quarter ended March 31, 2026 was 14.4 %, as compared to 17.0 % for the quarter ended March 31, 2025. The lower effective tax rate for the quarter ended March 31, 2026 compared to March 31, 2025 was primarily driven by a higher tax benefit from stock based compensation in the current quarter as well as a lower forecasted annualized effective tax rate for 2026 principally due to a higher Foreign Derived Deduction Eligible Income (FDDEI) benefit from the U.S. tax legislation enacted in 2025. We conduct business globally and, as a result, RTX or one or more of our subsidiaries files income tax returns in the U.S. federal jurisdiction and various state and foreign jurisdictions. In the normal course of business, we are subject to examination by taxing authorities throughout the world, including such major jurisdictions as Canada, China, France, Germany, India, Poland, Singapore, Switzerland, the United Kingdom, and the United States. With few exceptions, we are no longer subject to U.S. federal, state and local, or non-U.S. income tax examinations for years before 2014. 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 currently expects resolution at the Appeals Division for the RTX, Rockwell, and Raytheon Company protests within the next twelve to eighteen months . Note 11: Financial Instruments We enter into derivative instruments primarily for risk management purposes, including derivatives designated as hedging instruments and those utilized as economic hedges. We operate internationally and, in the normal course of business, are exposed to fluctuations in interest rates, foreign exchange rates, and commodity prices. These fluctuations can increase the costs of financing, investing, and operating the business. We have used derivative instruments, including swaps, forward contracts, and options, to manage certain foreign currency, interest rate, and commodity price exposures. The present value of the aggregate notional principal of our outstanding foreign currency hedges was $ 26 billion at March 31, 2026 and December 31, 2025. 14 Table of Content s The following table summarizes the fair value and presentation in the Condensed Consolidated Balance Sheet for derivative instruments: (dollars in millions) Balance Sheet Location March 31, 2026 December 31, 2025 Derivatives designated as hedging instruments: Foreign exchange contracts Other assets, current $ 293 $ 357 Other accrued liabilities 217 254 Derivatives not designated as hedging instruments: Foreign exchange contracts Other assets, current $ 10 $ 79 Other accrued liabilities 94 11 At March 31, 2026, all derivative contracts accounted for as cash flow hedges will m ature by May 2036. Cash receipts or payments on derivatives designated as cash flow hedges are recorded in Other operating activities, net within the Condensed 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 has entered 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 Condensed Consolidated Statement of Cash Flows. As of March 31, 2026, a portion of our € 500 million euro-denominated long-term debt was designated as a net investment hedge against our investments in European businesses. The effect of cash flow hedging and net investment hedging relationships on Accumulated other comprehensive loss and on the Condensed Consolidated Statement of Operations in the quarters ended March 31, 2026 and 2025 are presented in “Note 16: 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, net, on the Condensed 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 Condensed Consolidated Statement of Cash Flows. Note 12: Fair Value Measurements The following tables provide the valuation hierarchy classification of assets and liabilities that are carried at fair value and measured on a recurring basis in our Condensed Consolidated Balance Sheet: March 31, 2026 (dollars in millions) Total Level 1 Level 2 Level 3 Recurring fair value measurements: Marketable securities held in trusts $ 694 $ 620 $ 74 $ — Derivative assets 303 — 303 — Derivative liabilities 311 — 311 — December 31, 2025 (dollars in millions) Total Level 1 Level 2 Level 3 Recurring fair value measurements: Marketable securities held in trusts $ 750 $ 676 $ 74 $ — Derivative assets 436 — 436 — Derivative liabilities 265 — 265 — Valuation Techniques. Our derivative assets and liabilities include foreign exchange contracts that are measured at fair value using internal models based on observable market inputs such as forward rates, interest rates, our own credit risk, and our counterparties’ credit risks. 15 Table of Content s As of March 31, 2026, there has not been any significant impact to the fair value of our derivative liabilities due to our own credit risk. Similarly, there has not been any significant adverse impact to our derivative assets based on our evaluation of our counterparties’ credit risks. The following table provides carrying amounts and fair values of financial instruments that are not carried at fair value in our Condensed Consolidated Balance Sheet: March 31, 2026 December 31, 2025 (dollars in millions) Carrying Amount Fair Value Carrying Amount Fair Value Long-term debt (excluding finance leases) $ 37,116 $ 34,572 $ 37,627 $ 35,733 The following tables provide the valuation hierarchy classification of assets and liabilities that are not carried at fair value in our Condensed Consolidated Balance Sheet: March 31, 2026 (dollars in millions) Total Level 1 Level 2 Level 3 Long-term debt (excluding finance leases) $ 34,572 $ — $ 33,639 $ 933 December 31, 2025 (dollars in millions) Total Level 1 Level 2 Level 3 Long-term debt (excluding finance leases) $ 35,733 $ — $ 34,800 $ 933 The fair value of our Short-term borrowings approximates the carrying value due to their short-term nature and is classified as level 3 within the fair value hierarchy. Note 13: Variable Interest Entities Pratt & Whitney holds a 61 % program share interest in the International Aero Engines AG (IAE) collaboration with MTU Aero Engines AG (MTU) and Japanese Aero Engines Corporation (JAEC), and a 49.5 % ownership interest in IAE. IAE’s business purpose is to coordinate the design, development, manufacturing, and product support of the V2500 engine program through involvement with the collaborators. Additionally, Pratt & Whitney, JAEC, and MTU are participants in the International Aero Engines, LLC (IAE LLC) collaboration, whose business purpose is to coordinate the design, development, manufacturing, and product support for the PW1100G-JM engine for the Airbus A320neo family of aircraft. Pratt & Whitney holds a 59 % program share interest and a 59 % ownership interest in IAE LLC. IAE and IAE LLC retain limited equity with the primary economics of the programs passed to the participants. As such, we have determined that IAE and IAE LLC are variable interest entities with Pratt & Whitney as the primary beneficiary. IAE and IAE LLC have, therefore, been consolidated. Other collaborators participate in Pratt & Whitney’s program share interest in IAE and IAE LLC. Pratt & Whitney’s net program share interest in IAE and IAE LLC, after considering its sub-collaborator share, is 57 % and 51 %, respectively. The carrying amounts and classification of assets and liabilities for variable interest entities in our Condensed Consolidated Balance Sheet are as follows: (dollars in millions) March 31, 2026 December 31, 2025 Current assets $ 14,268 $ 14,703 Non-current assets 1,222 1,191 Total assets $ 15,490 $ 15,894 Current liabilities $ 16,227 $ 16,265 Non-current liabilities 104 116 Total liabilities $ 16,331 $ 16,381 Note 14: Guarantees We extend a variety of financial, market value, and product performance guarantees to third parties. These instruments expire on various dates through 2062. Additional guarantees of project performance for which there is no stated value also remain 16 Table of Content s outstanding. A portion of our third party guarantees are subject to indemnification for our benefit for any liabilities that could arise. As of March 31, 2026 and December 31, 2025, the following financial guarantees were outstanding: March 31, 2026 December 31, 2025 (dollars in millions) Maximum Potential Payment Carrying Amount of Liability Maximum Potential Payment Carrying Amount of Liability Commercial aerospace financing arrangements $ 68 $ — $ 106 $ — Third party guarantees 247 — 248 — We have made residual value and other guarantees related to various commercial aerospace customer financing arrangements. The estimated fair market values of the guaranteed assets equal or exceed the value of the related guarantees. We accrue for costs associated with guarantees when it is probable that a liability has been incurred and the amount can be reasonably estimated. The most likely cost to be incurred is accrued based on an evaluation of currently available facts, and where no amount within a range of estimates is more likely, the minimum is accrued. We also provide service and warranty policies on our products and extend performance and operating cost guarantees beyond our normal service and warranty policies on some of our products, particularly commercial aircraft engines. In addition, we incur discretionary costs to service our products in connection with specific product performance issues. Liabilities for performance and operating cost guarantees are based upon future product performance and durability and are largely estimated based upon historical experience. Adjustments are made to accruals as claims data and historical experience warrant. The changes in the carrying amount of service and product warranties and product performance guarantees for the quarters ended March 31, 2026 and 2025 were as follows: (dollars in millions) 2026 2025 Balance as of January 1 $ 1,035 $ 993 Warranties and performance guarantees issued 48 80 Settlements ( 65 ) ( 52 ) Other ( 1 ) 2 Balance as of March 31 $ 1,017 $ 1,023 Product and service guarantees incurred in connection with long term production contracts and certain aftermarket arrangements are generally accounted for within the contract estimates at completion. Note 15: Commitments and Contingencies Except as otherwise noted, while we are unable to predict the final outcome, based on information currently available, we do not believe that resolution of any of the following matters will have a material adverse effect upon our competitive position, results of operations, financial condition, or liquidity. Environmental. Our operations are subject to environmental regulation by federal, state, and local authorities in the United States and regulatory authorities with jurisdiction over our foreign operations. We have accrued for the costs of environmental remediation activities, including but not limited to investigatory, remediation, operating and maintenance costs, and performance guarantees, and periodically reassess these amounts. We do not expect any additional liability to have a material adverse effect on our results of operations, financial condition, or liquidity. As of both March 31, 2026 and December 31, 2025, we had $ 0.8 billion reserved for environmental remediation. Commercial Aerospace Financing and Other Commitments. We had commercial aerospace financing commitments and other contractual commitments of approximately $ 13 billion as of both March 31, 2026 and December 31, 2025, on a gross basis before reduction for our collaboration partners’ share. Aircraft financing commitments, in the form of debt or lease financing, are provided to certain commercial aerospace customers. The extent to which the financing commitments will be utilized is not currently known, since customers may be able to obtain more favorable terms from other financing sources. We may also arrange for third-party investors to assume a portion of these commitments. The majority of financing commitments are collateralized arrangements. 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 creditworthiness of our customers. As a result, the fair value of these financing commitments is expected to equal the amounts funded. 17 Table of Content s We also have other contractual commitments to make payments to secure certain contractual rights to provide product on new aircraft platforms. The estimated amount and timing of these payments are generally based on future sales or engine flight hours. Payments made on these contractual commitments are included within intangible assets as exclusivity assets and are amortized over the term of underlying economic benefit. We have entered into certain collaboration arrangements, which may include participation by our collaboration partners in these commitments. In addition, in connection with our 2012 agreement to acquire Rolls-Royce’s ownership and collaboration interests in IAE, additional payments are due to Rolls-Royce contingent upon each hour flown through June 2027 by the V2500-powered aircraft in service as of the acquisition date. These flight hour payments will be capitalized as collaboration intangible assets as payments are made. Other Financing Arrangements. 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 $ 4.1 billion as of March 31, 2026. 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 March 31, 2026, the aggregate amount of these agreements, both agreed to and anticipated to be agreed to, had an outstanding notional value of approximately $ 14 billion. These agreements are designed to return economic value to the foreign country by requiring us to engage in activities supporting local defense or commercial industries, promoting a balance of trade, developing in-country technology capabilities, or addressing other local development priorities. Offset agreements may be satisfied through activities that do not require a direct cash payment, including transferring technology, providing manufacturing, training, and other consulting support to in-country projects, and the purchase by third parties (e.g., our vendors) of supplies from in-country vendors. These agreements may also be satisfied through our use of cash for activities such as subcontracting with local partners, purchasing supplies from in-country vendors, providing financial support for in-country projects, and making investments in local ventures. Such activities may also vary by country depending upon requirements as dictated by their governments. We typically do not commit to offset agreements until orders for our products or services are definitive. The amounts ultimately applied against our offset agreements are based on negotiations with the customers and typically require cash outlays that represent only a fraction of the notional value in the offset agreements. Offset programs usually extend over several or more years and may provide for penalties in the event we fail to perform in accordance with offset requirements. Historically, we have not been required to pay any penalties of significance. Government Oversight. In the ordinary course of business, the Company and its subsidiaries and our properties are subject to regulatory and governmental examinations, information gathering requests, inquiries, investigations, and threatened legal actions and proceedings. For example, we are now, and believe that, in light of the current U.S. government contracting and overall enforcement environment, we will continue to be the subject of one or more U.S. government investigations. Our contracts with the U.S. government are also subject to audits. 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 War (DoW) 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. From time to time, agencies investigate or conduct audits to determine whether our operations are being conducted in accordance with applicable requirements. Such investigations and audits may be initiated due to a number of reasons, including as a result of a whistleblower complaint. Such investigations and audits could result in administrative, civil, or criminal liabilities, including the imposition of repayment obligations, fines, treble or other damages, forfeitures, disgorgement, restitution, or penalties, the suspension of government export licenses, and/or suspension or debarment from future U.S. government contracting. They could also result in deferred prosecution agreements, administrative orders, consent agreements, guilty plea agreements, and/or imposition of an independent compliance monitor. U.S. government investigations often take years to complete. 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 18 Table of Content s 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 was engaged in April 2026. 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 Consent Agreement (CA) with the Department of State (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 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 noted above, the U.S. government reserves the right to suspend or debar a contractor from receiving new government contracts for fraudulent, criminal, or other seriously improper conduct. The U.S. government could also void any contracts found to be tainted by fraud. Like many defense contractors, we have received audit reports recommending the reduction of certain contract prices because, for example, cost or pricing data or cost accounting practices used to price and negotiate those contracts may not have conformed to government regulations. Some of these audit reports recommend that certain payments be repaid, delayed, or withheld, and may involve substantial amounts. We have made voluntary refunds in those cases we believe appropriate, have settled some allegations and, in some cases, continue to negotiate and/or litigate. The Company may be, and in some cases has been, required to make payments into escrow of disputed liabilities while the related litigation is pending. 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. 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. In addition, the DOJ has, from time to time, convened grand juries to investigate possible irregularities by us. We also provide products and services to customers outside of the U.S., and those sales are subject to local government laws, regulations, and procurement policies and practices. Our compliance with such local government regulations or any applicable U.S. government regulations (e.g., Arms Export Control Act (AECA), Export Administration Regulations (EAR), Foreign Corrupt Practices Act (FCPA), and ITAR) may also be investigated or audited. In addition, we accrue for liabilities associated with those matters that are probable and can be reasonably estimated. The most likely liability amount to be incurred is accrued based upon a range of estimates. Where no amount within a range of estimates is more likely, then we accrue the minimum amount. Other than as specifically disclosed in this Form 10-Q, 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. Pratt & Whitney Powder Metal Matter. In 2023, Pratt & Whitney determined that a rare condition in powder metal used to manufacture certain engine parts requires accelerated inspection of the PW1100 GTF fleet, which powers the A320neo. This determination was made pursuant to Pratt & Whitney’s safety management system. On August 4, 2023, Pratt & Whitney issued a special instruction (SI) to operators of PW1100 GTF powered A320neo aircraft, which required accelerated inspections and engine removals covering an initial subset of operational engines, no later than September 15, 2023. During the third quarter of 2023, through its safety management system, Pratt & Whitney continued its engineering and industrial assessment, which resulted in an updated fleet management plan for the remaining PW1100 fleet. This updated plan requires a combination of part inspections and retirements for some high pressure turbine and high pressure compressor parts made from affected raw material. Guidance to affected operators was released via service bulletins (SB) and SI in November 2023, and this guidance has been reflected in airworthiness directives issued by the Federal Aviation Administration (FAA). Consistent with previous information, the actions are resulting in significant incremental shop visits. As a result of this matter, Pratt & Whitney expects aircraft on ground levels for the PW1100 powered A320neo fleet to remain elevated through 2026. As a result of anticipated increased aircraft on ground levels and expected compensation to customers for this disruption, as well as incremental maintenance costs resulting from increased inspections and shop visits, Pratt & Whitney recorded a pre-tax operating profit charge in the third quarter of 2023 of $ 2.9 billion, reflecting Pratt & Whitney’s net 51 % program share of the PW1100 program. This amount reflected our best estimate of expected customer compensation for the estimated duration of the disruption as well as the EAC adjustment impact of this matter to Pratt & Whitney’s long-term maintenance contracts. The incremental costs to the business’s long-term maintenance contracts include the estimated cost of additional inspections, replacement of parts, and other related impacts. The charge recorded in the third quarter of 2023 resulted in a net increase in Other accrued liabilities of $ 2.8 billion, which principally related to our 51 % share of an accrual for expected customer compensation. At March 31, 2026 and December 31, 2025, we had other accrued liabilities of $ 0.5 billion and $ 0.7 billion, respectively, related to expected compensation to customers. The decrease in the accrual during the quarter ended March 31, 2026 was primarily due to customer compensation in the form of credits issued to customers during the period. 19 Table of Content s Other engine models within Pratt & Whitney’s fleet contain parts manufactured with affected powder metal, but we do not currently believe there will be any resultant significant financial impact with respect to these other engine models at this time. The financial impact of the powder metal issue is based on historical experience and is subject to various assumptions and judgments, most notably, the number and expected timing of shop visits, inspection results and scope of work to be performed, turnaround time, availability of parts, available capacity at overhaul facilities, and outcomes of negotiations with impacted customers. While these assumptions reflect our best estimates at this time, they are subject to variability. Potential changes to these assumptions and actual incurred costs could significantly affect the estimates inherent in our financial statements and could have a material effect on the Company’s results of operations for the periods in which they are recognized. Legal Proceedings. The Company and its subsidiaries are subject to various contract pricing disputes, government investigations, and litigation matters across jurisdictions, updates to certain of which are set forth below. Cost Accounting Standards Claims As previously disclosed, in April 2019, a Divisional Administrative Contracting Officer (DACO) of the United States DCMA asserted a claim against Pratt & Whitney to recover alleged overpayments of approximately $ 1.7 billion plus interest ($ 1.5 billion at March 31, 2026). The claim is based on Pratt & Whitney’s alleged noncompliance with Cost Accounting Standards (CAS) from January 1, 2007 to March 31, 2019, due to its method of allocating independent research and development costs to government contracts. Pratt & Whitney believes that the claim is without merit and filed an appeal to the ASBCA on June 7, 2019. On September 30, 2024, a DCMA DACO issued a second claim against Pratt & Whitney that similarly alleges that Pratt & Whitney was noncompliant with CAS due to its method of allocating independent research and development costs to government contracts from April 1, 2019 to December 31, 2023. The second claim demands payment of $ 1.1 billion plus interest ($ 437 million at March 31, 2026 ). Pratt & Whitney believes the second claim is without merit and filed an appeal to the ASBCA on October 15, 2024. As previously disclosed, in December 2013, a DCMA DACO asserted a claim against Pratt & Whitney to recover alleged overpayments of approximately $ 177 million plus interest ($ 216 million at March 31, 2026). The claim is based on Pratt & Whitney’s alleged noncompliance with CAS from January 1, 2005 to December 31, 2012, due to its method of determining the cost of collaborator parts used in the calculation of material overhead costs for government contracts. In 2014, Pratt & Whitney filed an appeal to the ASBCA. An evidentiary hearing was held and completed in June 2019. On November 22, 2021, the ASBCA issued its written decision sustaining in part and denying in part Pratt & Whitney’s appeal. The ASBCA rejected the DCMA’s asserted measure of the cost of collaborator parts, and ruled substantially in Pratt & Whitney’s favor on other liability issues. The ASBCA remanded the appeal to the parties for resolution of damages issues, which could require further proceedings at the ASBCA. On December 23, 2021, the DCMA filed a motion with the ASBCA seeking partial reconsideration of the November 22, 2021 decision. The motion for reconsideration was denied on August 29, 2022. 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. This second claim, which asserts the same measure of the cost of collaborator parts rejected by the ASBCA’s November 22, 2021 decision, demands payment of $ 269 million plus interest ($ 195 million at March 31, 2026). Pratt & Whitney appealed this second claim to the ASBCA in January 2019. In December 2023, a DCMA DACO issued a third claim against Pratt & Whitney that similarly alleges that its method of determining the cost of collaborator parts does not comply with the CAS for calendar years 2018 through 2022. This third claim, which asserts the same measure of the cost of collaborator parts rejected by the ASBCA’s prior decision, demands payment of $ 277 million plus interest ($ 112 million at March 31, 2026). Pratt & Whitney appealed this third claim to the ASBCA at the end of December 2023. Although subject to further litigation at the ASBCA and potentially further appellate proceedings, we continue to believe that the November 22, 2021 decision in the first claim will apply with equal legal effect to the second and third claims. Accordingly, we believe that the amounts demanded by the DCMA as set forth in the three claims are without legal basis and that any damages owed to the U.S. government for the three claims will not have a material adverse effect on our results of operations, financial condition, or liquidity. Thales-Raytheon Systems and Related Matters 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 20 Table of Content s 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. 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 was engaged in April 2026. 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 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. 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 was engaged in April 2026. During the fourth quarter of 2024, the Company paid $ 580 million in the aggregate for DPA-2 and the FCA Settlement Agreement which was consistent with amounts accrued plus interest. The Company does not believe that these matters will have a material adverse effect on our results of operations, financial condition, or liquidity. Trade Compliance Matters From time to time, we identify, investigate, remediate, and voluntarily disclose violations or potential violations of the ITAR and EAR to the relevant regulators. In May 2024, the 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 CA with the DOS to resolve these matters. The CA settles certain AECA and ITAR compliance matters with the DTCC and the Directorate of Defense Trade Controls. The CA has a three-year term and provides for: (i) a civil penalty of $ 200 million, $ 100 million of which is suspended on the condition that such amount is applied to DTCC-approved remedial compliance measures; (ii) the appointment of an external Special Compliance Officer (SCO) to oversee compliance with the CA, the AECA, and the ITAR; (iii) an external audit of the Company’s AECA and ITAR compliance program; and (iv) implementation of additional remedial compliance measures related to AECA and ITAR compliance. The $ 100 million portion of the settlement that is not subject to suspension, which was accrued by the Company in the second quarter of 2024, will be paid in installments, with $ 34 million paid in September 2024, $ 33 million 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. We have $ 218 million accrued in the aggregate as of March 31, 2026 for these matters and the matters being resolved pursuant to the CA. We are currently unable to estimate the timing or outcome 21 Table of Content s of the other voluntarily disclosed export compliance matters that are not subject to the CA. However, the Company does not believe these matters will have a material adverse effect on our results of operations, financial condition, or liquidity. Powder Metal Disclosure Litigation and SEC Investigation Following the Company’s disclosures of a rare condition in powder metal used to manufacture certain Pratt & Whitney engine parts, two sets of civil actions were filed against RTX. First, two putative federal securities class action lawsuits were filed in the United States District Court for the District of Connecticut against the Company and certain current and former executives of the Company. The lawsuits 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 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. 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. Where appropriate, we have recorded loss contingency accruals for the above-referenced matters. Unless noted above, loss contingency accruals are immaterial individually or in the aggregate. Other. As described in “Note 14: Guarantees,” we extend performance and operating cost guarantees beyond our normal warranty and service policies for extended periods on some of our products. We have accrued our estimate of the liability that may result under these guarantees and for service costs that are probable and can be reasonably estimated. We also have other commitments and contingent liabilities related to legal proceedings, self-insurance programs, and matters arising out of the normal course of business. We accrue contingencies based upon a range of possible outcomes. If no amount within this range is a better estimate than any other, then we accrue the minimum amount. In the ordinary course of business, the Company and its subsidiaries are also routinely defendants in, parties to, or otherwise subject to many pending and threatened legal actions, claims, disputes, and proceedings. 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. We do not believe that these matters will have a material adverse effect upon our results of operations, financial condition, or liquidity. Note 16: Equity Accumulated Other Comprehensive Loss. A summary of the changes in each component of Accumulated other comprehensive loss, net of tax for the quarters ended March 31, 2026 and 2025 is provided below: (dollars in millions) Foreign Currency Translation (1) Defined Benefit Pension and Postretirement Plans Unrealized Hedging Gains (Losses) Accumulated Other Comprehensive Loss Quarter Ended March 31, 2026 Balance at December 31, 2025 $ 492 $ ( 3,304 ) $ 94 $ ( 2,718 ) Other comprehensive loss before reclassifications, net ( 133 ) ( 3 ) ( 69 ) ( 205 ) Amounts reclassified, pre-tax — ( 24 ) ( 16 ) ( 40 ) Tax (expense) benefit ( 4 ) 7 15 18 Balance at March 31, 2026 $ 355 $ ( 3,324 ) $ 24 $ ( 2,945 ) (1) The amount of foreign currency translation recognized in Other Comprehensive (Loss) Income (OCI) includes gains (losses) relating to net investment hedges, as further discussed in “Note 11: Financial Instruments”. 22 Table of Content s (dollars in millions) Foreign Currency Translation (1) Defined Benefit Pension and Postretirement Plans Unrealized Hedging Gains (Losses) Accumulated Other Comprehensive Loss Quarter Ended March 31, 2025 Balance at December 31, 2024 $ ( 949 ) $ ( 2,679 ) $ ( 127 ) $ ( 3,755 ) Other comprehensive income (loss) before reclassifications, net 499 ( 36 ) 147 610 Amounts reclassified, pre-tax — ( 39 ) ( 3 ) ( 42 ) Tax benefit (expense) 1 9 ( 30 ) ( 20 ) Balance at March 31, 2025 $ ( 449 ) $ ( 2,745 ) $ ( 13 ) $ ( 3,207 ) (1) The amount of foreign currency translation recognized in OCI includes gains (losses) relating to net investment hedges, as further discussed in “Note 11: Financial Instruments”. Note 17: Segment Financial Data Our operations, for the periods presented herein, are classified into three principal segments: Collins, Pratt & Whitney, and Raytheon. Our segments are generally based on the management structure of the businesses and the grouping of similar operating companies, where each management organization has general operating autonomy over diversified products and services. 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. Total sales and operating profit by segment include inter-segment sales which are generally recorded at cost-plus a specified fee or at a negotiated fixed price. These pricing arrangements may result in margins different than what the purchasing segment realizes on the ultimate third-party sale. We present a FAS/CAS operating adjustment outside of segment results, which represents the difference between the service cost component of our pension and PRB expense under the Financial Accounting Standards (FAS) requirements of U.S. Generally Accepted Accounting Principles (GAAP) and our pension and PRB expense under U.S. government Cost Accounting Standards (CAS) primarily related to our Raytheon segment. While the ultimate liability for pension and PRB costs under FAS and CAS is similar, the pattern of cost recognition is different. Over time, we generally expect to recover the related Raytheon pension and PRB liabilities through the pricing of our products and services to the U.S. government. Collins and Pratt & Whitney generally record pension and PRB expense on a FAS basis . Acquisition accounting adjustments include the amortization of acquired intangible assets related to acquisitions, the amortization of the property, plant, and equipment fair value adjustment acquired through acquisitions, the amortization of customer contractual obligations related to loss making or below market contracts acquired, and goodwill impairment, if applicable. These adjustments are not considered part of management’s evaluation of segment results. Results for the quarters ended March 31, 2026 and 2025 are as follows: 2026 (dollars in millions) Net Sales Research and Development Other Segment Items (1) Operating Profit Operating Profit Margin Collins Aerospace $ 7,602 $ ( 295 ) $ ( 6,000 ) $ 1,307 17.2 % Pratt & Whitney 8,173 ( 220 ) ( 7,243 ) 710 8.7 % Raytheon 6,945 ( 114 ) ( 5,990 ) 841 12.1 % Total segment 22,720 $ ( 629 ) $ ( 19,233 ) 2,858 12.6 % Eliminations and other (2) ( 644 ) 38 Corporate expenses and other unallocated items — ( 42 ) FAS/CAS operating adjustment — 172 Acquisition accounting adjustments — ( 471 ) Consolidated $ 22,076 $ 2,555 11.6 % (1) Includes Cost of sales, Selling, general, and administrative expenses, and Other income, net. (2) Includes the operating results of certain smaller operations. 23 Table of Content s 2025 (dollars in millions) Net Sales Research and Development Other Segment Items (1) Operating Profit Operating Profit Margin Collins Aerospace $ 7,217 $ ( 313 ) $ ( 5,816 ) $ 1,088 15.1 % Pratt & Whitney 7,366 ( 229 ) ( 6,557 ) 580 7.9 % Raytheon 6,340 ( 98 ) ( 5,564 ) 678 10.7 % Total segment 20,923 $ ( 640 ) $ ( 17,937 ) 2,346 11.2 % Eliminations and other (2) ( 617 ) 12 Corporate expenses and other unallocated items — ( 38 ) FAS/CAS operating adjustment — 185 Acquisition accounting adjustments — ( 470 ) Consolidated $ 20,306 $ 2,035 10.0 % (1) Includes Cost of sales, Selling, general, and administrative expenses, and Other income, net. (2) Includes the operating results of certain smaller operations. Capital Expenditures and Depreciation and Amortization segment information for the quarters ended March 31, 2026 and 2025 are as follows: Capital Expenditures Depreciation & Amortization (dollars in millions) 2026 2025 2026 2025 Collins Aerospace $ 155 $ 112 $ 231 $ 217 Pratt & Whitney 174 153 200 194 Raytheon 171 225 127 131 Total segment 500 490 558 542 Corporate, eliminations, and other 46 23 26 21 Acquisition accounting adjustments 487 489 Consolidated $ 546 $ 513 $ 1,071 $ 1,052 Total assets by segment are as follows: (dollars in millions) March 31, 2026 December 31, 2025 Collins Aerospace (1) $ 71,527 $ 71,680 Pratt & Whitney (1) 51,630 52,482 Raytheon (1) 45,123 44,795 Total segment 168,280 168,957 Corporate, eliminations, and other 2,151 2,122 Consolidated $ 170,431 $ 171,079 (1) Total assets include acquired intangible assets and the property, plant, and equipment fair value adjustment. Related amortization expense is included in Acquisition accounting adjustments. We disaggregate our contracts from customers by geographic region based on customer location, by type of customer, and by sales type. Our geographic region based on customer location uses end user customer location where known or practical to determine, or in instances where the end user customer is not known or not practical to determine, uses “ship to” location as the customer location. In addition, for our Raytheon segment, we disaggregate our contracts from customers by contract type. We believe these categories best depict how the nature, amount, timing, and uncertainty of our revenue and cash flows are affected by economic factors. 24 Table of Content s Segment sales disaggregated by geographic region based on customer location for the quarters ended March 31, 2026 and 2025 are as follows: 2026 2025 (dollars in millions) Collins Aerospace Pratt & Whitney Raytheon Other Total Collins Aerospace Pratt & Whitney Raytheon Other Total United States $ 3,679 $ 3,603 $ 4,578 $ 53 $ 11,913 $ 3,348 $ 3,418 $ 4,447 $ 53 $ 11,266 Europe 1,748 1,939 1,193 2 4,882 1,730 1,839 843 1 4,413 Asia Pacific 834 1,399 571 — 2,804 826 1,241 525 — 2,592 Middle East and North Africa 200 243 487 — 930 239 175 434 — 848 Other regions 473 989 85 — 1,547 444 692 51 — 1,187 Consolidated net sales 6,934 8,173 6,914 55 22,076 6,587 7,365 6,300 54 20,306 Inter-segment sales 668 — 31 ( 699 ) — 630 1 40 ( 671 ) — Business segment sales $ 7,602 $ 8,173 $ 6,945 $ ( 644 ) $ 22,076 $ 7,217 $ 7,366 $ 6,340 $ ( 617 ) $ 20,306 Segment sales disaggregated by type of customer for the quarters ended March 31, 2026 and 2025 are as follows: 2026 2025 (dollars in millions) Collins Aerospace Pratt & Whitney Raytheon Other Total Collins Aerospace Pratt & Whitney Raytheon Other Total Sales to the U.S. government (1) $ 1,717 $ 1,673 $ 4,528 $ 52 $ 7,970 $ 1,659 $ 1,585 $ 4,435 $ 53 $ 7,732 Foreign military sales through the U.S. government 135 411 1,235 — 1,781 116 379 976 — 1,471 Foreign government direct commercial sales 266 180 1,100 1 1,547 327 148 876 1 1,352 Commercial aerospace and other commercial sales 4,816 5,909 51 2 10,778 4,485 5,253 13 — 9,751 Consolidated net sales 6,934 8,173 6,914 55 22,076 6,587 7,365 6,300 54 20,306 Inter-segment sales 668 — 31 ( 699 ) — 630 1 40 ( 671 ) — Business segment sales $ 7,602 $ 8,173 $ 6,945 $ ( 644 ) $ 22,076 $ 7,217 $ 7,366 $ 6,340 $ ( 617 ) $ 20,306 (1) Excludes foreign military sales through the U.S. government. Segment sales disaggregated by sales type for the quarters ended March 31, 2026 and 2025 are as follows: 2026 2025 (dollars in millions) Collins Aerospace Pratt & Whitney Raytheon Other Total Collins Aerospace Pratt & Whitney Raytheon Other Total Products $ 5,424 $ 4,288 $ 6,006 $ 47 $ 15,765 $ 5,110 $ 4,032 $ 5,406 $ 43 $ 14,591 Services 1,510 3,885 908 8 6,311 1,477 3,333 894 11 5,715 Consolidated net sales 6,934 8,173 6,914 55 22,076 6,587 7,365 6,300 54 20,306 Inter-segment sales 668 — 31 ( 699 ) — 630 1 40 ( 671 ) — Business segment sales $ 7,602 $ 8,173 $ 6,945 $ ( 644 ) $ 22,076 $ 7,217 $ 7,366 $ 6,340 $ ( 617 ) $ 20,306 Raytheon segment sales disaggregated by contract type for the quarters ended March 31, 2026 and 2025 are as follows: (dollars in millions) 2026 2025 Fixed-price $ 4,062 $ 3,605 Cost-type 2,852 2,695 Consolidated net sales 6,914 6,300 Inter-segment sales 31 40 Business segment sales $ 6,945 $ 6,340 Note 18: Remaining Performance Obligations (RPO) RPO represents the aggregate amount of total contract transaction price that is unsatisfied or partially unsatisfied. Total RPO was approximately $ 271 billion as of March 31, 2026. Of the total RPO as of March 31, 2026, we expect approximately 25 % 25 Table of Content s will be recognized as revenue over the next 12 months. Approximately 45 % of our RPO relates to long-term commercial aerospace maintenance contracts at Pratt & Whitney, which are generally expected to be realized over a span of up to 20 years. Note 19: Accounting Pronouncements 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 standard requires the disclosure of the total amount of selling expenses and, in annual reporting periods, an entity’s definition of selling expenses. The new standard is effective for annual reporting periods beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027, on a prospective basis. Early adoption is permitted. We are currently evaluating the impact on our disclosures of adopting this new pronouncement. Other new pronouncements issued but not effective until after March 31, 2026 are not expected to have a material impact on our results of operations, financial condition, or liquidity. 26 Table of Content s With respect to the unaudited condensed consolidated financial information of RTX for the quarters ended March 31, 2026 and 2025, PricewaterhouseCoopers LLP (PwC) reported that it has applied limited procedures in accordance with professional standards for a review of such information. However, its report dated April 21, 2026, appearing below, states that the firm did not audit and does not express an opinion on that unaudited condensed consolidated financial information. PwC has not carried out any significant or additional audit tests beyond those that would have been necessary if their report had not been included. Accordingly, the degree of reliance on its report on such information should be restricted in light of the limited nature of the review procedures applied. PwC is not subject to the liability provisions of Section 11 of the Securities Act of 1933, as amended (the Act) for its report on the unaudited condensed consolidated financial information because that report is not a “report” or a “part” of a registration statement prepared or certified by PwC within the meaning of Sections 7 and 11 of the Act. Report of Independent Registered Public Accounting Firm To the Shareowners and Board of Directors of RTX Corporation Results of Review of Interim Financial Information We have reviewed the accompanying condensed consolidated balance sheet of RTX Corporation and its subsidiaries (the “Company”) as of March 31, 2026, and the related condensed consolidated statements of operations, of comprehensive income, of changes in equity, and of cash flows for the three-month periods ended March 31, 2026 and 2025, including the related notes (collectively referred to as the “interim financial information”). Based on our reviews, we are not aware of any material modifications that should be made to the accompanying interim financial information for it to be in conformity with accounting principles generally accepted in the United States of America. We have previously audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the consolidated balance sheet of the Company as of December 31, 2025, and the related consolidated statements of operations, of comprehensive income, of changes in equity, and of cash flows for the year then ended (not presented herein), and in our report dated February 6, 2026, we expressed an unqualified opinion on those consolidated financial statements. In our opinion, the information set forth in the accompanying condensed consolidated balance sheet as of December 31, 2025, is fairly stated, in all material respects, in relation to the consolidated balance sheet from which it has been derived. Basis for Review Results This interim financial information is the responsibility of the Company’s management. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our review in accordance with the standards of the PCAOB. A review of interim financial information consists principally of applying analytical procedures and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with the standards of the PCAOB, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion. /s/ PricewaterhouseCoopers LLP Boston, Massachusetts April 21, 2026 27 Table of Content s