RTX Corp - Quarter Report: 2025 June (Form 10-Q)

Net income attributable to common shareowners$ $ $ $ Earnings Per Share attributable to common shareowners:Basic$ $ $ $ Effect of foreign exchange rate changes on cash and cash equivalents ()Net decrease in cash, cash equivalents, and restricted cash()()Cash, cash equivalents, and restricted cash, beginning of period Cash, cash equivalents, and restricted cash, end of period Less: Restricted cash, included in Other assets, current and Other assets Cash and cash equivalents, end of period$ $

See accompanying Notes to Condensed Consolidated Financial Statements

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RTX CORPORATION

AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

(Unaudited)


	Quarter Ended June 30,			Six Months Ended June 30,
(dollars in millions, except per share amounts; shares in thousands)	2025		2024	2025	2024
Equity beginning balance	$		$	$	$
Common Stock
Beginning balance
Common stock plans activity
Share-based 401(k) matching contributions
Ending balance
Treasury Stock
Beginning balance	()		()	()	()
Share-based 401(k) matching contributions
Common stock repurchased			()	()	()
Ending balance	()		()	()	()
Retained Earnings
Beginning balance
Net income attributable to common shareholders
Dividends on common stock	()		()	()	()
Dividends on ESOP common stock	()		()	()	()
Other	()			()	()
Ending balance
Unearned ESOP Shares
Beginning balance			()		()
Share-based 401(k) matching contributions
Ending balance			()		()
Accumulated Other Comprehensive Loss
Beginning balance	()		()	()	()
Other comprehensive income (loss), net of tax			()		()
Ending balance	()		()	()	()
Noncontrolling Interest
Beginning balance
Net income
Less: Redeemable noncontrolling interest net income	()		()	()	()
Dividends attributable to noncontrolling interest	()		()	()	()
		$

(1) The reduction in Acquisitions and Divestitures includes the reclassification of goodwill to held for sale and presented in Other assets within the Condensed Consolidated Balance Sheet.

Intangible Assets.

Six Months Ended June 30,(dollars in millions, except per share amounts)))% term loan due 2025$ $

% notes due 2025 (1)

% notes due 2026 (1)

3 Month SOFR plus % term loan due 2026

% notes due 2026 (1)

% notes due 2027 (1)

% notes due 2027

% notes due 2028

% notes due 2028 (1)

% notes due 2029 (1)

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

% notes due 2030 (1)

% notes due 2031 (1)

% notes due 2032 (1)

% notes due 2033 (1)

% notes due 2034 (1)

% notes due 2035 (1)

% notes due 2036 (1)

% notes due 2038

% notes due 2038 (1)

% notes due 2040 (1)

% notes due 2041 (1)

% notes due 2042 (1)

% notes due 2043 (1)

% notes due 2044 (1)

% notes due 2045 (1)

% notes due 2046 (1)

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% notes due 2047 (1)

% notes due 2048 (1)

% notes due 2050 (1)

% notes due 2051 (1)

% notes due 2052 (1)

% notes due 2053 (1)

% notes due 2054 (1)

Other (including finance leases)

Total principal long-term debt Other (fair market value adjustments, (discounts)/premiums, and debt issuance costs)()()Total long-term debt Less: current portion Long-term debt, net of current portion$ $

(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 June 30, 2025 is approximately years.

$ $ $ International defined benefit plans PRB plans Defined contribution plans $ Current pension and PRB liabilities (included in Accrued employee compensation) Future pension and postretirement benefit obligations

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


(dollars in millions)	June 30, 2025	December 31, 2024
Non-current pension liabilities	$	$
Non-current PRB liabilities
Other pension and PRB related items
Future pension and postretirement benefit obligations	$	$

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$ $ $ Non-operating expenseInterest cost Expected return on plan assets()()()()Amortization of prior service credit()()()()Recognized actuarial net loss Net settlement, curtailment, and special termination benefit (gain) loss ()Non-service pension income()()()()Total net periodic pension income$()$()$()$()

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.

% and %, respectively, as compared to % and % for the quarter and six months ended June 30, 2024.

The effective tax rate for the quarter ended June 30, 2025 includes a tax benefit of $ million associated with the conclusion of the Internal Revenue Service (IRS) examination of RTX’s 2020 tax year. The effective tax rate for the quarter ended June 30, 2024 includes the impact of the $ million charge associated with the Resolution of Certain Legal Matters where no related tax benefit was recorded in the quarter.

The effective tax rate for the six months ended June 30, 2025 and June 30, 2024 are relatively consistent. However, the effective tax rate for the six months ended June 30, 2025 includes the impact from the IRS examination noted above and the effective tax rate for the six months ended June 30, 2024 includes a $ million tax benefit recognized from the conclusion of the examination phases of the RTX and Rockwell Collins audits, a $ million tax cost associated with the sale of the CIS business, and the impact of the $ million charge associated with the Resolution of Certain Legal Matters.

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, Saudi Arabia, 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 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 (GTSC) and recorded the net income impact of this decision. The Company continues to believe the position of the KSA tax authority is not supported by the facts in question or KSA tax law and is pursuing available options to seek reversal of the GSTC’s decision.

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billion and $ billion at June 30, 2025 and December 31, 2024, respectively. $ Other accrued liabilities Derivatives not designated as hedging instruments:Foreign exchange contractsOther assets, current$ $ Other accrued liabilities

At June 30, 2025, all derivative contracts accounted for as cash flow hedges will mature 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.

During the quarter ended June 30, 2025, the Company 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 December 31, 2024, we had € million of our € million principal value of euro-denominated long-term debt designated as a net investment hedge against our investments in European businesses. At March 31, 2025, this was no longer designated as a net investment hedge. For the quarter and six months ended June 30, 2025, the effects are reflected within Other income (expense), net.

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 and six months ended June 30, 2025 and 2024 are presented in “Note 17: Equity.” The hedged items and derivatives designated as hedging instruments are highly effective.

The effect of derivatives not designated as hedging instruments is included within Other income (expense), 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.

$ $ $ Derivative assets Derivative liabilities

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$ $ $ Derivative assets Derivative liabilities

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.

As of June 30, 2025, 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 tables provide the valuation hierarchy classification of assets and liabilities that are not carried at fair value in our Condensed Consolidated Balance Sheet:

June 30, 2025

(dollars in millions)

Total

Level 1

Level 2

Level 3

Long-term debt (excluding finance leases)

December 31, 2024

(dollars in millions)

Total

Level 1

Level 2

Level 3

Long-term debt (excluding finance leases)

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

% 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 % 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 % program share interest and a % 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

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% and %, respectively. $ Non-current assets Total assets$ $ Current liabilities$ $ Non-current liabilities Total liabilities$ $

$ $ $ Third party guarantees

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, net of existing reserves. Collaboration partners’ share of these financing guarantees was $ billion at June 30, 2025 and December 31, 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 was $ billion at June 30, 2025 and December 31, 2024. These primarily relate to environmental liabilities, which are included in our total environmental liabilities as further discussed in “Note 16: Commitments and Contingencies.”

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.

$ Warranties and performance guarantees issued Settlements()()Other ()Balance as of June 30$ $

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

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billion reserved for environmental remediation.

Commercial Aerospace Financing and Other Commitments. We had commercial aerospace financing commitments and other contractual commitments of approximately $ billion and $ billion as of June 30, 2025 and December 31, 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. 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 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). 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.

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 are 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 obligations. The stated values of these letters of credit agreements and surety bonds totaled $ billion as of June 30, 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 June 30, 2025, the aggregate amount of these agreements, both agreed to and anticipated to be agreed to, had an outstanding notional value of approximately $ 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.

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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 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. 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 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.

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billion, reflecting Pratt & Whitney’s net % 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 $ billion, which principally related to our % share of an accrual for expected customer compensation. At June 30, 2025 and December 31, 2024, we had other accrued liabilities of $ billion and $ billion, respectively, primarily related to expected compensation to customers. The decrease in the accrual during the six months ended June 30, 2025 was primarily due to customer compensation in the form of credits issued to customers during the period.

Other engine models within Pratt & Whitney’s fleet contain parts manufactured with affected powder metal, but we do not currently believe there will be any resultant significant financial impact with respect to these other engine models at this time. The financial impact of the powder metal issue is based on historical experience and is subject to various assumptions and judgments, most notably, the number and expected timing of shop visits, inspection results and scope of work to be performed, turnaround time, availability of parts, available capacity at overhaul facilities, and outcomes of negotiations with impacted customers. 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 $ billion plus interest ($ billion at June 30, 2025). 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 $ billion plus interest ($ million at June 30, 2025). Pratt & Whitney believes the second claim is without merit and filed an appeal to the ASBCA on October 15, 2024.

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million plus interest ($ million at June 30, 2025). 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 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. 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 $ million plus interest ($ million at June 30, 2025). 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 $ million plus interest ($ million at June 30, 2025). 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 claims are without legal basis and that any damages owed to the U.S. government for the 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, 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 TRS joint venture, 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 second quarter of 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 , criminal prosecution of Raytheon Company related to Raytheon Company’s conspiracy to violate the anti-bribery provisions of the FCPA and conspiracy to violate the AECA by failing to make related disclosures of certain payments that qualified as fees, commissions, and/or political contributions under Part 130 of the ITAR. If Raytheon Company and the Company fully comply with all of their respective obligations under DPA-1 during its term (commencing on the effective date of DPA-1 and ending 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 $ 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 $ 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 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 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 $ million in the aggregate for DPA-1 and the SEC's Administrative Order which was consistent with amounts accrued. The Company does not believe that these matters will have a material adverse effect on our results of operations, financial condition, or liquidity.

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, criminal prosecution of Raytheon Company related to counts of major fraud against the United States by Raytheon Company involving legacy contracts. If Raytheon Company and the Company fully comply with all of their respective obligations in DPA-2 during its term (commencing on the effective date of DPA-1 and ending 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 $ million, plus restitution, and the FCA Settlement Agreement provides for an FCA settlement payment in the amount of $ 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 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 from the date on which the monitor is engaged). The compliance monitor will oversee Raytheon Company’s and the Company’s compliance with their respective obligations under DPA-2 as well as DPA-1 and the SEC Administrative Order discussed in “Thales-Raytheon Systems and Related Matters” above. During the fourth quarter of 2024, the Company paid $ million in the aggregate for DPA-2 and the FCA Settlement Agreement which was consistent with amounts accrued plus interest. The Company does not believe that these matters, will have a material adverse effect on our results of operations, financial condition, or liquidity.

Trade Compliance Matters

From time to time, we identify, investigate, remediate, and voluntarily disclose violations or potential violations of the ITAR and EAR to the relevant regulators. In May 2024, the U.S. 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 term and provides for: (i) a civil penalty of $ million, $ 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 $ 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 $ million paid in September 2024, $ million due by August 29, 2025, and $ million due by August 29, 2026. As previously disclosed, the Company has determined that there is a probable risk of liability for potential penalties related to other export compliance matters which have been voluntarily disclosed to the cognizant regulators, but which are not subject to the CA. We have accrued $ million in the aggregate as of June 30, 2025 for these matters and the matters being resolved pursuant to the CA. We are currently unable to estimate the timing or outcome of the other voluntarily disclosed export compliance matters that are not subject to the CA. However, the Company does not believe these matters will have a material adverse effect on our results of operations, financial condition, or liquidity.

UTC Equity Conversion Litigation

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

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sets of civil actions were filed against RTX. First, 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 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. 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. 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 15: 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.

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)$()$()$()Other comprehensive income (loss) before reclassifications, net () Amounts reclassified, pre-tax () ()Tax benefit (expense) ()()Balance at June 30, 2025$ $()$ $()Six Months Ended June 30, 2025Balance at December 31, 2024$()$()$()$()Other comprehensive income (loss) before reclassifications, net () $ Amounts reclassified, pre-tax () $()Tax benefit (expense) ()()Balance at June 30, 2025$ $()$ $()

(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 12: Financial Instruments”.

(dollars in millions)

Foreign Currency Translation

Defined Benefit Pension and Postretirement Plans

Unrealized Hedging Gains (Losses)

Accumulated Other Comprehensive Loss

Quarter Ended June 30, 2024

Balance at March 31, 2024

()

Other comprehensive income (loss) before reclassifications, net

()

Amounts reclassified, pre-tax

()

Tax benefit (expense)

()

Balance at June 30, 2024

()

Six Months Ended June 30, 2024

Balance at December 31, 2023

()

Other comprehensive income (loss) before reclassifications, net

()

Amounts reclassified, pre-tax

()

Tax benefit (expense)

()

Balance at June 30, 2024

()

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.

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$()$()$ %Pratt & Whitney ()() %Raytheon ()() %Total segment $()$() %

Eliminations and other (2)

() Corporate expenses and other unallocated items— ()FAS/CAS operating adjustment— Acquisition accounting adjustments— ()Consolidated$ $ %

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

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


	2024
(dollars in millions)	Net Sales	Research and Development		Other Segment Items (1)		Operating Profit	Operating Profit Margin
Collins Aerospace	$	$	()	$	()	$		%
Pratt & Whitney		()		()				%
Raytheon (3)		()		()				%
Total segment		$	()	$	()			%
Eliminations and other (2)	()					()
Corporate expenses and other unallocated items (4)	—					()
FAS/CAS operating adjustment	—
Acquisition accounting adjustments	—					()
Consolidated	$					$		%

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

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

(3) Operating Profit and Margin includes a $ billion charge in the second quarter of 2024 related to the Raytheon Contract Termination. See “Note 5: Changes in Contract Estimates at Completion” for additional information.

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

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$()$()$ %Pratt & Whitney ()() %Raytheon ()() %Total segment $()$() %

Eliminations and other (2)

() Corporate expenses and other unallocated items— ()FAS/CAS operating adjustment— Acquisition accounting adjustments— ()Consolidated$ $ %

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

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


	2024
(dollars in millions)	Net Sales	Research and Development		Other Segment Items (1)		Operating Profit	Operating Profit Margin
Collins Aerospace	$	$	()	$	()	$		%
Pratt & Whitney		()		()				%
Raytheon (3)		()		()				%
Total segment		$	()	$	()			%
Eliminations and other (2)	()					()
Corporate expenses and other unallocated items (4)	—					()
FAS/CAS operating adjustment	—
Acquisition accounting adjustments	—					()
Consolidated	$					$		%

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

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

(3) Operating Profit and Margin includes a $ billion charge in the second quarter of 2024 related to the Raytheon Contract Termination and a $ billion gain, net of transaction and other related costs, in the first quarter of 2024 related to the sale of our CIS business. See “Note 5: Changes in Contract Estimates at Completion” and “Note 2: Acquisitions and Dispositions,” respectively, for additional information.

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

Capital Expenditures and Depreciation and Amortization segment information for the quarters ended June 30, 2025 and 2024 are as follows:


	Capital Expenditures		Depreciation & Amortization
(dollars in millions)	2025	2024	2025	2024
Collins Aerospace	$	$	$	$
Pratt & Whitney
Raytheon
Total segment
Corporate, eliminations, and other
Acquisition accounting adjustments
Consolidated	$	$	$	$

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$ $ $ Pratt & Whitney Raytheon Total segment Corporate, eliminations, and other Acquisition accounting adjustments Consolidated$ $ $ $

Total assets by segment are as follows:


(dollars in millions)	June 30, 2025	December 31, 2024
Collins Aerospace (1)	$	$
Pratt & Whitney (1)
Raytheon (1)
Total segment
Corporate, eliminations, and other
Consolidated	$	$

(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.

$ $ $ $ $ $ $ $ $ Europe Asia Pacific Middle East and North Africa Other regions Consolidated net sales Inter-segment sales ()— ()— Business segment sales$ $ $ $()$ $ $ $ $()$

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$ $ $ $ $ $ $ $ $ Europe Asia Pacific Middle East and North Africa Other regions Consolidated net sales Inter-segment sales ()— ()— Business segment sales$ $ $ $()$ $ $ $ $()$

Segment sales disaggregated by type of customer for the quarters ended June 30, 2025 and 2024 are as follows:


	2025						2024
(dollars in millions)	Collins Aerospace	Pratt & Whitney	Raytheon	Other		Total	Collins Aerospace	Pratt & Whitney	Raytheon	Other		Total
Sales to the U.S. government (1)	$	$	$	$		$	$	$	$	$		$
Foreign military sales through the U.S. government
Foreign government direct commercial sales
Commercial aerospace and other commercial sales
Consolidated net sales
Inter-segment sales				()		—				()		—
Business segment sales	$	$	$	$	()	$	$	$	$	$	()	$

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

Segment sales disaggregated by type of customer for the six months ended June 30, 2025 and 2024 are as follows:


	2025						2024
(dollars in millions)	Collins Aerospace	Pratt & Whitney	Raytheon	Other		Total	Collins Aerospace	Pratt & Whitney	Raytheon	Other		Total
Sales to the U.S. government (1)	$	$	$	$		$	$	$	$	$		$
Foreign military sales through the U.S. government
Foreign government direct commercial sales
Commercial aerospace and other commercial sales
Consolidated net sales
Inter-segment sales				()		—				()		—
Business segment sales	$	$	$	$	()	$	$	$	$	$	()	$

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

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$ $ $ $ $ $ $ $ $ Services Consolidated net sales Inter-segment sales ()— ()— Business segment sales$ $ $ $()$ $ $ $ $()$

Segment sales disaggregated by sales type for the six months ended June 30, 2025 and 2024 are as follows:


	2025						2024
(dollars in millions)	Collins Aerospace	Pratt & Whitney	Raytheon	Other		Total	Collins Aerospace	Pratt & Whitney	Raytheon	Other		Total
Products	$	$	$	$		$	$	$	$	$		$
Services
Consolidated net sales
Inter-segment sales				()		—				()		—
Business segment sales	$	$	$	$	()	$	$	$	$	$	()	$

Raytheon segment sales disaggregated by contract type for the quarters ended June 30, 2025 and 2024 are as follows:


(dollars in millions)	2025		2024
	Quarter Ended June 30,				Six Months Ended June 30,
(dollars in millions)	2025	19,721		$	41,887	$	39,026

The factors contributing to the change year-over-year in total net sales for the quarter and six months ended June 30, 2025 are as follows:


(dollars in millions)	Quarter Ended June 30, 2025		Six Months Ended June 30, 2025
Organic (1)	$	1,783	$	3,304
Acquisitions and divestitures, net	(30)		(522)
Other	107		79
Total change	$	1,860	$	2,861

(1) See “Results of Operations” for definition of organic. A reconciliation of this measure to reported U.S. GAAP amounts is provided in the table above.

Net sales increased $1.8 billion organically in the quarter ended June 30, 2025 compared to the quarter ended June 30, 2024 primarily due to higher organic net sales of $0.8 billion at Pratt & Whitney, $0.6 billion at Collins, and $0.4 billion at Raytheon.

Net sales increased $3.3 billion organically in the six months ended June 30, 2025 compared to the six months ended June 30, 2024 primarily due to higher organic net sales of $1.7 billion at Pratt & Whitney, $1.2 billion at Collins, and $0.6 billion at Raytheon.

The decrease in net sales due to Acquisitions and divestitures, net of $0.5 billion for the six months ended June 30, 2025 compared to the six months ended June 30, 2024 was primarily driven by the sale of our Cybersecurity, Intelligence and Services (CIS) business within our Raytheon segment completed in the first quarter of 2024.

See “Segment Review” below for further information by segment.


	Quarter Ended June 30,				% of Total Net Sales
(dollars in millions)	2025		2024		2025		2024
Net Sales
Products	$	15,551	$	14,562	72.1	%	73.8	%
Services	6,030		5,159		27.9	%	26.2	%
Total net sales	$	21,581	$	19,721	100	%	100	%

Refer to “Note 18: Segment Financial Data” within Item 1 of this Form 10-Q for the composition of external net sales by products and services by segment.

Net products sales increased $1.0 billion in the quarter ended June 30, 2025 compared to the quarter ended June 30, 2024 primarily due to increases in external products sales of $0.4 billion at Collins, $0.3 billion at Pratt & Whitney, and $0.3 billion at Raytheon.

Net services sales increased $0.9 billion in the quarter ended June 30, 2025 compared to the quarter ended June 30, 2024 primarily due to increases in external services sales of $0.6 billion at Pratt & Whitney, $0.2 billion at Raytheon, and $0.1 billion at Collins.

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	Six Months Ended June 30,				% of Total Net Sales
(dollars in millions)	2025		2024		2025		2024
Net Sales
Products	$	30,142	$	28,865	72.0	%	74.0	%
Services	11,745		10,161		28.0	%	26.0	%
Total net sales	$	41,887	$	39,026	100	%	100	%

Net products sales increased $1.3 billion in the six months ended June 30, 2025 compared to the six months ended June 30, 2024 primarily driven by increases in external products sales of $0.7 billion at Collins, $0.3 billion at Pratt & Whitney, and $0.3 billion at Raytheon.

Net services sales increased $1.6 billion in the six months ended June 30, 2025 compared to the six months ended June 30, 2024 primarily due to increases in external services sales of $1.4 billion at Pratt & Whitney and $0.3 billion at Collins, partially offset by a decrease in external services sales of $0.1 billion at Raytheon, primarily driven by the sale of the CIS business within our Raytheon segment completed in the first quarter of 2024.

Our sales to major customers were as follows:


	Quarter Ended June 30,				% of Total Net Sales
(dollars in millions)	2025		2024		2025		2024
Sales to the U.S. government (1)	$	8,273	$	8,052	38.3	%	40.8	%
Foreign military sales through the U.S. government	1,635		1,269		7.6	%	6.4	%
Foreign government direct commercial sales	1,433		1,171		6.6	%	5.9	%
Commercial aerospace and other commercial sales	10,240		9,229		47.4	%	46.8	%
Total net sales	$	21,581	$	19,721	100	%	100	%

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


	Six Months Ended June 30,				% of Total Net Sales
(dollars in millions)	2025		2024		2025		2024
Sales to the U.S. government (1)	$	16,005	$	16,179	38.2	%	41.5	%
Foreign military sales through the U.S. government	3,106		2,518		7.4	%	6.5	%
Foreign government direct commercial sales	2,785		2,379		6.6	%	6.1	%
Commercial aerospace and other commercial sales	19,991		17,950		47.7	%	46.0	%
Total net sales	$	41,887	$	39,026	100	%	100	%

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

Cost of Sales


	Quarter Ended June 30,						Six Months Ended June 30,
(dollars in millions)	2025			2024			2025			2024
Total cost of sales	$	17,205		$	16,141		$	33,395		$	31,885
Percentage of net sales	79.7		%	81.8		%	79.7		%	81.7		%

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The factors contributing to the change year-over-year in total cost of sales for the quarter and six months ended June 30, 2025 are as follows:


(dollars in millions)	Quarter Ended June 30, 2025		Six Months Ended June 30, 2025
Organic (1)	$	1,510	$	2,579
Acquisitions and divestitures, net	(23)		(471)
Restructuring	13		57
FAS/CAS operating adjustment	28		58
Acquisition accounting adjustments	(18)		(46)
Other	(446)		(667)
Total change	$	1,064	$	1,510

(1) See “Results of Operations” for definition of organic. A reconciliation of this measure to reported U.S. GAAP amounts is provided in the table above.

The organic increase in total cost of sales of $1.5 billion for the quarter ended June 30, 2025 compared to the quarter ended June 30, 2024, was primarily driven by the organic net sales increases at Pratt & Whitney, Collins, and Raytheon noted above.

Other cost of sales decreased $0.4 billion in the quarter ended June 30, 2025 compared to the quarter ended June 30, 2024, primarily driven by a $0.5 billion charge recorded in the second quarter of 2024 at Raytheon related to the termination of a fixed price development contract with a foreign customer (herein referred to as “Raytheon Contract Termination”).

The organic increase in total cost of sales of $2.6 billion for the six months ended June 30, 2025 compared to the six months ended June 30, 2024, was primarily driven by the organic net sales increases at Pratt & Whitney, Collins, and Raytheon noted above.

Other cost of sales decreased $0.7 billion in the six months ended June 30, 2025 compared to the six months ended June 30, 2024, primarily driven by a $0.5 billion charge recorded in the second quarter of 2024 at Raytheon related to the Raytheon Contract Termination and $0.2 billion of charges recorded in the first quarter of 2024 at Collins related to the recognition of unfavorable purchase commitments and an impairment of contract fulfillment costs that were no longer recoverable as a result of initiating alternative titanium sources.

The decrease in total cost of sales due to Acquisitions and divestitures, net of $0.5 billion for the six months ended June 30, 2025 compared to the six months ended June 30, 2024, was primarily driven by the sale of the CIS business within our Raytheon segment completed in the first quarter of 2024.

Restructuring actions relate to ongoing cost reduction efforts including workforce reductions and the consolidation of facilities.

For discussion on FAS/CAS operating adjustment, see the “FAS/CAS operating adjustment” subsection under the “Segment Review” section below. For discussion on Acquisition accounting adjustments, see the “Acquisition accounting adjustments” subsection under the “Segment Review” section below.


	Quarter Ended June 30,				% of Total Net Sales
(dollars in millions)	2025		2024		2025		2024
Cost of sales
Products	$	12,989	$	12,625	60.2	%	64.0	%
Services	4,216		3,516		19.5	%	17.8	%
Total cost of sales	$	17,205	$	16,141	79.7	%	81.8	%

Net products cost of sales increased $0.4 billion in the quarter ended June 30, 2025 compared to the quarter ended June 30, 2024, primarily driven by increases in external products cost of sales at Collins, Pratt & Whitney, and Raytheon, each driven by the products sales changes noted above. The increase was partially offset by a $0.5 billion charge recorded in the second quarter of 2024 at Raytheon related to the Raytheon Contract Termination.

Net services cost of sales increased $0.7 billion in the quarter ended June 30, 2025 compared to the quarter ended June 30, 2024, primarily due to increases in external services cost of sales at Pratt & Whitney, Raytheon, and Collins, driven by the services sales changes noted above.

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	Six Months Ended June 30,				% of Total Net Sales
(dollars in millions)	2025		2024		2025		2024
Cost of sales
Products	$	25,272	$	24,841	60.3	%	63.7	%
Services	8,123		7,044		19.4	%	18.0	%
Total cost of sales	$	33,395	$	31,885	79.7	%	81.7	%

Net products cost of sales increased $0.4 billion in the six months ended June 30, 2025 compared to the six months ended June 30, 2024, primarily driven by increases in external products cost of sales at Collins, Pratt & Whitney, and Raytheon, each driven by the products sales changes noted above. The increase was partially offset by a $0.5 billion charge recorded in the second quarter of 2024 at Raytheon related to the Raytheon Contract Termination and charges of $0.2 billion recorded in the first quarter of 2024 at Collins as a result of initiating alternative titanium sources.

Net services cost of sales increased $1.1 billion in the six months ended June 30, 2025 compared to the six months ended June 30, 2024, primarily due to increases in external services cost of sales at Pratt & Whitney and Collins, driven by the services sales changes noted above, partially offset by a decrease in external services cost of sales at Raytheon, primarily driven by the sale of the CIS business completed in the first quarter of 2024.

Research and Development


	Quarter Ended June 30,						Six Months Ended June 30,
(dollars in millions)	2025			2024			2025			2024
Company-funded	$	697		$	706		$	1,334		$	1,375
Percentage of net sales	3.2		%	3.6		%	3.2		%	3.5		%
Customer-funded (1)	$	1,247		$	1,186		$	2,447		$	2,422
Percentage of net sales	5.8		%	6.0		%	5.8		%	6.2		%

(1) Included in Cost of sales in our Condensed Consolidated Statement of Operations.

Research and development spending is subject to the variable nature of program development schedules and, therefore, year-over-year fluctuations in spending levels are expected.

Company-funded research and development expenses for the quarter and six months ended June 30, 2025 were relatively consistent with the quarter and six months ended June 30, 2024, respectively.

The increase in Customer-funded research and development expenses of $0.1 billion for the quarter ended June 30, 2025 compared to the quarter ended June 30, 2024 was primarily driven by higher expenses on various military and commercial programs at Collins and increased spending at Pratt & Whitney on military development programs. These increases were partially offset by lower customer-funded expenses at Raytheon primarily related to the Next Generation Interceptor (NGI) program.

Customer-funded research and development expenses for the six months ended June 30, 2025 were relatively consistent with the six months ended June 30, 2024.

Selling, General, and Administrative


	Quarter Ended June 30,						Six Months Ended June 30,
(dollars in millions)	2025			2024			2025			2024
Selling, general, and administrative	$	1,573		$	1,449		$	3,021		$	2,843
Percentage of net sales	7.3		%	7.3		%	7.2		%	7.3		%

The increase in Selling, general, and administrative expenses of $0.1 billion for the quarter ended June 30, 2025 compared to the quarter ended June 30, 2024 was primarily driven by a $0.1 billion charge at Pratt & Whitney related to a customer bankruptcy during the second quarter of 2025.

The increase in Selling, general, and administrative expenses of $0.2 billion for the six months ended June 30, 2025 compared to the six months ended June 30, 2024 was primarily driven by a $0.1 billion charge at Pratt & Whitney related to a customer bankruptcy during the second quarter of 2025 and $0.1 billion of higher restructuring costs related to ongoing cost reduction efforts driven by various workforce reductions primarily initiated in the first half of 2025 at Collins.

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We are continuously evaluating our cost structure and have implemented restructuring actions in an effort to keep our cost structure competitive. Therefore, the amounts reflected above include the beneficial impact of previous restructuring actions on Selling, general, and administrative expenses.

Other Income (Expense), Net


	Quarter Ended June 30,				Six Months Ended June 30,
(dollars in millions)	2025		2024		2025		2024
Other income (expense), net	$	40	$	(896)	$	44	$	(524)

Other income (expense), net includes equity earnings in unconsolidated entities, royalty income, foreign exchange gains and losses, and other ongoing and non-recurring items.

The increase in Other income (expense), net of $0.9 billion for the quarter ended June 30, 2025 compared to the quarter ended June 30, 2024 was primarily due to the absence of a $0.9 billion charge recorded in the second quarter of 2024 related to the Resolution of Certain Legal Matters.

The increase in Other income (expense), net of $0.6 billion for the six months ended June 30, 2025 compared to the six months ended June 30, 2024 was primarily due to the absence of a $0.9 billion charge recorded in the second quarter of 2024 related to the Resolution of Certain Legal Matters, partially offset by the absence of a $0.4 billion gain on sale of the CIS business net of transaction and other related costs, in the first quarter of 2024.

Operating Profit


	Quarter Ended June 30,						Six Months Ended June 30,
(dollars in millions)	2025			2024			2025			2024
Operating profit	$	2,146		$	529		$	4,181		$	2,399
Operating profit margin	9.9		%	2.7		%	10.0		%	6.1		%

The increase in Operating profit of $1.6 billion for the quarter ended June 30, 2025 compared to the quarter ended June 30, 2024 was primarily driven by the operating performance of our segments and the absence of charges recorded in the first half of 2024, including a $0.9 billion charge related to the Resolution of Certain Legal Matters and a $0.6 billion charge related to the Raytheon Contract Termination. These increases were partially offset by a $0.1 billion charge at Pratt & Whitney related to a customer bankruptcy during the second quarter of 2025.

The increase in Operating profit of $1.8 billion for the six months ended June 30, 2025 compared to the six months ended June 30, 2024 was primarily driven by an increase in the operating performance of our segments of $0.7 billion and the absence of charges recorded in the first half of 2024, including a $0.9 billion charge related to the Resolution of Certain Legal Matters, a $0.6 billion charge related to the Raytheon Contract Termination, and charges of $0.2 billion at Collins as a result of initiating alternative titanium sources. These items were partially offset by $0.1 billion of higher restructuring costs, a $0.1 billion charge at Pratt & Whitney related to a customer bankruptcy, and the absence of a $0.4 billion gain on sale of the CIS business, net of transaction and other related costs, in the first quarter of 2024.

Non-service Pension Income


	Quarter Ended June 30,				Six Months Ended June 30,
(dollars in millions)	2025		2024		2025		2024
Non-service pension income	$	(351)	$	(374)	$	(717)	$	(760)

The Non-service pension income in the quarter and six months ended June 30, 2025 was relatively consistent with the quarter and six months ended June 30, 2024, respectively.

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Interest Expense, Net


	Quarter Ended June 30,						Six Months Ended June 30,
(dollars in millions)	2025			2024			2025			2024
Interest expense	$	480		$	488		$	982		$	908
Interest income	(28)			(19)			(79)			(30)
Other non-operating expense (income) (1)	5			6			(3)			2
Interest expense, net	$	457		$	475		$	900		$	880
Average interest expense rate	4.5		%	4.6		%	4.5		%	4.6		%

(1) Primarily consists of the gains or losses on assets associated with certain of our nonqualified deferred compensation and employee benefit plans, the gains or losses on liabilities associated with certain of our nonqualified deferred compensation plans, and non-operating dividend income.

Interest expense, net for the quarter and six months ended June 30, 2025 was relatively consistent with the quarter and six months ended June 30, 2024, respectively.

The increase in Interest expense of $0.1 billion for the six months ended June 30, 2025 compared to the six months ended June 30, 2024 was primarily due to the reversal of interest accruals as a result of the conclusion of certain tax audits recorded during the first half of 2024, partially offset by lower net interest expense on long-term debt and short-term borrowings in the first half of 2025.

Income Taxes


	Quarter Ended June 30,				Six Months Ended June 30,
	2025		2024		2025		2024
Effective income tax rate	15.4	%	59.1	%	16.2	%	15.8	%

Our effective tax rate for the quarter and six months ended June 30, 2025 was 15.4% and 16.2%, respectively, as compared to 59.1% and 15.8% for the quarter and six months ended June 30, 2024.

The effective tax rate for the quarter ended June 30, 2025 includes a tax benefit of $33 million associated with the conclusion of the Internal Revenue Service (IRS) examination of RTX’s 2020 tax year. The effective tax rate for the quarter ended June 30, 2024 includes the impact of the $918 million charge associated with the Resolution of Certain Legal Matters where no related tax benefit was recorded in the quarter.

The effective tax rate for the six months ended June 30, 2025 and June 30, 2024 are relatively consistent. However, the effective tax rate for the six months ended June 30, 2025 includes the impact from the IRS examination noted above and the effective tax rate for the six months ended June 30, 2024 includes a $275 million tax benefit recognized from the conclusion of the examination phases of the RTX and Rockwell Collins audits, a $143 million tax cost associated with the sale of the CIS business, and the impact of the $918 million charge associated with the Resolution of Certain Legal Matters.

Net Income Attributable to Common Shareowners


	Quarter Ended June 30,				Six Months Ended June 30,
(dollars in millions, except per share amounts)	2025		2024		2025		2024
Net income attributable to common shareowners	$	1,657	$	111	$	3,192	$	1,820
Diluted earnings per share	$	1.22	$	0.08	$	2.36	$	1.36

Net income attributable to common shareowners for the quarter ended June 30, 2025 includes the following:

•acquisition accounting adjustments of $0.4 billion, net of tax, which had an unfavorable impact on diluted earnings per share (EPS) of $0.28.

Net income attributable to common shareowners for the quarter ended June 30, 2024 includes the following:

•a charge related to the Resolution of Certain Legal Matters of $0.9 billion, which had an unfavorable impact

on diluted EPS of $0.68;

• a charge of $0.4 billion, net of tax, related to the Raytheon Contract Termination, which had an unfavorable impact

on diluted EPS of $0.33; and

• acquisition accounting adjustments of $0.4 billion, net of tax, which had an unfavorable impact on diluted EPS of

$0.29.

Net income attributable to common shareowners for the six months ended June 30, 2025 includes the following:

•acquisition accounting adjustments of $0.7 billion, net of tax, which had an unfavorable impact on diluted EPS of $0.55;

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•restructuring charges of $0.1 billion, net of tax, which had an unfavorable impact on diluted EPS of $0.10.

Net income attributable to common shareowners for the six months ended June 30, 2024 includes the following:

•a charge related to the Resolution of Certain Legal Matters of $0.9 billion, which had an unfavorable impact

on diluted EPS of $0.69;

•acquisition accounting adjustments of $0.8 billion, net of tax, which had an unfavorable impact on diluted EPS of

$0.58;

•a charge of $0.4 billion, net of tax, related to the Raytheon Contract Termination, which had an unfavorable impact

on diluted EPS of $0.33;

•benefit recognized as a result of the conclusion of the examination phases of the RTX and Rockwell Collins tax audits

of $0.3 billion, net of tax, which had a favorable impact on diluted EPS of $0.21;

•a gain on sale of the CIS business, net of transaction and other related costs, of $0.2 billion, net of tax, which had a

favorable impact on diluted EPS of $0.18; and

•charges related to initiating alternative titanium sources at our Collins segment of $0.2 billion, which had an

unfavorable impact on diluted EPS of $0.13.

SEGMENT REVIEW

Our operations, for the periods presented herein, are classified into three principal segments: Collins, Pratt & Whitney, and Raytheon. Segments are generally based on the management structure of the businesses and the grouping of similar operations, based on capabilities and technologies, where each management organization has general operating autonomy over diversified products and services. Segment Total net sales and Operating profit include intercompany sales and profit, which are ultimately eliminated within Eliminations and other, which also includes certain smaller non-reportable segments. Segment Operating Profit excludes certain acquisition accounting adjustments, the FAS/CAS operating adjustment, and certain corporate expenses, as further discussed below.

Given the nature of our business, we believe that total net sales and operating profit (and the related operating profit margin percentage), which we disclose and discuss at the segment level, are most relevant to an understanding of management’s view of our segment performance, as described below.

We provide the organic change in Net sales and Operating profit for our segments as discussed above in “Results of Operations.” We believe that these non-GAAP measures are useful to investors because they provide transparency to the underlying performance of our business, which allows for better year-over-year comparability. For Pratt & Whitney only, Other also includes the transactional impact of foreign exchange hedging at Pratt & Whitney Canada due to its significance to Pratt & Whitney’s overall operating results.

Total Net Sales. Total net sales by segment were as follows:


	Quarter Ended June 30,				Six Months Ended June 30,
(dollars in millions)	2025		2024		2025		2024
Collins Aerospace	$	7,622	$	6,999	$	14,839	$	13,672
Pratt & Whitney	7,631		6,802		14,997		13,258
Raytheon	7,001		6,511		13,341		13,170
Total segment	22,254		20,312		43,177		40,100
Eliminations and other (1)	(673)		(591)		(1,290)		(1,074)
Consolidated	$	21,581	$	19,721	$	41,887	$	39,026

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

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Operating Profit. Operating profit by segment was as follows:


	Quarter Ended June 30,				Six Months Ended June 30,
(dollars in millions)	2025		2024		2025		2024
Collins Aerospace	$	1,173	$	1,118	$	2,261	$	1,967
Pratt & Whitney	492		542		1,072		954
Raytheon (2)	805		127		1,483		1,123
Total segment	2,470		1,787		4,816		4,044
Eliminations and other (1)	24		(36)		36		(41)
Corporate expenses and other unallocated items (3)	(47)		(930)		(85)		(1,026)
FAS/CAS operating adjustment	186		212		371		426
Acquisition accounting adjustments	(487)		(504)		(957)		(1,004)
Consolidated	$	2,146	$	529	$	4,181	$	2,399

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

(2) Operating Profit and Margin includes a $0.6 billion charge in the second quarter of 2024 related to the Raytheon Contract Termination and a $0.4 billion gain, net of transaction and other related costs, in the first quarter of 2024 related to the sale of our CIS business. See “Note 5: Changes in Contract Estimates at Completion” and “Note 2: Acquisitions and Dispositions,” respectively, within Item 1 of this Form 10-Q for additional information.

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

Included in segment Operating profit are EAC adjustments, which relate to changes in Operating profit and margin due to revisions to total estimated revenues and costs at completion. These changes may reflect improved or deteriorated operating performance, as well as changes in facts and assumptions related to contract options, contract modifications, incentive and award fees associated with program performance, customer activity levels, and other customer-directed changes. For a full description of our EAC process, refer to “Note 5: Changes in Contract Estimates at Completion” within Item 1 of this Form 10-Q. Given that we have thousands of individual contracts, and given the types and complexity of the assumptions and estimates we must make on an on-going basis, and the nature of the work required to be performed under our contracts, we have both favorable and unfavorable EAC adjustments in the ordinary course.

We had the following net EAC adjustments for the periods presented:


	Quarter Ended June 30,								Six Months Ended June 30,
(dollars in millions)	2025				2024				2025				2024
(31)			$	—			$	23			$	623

		(27)				(9)				55

(1) See “Segment Review” above for definition of organic. A reconciliation of these measures to reported U.S. GAAP amounts is provided in the table above.

The organic net sales increase of $0.6 billion in the quarter ended June 30, 2025 compared to the quarter ended June 30, 2024 primarily relates to higher commercial aerospace aftermarket sales of $0.3 billion, higher defense sales of $0.3 billion, and a slight increase in commercial aerospace OEM sales. The increase in commercial aerospace aftermarket sales was principally driven by continued growth in commercial air traffic, which has resulted in an increase in flight hours and increased volume. The increase in defense sales was primarily due to higher volume across multiple programs and platforms.

The organic operating profit increase of $0.1 billion in the quarter ended June 30, 2025 compared to the quarter ended June 30, 2024 was primarily due to higher defense operating profit of $0.1 billion, principally driven by higher volume and favorable mix. Commercial aerospace operating profit in the quarter ended June 30, 2025 was slightly higher as compared to the prior year as the benefit of higher commercial aftermarket volume was mostly offset by unfavorable OEM mix including the impact of higher tariffs.

Six Months Ended June 30, 2025 Compared with Six Months Ended June 30, 2024



	Factors Contributing to Total Change
(dollars in millions)	Organic (1)				Acquisitions / Divestitures, net				Restructuring Costs				Other		Total Change
Net sales	$	1,223			$	(63)			$	—			$	7	$	1,167

—			$	—			$	18			$	829

		7				(136)				(50)

(1) See “Segment Review” above for definition of organic. A reconciliation of these measures to reported U.S. GAAP amounts is provided in the table above.

The organic net sales increase of $0.8 billion in the quarter ended June 30, 2025, compared to the quarter ended June 30, 2024, reflects higher commercial aftermarket sales of $0.6 billion, primarily driven by higher volume in large commercial engines and higher commercial OEM sales of $0.2 billion driven by favorable mix within large commercial engines. Military sales were flat driven by lower F135 volume, including the impact of contract award timing.

The organic operating profit increase of $0.1 billion in the quarter ended June 30, 2025, compared to the quarter ended June 30, 2024 reflects higher commercial aerospace operating profit of $0.1 billion, driven by higher commercial aftermarket sales volume, and favorable large commercial OEM mix, partially offset by unfavorable aftermarket mix and the impact of higher tariffs. Organic operating profit also benefited from lower research and development expenses.

The decrease in other operating profit of $0.1 billion in the quarter ended June 30, 2025, compared to the quarter ended June 30, 2024, primarily relates to a $0.1 billion charge related to a customer bankruptcy during the second quarter of 2025.

Six Months Ended June 30, 2025 Compared with Six Months Ended June 30, 2024



	Factors Contributing to Total Change
(dollars in millions)	Organic (1)		Acquisitions / Divestitures, net		Restructuring Costs		Other		Total Change
Net sales	$	1,741	$	—	$	—	$	(2)	$	1,739

		3		590		678

12 209 360

(1) See “Segment Review” above for definition of organic. A reconciliation of this measure to the reported U.S. GAAP amount is provided in the table above.

The organic net sales increase of $0.6 billion in the six months ended June 30, 2025 compared to the six months ended June 30, 2024 was primarily due to higher net sales of $0.7 billion from land and air defense systems programs primarily driven by higher net sales on international Patriot programs, international NASAMS programs, and Lower Tier Air and Missile Defense Sensor (LTAMDS) programs, and higher net sales of $0.2 billion from naval power programs primarily due to higher net sales on ESSM programs and SPY-6 radar programs. These increases were partially offset by lower net sales of $0.3 billion driven by lower development program volume within air and space defense systems.

The organic operating profit increase of $0.2 billion in the six months ended June 30, 2025 compared to the six months ended June 30, 2024 was primarily due to a favorable change in mix and other performance of $0.1 billion and higher volume of approximately $40 million. The favorable change in mix and other performance was primarily driven by increased production on international Patriot programs. The increase in volume was principally driven by the higher net sales discussed above. In addition, favorable changes in net EAC adjustments were a modest contributor to the organic operating profit increase.

The decrease in net sales and operating profit due to acquisitions / divestitures, net in the six months ended June 30, 2025 compared to the six months ended June 30, 2024 primarily relates to the sale of the CIS business completed in the first quarter of 2024.

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The other net sales and operating profit increases of $0.1 billion and $0.2 billion, respectively, in the six months ended June 30, 2025 compared to the six months ended June 30, 2024 were primarily due to a charge related to the Raytheon Contract Termination initiated in the second quarter of 2024, with the operating profit decrease partially offset by a gain on sale of the CIS business, net of transaction and other related costs, in the first quarter of 2024.

Defense Backlog and Bookings – Backlog was $64 billion as of June 30, 2025 and $63 billion as of December 31, 2024. In addition to a number of smaller bookings, in the quarter ended June 30, 2025, Raytheon booked $1.1 billion for AIM-9X Sidewinder Block II short-range air-to-air missiles for the U.S. Navy and international customers, $901 million to provide Standard Missile-3 (SM-3) for the Missile Defense Agency (MDA), $647 million for a SPY-6 Hardware Production and Sustainment contract for the U.S. Navy, $581 million for Next Generation Jammer Mid-Band (NGJ-MB) for the U.S. Navy and the Royal Australian Air Force, $326 million for an advanced development program for the U.S. government, $325 million for an Advanced Tactical Electro-Optical Infrared (EO/IR) system for the U.S. Air Force, $322 million for SM-3 to the MDA and international customers, $314 million for various Multi-Spectral Targeting System-A (MTS-A) for the U.S. Navy and international customers, $300 million to provide ESSM to the U.S. Navy, and $1.8 billion on a number of classified contracts. In addition to these bookings, in the six months ended June 30, 2025, Raytheon booked $529 million to provide Patriot systems for the Netherlands, $251 million to provide ESSM for Japan, and $651 million on a number of classified contracts.

Corporate and Eliminations and other

Eliminations and other reflects the elimination of sales, other income, and operating profit transacted between segments, as well as the operating results of certain smaller operations.

Corporate expenses and other unallocated items consists of costs not considered part of management’s evaluation of reportable segment operating performance, including certain unallowable costs and reserves.


	Net Sales				Operating Profit
	Quarter Ended June 30,				Quarter Ended June 30,
(dollars in millions)	2025		2024		2025		2024
Eliminations and other	$	(673)	$	(591)	$	24	$	(36)
Corporate expenses and other unallocated items	—		—		(47)		(930)

The increase in eliminations and other net sales of $0.1 billion in the quarter ended June 30, 2025 compared to the quarter ended June 30, 2024, was primarily due to an increase in intersegment eliminations, principally driven by Collins.

The change in eliminations and other operating profit of $0.1 billion in the quarter ended June 30, 2025 compared to the quarter ended June 30, 2024, was primarily due to a gain related to the increase in fair value on an investment recognized in the second quarter of 2025.

The change in corporate expenses and other unallocated items of $0.9 billion in the quarter ended June 30, 2025 compared to the quarter ended June 30, 2024, was primarily due to a $0.9 billion charge recorded in the second quarter of 2024 related to the Resolution of Certain Legal Matters.


	Net Sales				Operating Profit
	Six months ended June 30,				Six months ended June 30,
(dollars in millions)	2025		2024		2025		2024
Eliminations and other	$	(1,290)	$	(1,074)	$	36	$	(41)
Corporate expenses and other unallocated items	—		—		(85)		(1,026)

The increase in eliminations and other sales of $0.2 billion in the six months ended June 30, 2025 compared to the six months ended June 30, 2024 was primarily due to an increase in intersegment eliminations, principally driven by Collins.

The change in eliminations and other operating profit of $0.1 billion in the six months ended June 30, 2025 compared to the six months ended June 30, 2024, was primarily due to a gain related to the increase in fair value on an investment recognized in the second quarter of 2025.

The change in Corporate expenses and other unallocated items of $0.9 billion in the six months ended June 30, 2025 compared to the six months ended June 30, 2024, was primarily due to a $0.9 billion charge recorded in the second quarter of 2024 related to the Resolution of Certain Legal Matters.

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FAS/CAS operating adjustment

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 FAS requirements of U.S. GAAP and our pension and PRB expense under U.S. government 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.

The components of the FAS/CAS operating adjustment were as follows:


	Quarter Ended June 30,				Six Months Ended June 30,
(dollars in millions)	2025		2024		2025		2024
FAS service cost (expense)	$	(30)	$	(34)	$	(60)	$	(69)
CAS expense	216		246		431		495
FAS/CAS operating adjustment	$	186	$	212	$	371	$	426

The FAS/CAS operating adjustments in the quarter and six months ended June 30, 2025 were relatively consistent with the quarter and six months ended June 30, 2025, respectively.

Acquisition accounting adjustments

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.

The components of Acquisition accounting adjustments were as follows:


	Quarter Ended June 30,				Six Months Ended June 30,
(dollars in millions)	2025		2024		2025		2024
Amortization of acquired intangibles	$	(498)	$	(516)	$	(978)	$	(1,022)
Amortization of property, plant, and equipment fair value adjustment	(8)		(11)		(17)		(23)
Amortization of customer contractual obligations related to acquired loss-making and below-market contracts	19		23		38		41
Acquisition accounting adjustments	$	(487)	$	(504)	$	(957)	$	(1,004)

Acquisition accounting adjustments related to acquisitions in each segment were as follows:


	Quarter Ended June 30,				Six Months Ended June 30,
(dollars in millions)	2025		2024		2025		2024
Collins Aerospace	$	(203)	$	(205)	$	(403)	$	(416)
Pratt & Whitney	(81)		(70)		(147)		(130)
Raytheon	(203)		(229)		(407)		(458)
Total segment	(487)		(504)		(957)		(1,004)
Eliminations and other	—		—		—		—
Acquisition accounting adjustments	$	(487)	$	(504)	$	(957)	$	(1,004)

Acquisition accounting adjustments in the quarter and six months ended June 30, 2025 were relatively consistent with the quarter and six months ended June 30, 2024.

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LIQUIDITY AND FINANCIAL CONDITION


(dollars in millions)	June 30, 2025			December 31, 2024
Cash and cash equivalents	$	4,782		$	5,578
Total debt	41,978			41,261
Total equity	64,206			61,923
Total capitalization (total debt plus total equity)	106,184			103,184
Total debt to total capitalization	40		%	40		%

We assess our liquidity in terms of our ability to generate cash to fund our operating, investing, and financing activities and the timing of such activities. Our principal source of liquidity is cash flows from operating activities. In addition to operating cash flows, other significant factors that affect our overall management of liquidity include: capital expenditures, customer financing requirements, investments in and divestitures of businesses, dividends, common stock repurchases, pension funding, access to the commercial paper markets, adequacy of available bank lines of credit, redemptions of debt, and the ability to attract long-term capital at satisfactory terms.

At June 30, 2025, we had cash and cash equivalents of $4.8 billion, of which approximately 48% was held by RTX’s foreign subsidiaries. We manage our worldwide cash requirements by reviewing available funds among the many subsidiaries through which we conduct our business and the cost effectiveness with which those funds can be accessed. The Company intends to repatriate certain undistributed earnings of its international subsidiaries that have been previously taxed in the U.S. Taxes associated with the future remittance of these earnings have been recorded. For the remainder of the Company’s undistributed international earnings, unless tax effective to repatriate, RTX will continue to permanently reinvest these earnings.

Our ability to access global debt markets and the related cost of these borrowings depends on the strength of our credit rating and market conditions. In March 2025, our Moody’s Investors Service outlook improved from Baa1/negative to Baa1/stable. In June 2025, our S&P Global rating was affirmed and our outlook was revised from BBB+/negative to BBB+/stable. Though the Company expects to continue having adequate access to funds, declines in our credit ratings or Company outlook could result in higher borrowing costs.

As of June 30, 2025, 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 June 30, 2025, there were no borrowings outstanding under this agreement.

From time to time, we use commercial paper borrowings for general corporate purposes, including the funding of potential acquisitions, pension contributions, debt refinancing, dividend payments, and repurchases of our common stock. The commercial paper notes have original maturities of not more than 364 days from the date of issuance. As of June 30, 2025, 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 June 30, 2025, we had $1.4 billion of commercial paper borrowings outstanding. At June 30, 2025, short-term commercial paper borrowings outstanding had a weighted-average interest rate of 4.7%.

We made the following repayment of long-term debt during the six months ended June 30, 2025:


Date	Description of Notes	Aggregate Principal Balance (in millions)
May 7, 2025	3 Month SOFR plus 1.225% term loan due 2025	$	750

We have an existing universal shelf registration statement, which we filed with the SEC on September 22, 2022, for an indeterminate amount of debt and equity securities for future issuance, subject to our internal limitations on the amount of debt to be issued under this shelf registration statement.

We believe our cash on hand and future operating cash flows will be sufficient to meet our future operating cash needs. Further, we continue to have access to the commercial paper markets and our existing credit facilities, and our ability to obtain debt or equity financing, as well as the availability under committed credit lines, provides additional potential sources of liquidity should they be required or appropriate.

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Cash Flow - Operating Activities


	Six Months Ended June 30,
(dollars in millions)	2025		2024
Net cash flows provided by operating activities	$	1,763	$	3,075

Included within Net income for the six months ended June 30, 2024, was a $0.9 billion charge related to the Resolution of Certain Legal Matters and a $0.4 billion, net of tax, charge related to the Raytheon Contract Termination, both of which had no effect on cash flow in that period. These charges also had the effect of increasing Other accrued liabilities by $1.3 billion in the six months ended June 30, 2024.

Excluding the impact of these charges, the $1.3 billion decrease in cash flows provided by operating activities in the six months ended June 30, 2025 compared to in the six months ended June 30, 2024, was primarily driven by an increase in accounts receivable, including an increase in collaborator receivables, due to timing of collections, and higher tax payments in the six months ended June 30, 2025. These changes were partially offset by higher net income after adjustments to reconcile to net cash provided by operating activities.

The Company enters into various factoring agreements with third-parties to sell certain of its receivables, primarily related to customer facilitated programs. The activity in these agreements is generally dependent on underlying delivery volumes within our commercial OEM programs. Factoring activity resulted in a $0.2 billion decrease in cash provided by operating activities during the six months ended June 30, 2025 compared to during the six months ended June 30, 2024.

We made tax payments, net of refunds of $0.7 billion and $0.2 billion in the six months ended June 30, 2025 and 2024, respectively.

While the timing of cash flows are subject to a number of variables, for the Powder Metal Matter we estimate the accrual for expected customer compensation to be utilized consistent with the timing of execution of the fleet management plan, the period of increased aircraft on ground levels, and contractual terms with customers. We currently estimate a full year 2025 cash impact related to the Powder Metal Matter of approximately $1.1 billion to $1.3 billion, which includes the impact of cash paid, customer credits applied, and the timing of partner recovery.

Cash Flow - Investing Activities


	Six Months Ended June 30,
(dollars in millions)	2025		2024
Net cash flows used in investing activities	$	(1,187)	$	(40)

Our investing activities primarily include capital expenditures, cash investments in customer financing assets, investments in and dispositions of businesses, payments related to our collaboration intangible assets and contractual rights to provide product on new aircraft platforms, and settlements of derivative contracts not designated as hedging instruments.

The $1.1 billion change in cash flows used in investing activities in the six months ended June 30, 2025, compared to the six months ended June 30, 2024, was primarily related to the sale of the CIS business during the quarter ended March 31, 2024 for proceeds of approximately $1.3 billion in cash.

During the six months ended June 30, 2025 and 2024, other intangible assets increased by $0.2 billion and $0.3 billion, respectively, primarily related to collaboration payments made under our 2012 agreement to acquire Rolls-Royce’s collaboration interests in International Aero Engines AG (IAE) and exclusivity payments made on contractual commitments included within intangible assets.

Cash Flow - Financing Activities


	Six Months Ended June 30,
(dollars in millions)	2025		2024
Net cash flows used in financing activities	$	(1,409)	$	(3,591)

Our financing activities primarily include the issuance and repayment of commercial paper and other short-term and long-term debt, payment of dividends, and stock repurchases.

The $2.2 billion change in cash flows used in financing activities in the six months ended June 30, 2025, compared to the six months ended June 30, 2024, was primarily driven by an increase in issuance of commercial paper of $1.4 billion and lower 2025 long-term debt repayments of $0.9 billion. Refer to “Note 9: Borrowings and Lines of Credit” within Item 1 of this Form 10-Q for additional information on debt repayments.

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At June 30, 2025, management had remaining authority to repurchase approximately $0.6 billion of our common stock under the October 21, 2023 share repurchase program. Under the 2023 program, shares may be purchased on the open market, in privately negotiated transactions, under accelerated share repurchase programs, and under plans complying with Rules 10b5-1 and 10b-18 under the Securities Exchange Act of 1934, as amended. We may also reacquire shares outside of the program in connection with the surrender of shares to cover taxes on vesting of restricted stock. Our ability to repurchase shares is subject to applicable law.

Our share repurchases, which include shares reacquired outside of our share repurchase program, were as follows:


	Six Months Ended June 30,
	2025			2024
(dollars in millions; shares in thousands)	$		Shares	$		Shares
Shares of common stock repurchased (1)	$	50	396	$	100	1,045

(1) Amounts relate to share repurchases that were settled in cash during the period.

On May 1, 2025, the Board of Directors declared a dividend of $0.68 per share payable June 12, 2025 to shareowners of record at the close of business on May 23, 2025. On June 27, 2025, the Board of Directors declared a dividend of $0.68 per share payable September 4, 2025 to shareowners of record at the close of business on August 15, 2025.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

There has been no significant change in our exposure to market risk during the six months ended June 30, 2025. For discussion of our exposure to market risk, refer to Part II, Item 7A, “Quantitative and Qualitative Disclosures About Market Risk,” contained in our 2024 Form 10-K.

Item 4. Controls and Procedures

As required by Rule 13a-15 under the Securities Exchange Act of 1934, as amended, we carried out an evaluation under the supervision and with the participation of our management, including the Chairman and Chief Executive Officer (CEO), the Executive Vice President and Chief Financial Officer (CFO), and the Corporate Vice President and Controller (Controller), of the effectiveness of the design and operation of our disclosure controls and procedures as of June 30, 2025. There are inherent limitations to the effectiveness of any system of disclosure controls and procedures, including the possibility of human error and the circumvention or overriding of the controls and procedures. Accordingly, even effective disclosure controls and procedures can only provide reasonable assurance of achieving their control objectives. Based upon our evaluation, our CEO, CFO, and Controller concluded that, as of June 30, 2025, our disclosure controls and procedures were effective to provide reasonable assurance that information required to be disclosed by us in the reports that we file or submit under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized, and reported within the time periods specified in the applicable rules and forms, and that it is accumulated and communicated to our management, including our CEO, CFO, and Controller, as appropriate, to allow timely decisions regarding required disclosure.

There were no changes in our internal control over financial reporting during the quarter ended June 30, 2025 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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Cautionary Note Concerning Factors That May Affect Future Results

This Form 10-Q contains statements which, to the extent they are not statements of historical or present fact, constitute “forward-looking statements” under the securities laws. From time to time, oral or written forward-looking statements may also be included in other information released to the public. These forward-looking statements are intended to provide management’s current expectations or plans for our future operating and financial performance, based on assumptions currently believed to be valid, and are not statements of historical fact. Forward-looking statements can be identified by the use of words such as “believe,” “expect,” “expectations,” “plans,” “strategy,” “prospects,” “estimate,” “project,” “target,” “commit,” “commitment,” “anticipate,” “will,” “should,” “see,” “guidance,” “outlook,” “goals,” “objectives,” “confident,” “on track,” and other words of similar meaning. Forward-looking statements may include, among other things, statements relating to future sales, earnings, cash flow, results of operations, uses of cash, share repurchases, tax payments and rates, research and development spending, cost savings, other measures of financial performance, potential future plans, strategies or transactions, credit ratings and net indebtedness, the Powder Metal Matter and related matters and activities, including without limitation other engine models that may be impacted, targets and commitments (including for share repurchases or otherwise), and other statements which are not solely historical facts. All forward-looking statements involve risks, uncertainties and other factors that may cause actual results to differ materially from those expressed or implied in the forward-looking statements. For those statements, we claim the protection of the safe harbor for forward-looking statements contained in the U.S. Private Securities Litigation Reform Act of 1995. Such risks, uncertainties and other factors include, without limitation:

•the effect of changes in economic, capital market, and political conditions in the U.S. and globally, such as from the global sanctions and export controls with respect to Russia, and any changes therein, and including changes related to financial market conditions, banking industry disruptions, fluctuations in commodity prices or supply (including energy supply), inflation, interest rates and foreign currency exchange rates, disruptions in global supply chain and labor markets, levels of consumer and business confidence, the imposition and duration of tariffs (including counter tariffs) and other trade measures and the inability of RTX to mitigate U.S. tariffs and countermeasures including by exemptions, exclusions, operational changes or otherwise, and geopolitical risks, including, without limitation, in the Middle East and Ukraine;

•risks associated with U.S. government sales, including changes or shifts in defense spending due to budgetary constraints, spending cuts resulting from sequestration, a continuing resolution, a government shutdown, the debt ceiling or measures taken to avoid default, or otherwise, and uncertain funding of programs;

•risks relating to our performance on our contracts and programs, including our ability to control costs, the mix of our contracts and programs, and our inability to pass some or all of our costs on fixed price contracts to the customer, and risks related to our dependence on U.S. government approvals for international contracts;

•challenges in the development, certification, production, delivery, support, and performance of RTX advanced technologies and new products and services and the realization of the anticipated benefits (including our expected returns under customer contracts), as well as the challenges of operating in RTX’s highly-competitive industries both domestically and abroad;

•risks relating to RTX’s reliance on U.S. and non-U.S. suppliers and commodity markets, including the effect of sanctions, tariffs (and counter tariffs) and other trade measures and the duration thereof, delays, and disruptions in the delivery of materials and services to RTX or its suppliers and cost increases, and the inability of RTX to mitigate U.S. tariffs and countermeasures including by exemptions, exclusions, operational changes or otherwise;

•risks relating to RTX’s international operations from, among other things, changes in trade policies and implementation of sanctions, foreign currency fluctuations, economic conditions, political factors, sales methods, U.S. or local government regulations, and our dependence on U.S. government approvals for international contracts;

•the condition of the aerospace industry;

•potential changes in U.S. government policy positions, including changes in Department of Defense (DoD) policies or priorities;

•the ability of RTX to attract, train, qualify, and retain qualified personnel and maintain its culture and high ethical standards, and the ability of our personnel to continue to operate our facilities and businesses around the world;

•the scope, nature, timing, and challenges of managing acquisitions, investments, divestitures, and other transactions, including the realization of synergies and opportunities for growth and innovation, the assumption of liabilities, and other risks and incurrence of related costs and expenses, and risks related to completion of announced divestitures;

•compliance with legal, environmental, regulatory, and other requirements, including, among other things, obtaining regulatory approvals for new technologies and products, and export and import requirements such as International Traffic in Arms Regulations (ITAR) and Export Administration Regulations (EAR), anti-bribery and anticorruption requirements, such as the Foreign Corrupt Practices Act (FCPA), industrial cooperation agreement obligations, and procurement and other regulations in the U.S. and other countries in which RTX and its businesses operate;

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•the outcome of pending, threatened, and future legal proceedings, investigations, and other contingencies, including those related to U.S. government audits and disputes and the potential for suspension or debarment of U.S. government contracting or export privileges as a result thereof;

•risks relating to the Deferred Prosecution Agreements, Securities and Exchange Commission (SEC) Administrative Order, the Consent Agreement; and the related investigations by the SEC and the Department of Justice (DOJ);

•factors that could impact RTX’s ability to engage in desirable capital-raising or strategic transactions, including its credit rating, capital structure, levels of indebtedness, and related obligations, capital expenditures, and research and development spending, and capital deployment strategy including with respect to share repurchases, and the availability of credit, borrowing costs, credit market conditions, and other factors;

•uncertainties associated with the timing and scope of future repurchases by RTX of its common stock, or declarations of cash dividends, which may be discontinued, accelerated, suspended, or delayed at any time due to various factors, including market conditions and the level of other investing activities and uses of cash;

•risks relating to realizing expected benefits from, incurring costs for, and successfully managing strategic initiatives such as cost reduction, restructuring, digital transformation, and other operational initiatives;

•risks of additional tax exposures due to new tax legislation or other developments in the U.S. and other countries in which RTX and its businesses operate;

•risks relating to addressing the Powder Metal Matter, including, without limitation, the number and expected timing of shop visits, inspection results and scope of work to be performed, turnaround time, availability of parts, available capacity at overhaul facilities, outcomes of negotiations with impacted customers, and risks related to other engine models that may be impacted by the Powder Metal Matter, and in each case the timing and costs relating thereto, as well as other issues that could impact RTX product performance, including quality, reliability, or durability;

•changes in production volumes of one or more of our significant customers as a result of business, labor, or other challenges, and the resulting effect on its or their demand for our products and services;

•risks relating to an RTX product safety failure, quality issue, or other failure affecting RTX’s or its customers’ or suppliers’ products or systems;

•risks relating to cybersecurity, including cyber-attacks on RTX’s information technology (IT) infrastructure, products, suppliers, customers and partners, and cybersecurity-related regulations;

•risks relating to insufficient indemnity or insurance coverage;

•risks relating to artificial intelligence;

•risks relating to our intellectual property and certain third-party intellectual property;

•threats to RTX facilities and personnel, or those of its suppliers or customers, as well as other events outside of RTX’s control that may affect RTX or its suppliers or customers, including without limitation public health crises, damaging weather, or other acts of nature;

•the effect of changes in accounting estimates for our programs on our financial results;

•the effect of changes in pension and other postretirement plan estimates and assumptions and contributions;

•risks relating to an impairment of goodwill and other intangible assets;

•the effects of climate change and changing or new climate-related regulations, customer and market demands, products and technologies; and

•the intended qualification of (1) the Raytheon merger as a tax-free reorganization and (2) the separation transactions and other internal restructurings as tax-free to us (formerly known as United Technologies Corporation (UTC)) and former UTC shareowners, in each case, for U.S. federal income tax purposes.

In addition, this Form 10-Q includes important information as to risks, uncertainties, and other factors that may cause actual results to differ materially from those expressed or implied in the forward-looking statements. See “Note 16: Commitments and Contingencies” within Item 1 of this Form 10-Q and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” under the headings “Business Overview,” “Results of Operations,” and “Liquidity and Financial Condition,” within Item 2 of this Form 10-Q. Additional important information as to these factors is included in our Annual Report on Form 10-K in the sections titled Item 1, “Business” under the headings “General,” “Business Segments,” and “Other Matters Relating to Our Business,” Item 1A, “Risk Factors,” Item 3, “Legal Proceedings,” and Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” under the headings “Business Overview,” “Results of Operations,” “Liquidity and Financial Condition,” “Critical Accounting Estimates,” and “Government Matters”. The forward-looking statements speak only as of the date of this report or, in the case of any document incorporated by reference, the date of that document. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by applicable law. Additional information as to factors that may cause actual results to differ materially from those expressed or implied in the forward-looking statements is disclosed from time to time in our other filings with the SEC.

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PART II – OTHER INFORMATION

Item 1. Legal Proceedings

See “Note 16: Commitments and Contingencies” within Item 1 of this Form 10-Q for a discussion regarding additional material legal proceedings.

Except as otherwise noted above, there have been no material developments in legal proceedings. For previously reported information about legal proceedings refer to Part I, Item 3, “Legal Proceedings,” of our 2024 Annual Report on Form 10-K.

Item 1A. Risk Factors

You should carefully review and consider the information regarding certain factors which could materially affect our business, financial condition, or future results set forth under Item 1A in our 2024 Annual Report on Form 10-K (2024 Form 10-K). There have been no material changes from the factors disclosed in our 2024 Form 10-K, although we may disclose changes to such factors or disclose additional factors from time to time in our future filings with the Securities and Exchange Commission (SEC).

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Issuer Purchases of Equity Securities

The following table provides information about our purchases of equity securities that are registered by us pursuant to Section 12 of the Exchange Act during the quarter ended June 30, 2025.


2025	Total Number of Shares Purchased (000’s)	Average Price Paid per Share (dollars)		Total Number of Shares Purchased as Part of a Publicly Announced Program (000’s)	Approximate Dollar Value of Shares that May Yet Be Purchased Under the Program (dollars in millions)
April 1 - April 30	—	$	—	—	$	615
May 1 - May 31	—	—		—	615
June 1 - June 30	—	—		—	615
Total	—	$	—	—

On October 21, 2023, our Board of Directors authorized a share repurchase program for up to $11 billion of our common stock, replacing the previous program announced on December 12, 2022. Under the 2023 program, shares may be purchased on the open market, in privately negotiated transactions, under accelerated share repurchase programs, and under plans complying with Rules 10b5-1 and 10b-18 under the Securities Exchange Act of 1934, as amended.

We may also reacquire shares outside of the program in connection with the surrender of shares to cover taxes on vesting of restricted stock. Our ability to repurchase shares is subject to applicable law. During the quarter ended June 30, 2025, we did not repurchase shares outside of the program.

Item 5. Other Information

During the quarter ended June 30, 2025, director or “officer” (as defined in Rule 16a-1(f)) of the Company adopted or terminated a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement,” as each term is defined in Item 408(a) of Regulation S-K.

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Item 6. Exhibits


Exhibit Number						Exhibit Description

15						Letter re: unaudited interim financial information.*

31.1						Rule 13a-14(a)/15d-14(a) Certification.*

31.2						Rule 13a-14(a)/15d-14(a) Certification.*

31.3						Rule 13a-14(a)/15d-14(a) Certification.*

32						Section 1350 Certifications.*

101.INS						Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.*

101.SCH						Inline XBRL Taxonomy Extension Schema Document.*

101.CAL						Inline XBRL Taxonomy Extension Calculation Linkbase Document.*

101.DEF						Inline XBRL Taxonomy Extension Definition Linkbase Document.*

101.LAB						Inline XBRL Taxonomy Extension Label Linkbase Document.*

101.PRE						Inline XBRL Taxonomy Extension Presentation Linkbase Document.*

104						Cover Page Interactive Data File - the cover page XBRL tags are embedded within the Inline XBRL document.

Notes to Exhibits List:

* Submitted electronically herewith.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


		RTX CORPORATION (Registrant)

Dated:	July 22, 2025	By:	/s/ NEIL G. MITCHILL, JR.
			Neil G. Mitchill, Jr.
			Executive Vice President and Chief Financial Officer

			(on behalf of the Registrant and as the Registrant’s Principal Financial Officer)

Dated:	July 22, 2025	By:	/s/ AMY L. JOHNSON
			Amy L. Johnson
			Corporate Vice President and Controller

			(on behalf of the Registrant and as the Registrant’s Principal Accounting Officer)

RTX Corp - Quarter Report: 2025 June (Form 10-Q)

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