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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON D.C. 20549

 ____________________________________ 

FORM 10-Q

____________________________________ 

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2020

OR

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                  to                 

Commission file number 001-00812

____________________________________ 

RAYTHEON TECHNOLOGIES CORPORATION

____________________________________ 

Delaware	06-0570975
(State or other jurisdiction of incorporation)	(I.R.S. Employer Identification No.)

870 Winter Street, Waltham, Massachusetts 02451

(Address of principal executive offices, including zip code)

(781) 522-3000

(Registrant's telephone number, including area code)

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock ($1 par value)	RTX	New York Stock Exchange
(CUSIP 75513E 101)
2.150% Notes due 2030	RTX 30	New York Stock Exchange
(CUSIP 75513E AB7)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  ☒.    No  ☐.

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  ☒.    No  ☐.

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Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer	☒	Accelerated Filer	☐
Non-accelerated Filer	☐	Smaller Reporting Company	☐
		Emerging Growth Company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.   ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ☐.    No  ☒.

At July 21, 2020 there were 1,527,655,238 shares of Common Stock outstanding.

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Explanatory Note

On April 3, 2020, United Technologies Corporation (UTC) combined its aerospace businesses with Raytheon Company (Raytheon) in a merger of equals transaction with Raytheon surviving as a wholly owned subsidiary of UTC (the Raytheon Merger). Upon the closing of the Raytheon Merger, the combined company name changed to “Raytheon Technologies Corporation” (Raytheon Technologies, RTC or the Company.) Prior to the Raytheon Merger, UTC separated its Carrier Global Corporation (Carrier) and Otis Worldwide Corporation (Otis) businesses from its aerospace businesses (the Separation Transactions) on April 3, 2020, pursuant to the Separation and Distribution Agreement entered into between UTC, Carrier and Otis on April 2, 2020.

The financial statements of the Company contained herein are as of and for the period ended June 30, 2020, and reflect the results of the Company after giving effect to the Separation Transactions and the Raytheon Merger. Historical operations of Otis and Carrier prior to April 3, 2020 are presented as discontinued operations, while the Raytheon Company results are included in the Company’s results effective April 3, 2020.

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RAYTHEON TECHNOLOGIES CORPORATION

AND SUBSIDIARIES

CONTENTS OF QUARTERLY REPORT ON FORM 10-Q

Quarter Ended June 30, 2020

	Page
PART I – FINANCIAL INFORMATION	5
Item 1. Unaudited Financial Statements:	5
Condensed Consolidated Statement of Operations for the quarters and six months ended June 30, 2020 and 2019	5
Condensed Consolidated Statement of Comprehensive Income (Loss) for the quarters and six months ended June 30, 2020 and 2019	6
Condensed Consolidated Balance Sheet at June 30, 2020 and December 31, 2019	7
Condensed Consolidated Statement of Cash Flows for the six months ended June 30, 2020 and 2019	8
Condensed Consolidated Statement of Changes in Equity for the quarters and six months ended June 30, 2020 and 2019	9
Notes to Condensed Consolidated Financial Statements	10
Report of Independent Registered Public Accounting Firm	52
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	53
Item 3. Quantitative and Qualitative Disclosures About Market Risk	83
Item 4. Controls and Procedures	83
PART II – OTHER INFORMATION	86
Item 1. Legal Proceedings	86
Item 1A. Risk Factors	87
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	88
Item 6. Exhibits	89
SIGNATURES	91

Raytheon Technologies Corporation and its subsidiaries’ names, abbreviations thereof, logos, and product and service designators are all either the registered or unregistered trademarks or tradenames of Raytheon Technologies Corporation and its subsidiaries. Names, abbreviations of names, logos, and products and service designators of other companies are either the registered or unregistered trademarks or tradenames of their respective owners. References to internet web sites in this Form 10-Q are provided for convenience only. Information available through these web sites is not incorporated by reference into this Form 10-Q.

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PART I – FINANCIAL INFORMATION

Item 1. Financial Statements

RAYTHEON TECHNOLOGIES CORPORATION

AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS

(Unaudited) 

	Quarter Ended June 30,				Six Months Ended June 30,
(dollars in millions, except per share amounts)	2020		2019		2020		2019
Net Sales:
Product sales	$	10,768	$	8,389	$	18,933	$	16,424
Service sales	3,293		2,940		6,488		5,858
Total Net Sales	14,061		11,329		25,421		22,282
Costs and Expenses:
Cost of products sold	9,620		6,736		16,249		13,399
Cost of services sold	2,594		1,818		4,537		3,574
Research and development	695		605		1,230		1,192
Selling, general and administrative	1,811		902		2,788		1,770
Total Costs and Expenses	14,720		10,061		24,804		19,935
Goodwill impairment	(3,183)		—		(3,183)		—
Other income (expense), net	82		118		101		181
Operating profit (loss)	(3,760)		1,386		(2,465)		2,528
Non-operating (income) expense, net
Non-service pension (benefit)	(237)		(200)		(405)		(392)
Interest expense, net	335		352		667		772
Total non-operating (income) expense, net	98		152		262		380
Income (loss) from continuing operations before income taxes	(3,858)		1,234		(2,727)		2,148
Income tax expense (benefit)	(38)		6		601		159
Net income (loss) from continuing operations	(3,820)		1,228		(3,328)		1,989
Less: Noncontrolling interest in subsidiaries’ earnings from continuing operations	24		45		78		94
Income (loss) from continuing operations attributable to common shareowners	(3,844)		1,183		(3,406)		1,895
Discontinued operations (Note 3):
Income (loss) from discontinued operations	(56)		1,206		(232)		2,114
Income tax expense (benefit) from discontinued operations	(65)		435		237		679
Income (loss) from discontinued operations, net of tax	9		771		(469)		1,435
Less: Noncontrolling interest in subsidiaries’ earnings from discontinued operations	—		54		43		84
Income (loss) from discontinued operations attributable to common shareowners	9		717		(512)		1,351
Net income (loss) attributable to common shareowners	$	(3,835)	$	1,900	$	(3,918)	$	3,246
(Loss) Earnings Per Share attributable to common shareowners - Basic:
Income (loss) from continuing operations attributable to common shareowners	$	(2.56)	$	1.38	$	(2.78)	$	2.22
Income (loss) from discontinued operations	0.01		0.84		(0.42)		1.58
Net income (loss) attributable to common shareowners	$	(2.55)	$	2.22	$	(3.20)	$	3.80
(Loss) Earnings Per Share attributable to common shareowners - Diluted:
Income (loss) from continuing operations attributable to common shareowners	$	(2.56)	$	1.37	$	(2.78)	$	2.20
Income (loss) from discontinued operations	0.01		0.83		(0.42)		1.56
Net income (loss) attributable to common shareowners	$	(2.55)	$	2.20	$	(3.20)	$	3.76

See accompanying Notes to Condensed Consolidated Financial Statements

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RAYTHEON TECHNOLOGIES CORPORATION

AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (LOSS)

(Unaudited)

	Quarter Ended June 30,				Six Months Ended June 30,
(dollars in millions)	2020		2019		2020		2019
Net income (loss)	$	(3,811)	$	1,999	$	(3,797)	$	3,424
Other comprehensive income (loss), before tax:
Foreign currency translation adjustments	665		(437)		(780)		97
Pension and postretirement benefit plans adjustments	(2,286)		30		(2,176)		73
Change in unrealized cash flow hedging	215		37		(159)		48
Other comprehensive income (loss), before tax	(1,406)		(370)		(3,115)		218
Income tax benefit (expense) related to items of other comprehensive income (loss)	519		(4)		589		(30)
Other comprehensive income (loss), net of tax	(887)		(374)		(2,526)		188
Comprehensive income (loss)	(4,698)		1,625		(6,323)		3,612
Less: Comprehensive income attributable to noncontrolling interest	(30)		(100)		(121)		(182)
Comprehensive income (loss) attributable to common shareowners	$	(4,728)	$	1,525	$	(6,444)	$	3,430

See accompanying Notes to Condensed Consolidated Financial Statements

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RAYTHEON TECHNOLOGIES CORPORATION

AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEET

(Unaudited)

(dollars in millions)	June 30, 2020		December 31, 2019
Assets
Current Assets
Cash and cash equivalents	$	6,975	$	4,937
Accounts receivable, net	9,496		8,743
Contract assets	9,943		4,462
Inventory, net	10,256		9,047
Assets related to discontinued operations	135		31,823
Other assets, current	5,469		2,565
Total Current Assets	42,274		61,577
Customer financing assets	3,363		3,463
Future income tax benefits	732		884
Fixed assets	25,118		20,077
Accumulated depreciation	(10,313)		(9,755)
Fixed assets, net	14,805		10,322
Operating lease right-of-use assets	2,102		1,252
Goodwill	53,269		36,609
Intangible assets, net	42,003		24,473
Other assets	2,969		1,035
Total Assets	$	161,517	$	139,615
Liabilities, Redeemable Noncontrolling Interests and Equity
Current Liabilities
Short-term borrowings	$	243	$	2,293
Accounts payable	7,182		7,816
Accrued liabilities	14,253		9,770
Contract liabilities	11,997		9,014
Liabilities related to discontinued operations	319		14,443
Long-term debt currently due	1,297		3,258
Total Current Liabilities	35,291		46,594
Long-term debt	31,210		37,701
Operating lease liabilities, non-current	1,723		1,093
Future pension and postretirement benefit obligations	14,972		2,487
Other long-term liabilities	9,394		7,414
Total Liabilities	92,590		95,289
Commitments and contingencies (Note 17)
Redeemable noncontrolling interests	35		95
Shareowners’ Equity:
Common Stock	36,735		23,019
Treasury Stock	(10,398)		(32,626)
Retained earnings	49,744		61,594
Unearned ESOP shares	(56)		(64)
Accumulated other comprehensive loss	(8,800)		(10,149)
Total Shareowners’ Equity	67,225		41,774
Noncontrolling interest	1,667		2,457
Total Equity	68,892		44,231
Total Liabilities, Redeemable Noncontrolling Interests and Equity	$	161,517	$	139,615

See accompanying Notes to Condensed Consolidated Financial Statements

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RAYTHEON TECHNOLOGIES CORPORATION

AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (Unaudited)

	Six Months Ended June 30,
(dollars in millions)	2020		2019
Operating Activities:
Net income (loss) from continuing operations	$	(3,328)	$	1,989