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 September 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  ☐.

1

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 October 20, 2020 there were 1,518,716,426 shares of Common Stock outstanding.

2

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 September 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.

3

RAYTHEON TECHNOLOGIES CORPORATION

AND SUBSIDIARIES

CONTENTS OF QUARTERLY REPORT ON FORM 10-Q

Quarter Ended September 30, 2020

	Page
PART I – FINANCIAL INFORMATION	5
Item 1. Unaudited Financial Statements:	5
Condensed Consolidated Statement of Operations for the quarters and nine months ended September 30, 2020 and 2019	5
Condensed Consolidated Statement of Comprehensive Income (Loss) for the quarters and nine months ended September 30, 2020 and 2019	6
Condensed Consolidated Balance Sheet at September 30, 2020 and December 31, 2019	7
Condensed Consolidated Statement of Cash Flows for the nine months ended September 30, 2020 and 2019	8
Condensed Consolidated Statement of Changes in Equity for the quarters and nine months ended September 30, 2020 and 2019	9
Notes to Condensed Consolidated Financial Statements	10
Report of Independent Registered Public Accounting Firm	53
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	54
Item 3. Quantitative and Qualitative Disclosures About Market Risk	86
Item 4. Controls and Procedures	87
PART II – OTHER INFORMATION	89
Item 1. Legal Proceedings	89
Item 1A. Risk Factors	90
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	91
Item 6. Exhibits	91
SIGNATURES	92

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.

4

PART I – FINANCIAL INFORMATION

Item 1.    Financial Statements

RAYTHEON TECHNOLOGIES CORPORATION

AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS

(Unaudited) 

	Quarter Ended September 30,				Nine Months Ended September 30,
(dollars in millions, except per share amounts)	2020		2019		2020		2019
Net Sales:
Product sales	$	11,469	$	8,211	$	30,402	$	24,635
Service sales	3,278		3,162		9,766		9,020
Total Net Sales	14,747		11,373		40,168		33,655
Costs and Expenses:
Cost of products sold	10,322		6,498		26,571		19,897
Cost of services sold	2,682		2,011		7,219		5,585
Research and development	642		592		1,872		1,784
Selling, general and administrative	1,401		902		4,189		2,672
Total Costs and Expenses	15,047		10,003		39,851		29,938
Goodwill impairment	—		—		(3,183)		—
Other income, net	734		60		835		241
Operating profit (loss)	434		1,430		(2,031)		3,958
Non-operating expense (income), net
Non-service pension (income) expense	(253)		(289)		(658)		(681)
Interest expense, net	350		402		1,017		1,174
Total non-operating expense (income), net	97		113		359		493
Income (loss) from continuing operations before income taxes	337		1,317		(2,390)		3,465
Income tax expense	152		306		753		465
Net income (loss) from continuing operations	185		1,011		(3,143)		3,000
Less: Noncontrolling interest in subsidiaries’ earnings from continuing operations	34		53		112		147
Income (loss) from continuing operations attributable to common shareowners	151		958		(3,255)		2,853
Discontinued operations (Note 3):
Income (loss) from discontinued operations	13		1,071		(219)		3,185
Income tax (benefit) expense from discontinued operations	(100)		825		137		1,504
Income (loss) from discontinued operations, net of tax	113		246		(356)		1,681
Less: Noncontrolling interest in subsidiaries’ earnings from discontinued operations	—		56		43		140
Income (loss) from discontinued operations attributable to common shareowners	113		190		(399)		1,541
Net income (loss) attributable to common shareowners	$	264	$	1,148	$	(3,654)	$	4,394
Earnings (Loss) Per Share attributable to common shareowners - Basic:
Income (loss) from continuing operations	$	0.10	$	1.12	$	(2.48)	$	3.34
Income (loss) from discontinued operations	0.08		0.22		(0.30)		1.80
Net income (loss) attributable to common shareowners	$	0.17	$	1.34	$	(2.79)	$	5.14
Earnings (Loss) Per Share attributable to common shareowners - Diluted:
Income (loss) from continuing operations	$	0.10	$	1.11	$	(2.48)	$	3.31
Income (loss) from discontinued operations	0.08		0.22		(0.30)		1.78
Net income (loss) attributable to common shareowners	$	0.17	$	1.33	$	(2.79)	$	5.09

See accompanying Notes to Condensed Consolidated Financial Statements

5

RAYTHEON TECHNOLOGIES CORPORATION

AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (LOSS)

(Unaudited)

	Quarter Ended September 30,				Nine Months Ended September 30,
(dollars in millions)	2020		2019		2020		2019
Net income (loss) from continuing and discontinued operations	$	298	$	1,257	$	(3,499)	$	4,681
Other comprehensive income (loss), before tax:
Foreign currency translation adjustments	605		(433)		(175)		(336)
Pension and postretirement benefit plans adjustments	83		(461)		(2,093)		(388)
Change in unrealized cash flow hedging	154		(133)		(5)		(85)
Other comprehensive income (loss), before tax	842		(1,027)		(2,273)		(809)
Income tax benefit (expense) related to items of other comprehensive income (loss)	(54)		84		535		54
Other comprehensive income (loss), net of tax	788		(943)		(1,738)		(755)
Comprehensive income (loss)	1,086		314		(5,237)		3,926
Less: Comprehensive income attributable to noncontrolling interest	(34)		(91)		(155)		(273)
Comprehensive income (loss) attributable to common shareowners	$	1,052	$	223	$	(5,392)	$	3,653

See accompanying Notes to Condensed Consolidated Financial Statements

6

RAYTHEON TECHNOLOGIES CORPORATION

AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEET

(Unaudited)

(dollars in millions)	September 30, 2020		December 31, 2019
Assets
Current Assets
Cash and cash equivalents	$	10,001	$	4,937
Accounts receivable, net	10,115		8,743
Contract assets	9,617		4,462
Inventory, net	9,843		9,047
Assets related to discontinued operations	56		31,823
Other assets, current	3,879		2,565
Total Current Assets	43,511		61,577
Customer financing assets	3,314		3,463
Future income tax benefits	699		884
Fixed assets	25,600		20,077
Accumulated depreciation	(10,870)		(9,755)
Fixed assets, net	14,730		10,322
Operating lease right-of-use assets	2,027		1,252
Goodwill	53,524		36,609
Intangible assets, net	41,564		24,473
Other assets	3,030		1,035
Total Assets	$	162,399	$	139,615
Liabilities, Redeemable Noncontrolling Interests and Equity
Current Liabilities
Short-term borrowings	$	228	$	2,293
Accounts payable	8,143		7,816
Accrued liabilities	13,558		9,770
Contract liabilities	12,208		9,014
Liabilities related to discontinued operations	118		14,443
Long-term debt currently due	1,307		3,258
Total Current Liabilities	35,562		46,594
Long-term debt	31,246		37,701
Operating lease liabilities, non-current	1,651		1,093
Future pension and postretirement benefit obligations	14,688		2,487
Other long-term liabilities	9,142		7,414
Total Liabilities	92,289		95,289
Commitments and contingencies (Note 17)
Redeemable noncontrolling interests	30		95
Shareowners’ Equity:
Common Stock	36,833		23,019
Treasury Stock	(10,407)		(32,626)
Retained earnings	50,017		61,594
Unearned ESOP shares	(52)		(64)
Accumulated other comprehensive loss	(8,012)		(10,149)
Total Shareowners’ Equity	68,379		41,774
Noncontrolling interest	1,701		2,457
Total Equity	70,080		44,231
Total Liabilities, Redeemable Noncontrolling Interests and Equity	$	162,399	$	139,615

See accompanying Notes to Condensed Consolidated Financial Statements

7

RAYTHEON TECHNOLOGIES CORPORATION

AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (Unaudited)

	Nine Months Ended September 30,
(dollars in millions)	2020		2019
Operating Activities:
Net income (loss) from continuing operations	$	(3,143)	$	3,000
Adjustments to reconcile net income (loss) from continuing operations to net cash flows provided by operating activities:
Depreciation and amortization	3,003		2,022
Deferred income tax provision	(34)		19
Stock compensation cost	253		192
Net periodic pension and other postretirement income	(325)		(471)
Goodwill impairment loss	3,183		—
Change in:
Accounts receivable	567		(38)
Contract assets	699		(702)
Inventory	(111)		(1,256)
Other current assets	(381)		(640)
Accounts payable and accrued liabilities	(866)		1,170
Contract liabilities	354		853
Global pension contributions	(64)		(41)
Canadian government settlement	—		(38)
Other operating activities, net	(171)		426
Net cash flows provided by operating activities from continuing operations	2,964		4,496
Investing Activities:
Capital expenditures	(1,172)		(1,122)
Dispositions of businesses (Note 2)	2,575		134
Cash acquired in Raytheon Merger	3,208		—
Increase in customer financing assets, net	(138)		(445)
Increase in collaboration intangible assets	(136)		(259)
(Payments) receipts from settlements of derivative contracts, net	(115)		160
Other investing activities, net	(70)		(200)
Net cash flows provided by (used in) investing activities from continuing operations	4,152