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, 2021

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  ☐.

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 June 30, 2021 there were 1,507,878,091 shares of Common Stock outstanding.

2

RAYTHEON TECHNOLOGIES CORPORATION

AND SUBSIDIARIES

CONTENTS OF QUARTERLY REPORT ON FORM 10-Q

Quarter Ended June 30, 2021

 

	Page
PART I – FINANCIAL INFORMATION	4
Item 1. Unaudited Financial Statements:	4
Condensed Consolidated Statement of Operations for the quarters and six months ended June 30, 2021 and 2020	4
Condensed Consolidated Statement of Comprehensive Income (Loss) for the quarters and six months ended June 30, 2021 and 2020	5
Condensed Consolidated Balance Sheet at June 30, 2021 and December 31, 2020	6
Condensed Consolidated Statement of Cash Flows for the six months ended June 30, 2021 and 2020	7
Condensed Consolidated Statement of Changes in Equity for the quarters and six months ended June 30, 2021 and 2020	8
Notes to Condensed Consolidated Financial Statements	9
Report of Independent Registered Public Accounting Firm	42
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	43
Item 3. Quantitative and Qualitative Disclosures About Market Risk	67
Item 4. Controls and Procedures	68
PART II – OTHER INFORMATION	70
Item 1. Legal Proceedings	70
Item 1A. Risk Factors	70
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	71
Item 6. Exhibits	71
SIGNATURES	73

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.

3

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)	2021		2020		2021		2020
Net Sales:
Product sales	$	12,179	$	10,768	$	23,843	$	18,933
Service sales	3,701		3,293		7,288		6,488
Total Net Sales	15,880		14,061		31,131		25,421
Costs and Expenses:
Cost of sales - products	9,997		9,620		19,971		16,249
Cost of sales - services	2,658		2,594		5,221		4,537
Research and development	657		695		1,246		1,230
Selling, general and administrative	1,368		1,811		2,588		2,788
Total Costs and Expenses	14,680		14,720		29,026		24,804
Goodwill impairment	—		(3,183)		—		(3,183)
Other income, net	82		82		190		101
Operating profit (loss)	1,282		(3,760)		2,295		(2,465)
Non-operating expense (income), net
Non-service pension benefit	(490)		(237)		(981)		(405)
Interest expense, net	342		335		688		667
Total non-operating expense (income), net	(148)		98		(293)		262
Income (loss) from continuing operations before income taxes	1,430		(3,858)		2,588		(2,727)
Income tax expense (benefit)	342		(38)		687		601
Net income (loss) from continuing operations	1,088		(3,820)		1,901		(3,328)
Less: Noncontrolling interest in subsidiaries’ earnings from continuing operations	48		24		89		78
Income (loss) from continuing operations attributable to common shareowners	1,040		(3,844)		1,812		(3,406)
Discontinued operations (Note 3):
Loss from discontinued operations, before tax	(10)		(56)		(30)		(232)
Income tax (benefit) expense from discontinued operations	(2)		(65)		(3)		237
Net income (loss) from discontinued operations	(8)		9		(27)		(469)
Less: Noncontrolling interest in subsidiaries’ earnings from discontinued operations	—		—		—		43
Income (loss) from discontinued operations attributable to common shareowners	(8)		9		(27)		(512)
Net income (loss) attributable to common shareowners	$	1,032	$	(3,835)	$	1,785	$	(3,918)
Earnings (loss) Per Share attributable to common shareowners - Basic:
Income (loss) from continuing operations	$	0.69	$	(2.56)	$	1.20	$	(2.78)
Income (loss) from discontinued operations	—		0.01		(0.02)		(0.42)
Net income (loss) attributable to common shareowners	$	0.69	$	(2.55)	$	1.18	$	(3.20)
Earnings (loss) Per Share attributable to common shareowners - Diluted:
Income (loss) from continuing operations	$	0.69	$	(2.56)	$	1.20	$	(2.78)
Income (loss) from discontinued operations	(0.01)		0.01		(0.02)		(0.42)
Net income (loss) attributable to common shareowners	$	0.68	$	(2.55)	$	1.18	$	(3.20)

See accompanying Notes to Condensed Consolidated Financial Statements

4

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)	2021		2020		2021		2020
Net income (loss) from continuing and discontinued operations	$	1,080	$	(3,811)	$	1,874	$	(3,797)
Other comprehensive income (loss), before tax:
Foreign currency translation adjustments	258		665		82		(780)
Pension and postretirement benefit plans adjustments	50		(2,286)		104		(2,176)
Change in unrealized cash flow hedging	88		215		28		(159)
Other comprehensive income (loss), before tax	396		(1,406)		214		(3,115)
Income tax (expense) benefit related to items of other comprehensive income (loss)	(30)		519		(35)		589
Other comprehensive income (loss), net of tax	366		(887)		179		(2,526)
Comprehensive income (loss)	1,446		(4,698)		2,053		(6,323)
Less: Comprehensive income attributable to noncontrolling interest	48		30		89		121
Comprehensive income (loss) attributable to common shareowners	$	1,398	$	(4,728)	$	1,964	$	(6,444)

See accompanying Notes to Condensed Consolidated Financial Statements

5

RAYTHEON TECHNOLOGIES CORPORATION

AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEET

(Unaudited)

(dollars in millions)	June 30, 2021		December 31, 2020
Assets
Current Assets
Cash and cash equivalents	$	8,051	$	8,802
Accounts receivable, net	8,912		9,254
Contract assets	10,485		9,931
Inventory, net	9,548		9,411
Other assets, current	3,883		5,978
Total Current Assets	40,879		43,376
Customer financing assets	3,063		3,144
Fixed assets	26,959		26,346
Accumulated depreciation	(12,294)		(11,384)
Fixed assets, net	14,665		14,962
Operating lease right-of-use assets	1,900		1,880
Goodwill	54,394		54,285
Intangible assets, net	39,523		40,539
Other assets	4,414		3,967
Total Assets	$	158,838	$	162,153
Liabilities, Redeemable Noncontrolling Interest and Equity
Current Liabilities
Short-term borrowings	$	196	$	247
Accounts payable	8,043		8,639
Accrued employee compensation	2,233		3,006
Other accrued liabilities	10,361		10,517
Contract liabilities	12,591		12,889
Long-term debt currently due	1,370		550
Total Current Liabilities	34,794		35,848
Long-term debt	29,916		31,026
Operating lease liabilities, non-current	1,563		1,516
Future pension and postretirement benefit obligations	9,929		10,342
Other long-term liabilities	9,885		9,537
Total Liabilities	86,087		88,269
Commitments and contingencies (Note 17)
Redeemable noncontrolling interest	30		32
Shareowners’ Equity:
Common Stock	37,183		36,930
Treasury Stock	(11,424)		(10,407)
Retained earnings	48,954		49,423
Unearned ESOP shares	(43)		(49)
Accumulated other comprehensive loss	(3,555)		(3,734)
Total Shareowners’ Equity	71,115		72,163
Noncontrolling interest	1,606		1,689
Total Equity	72,721		73,852
Total Liabilities, Redeemable Noncontrolling Interest and Equity	$	158,838	$	162,153

See accompanying Notes to Condensed Consolidated Financial Statements

6

RAYTHEON TECHNOLOGIES CORPORATION

AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

(Unaudited)

	Six Months Ended June 30,
(dollars in millions)	2021		2020
Operating Activities:
Net income (loss) from continuing operations	$	1,901	$	(3,328)
Adjustments to reconcile net income (loss) from continuing operations to net cash flows provided by operating activities:
Depreciation and amortization	2,255		1,839
Deferred income tax provision	175		118
Stock compensation cost	227		135
Net periodic pension and other postretirement income	(715)		(223)
Goodwill impairment charge	—		3,183
Change in:
Accounts receivable	293		1,163
Contract assets	(557)		376
Inventory	(133)		(550)
Other current assets	(258)		(180)
Accounts payable and accrued liabilities	(733)		(1,395)
Contract liabilities	(45)		201
Global pension contributions	(25)		(42)
Other operating activities, net	(336)		45
Net cash flows provided by operating activities from continuing operations	2,049		1,342
Investing Activities:
Capital expenditures	(747)		(783)
Investments in businesses	(6)		—
Dispositions of businesses, net of cash transferred (Note 2)	1,074		234
Cash acquired in Raytheon Merger	—		3,208
Increase in customer financing assets, net	(102)		(129)
Increase in collaboration intangible assets	(60)		(106)
Receipts (payments) from settlements of derivative contracts, net	50		(286)
Other investing activities, net	30		(82)
Net cash flows provided by investing activities from continuing operations	239		2,056
Financing Activities:
Issuance of long-term debt	—		1,984
Distribution from discontinued operations	—		17,207
Repayment of long-term debt	(307)		(15,038)
Decrease in short-term borrowings, net	(51)		(2,045)
Proceeds from Common Stock issued under employee stock plans	2		10
Dividends paid on Common Stock	(1,461)		(1,338)
Repurchase of Common Stock	(1,007)		(47)
Net transfers to discontinued operations	(24)		(1,966)
Other financing activities, net	(271)		(99)
Net cash flows used in financing activities from continuing operations	(3,119)		(1,332)
Discontinued Operations:
Net cash used in operating activities	(24)		(661)
Net cash used in investing activities	—		(241)
Net cash provided by (used in) financing activities	24		(1,481)
Net cash used in discontinued operations	—		(2,383)
Effect of foreign exchange rate changes on cash and cash equivalents from continuing operations	79		(10)
Effect of foreign exchange rate changes on cash and cash equivalents from discontinued operations	—		(76)
Net decrease in cash, cash equivalents and restricted cash	(752)		(403)
Cash, cash equivalents and restricted cash, beginning of period	8,832		4,961
Cash, cash equivalents and restricted cash within assets related to discontinued operations, beginning of period	—		2,459
Cash, cash equivalents and restricted cash, end of period	8,080		7,017
Less: Restricted cash, included in Other assets	29		42
Cash and cash equivalents, end of period	$	8,051	$	6,975

See accompanying Notes to Condensed Consolidated Financial Statements

7

RAYTHEON TECHNOLOGIES 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)	2021		2020		2021		2020
Equity beginning balance	$	73,308	$	41,935	$	73,852	$	44,231
Common Stock
Beginning balance	36,997		23,099		36,930		23,019
Common Stock plans activity	186		140		253		221
Common Stock issued for Raytheon Company outstanding common stock and equity awards	—		10,897		—		10,897
Adjustment to Common Stock for the Otis Distribution	—		2,598		—		2,598
Sale of subsidiary shares from noncontrolling interest, net	—		1		—		—
Ending balance	37,183		36,735		37,183		36,735
Treasury Stock
Beginning balance	(10,780)		(32,665)		(10,407)		(32,626)
Common Stock plans activity	—		(2)		—		2
Common Stock repurchased	(645)		—		(1,020)		(43)
Common Stock issued for Raytheon Company outstanding common stock and equity awards	—		22,269		—		22,269
Other	1		—		3		—
Ending balance	(11,424)		(10,398)		(11,424)		(10,398)
Retained Earnings
Beginning balance	49,460		60,826		49,423		61,594
Net income (loss)	1,032		(3,835)		1,785		(3,918)
Adjustment to retained earnings for the Carrier Distribution	—		(5,805)		—		(5,805)
Dividends on Common Stock	(1,510)		(1,427)		(2,215)		(2,041)
Dividends on ESOP Common Stock	(26)		(10)		(37)		(27)
Redeemable noncontrolling interest fair value adjustment	—		(1)		—		—
Other, including the adoption impact of ASU 2016-13 (Note 21)	(2)		(4)		(2)		(59)
Ending balance	48,954		49,744		48,954		49,744
Unearned ESOP Shares
Beginning balance	(46)		(61)		(49)		(64)