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, 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

(Exact name of registrant as specified in its charter)

____________________________________ 

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

870 Winter Street,	Waltham,	Massachusetts	02451
(Address of principal executive offices)			(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 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit 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 September 30, 2021 there were 1,496,777,742 shares of Common Stock outstanding.

2

RAYTHEON TECHNOLOGIES CORPORATION

AND SUBSIDIARIES

CONTENTS OF QUARTERLY REPORT ON FORM 10-Q

Quarter Ended September 30, 2021

 

	Page
PART I – FINANCIAL INFORMATION	4
Item 1. Unaudited Financial Statements:	4
Condensed Consolidated Statement of Operations for the quarters and nine months ended September 30, 2021 and 2020	4
Condensed Consolidated Statement of Comprehensive Income (Loss) for the quarters and nine months ended September 30, 2021 and 2020	5
Condensed Consolidated Balance Sheet at September 30, 2021 and December 31, 2020	6
Condensed Consolidated Statement of Cash Flows for the nine months ended September 30, 2021 and 2020	7
Condensed Consolidated Statement of Changes in Equity for the quarters and nine months ended September 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	69
Item 4. Controls and Procedures	69
PART II – OTHER INFORMATION	71
Item 1. Legal Proceedings	71
Item 1A. Risk Factors	71
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	72
Item 6. Exhibits	72
SIGNATURES	73

Raytheon Technologies Corporation and its subsidiaries’ names, abbreviations thereof, logos, and products and services 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 services 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 September 30,				Nine Months Ended September 30,
(dollars in millions, except per share amounts)	2021		2020		2021		2020
Net Sales:
Products sales	$	12,331	$	11,469	$	36,174	$	30,402
Services sales	3,882		3,278		11,170		9,766
Total Net Sales	16,213		14,747		47,344		40,168
Costs and Expenses:
Cost of sales - products	10,296		10,322		30,267		26,571
Cost of sales - services	2,793		2,682		8,014		7,219
Research and development	676		642		1,922		1,872
Selling, general and administrative	1,229		1,401		3,817		4,189
Total Costs and Expenses	14,994		15,047		44,020		39,851
Goodwill impairment	—		—		—		(3,183)
Other income, net	124		734		314		835
Operating profit (loss)	1,343		434		3,638		(2,031)
Non-operating expense (income), net
Non-service pension benefit	(491)		(253)		(1,472)		(658)
Interest expense, net	358		350		1,046		1,017
Total non-operating expense (income), net	(133)		97		(426)		359
Income (loss) from continuing operations before income taxes	1,476		337		4,064		(2,390)
Income tax expense	3		152		690		753
Net income (loss) from continuing operations	1,473		185		3,374		(3,143)
Less: Noncontrolling interest in subsidiaries’ earnings from continuing operations	73		34		162		112
Income (loss) from continuing operations attributable to common shareowners	1,400		151		3,212		(3,255)
Discontinued operations (Note 3):
Income (loss) from discontinued operations, before tax	(1)		13		(31)		(219)
Income tax expense (benefit) from discontinued operations	6		(100)		3		137
Net income (loss) from discontinued operations	(7)		113		(34)		(356)
Less: Noncontrolling interest in subsidiaries’ earnings from discontinued operations	—		—		—		43
Income (loss) from discontinued operations attributable to common shareowners	(7)		113		(34)		(399)
Net income (loss) attributable to common shareowners	$	1,393	$	264	$	3,178	$	(3,654)
Earnings (loss) Per Share attributable to common shareowners - Basic:
Income (loss) from continuing operations	$	0.93	$	0.10	$	2.13	$	(2.48)
Income (loss) from discontinued operations	—		0.08		(0.02)		(0.30)
Net income (loss) attributable to common shareowners	$	0.93	$	0.17	$	2.11	$	(2.79)
Earnings (loss) Per Share attributable to common shareowners - Diluted:
Income (loss) from continuing operations	$	0.93	$	0.10	$	2.13	$	(2.48)
Income (loss) from discontinued operations	—		0.08		(0.03)		(0.30)
Net income (loss) attributable to common shareowners	$	0.93	$	0.17	$	2.10	$	(2.79)

See accompanying Notes to Condensed Consolidated Financial Statements

4

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)	2021		2020		2021		2020
Net income (loss) from continuing and discontinued operations	$	1,466	$	298	$	3,340	$	(3,499)
Other comprehensive income (loss), before tax:
Foreign currency translation adjustments	(321)		605		(239)		(175)
Pension and postretirement benefit plans adjustments	86		83		190		(2,093)
Change in unrealized cash flow hedging	(167)		154		(139)		(5)
Other comprehensive income (loss), before tax	(402)		842		(188)		(2,273)
Income tax (expense) benefit related to items of other comprehensive income (loss)	18		(54)		(17)		535
Other comprehensive income (loss), net of tax	(384)		788		(205)		(1,738)
Comprehensive income (loss)	1,082		1,086		3,135		(5,237)
Less: Comprehensive income attributable to noncontrolling interest	73		34		162		155
Comprehensive income (loss) attributable to common shareowners	$	1,009	$	1,052	$	2,973	$	(5,392)

See accompanying Notes to Condensed Consolidated Financial Statements

5

RAYTHEON TECHNOLOGIES CORPORATION

AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEET

(Unaudited)

(dollars in millions)	September 30, 2021		December 31, 2020
Assets
Current Assets
Cash and cash equivalents	$	7,476	$	8,802
Accounts receivable, net	9,538		9,254
Contract assets	10,899		9,931
Inventory, net	9,426		9,411
Other assets, current	4,653		5,978
Total Current Assets	41,992		43,376
Customer financing assets	2,960		3,144
Fixed assets	27,116		26,346
Accumulated depreciation	(12,599)		(11,384)
Fixed assets, net	14,517		14,962
Operating lease right-of-use assets	1,876		1,880
Goodwill	53,789		54,285
Intangible assets, net	38,842		40,539
Other assets	4,796		3,967
Total Assets	$	158,772	$	162,153
Liabilities, Redeemable Noncontrolling Interest and Equity
Current Liabilities
Short-term borrowings	$	206	$	247
Accounts payable	8,667		8,639
Accrued employee compensation	2,756		3,006
Other accrued liabilities	9,685		10,517
Contract liabilities	12,543		12,889
Long-term debt currently due	274		550
Total Current Liabilities	34,131		35,848
Long-term debt	30,768		31,026
Operating lease liabilities, non-current	1,541		1,516
Future pension and postretirement benefit obligations	9,742		10,342
Other long-term liabilities	9,621		9,537
Total Liabilities	85,803		88,269
Commitments and contingencies (Note 17)
Redeemable noncontrolling interest	32		32
Shareowners’ Equity:
Common Stock	37,343		36,930
Treasury Stock	(12,398)		(10,407)
Retained earnings	50,343		49,423
Unearned ESOP shares	(41)		(49)
Accumulated other comprehensive loss	(3,939)		(3,734)
Total Shareowners’ Equity	71,308		72,163
Noncontrolling interest	1,629		1,689
Total Equity	72,937		73,852
Total Liabilities, Redeemable Noncontrolling Interest and Equity	$	158,772	$	162,153

See accompanying Notes to Condensed Consolidated Financial Statements

6

RAYTHEON TECHNOLOGIES CORPORATION

AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

(Unaudited)

	Nine Months Ended September 30,
(dollars in millions)	2021		2020
Operating Activities:
Net income (loss) from continuing operations	$	3,374	$	(3,143)
Adjustments to reconcile net income (loss) from continuing operations to net cash flows provided by operating activities:
Depreciation and amortization	3,413		3,003
Deferred income tax provision	(142)		(34)
Stock compensation cost	343		253
Net periodic pension and other postretirement income	(1,073)		(325)
Goodwill impairment charge	—		3,183
Change in:
Accounts receivable	(397)		567
Contract assets	(1,117)		699
Inventory	(57)		(111)
Other current assets	(275)		(381)
Accounts payable and accrued liabilities	425		(866)
Contract liabilities	83		354
Global pension contributions	(38)		(64)
Other operating activities, net	(558)		(171)
Net cash flows provided by operating activities from continuing operations	3,981		2,964
Investing Activities:
Capital expenditures	(1,180)		(1,172)
Investments in businesses (Note 2)	(6)		—
Dispositions of businesses, net of cash transferred (Note 2)	1,074		2,575
Cash acquired in Raytheon Merger (Note 2)	—		3,208
Customer financing assets receipts (payments), net	24		(138)
Increase in collaboration intangible assets	(138)		(136)
Receipts (payments) from settlements of derivative contracts, net	42		(115)
Other investing activities, net	45		(70)
Net cash flows (used in) provided by investing activities from continuing operations	(139)		4,152
Financing Activities:
Issuance of long-term debt	1,981		1,999
Distribution from discontinued operations	—		17,207
Repayment of long-term debt	(2,547)		(15,052)
Decrease in short-term borrowings, net	(41)		(2,060)
Proceeds from Common Stock issued under employee stock plans	3		6
Dividends paid on Common Stock	(2,212)		(2,026)
Repurchase of Common Stock	(2,000)		(47)
Net transfers to discontinued operations	(27)		(1,998)
Other financing activities, net	(339)		(85)
Net cash flows used in financing activities from continuing operations	(5,182)		(2,056)
Discontinued Operations:
Net cash used in operating activities	(27)		(693)
Net cash used in investing activities	—		(241)
Net cash provided by (used in) financing activities	27		(1,449)
Net cash used in discontinued operations	—		(2,383)
Effect of foreign exchange rate changes on cash and cash equivalents from continuing operations	10		11
Effect of foreign exchange rate changes on cash and cash equivalents from discontinued operations	—		(76)
Net (decrease) increase in cash, cash equivalents and restricted cash	(1,330)		2,612
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	7,502		10,032
Less: Restricted cash, included in Other assets	26		31
Cash and cash equivalents, end of period	$	7,476	$	10,001

See accompanying Notes to Condensed Consolidated Financial Statements

7

RAYTHEON TECHNOLOGIES CORPORATION

AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

(Unaudited)

	Quarter Ended September 30,				Nine Months Ended September 30,
(dollars in millions, except per share amounts; shares in thousands)	2021		2020		2021		2020
Equity beginning balance	$	72,721	$	68,892	$	73,852	$	44,231
Common Stock
Beginning balance	37,183		36,735		36,930		23,019
Common Stock plans activity	160		99		413		320
Common Stock issued for Raytheon Company outstanding common stock and equity awards	—		—		—		10,897
Adjustment to Common Stock for the Otis Distribution	—		—		—		2,598
Sale of subsidiary shares from noncontrolling interest, net	—		(1)		—		(1)
Ending balance	37,343		36,833		37,343		36,833
Treasury Stock
Beginning balance	(11,424)		(10,398)		(10,407)		(32,626)
Common Stock plans activity	—		—		—		2
Common Stock repurchased	(982)		—		(2,002)		(43)
Common Stock issued for Raytheon Company outstanding common stock and equity awards	—		—		—		22,269
Other	8		(9)		11		(9)
Ending balance	(12,398)		(10,407)		(12,398)		(10,407)
Retained Earnings
Beginning balance	48,954		49,744		49,423		61,594
Net income (loss)	1,393		264		3,178		(3,654)
Adjustment to retained earnings for the Carrier Distribution	—		—		—		(5,805)
Dividends on Common Stock	3		15		(2,212)		(2,026)
Dividends on ESOP Common Stock	—		(11)		(37)		(38)
Other, including the adoption impact of ASU 2016-13 (Note 21)	(7)		5		(9)		(54)
Ending balance	50,343		50,017		50,343		50,017
Unearned ESOP Shares
Beginning balance	(43)		(56)		(49)		(64)
Common Stock plans activity	2		4		8		12
Ending balance	(41)