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 March 31, 2022

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 March 31, 2022 there were 1,487,215,106 shares of Common Stock outstanding.

2

RAYTHEON TECHNOLOGIES CORPORATION

AND SUBSIDIARIES

CONTENTS OF QUARTERLY REPORT ON FORM 10-Q

Quarter Ended March 31, 2022

 

	Page
PART I – FINANCIAL INFORMATION	4
Item 1. Unaudited Financial Statements:	4
Condensed Consolidated Statement of Operations for the quarters ended March 31, 2022 and 2021	4
Condensed Consolidated Statement of Comprehensive Income for the quarters ended March 31, 2022 and 2021	5
Condensed Consolidated Balance Sheet at March 31, 2022 and December 31, 2021	6
Condensed Consolidated Statement of Cash Flows for the quarters ended March 31, 2022 and 2021	7
Condensed Consolidated Statement of Changes in Equity for the quarters ended March 31, 2022 and 2021	8
Notes to Condensed Consolidated Financial Statements	9
Report of Independent Registered Public Accounting Firm	27
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	28
Item 3. Quantitative and Qualitative Disclosures About Market Risk	42
Item 4. Controls and Procedures	42
PART II – OTHER INFORMATION	45
Item 1. Legal Proceedings	45
Item 1A. Risk Factors	45
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	46
Item 6. Exhibits	47
SIGNATURES	48

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.

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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 March 31,
(dollars in millions, except per share amounts)	2022		2021
Net Sales:
Products sales	$	11,862	$	11,664
Services sales	3,854		3,587
Total Net Sales	15,716		15,251
Costs and Expenses:
Cost of sales - products	9,820		9,974
Cost of sales - services	2,740		2,563
Research and development	635		589
Selling, general and administrative	1,469		1,220
Total Costs and Expenses	14,664		14,346
Other income, net	28		108
Operating profit	1,080		1,013
Non-operating expense (income), net
Non-service pension income	(480)		(491)
Interest expense, net	318		346
Total non-operating expense (income), net	(162)		(145)
Income from continuing operations before income taxes	1,242		1,158
Income tax expense	116		345
Net income from continuing operations	1,126		813
Less: Noncontrolling interest in subsidiaries’ earnings from continuing operations	23		41
Income from continuing operations attributable to common shareowners	1,103		772
Loss from discontinued operations attributable to common shareowners	(19)		(19)
Net income attributable to common shareowners	$	1,084	$	753
Earnings (loss) Per Share attributable to common shareowners - Basic:
Income from continuing operations	$	0.74	$	0.51
Loss from discontinued operations	(0.01)		(0.01)
Net income attributable to common shareowners	$	0.73	$	0.50
Earnings (loss) Per Share attributable to common shareowners - Diluted:
Income from continuing operations	$	0.74	$	0.51
Loss from discontinued operations	(0.02)		(0.01)
Net income attributable to common shareowners	$	0.72	$	0.50

See accompanying Notes to Condensed Consolidated Financial Statements

4

RAYTHEON TECHNOLOGIES CORPORATION

AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

(Unaudited)

	Quarter Ended March 31,
(dollars in millions)	2022		2021
Net income from continuing and discontinued operations	$	1,107	$	794
Other comprehensive income (loss), before tax:
Foreign currency translation adjustments	(240)		(176)
Pension and postretirement benefit plans adjustments	21		54
Change in unrealized cash flow hedging	37		(60)
Other comprehensive income (loss), before tax	(182)		(182)
Income tax expense related to items of other comprehensive income (loss)	(18)		(5)
Other comprehensive loss, net of tax	(200)		(187)
Comprehensive income	907		607
Less: Comprehensive income attributable to noncontrolling interest	23		41
Comprehensive income attributable to common shareowners	$	884	$	566

See accompanying Notes to Condensed Consolidated Financial Statements

5

RAYTHEON TECHNOLOGIES CORPORATION

AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEET

(Unaudited)

(dollars in millions)	March 31, 2022		December 31, 2021
Assets
Current Assets
Cash and cash equivalents	$	6,040	$	7,832
Accounts receivable, net	9,076		9,661
Contract assets	11,566		11,361
Inventory, net	9,749		9,178
Other assets, current	4,309		4,018
Total Current Assets	40,740		42,050
Customer financing assets	2,766		2,848
Fixed assets	27,815		27,637
Accumulated depreciation	(12,978)		(12,665)
Fixed assets, net	14,837		14,972
Operating lease right-of-use assets	1,911		1,958
Goodwill	54,316		54,436
Intangible assets, net	38,118		38,516
Other assets	6,678		6,624
Total Assets	$	159,366	$	161,404
Liabilities, Redeemable Noncontrolling Interest and Equity
Current Liabilities
Short-term borrowings	$	140	$	134
Accounts payable	8,270		8,751
Accrued employee compensation	1,880		2,658
Other accrued liabilities	11,004		10,162
Contract liabilities	13,739		13,720
Long-term debt currently due	24		24
Total Current Liabilities	35,057		35,449
Long-term debt	31,308		31,327
Operating lease liabilities, non-current	1,627		1,657
Future pension and postretirement benefit obligations	7,709		7,855
Other long-term liabilities	9,643		10,417
Total Liabilities	85,344		86,705
Commitments and contingencies (Note 15)
Redeemable noncontrolling interest	36		35
Shareowners’ Equity:
Common Stock	37,504		37,483
Treasury Stock	(13,483)		(12,727)
Retained earnings	50,592		50,265
Unearned ESOP shares	(36)		(38)
Accumulated other comprehensive loss	(2,115)		(1,915)
Total Shareowners’ Equity	72,462		73,068
Noncontrolling interest	1,524		1,596
Total Equity	73,986		74,664
Total Liabilities, Redeemable Noncontrolling Interest and Equity	$	159,366	$	161,404

See accompanying Notes to Condensed Consolidated Financial Statements

6

RAYTHEON TECHNOLOGIES CORPORATION

AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

(Unaudited)

	Quarter Ended March 31,
(dollars in millions)	2022		2021
Operating Activities:
Net income from continuing operations	$	1,126	$	813
Adjustments to reconcile net income from continuing operations to net cash flows provided by operating activities:
Depreciation and amortization	1,014		1,123
Deferred income tax (benefit) provision	(601)		153
Stock compensation cost	103		84
Net periodic pension and other postretirement income	(360)		(358)
Change in:
Accounts receivable	556		(799)
Contract assets	(219)		(311)
Inventory	(587)		(113)
Other current assets	(281)		(193)
Accounts payable and accrued liabilities	(316)		538
Contract liabilities	(50)		(56)
Other operating activities, net	91		(158)
Net cash flows provided by operating activities from continuing operations	476		723
Investing Activities:
Capital expenditures	(439)		(387)
Investments in businesses	—		(6)
Dispositions of businesses, net of cash transferred (Note 2)	35		1,049
Customer financing assets payments, net	(19)		(81)
Increase in collaboration intangible assets	(50)		(32)
(Payments) receipts from settlements of derivative contracts, net	(33)		49
Other investing activities, net	(12)		(10)
Net cash flows (used in) provided by investing activities from continuing operations	(518)		582
Financing Activities:
Repayment of long-term debt	—		(286)
Change in short-term borrowings, net	6		(13)
Dividends paid on Common Stock	(745)		(705)
Repurchase of Common Stock	(743)		(375)
Net transfers to discontinued operations	—		(5)
Other financing activities, net	(263)		(160)
Net cash flows used in financing activities from continuing operations	(1,745)		(1,544)
Discontinued Operations:
Net cash used in operating activities	—		(5)
Net cash used in investing activities	—		—
Net cash provided by financing activities	—		5
Net cash used in discontinued operations	—		—
Effect of foreign exchange rate changes on cash and cash equivalents	15		23
Net decrease in cash, cash equivalents and restricted cash	(1,772)		(216)
Cash, cash equivalents and restricted cash, beginning of period	7,853		8,832
Cash, cash equivalents and restricted cash, end of period	6,081		8,616
Less: Restricted cash, included in Other assets	41		37
Cash and cash equivalents, end of period	$	6,040	$	8,579

See accompanying Notes to Condensed Consolidated Financial Statements

7

RAYTHEON TECHNOLOGIES CORPORATION

AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

(Unaudited)

	Quarter Ended March 31,
(dollars in millions, except per share amounts; shares in thousands)	2022		2021
Equity beginning balance	$	74,664	$	73,852
Common Stock
Beginning balance	37,483		36,930
Common Stock plans activity	34		67
Purchase of subsidiary shares from noncontrolling interest, net	(13)		—
Ending balance	37,504		36,997
Treasury Stock
Beginning balance	(12,727)		(10,407)
Common Stock repurchased	(756)		(375)
Other	—		2
Ending balance	(13,483)		(10,780)
Retained Earnings
Beginning balance	50,265		49,423
Net income	1,084		753
Dividends on Common Stock	(745)		(705)
Dividends on ESOP Common Stock	(13)		(11)
Other	1		—
Ending balance	50,592		49,460
Unearned ESOP Shares
Beginning balance	(38)		(49)
Common Stock plans activity	2		3
Ending balance	(36)		(46)
Accumulated Other Comprehensive Loss
Beginning balance	(1,915)		(3,734)
Other comprehensive loss, net of tax	(200)		(187)
Ending balance	(2,115)		(3,921)
Noncontrolling Interest
Beginning balance	1,596		1,689
Net Income	23		41
Less: Redeemable noncontrolling interest net income	(1)		(2)
Dividends attributable to noncontrolling interest	(64)		(130)
Purchase of subsidiary shares from noncontrolling interest, net	(19)		—
Disposition of noncontrolling interest, net	(11)		—
Ending balance	1,524		1,598
Equity at March 31	$	73,986	$	73,308
Supplemental share information
Shares of Common Stock issued under employee plans, net	1,817		1,043
Shares of Common Stock repurchased	7,883		5,197
Dividends declared per share of Common Stock	0.510		0.475

See accompanying Notes to Condensed Consolidated Financial Statements

8

RAYTHEON TECHNOLOGIES CORPORATION

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Note 1: Basis of Presentation

The Condensed Consolidated Financial Statements at March 31, 2022 and for the quarters ended March 31, 2022 and 2021 are unaudited, and in the opinion of management include adjustments of a normal recurring nature necessary for a fair statement of the results for the interim periods. The results reported in these Condensed Consolidated Financial Statements should not necessarily be taken as indicative of results that may be expected for the entire year. The financial information included herein should be read in conjunction with the financial statements and notes in our 2021 Annual Report on Form 10-K.

Unless the context otherwise requires, the terms “we,” “our,” “us,” “the Company,” “Raytheon Technologies,” and “RTC” mean Raytheon Technologies Corporation and its subsidiaries.

Russia Sanctions. In response to the Russian military’s invasion of Ukraine on February 24, 2022, the U.S. government has imposed broad economic sanctions and export controls targeting key industries, entities and individuals in Russia. These U.S. government measures, among other items, restrict transactions involving various Russian banks and financial institutions and impose enhanced export controls limiting transfers of various goods, software and technologies to Russia, including broadened export controls specifically targeting Russia’s aerospace sector. Governments of various other jurisdictions in which we operate, including Canada, the United Kingdom, the European Union and others, have implemented similar measures. These sanctions and export controls, as well as responses from Russia, have adversely affected and could continue to adversely affect the Company and/or our supply chain, business partners or customers. As a result of these sanctions and export controls, in the first quarter of 2022, we recorded pretax charges of $290 million, $210 million net of tax and the impact of noncontrolling interest, within our Collins Aerospace Systems (Collins) and Pratt & Whitney businesses primarily related to increased estimates for credit losses on both our accounts receivables and contract assets, inventory reserves and purchase order obligations, impairment of customer financing assets for products under lease, impairment of contract fulfillment costs that are no longer recoverable, and a loss on the exit of our investment in a Russia-based joint venture. Additionally, we reversed approximately $1.3 billion of remaining performance obligation (RPO) in the quarter ended March 31, 2022 related to our sales contracts in Russia at Pratt & Whitney and Collins. We will continue to monitor the changes in sanctions and other developments, which may result in financial impacts in future periods. Based on information available to date, we currently do not expect these incremental impacts to have a material effect on the Company’s financial condition, results of operations or liquidity.

COVID-19 Pandemic. The coronavirus disease 2019 (COVID-19) pandemic continues to negatively affect the global economy, our business and operations, supply chains, and the industries in which we operate. However, we continue to see indications that commercial air travel is recovering in certain areas of demand. While we believe that the long-term outlook for the aerospace industry remains positive due to the fundamental drivers of air travel demand, there continues to be uncertainty with respect to when commercial air traffic capacity will fully return to and/or exceed pre-COVID-19 levels. Our expectations regarding the COVID-19 pandemic and ongoing recovery and their potential financial impact are based on available information and assumptions that we believe are reasonable at this time; however, the actual financial impact is highly uncertain and subject to a wide range of factors and future developments.

Note 2: Acquisitions, Dispositions, Goodwill and Intangible Assets

In the quarters ended March 31, 2022 and 2021, cash inflows related to dispositions were $35 million and $1.0 billion, respectively.

Our dispositions of businesses in the quarter ended March 31, 2022, primarily consisted of immaterial dispositions in our aerospace businesses.

Dispositions of businesses in the quarter ended March 31, 2021 reflect the January 8, 2021 sale of our Forcepoint business, for proceeds of $1.1 billion, net of cash transferred. We did not recognize a pre-tax gain or loss within the Condensed Consolidated Statement of Operations related to the sale of Forcepoint.

9

Goodwill. Changes in our goodwill balances for the quarter ended March 31, 2022 were as follows:

(dollars in millions)	Balance as of January 1, 2022		Acquisitions and Divestitures		Foreign Currency Translation and Other		Balance as of March 31, 2022
Collins Aerospace Systems	$	31,384	$	(1)	$	(139)	$	31,244
Pratt & Whitney	1,563		—		—		1,563
Raytheon Intelligence & Space	9,813		21		—		9,834
Raytheon Missiles & Defense	11,659		—		(1)		11,658
Total Segments	54,419		20		(140)		54,299
Eliminations and other	17		—		—		17
Total	$	54,436	$	20	$	(140)	$	54,316

Intangible Assets. Identifiable intangible assets are comprised of the following:

	March 31, 2022				December 31, 2021
(dollars in millions)	Gross Amount		Accumulated Amortization		Gross Amount		Accumulated Amortization
Amortized:
Collaboration assets	$	5,373	$	(1,227)	$	5,319	$	(1,173)
Exclusivity assets	2,737		(328)		2,673		(318)
Developed technology and other	1,208		(487)		1,214		(466)
Customer relationships	29,957		(7,805)		29,982		(7,411)
	39,275		(9,847)		39,188		(9,368)
Unamortized:
Trademarks and other	8,690		—		8,696		—
Total	$	47,965	$	(9,847)	$	47,884	$	(9,368)

Amortization of intangible assets for the quarters ended March 31, 2022 and 2021 was $487 million and $596 million, respectively. The following is the expected amortization of intangible assets for the remainder of 2022 through 2027. 

(dollars in millions)	Remaining 2022		2023		2024		2025		2026		2027
Amortization expense	$	1,491	$	2,094	$	2,216	$	2,098	$	2,009	$	1,856

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Note 3: Earnings Per Share

	Quarter Ended March 31,
(dollars and shares in millions, except per share amounts)	2022		2021
Net income attributable to common shareowners:
Income from continuing operations	$	1,103	$	772
Loss from discontinued operations	(19)		(19)
Net income attributable to common shareowners	$	1,084	$	753
Basic weighted average number of shares outstanding	1,486.8		1,511.1
Stock awards and equity units (share equivalent)	11.1		3.0
Diluted weighted average number of shares outstanding	1,497.9		1,514.1
Earnings (Loss) Per Share attributable to common shareowners - Basic:
Income from continuing operations	$	0.74	$	0.51
Loss from discontinued operations	(0.01)		(0.01)
Net income attributable to common shareowners	$	0.73	$	0.50
Earnings (Loss) Per Share attributable to common shareowners - Diluted:
Income from continuing operations	$	0.74	$	0.51
Loss from discontinued operations	(0.02)		(0.01)
Net income attributable to common shareowners	$	0.72	$	0.50

The computation of diluted earnings per share (EPS) excludes the effect of the potential exercise of stock awards, including stock appreciation rights and stock options, when the average market price of the common stock is lower than the exercise price of the related stock awards during the period because the effect would be anti-dilutive. In addition, the computation of diluted EPS excludes the effect of the potential exercise of stock awards when the awards’ assumed proceeds exceed the average market price of the common shares during the period. For the quarters ended March 31, 2022 and 2021, the number of stock awards excluded from the computation was 7.5 million and 26.7 million, respectively.

Note 4: Changes in Contract Estimates at Completion

We review our Estimates at Completion (EACs) at least annually or when a change in circumstances warrants a modification to a previous estimate. For significant contracts, we review our EACs more frequently. Due to the nature of the work required to be performed on many of the Company’s performance obligations, the estimation of total revenue and cost at completion is complex, subject to many variables and requires significant judgment by management on a contract by contract basis. As part of this process, management reviews information including, but not limited to, any outstanding key contract matters, progress towards completion and the related program schedule, identified risks and opportunities and the related changes in estimates of revenues and costs. The risks and opportunities relate to management’s judgment about the ability and cost to achieve the schedule, consideration of customer-directed delays or reductions in scheduled deliveries, technical requirements, customer activity levels, such as flight hours or aircraft landings, and related variable consideration. Management must make assumptions and estimates regarding contract revenue and costs, including estimates of labor productivity and availability, the complexity and scope of the work to be performed, the availability and cost of materials, the length of time to complete the performance obligation, execution by our subcontractors, the availability and timing of funding from our customer, overhead cost rates, and current and past maintenance cost and frequency driven by estimated aircraft and engine utilization and estimated useful lives of components, among others. Cost estimates may also include the estimated cost of satisfying our industrial cooperation agreements, sometimes in the form of either offset obligations or in-country industrial participation (ICIP) agreements, required under certain contracts primarily within our Raytheon Intelligence & Space (RIS) and Raytheon Missiles & Defense (RMD) segments. These obligations may or may not be distinct depending on their nature. If cash is paid to a customer to satisfy our offset obligations it is recorded as a reduction in the transaction price.

Changes in estimates of net sales, cost of sales and the related impact to operating profit on contracts recognized over time are recognized on a cumulative catch-up basis, which recognizes the cumulative effect of the profit changes on current and prior periods based on a performance obligation’s percentage of completion in the current period. A significant change in one or more of these estimates could affect the profitability of one or more of our performance obligations. Our EAC adjustments also include the establishment of loss provisions for our contracts accounted for on a percentage of completion basis.

11

Net EAC adjustments had the following impact on our operating results:

	Quarter Ended March 31,
(dollars in millions, except per share amounts)	2022		2021
Total Net Sales	$	97	$	52
Operating profit	36		12
Income from continuing operations attributable to common shareowners(1)	28		9
Diluted earnings per share from continuing operations attributable to common shareholders (1)	$	0.02	$	0.01

(1)     Amounts reflect a U.S. statutory tax rate of 21%, which approximates our tax rate on our EAC adjustments.

Note 5: Accounts Receivable, Net

Accounts receivable, net consisted of the following:

(dollars in millions)	March 31, 2022		December 31, 2021
Accounts receivable	$	9,589	$	10,136
Allowance for expected credit losses	(513)		(475)
Total accounts receivable, net	$	9,076	$	9,661

Note 6: Contract Assets and Liabilities

Contract assets reflect revenue recognized and performance obligations satisfied in advance of customer billing. Contract liabilities relate to payments received in advance of the satisfaction of performance under the contract. We receive payments from customers based on the terms established in our contracts. Total contract assets and contract liabilities were as follows:

(dollars in millions)	March 31, 2022		December 31, 2021
Contract assets	$	11,566	$	11,361
Contract liabilities	(13,739)		(13,720)
Net contract liabilities	$	(2,173)	$	(2,359)

Contract assets increased $205 million during the quarter ended March 31, 2022 primarily due to sales in excess of billings at RIS and RMD. Contract liabilities were relatively consistent during the quarter ended March 31, 2022 compared to December 31, 2021. We recognized revenue of $1.8 billion during the quarter ended March 31, 2022, related to contract liabilities as of January 1, 2022 and $1.7 billion during the quarter ended March 31, 2021, related to contract liabilities as of January 1, 2021.

As of March 31, 2022, our Contract liabilities include approximately $420 million of advance payments received from a Middle East customer on contracts for which we no longer believe we will be able to execute on or obtain required regulatory approvals. These advance payments may become refundable to the customer if the contracts are ultimately terminated. In addition, as of March 31, 2022, our Contract liabilities include advance payments, in immaterial amounts, received from Russian customers on contracts we are currently unable to perform on due to global sanctions on Russia and export controls. Depending on the contractual terms and as allowed by sanctions, certain of these advance payments may become refundable.

Contract assets include an allowance for credit losses of $330 million and $251 million as of March 31, 2022 and December 31, 2021, respectively.

Note 7: Inventory, net

(dollars in millions)	March 31, 2022		December 31, 2021
Raw materials	$	3,079	$	3,024
Work-in-process	3,471		3,085
Finished goods	3,199		3,069
Total inventory, net	$	9,749	$	9,178

Note 8: Borrowings and Lines of Credit

From time to time, we use commercial paper borrowings for general corporate purposes, including the funding of potential

12

acquisitions, pension contributions, debt refinancing, dividend payments and repurchases of our common stock. The commercial paper notes have original maturities of not more than 90 days from the date of issuance. As of March 31, 2022, our maximum commercial paper borrowing limit was $5.0 billion as the commercial paper is backed by our $5.0 billion revolving credit agreement. We had no commercial paper outstanding at March 31, 2022 or December 31, 2021.

As of March 31, 2022, we had revolving credit agreements with various banks permitting aggregate borrowings of up to $7.0 billion, consisting of a $5.0 billion revolving credit agreement, which expires in April 2025, and a $2.0 billion revolving credit agreement, which expires in May 2022. As of March 31, 2022, there were no borrowings outstanding under these agreements.

There were no repayments of long-term debt during the quarter ended March 31, 2022. We made the following repayments of long-term debt during the quarter ended March 31, 2021:

Repayment Date	Description of Notes	Aggregate Principal Balance (in millions)
March 1, 2021	8.750% notes due 2021	$	250

Long-term debt consisted of the following:

(dollars in millions)	March 31, 2022		December 31, 2021
3.650% notes due 2023 (1)	$	171	$	171
3.700% notes due 2023 (1)	400		400
3.200% notes due 2024 (1)	950		950
3.150% notes due 2024 (1)	300		300
3.950% notes due 2025 (1)	1,500		1,500
2.650% notes due 2026 (1)	719		719
3.125% notes due 2027 (1)	1,100		1,100
3.500% notes due 2027 (1)	1,300		1,300
7.200% notes due 2027 (1)	382		382
7.100% notes due 2027	135		135
6.700% notes due 2028	285		285
7.000% notes due 2028 (1)	185		185
4.125% notes due 2028 (1)	3,000		3,000
7.500% notes due 2029 (1)	414		414
2.150% notes due 2030 (€500 million principal value) (1)	550		565
2.250% notes due 2030 (1)	1,000		1,000
1.900% notes due 2031 (1)	1,000		1,000
2.375% notes due 2032 (1)	1,000		1,000
5.400% notes due 2035 (1)	446		446
6.050% notes due 2036 (1)	410		410
6.800% notes due 2036 (1)	117		117
7.000% notes due 2038	148		148
6.125% notes due 2038 (1)	575		575
4.450% notes due 2038 (1)	750		750
5.700% notes due 2040 (1)	553		553
4.875% notes due 2040 (1)	600		600
4.700% notes due 2041 (1)	425		425
4.500% notes due 2042 (1)	3,500		3,500
4.800% notes due 2043 (1)	400		400
4.200% notes due 2044 (1)	300		300
4.150% notes due 2045 (1)	850		850
3.750% notes due 2046 (1)	1,100		1,100
4.050% notes due 2047 (1)	600		600
4.350% notes due 2047 (1)	1,000		1,000

13

4.625% notes due 2048 (1)	1,750		1,750
3.125% notes due 2050 (1)	1,000		1,000
2.820% notes due 2051 (1)	1,000		1,000
3.030% notes due 2052 (1)	1,100		1,100
Other (including finance leases)	268		270
Total principal long-term debt	31,283		31,300
Other (fair value adjustments, (discounts)/premiums, and debt issuance costs)	49		51
Total long-term debt	31,332		31,351
Less: current portion	24		24
Long-term debt, net of current portion	$	31,308	$	31,327

(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 at March 31, 2022 is approximately 15 years.

Note 9: Employee Benefit Plans

Pension and Postretirement Plans. We sponsor both funded and unfunded domestic and foreign defined benefit pension and postretirement benefit (PRB) plans and defined contribution plans.