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Segment Financial Data

9 Months Ended

Sep. 30, 2022

Note 17: Segment Financial Data

Our operations, for the periods presented herein, are classified into four principal segments: Collins, Pratt & Whitney, RIS and RMD. The segments are generally based on the management structure of the businesses and the grouping of similar operating companies, where each management organization has general operating autonomy over diversified products and services.

We present a FAS/CAS operating adjustment outside of segment results, which represents the difference between the service cost component of our pension and PRB expense under the Financial Accounting Standards (FAS) requirements of U.S. Generally Accepted Accounting Principles (GAAP) and our pension and PRB expense under U.S. government Cost Accounting Standards (CAS) primarily related to our RIS and RMD segments. While the ultimate liability for pension and PRB costs under FAS and CAS is similar, the pattern of cost recognition is different. Over time, we generally expect to recover the related RIS and RMD pension and PRB liabilities through the pricing of our products and services to the U.S. government. Collins and Pratt & Whitney generally record pension and PRB expense on a FAS basis.

Acquisition accounting adjustments include the amortization of acquired intangible assets related to acquisitions, the amortization of the property, plant and equipment fair value adjustment acquired through acquisitions and the amortization of customer contractual obligations related to loss making or below market contracts acquired. These adjustments are not considered part of management’s evaluation of segment results.

Total sales and operating profit by segment include inter-segment sales which are generally recorded at cost-plus a specified fee or at a negotiated fixed price. These pricing arrangements may result in margins different than what the purchasing segment realizes on the ultimate third-party sale. Results for the quarters ended September 30, 2022 and 2021 are as follows:


	Net Sales				Operating Profit				Operating Profit Margins
(dollars in millions)	2022		2021		2022		2021		2022		2021
Collins Aerospace Systems	$	5,100	$	4,592	$	616	$	478	12.1	%	10.4	%
Pratt & Whitney	5,380		4,725		316		187		5.9	%	4.0	%
Raytheon Intelligence & Space	3,626		3,740		371		391		10.2	%	10.5	%
Raytheon Missiles & Defense	3,678		3,902		408		490		11.1	%	12.6	%
Total segment	17,784		16,959		1,711		1,546		9.6	%	9.1	%
Eliminations and other(1)	(833)		(746)		(50)		(27)
Corporate expenses and other unallocated items (2)	—		—		(77)		(89)
FAS/CAS operating adjustment	—		—		378		499
Acquisition accounting adjustments	—		—		(482)		(586)
Consolidated	$	16,951	$	16,213	$	1,480	$	1,343	8.7	%	8.3	%

(1) Includes the operating results of certain smaller non-reportable business segments.

(2) Includes the net expenses related to the U.S. Army’s Lower Tier Air and Missile Defense Sensor (LTAMDS) project.

Results for the nine months ended September 30, 2022 and 2021 are as follows:


	Net Sales				Operating Profit				Operating Profit Margins
(dollars in millions)	2022		2021		2022		2021		2022		2021
Collins Aerospace Systems	$	14,935	$	13,507	$	1,602	$	1,298	10.7	%	9.6	%
Pratt & Whitney	14,878		13,035		769		319		5.2	%	2.4	%
Raytheon Intelligence & Space	10,768		11,310		1,064		1,194		9.9	%	10.6	%
Raytheon Missiles & Defense	10,763		11,680		1,143		1,518		10.6	%	13.0	%
Total segment	51,344		49,532		4,578		4,329		8.9	%	8.7	%
Eliminations and other (1)	(2,363)		(2,188)		(131)		(98)
Corporate expenses and other unallocated items (2)	—		—		(255)		(319)
FAS/CAS operating adjustment	—		—		1,135		1,347
Acquisition accounting adjustments	—		—		(1,414)		(1,621)
Consolidated	$	48,981	$	47,344	$	3,913	$	3,638	8.0	%	7.7	%

(1) Includes the operating results of certain smaller non-reportable business segments.

(2) Includes the net expenses related to the U.S. Army’s LTAMDS project.

We disaggregate our contracts from customers by geographic region based on customer location, by customer and by sales type. Our geographic region based on customer location uses end user customer location where known or practical to determine, or in instances where the end user customer is not known or not practical to determine, we utilize “ship to” location as the customer location. In addition, for our RIS and RMD segments, we disaggregate our contracts from customers by contract type. We

believe these categories best depict how the nature, amount, timing and uncertainty of our revenue and cash flows are affected by economic factors.

Segment sales disaggregated by geographic region for the quarters ended September 30, 2022 and 2021 are as follows:


	2022												2021
(dollars in millions)	Collins Aerospace Systems		Pratt & Whitney		Raytheon Intelligence & Space		Raytheon Missiles & Defense		Other		Total		Collins Aerospace Systems		Pratt & Whitney		Raytheon Intelligence & Space		Raytheon Missiles & Defense		Other		Total
United States	$	2,455	$	2,756	$	2,922	$	2,285	$	4	$	10,422	$	2,334	$	2,367	$	2,977	$	2,414	$	4	$	10,096
Europe	1,231		1,074		102		256		—		2,663		1,066		943		107		297		(5)		2,408
Asia Pacific	533		1,028		187		412		—		2,160		465		1,007		199		335		—		2,006
Middle East and North Africa	132		160		48		638		—		978		136		127		105		772		—		1,140
Canada and All Other	310		360		31		27		—		728		226		281		39		17		—		563
Consolidated net sales	4,661		5,378		3,290		3,618		4		16,951		4,227		4,725		3,427		3,835		(1)		16,213
Inter-segment sales	439		2		336		60		(837)		—		365		—		313		67		(745)		—
Business segment sales	$	5,100	$	5,380	$	3,626	$	3,678	$	(833)	$	16,951	$	4,592	$	4,725	$	3,740	$	3,902	$	(746)	$	16,213

Segment sales disaggregated by geographic region for the nine months ended September 30, 2022 and 2021 are as follows:


	2022												2021
(dollars in millions)	Collins Aerospace Systems		Pratt & Whitney		Raytheon Intelligence & Space		Raytheon Missiles & Defense		Other		Total		Collins Aerospace Systems		Pratt & Whitney		Raytheon Intelligence & Space		Raytheon Missiles & Defense		Other		Total
United States	$	7,162	$	7,630	$	8,640	$	6,897	$	8	$	30,337	$	6,899	$	6,665	$	8,962	$	7,156	$	15	$	29,697
Europe	3,815		3,010		312		776		—		7,913		3,207		2,376		339		949		—		6,871
Asia Pacific	1,485		2,726		540		1,074		—		5,825		1,340		2,771		608		1,061		—		5,780
Middle East and North Africa	363		350		191		1,772		—		2,676		346		316		370		2,267		—		3,299
Canada and All Other	908		1,160		105		57		—		2,230		646		907		94		50		—		1,697
Consolidated net sales	13,733		14,876		9,788		10,576		8		48,981		12,438		13,035		10,373		11,483		15		47,344
Inter-segment sales	1,202		2		980		187		(2,371)		—		1,069		—		937		197		(2,203)		—
Business segment sales	$	14,935	$	14,878	$	10,768	$	10,763	$	(2,363)	$	48,981	$	13,507	$	13,035	$	11,310	$	11,680	$	(2,188)	$	47,344

Segment sales disaggregated by type of customer for the quarters ended September 30, 2022 and 2021 are as follows:


	2022												2021
(dollars in millions)	Collins Aerospace Systems		Pratt & Whitney		Raytheon Intelligence & Space		Raytheon Missiles & Defense		Other		Total		Collins Aerospace Systems		Pratt & Whitney		Raytheon Intelligence & Space		Raytheon Missiles & Defense		Other		Total
U.S. government (1)	$	1,066	$	1,324	$	2,877	$	2,284	$	4	$	7,555	$	1,101	$	1,295	$	2,923	$	2,414	$	4	$	7,737
Foreign military sales through the U.S. government	57		295		135		788		—		1,275		54		322		210		778		—		1,364
Foreign government direct commercial sales	205		116		204		539		—		1,064		258		126		216		642		—		1,242
Commercial aerospace and other commercial	3,333		3,643		74		7		—		7,057		2,814		2,982		78		1		(5)		5,870
Consolidated net sales	4,661		5,378		3,290		3,618		4		16,951		4,227		4,725		3,427		3,835		(1)		16,213
Inter-segment sales	439		2		336		60		(837)		—		365		—		313		67		(745)		—
Business segment sales	$	5,100	$	5,380	$	3,626	$	3,678	$	(833)	$	16,951	$	4,592	$	4,725	$	3,740	$	3,902	$	(746)	$	16,213

(1) Excludes foreign military sales through the U.S. government.

Segment sales disaggregated by type of customer for the nine months ended September 30, 2022 and 2021 are as follows:


	2022												2021
(dollars in millions)	Collins Aerospace Systems		Pratt & Whitney		Raytheon Intelligence & Space		Raytheon Missiles & Defense		Other		Total		Collins Aerospace Systems		Pratt & Whitney		Raytheon Intelligence & Space		Raytheon Missiles & Defense		Other		Total
U.S. government(1)	$	3,140	$	3,915	$	8,494	$	6,895	$	8	$	22,452	$	3,470	$	3,748	$	8,767	$	7,155	$	15	$	23,155
Foreign military sales through the U.S. government	164		796		444		2,228		—		3,632		119		961		627		2,449		—		4,156
Foreign government direct commercial sales	719		335		620		1,444		—		3,118		804		392		662		1,877		—		3,735
Commercial aerospace and other commercial	9,710		9,830		230		9		—		19,779		8,045		7,934		317		2		—		16,298
Consolidated net sales	13,733		14,876		9,788		10,576		8		48,981		12,438		13,035		10,373		11,483		15		47,344
Inter-segment sales	1,202		2		980		187		(2,371)		—		1,069		—		937		197		(2,203)		—
Business segment sales	$	14,935	$	14,878	$	10,768	$	10,763	$	(2,363)	$	48,981	$	13,507	$	13,035	$	11,310	$	11,680	$	(2,188)	$	47,344

(1) Excludes foreign military sales through the U.S. government.

Segment sales disaggregated by sales type for the quarters ended September 30, 2022 and 2021 are as follows:


	2022												2021
(dollars in millions)	Collins Aerospace Systems		Pratt & Whitney		Raytheon Intelligence & Space		Raytheon Missiles & Defense		Other		Total		Collins Aerospace Systems		Pratt & Whitney		Raytheon Intelligence & Space		Raytheon Missiles & Defense		Other		Total
Products	$	3,669	$	3,183	$	2,637	$	3,263	$	4	$	12,756	$	3,336	$	2,877	$	2,613	$	3,506	$	(1)	$	12,331
Services	992		2,195		653		355		—		4,195		891		1,848		814		329		—		3,882
Consolidated net sales	4,661		5,378		3,290		3,618		4		16,951		4,227		4,725		3,427		3,835		(1)		16,213
Inter-segment sales	439		2		336		60		(837)		—		365		—		313		67		(745)		—
Business segment sales	$	5,100	$	5,380	$	3,626	$	3,678	$	(833)	$	16,951	$	4,592	$	4,725	$	3,740	$	3,902	$	(746)	$	16,213

Segment sales disaggregated by sales type for the nine months ended September 30, 2022 and 2021 are as follows:


	2022												2021
(dollars in millions)	Collins Aerospace Systems		Pratt & Whitney		Raytheon Intelligence & Space		Raytheon Missiles & Defense		Other		Total		Collins Aerospace Systems		Pratt & Whitney		Raytheon Intelligence & Space		Raytheon Missiles & Defense		Other		Total
Products	$	10,728	$	8,798	$	7,805	$	9,537	$	8	$	36,876	$	9,867	$	7,882	$	7,964	$	10,446	$	15	$	36,174
Services	3,005		6,078		1,983		1,039		—		12,105		2,571		5,153		2,409		1,037		—		11,170
Consolidated net sales	13,733		14,876		9,788		10,576		8		48,981		12,438		13,035		10,373		11,483		15		47,344
Inter-segment sales	1,202		2		980		187		(2,371)		—		1,069		—		937		197		(2,203)		—
Business segment sales	$	14,935	$	14,878	$	10,768	$	10,763	$	(2,363)	$	48,981	$	13,507	$	13,035	$	11,310	$	11,680	$	(2,188)	$	47,344

RIS and RMD segment sales disaggregated by contract type for the quarters ended September 30, 2022 and 2021 are as follows:


	2022				2021
(dollars in millions)	Raytheon Intelligence & Space		Raytheon Missiles & Defense		Raytheon Intelligence & Space		Raytheon Missiles & Defense
Fixed-price	$	1,369	$	2,127	$	1,506	$	2,401
Cost-type	1,921		1,491		1,921		1,434
Consolidated net sales	3,290		3,618		3,427		3,835
Inter-segment sales	336		60		313		67
Business segment sales	$	3,626	$	3,678	$	3,740	$	3,902

RIS and RMD segment sales disaggregated by contract type for the nine months ended September 30, 2022 and 2021 are as follows:


	2022				2021
(dollars in millions)	Raytheon Intelligence & Space		Raytheon Missiles & Defense		Raytheon Intelligence & Space		Raytheon Missiles & Defense
Fixed-price	$	4,062	$	6,245	$	4,533	$	7,054
Cost-type	5,726		4,331		5,840		4,429
Consolidated net sales	9,788		10,576		10,373		11,483
Inter-segments sales	980		187		937		197
Business segment sales	$	10,768	$	10,763	$	11,310	$	11,680

- Definition

The entire disclosure for reporting segments including data and tables. Reportable segments include those that meet any of the following quantitative thresholds a) it's reported revenue, including sales to external customers and intersegment sales or transfers is 10 percent or more of the combined revenue, internal and external, of all operating segments b) the absolute amount of its reported profit or loss is 10 percent or more of the greater, in absolute amount of 1) the combined reported profit of all operating segments that did not report a loss or 2) the combined reported loss of all operating segments that did report a loss c) its assets are 10 percent or more of the combined assets of all operating segments.

+ References

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