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, 2023

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.)

1000 Wilson Boulevard,	Arlington,	Virginia	22209
(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, 2023 there were 1,461,142,016 shares of Common Stock outstanding.

2

RAYTHEON TECHNOLOGIES CORPORATION

AND SUBSIDIARIES

CONTENTS OF QUARTERLY REPORT ON FORM 10-Q

Quarter Ended March 31, 2023

 

	Page
PART I – FINANCIAL INFORMATION	4
Item 1. Unaudited Financial Statements:	4
Condensed Consolidated Statement of Operations for the quarters ended March 31, 2023 and 2022	4
Condensed Consolidated Statement of Comprehensive Income for the quarters ended March 31, 2023 and 2022	5
Condensed Consolidated Balance Sheet at March 31, 2023 and December 31, 2022	6
Condensed Consolidated Statement of Cash Flows for the quarters ended March 31, 2023 and 2022	7
Condensed Consolidated Statement of Changes in Equity for the quarters ended March 31, 2023 and 2022	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	43
Item 4. Controls and Procedures	43
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.

3

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)	2023		2022
Net Sales:
Products sales	$	12,787	$	11,862
Services sales	4,427		3,854
Total net sales	17,214		15,716
Costs and Expenses:
Cost of sales - products	10,700		9,820
Cost of sales - services	2,945		2,740
Research and development	607		635
Selling, general and administrative	1,398		1,469
Total costs and expenses	15,650		14,664
Other income, net	88		28
Operating profit	1,652		1,080
Non-operating expense (income), net:
Non-service pension income	(444)		(480)
Interest expense, net	315		318
Total non-operating expense (income), net	(129)		(162)
Income from continuing operations before income taxes	1,781		1,242
Income tax expense	300		116
Net income from continuing operations	1,481		1,126
Less: Noncontrolling interest in subsidiaries’ earnings from continuing operations	55		23
Net income from continuing operations attributable to common shareowners	1,426		1,103
Loss from discontinued operations attributable to common shareowners	—		(19)
Net income attributable to common shareowners	$	1,426	$	1,084
Earnings (loss) Per Share attributable to common shareowners - Basic:
Income from continuing operations	$	0.98	$	0.74
Loss from discontinued operations	—		(0.01)
Net income attributable to common shareowners	$	0.98	$	0.73
Earnings (loss) Per Share attributable to common shareowners - Diluted:
Income from continuing operations	$	0.97	$	0.74
Loss from discontinued operations	—		(0.02)
Net income attributable to common shareowners	$	0.97	$	0.72

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)	2023		2022
Net income from continuing and discontinued operations	$	1,481	$	1,107
Other comprehensive income (loss), before tax:
Foreign currency translation adjustments	122		(240)
Pension and postretirement benefit plans adjustments	(146)		21
Change in unrealized cash flow hedging	12		37
Other comprehensive income (loss), before tax	(12)		(182)
Income tax (expense) benefit related to items of other comprehensive income (loss)	41		(18)
Other comprehensive income (loss), net of tax	29		(200)
Comprehensive income	1,510		907
Less: Comprehensive income attributable to noncontrolling interest	55		23
Comprehensive income attributable to common shareowners	$	1,455	$	884

See accompanying Notes to Condensed Consolidated Financial Statements

5

RAYTHEON TECHNOLOGIES CORPORATION

AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEET

(Unaudited)

(dollars in millions)	March 31, 2023		December 31, 2022
Assets
Current Assets
Cash and cash equivalents	$	5,893	$	6,220
Accounts receivable, net	10,069		9,108
Contract assets	12,729		11,534
Inventory, net	11,327		10,617
Other assets, current	5,486		4,964
Total current assets	45,504		42,443
Customer financing assets	2,543		2,603
Fixed assets	29,536		29,116
Accumulated depreciation	(14,387)		(13,946)
Fixed assets, net	15,149		15,170
Operating lease right-of-use assets	1,844		1,829
Goodwill	53,904		53,840
Intangible assets, net	36,477		36,823
Other assets	6,215		6,156
Total assets	$	161,636	$	158,864
Liabilities, Redeemable Noncontrolling Interest and Equity
Current Liabilities
Short-term borrowings	$	224	$	625
Accounts payable	10,060		9,896
Accrued employee compensation	1,856		2,401
Other accrued liabilities	11,573		10,999
Contract liabilities	14,870		14,598
Long-term debt currently due	1,545		595
Total current liabilities	40,128		39,114
Long-term debt	32,717		30,694
Operating lease liabilities, non-current	1,624		1,586
Future pension and postretirement benefit obligations	4,676		4,807
Other long-term liabilities	8,106		8,449
Total liabilities	87,251		84,650
Commitments and contingencies (Note 15)
Redeemable noncontrolling interest	38		36
Shareowners’ Equity:
Common stock	38,031		37,939
Treasury stock	(16,112)		(15,530)
Retained earnings	52,891		52,269
Unearned ESOP shares	(26)		(28)
Accumulated other comprehensive loss	(1,989)		(2,018)
Total shareowners’ equity	72,795		72,632
Noncontrolling interest	1,552		1,546
Total equity	74,347		74,178
Total liabilities, redeemable noncontrolling interest and equity	$	161,636	$	158,864

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)	2023		2022
Operating Activities:
Net income from continuing operations	$	1,481	$	1,126
Adjustments to reconcile net income from continuing operations to net cash flows (used in) provided by operating activities:
Depreciation and amortization	1,034		1,014
Deferred income tax benefit	(329)		(601)
Stock compensation cost	100		103
Net periodic pension and other postretirement income	(388)		(360)
Change in:
Accounts receivable	(962)		556
Contract assets	(1,198)		(219)
Inventory	(720)		(587)
Other current assets	(526)		(281)
Accounts payable and accrued liabilities	490		(316)
Contract liabilities	223		(50)
Other operating activities, net	(68)		91
Net cash flows (used in) provided by operating activities from continuing operations	(863)		476
Investing Activities:
Capital expenditures	(520)		(439)
Dispositions of businesses, net of cash transferred	—		35
Customer financing assets receipts (payments), net	28		(19)
Increase in other intangible assets	(154)		(82)
Payments from settlements of derivative contracts, net	(13)		(33)
Other investing activities, net	80		20
Net cash flows used in investing activities from continuing operations	(579)		(518)
Financing Activities:
Issuance of long-term debt	2,971		—
Change in commercial paper, net (Note 8)	(427)		—
Change in other short-term borrowings, net	22		6
Dividends paid on common stock	(790)		(745)
Repurchase of common stock	(562)		(743)
Other financing activities, net	(118)		(263)
Net cash flows provided by (used in) financing activities from continuing operations	1,096		(1,745)
Effect of foreign exchange rate changes on cash and cash equivalents	1		15
Net decrease in cash, cash equivalents and restricted cash	(345)		(1,772)
Cash, cash equivalents and restricted cash, beginning of period	6,291		7,853
Cash, cash equivalents and restricted cash, end of period	5,946		6,081
Less: Restricted cash, included in Other assets, current and Other assets	53		41
Cash and cash equivalents, end of period	$	5,893	$	6,040

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)	2023		2022
Equity beginning balance	$	74,178	$	74,664
Common Stock
Beginning balance	37,939		37,483
Common stock plans activity	92		34
Purchase of subsidiary shares from noncontrolling interest, net	—		(13)
Ending balance	38,031		37,504
Treasury Stock
Beginning balance	(15,530)		(12,727)
Common stock repurchased	(582)		(756)
Ending balance	(16,112)		(13,483)
Retained Earnings
Beginning balance	52,269		50,265
Net income	1,426		1,084
Dividends on common stock	(790)		(745)
Dividends on ESOP common stock	(13)		(13)
Other	(1)		1
Ending balance	52,891		50,592
Unearned ESOP Shares
Beginning balance	(28)		(38)
Common stock plans activity	2		2
Ending balance	(26)		(36)
Accumulated Other Comprehensive Loss
Beginning balance	(2,018)		(1,915)
Other comprehensive income (loss), net of tax	29		(200)
Ending balance	(1,989)		(2,115)
Noncontrolling Interest
Beginning balance	1,546		1,596
Net income	55		23
Less: Redeemable noncontrolling interest net income	(2)		(1)
Dividends attributable to noncontrolling interest	(44)		(64)
Purchase of subsidiary shares from noncontrolling interest, net	—		(19)
Disposition of noncontrolling interest, net	(3)		(11)
Ending balance	1,552		1,524
Equity at March 31	$	74,347	$	73,986
Supplemental share information
Shares of common stock issued under employee plans, net	820		1,817
Shares of common stock repurchased	5,918		7,883
Dividends declared per share of common stock	$	0.550	$	0.510

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, 2023 and for the quarters ended March 31, 2023 and 2022 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 2022 Annual Report on Form 10-K.

We reclassified certain immaterial prior period amounts within the Condensed Consolidated Statement of Cash Flows to conform to our current period presentation.

Raytheon Intelligence & Space (RIS) and Raytheon Missiles & Defense (RMD) follow a 4-4-5 fiscal calendar while Collins Aerospace (Collins) and Pratt & Whitney use a quarter calendar end. Throughout this Quarterly Report on Form 10-Q, when we refer to the quarters ended March 31, 2023 and 2022 with respect to RIS or RMD, we are referring to their April 2, 2023 and April 3, 2022 fiscal quarter ends, respectively.

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

The Company recently announced its intention to streamline the structure of its core businesses into three principal business segments: Collins Aerospace, Pratt & Whitney, and Raytheon. The Company plans to implement the reorganization beginning in July 2023. All segment information included in this Form 10-Q is reflective of the existing four segments of Collins, Pratt & Whitney, RIS, and RMD in accordance with the management structure in place as of March 31, 2023.

Russia Sanctions. In response to the Russian military’s invasion of Ukraine on February 24, 2022, the U.S. government and the governments of various jurisdictions in which we operate, including Canada, the United Kingdom, the European Union, and others, have imposed broad economic sanctions and export controls targeting specific industries, entities, and individuals in Russia. The Russian government has implemented similar counter-sanctions and export controls targeting specific industries, entities, and individuals in the U.S. and other jurisdictions in which we operate, including certain members of the Company’s management team and Board of Directors. These government measures, among other limitations, restrict transactions involving various Russian banks and financial institutions and impose enhanced export controls limiting transfers of various goods, software, and technologies to and from Russia, including broadened export controls specifically targeting the aerospace sector. These measures 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 on Russia 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 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. We will continue to monitor future developments, including additional sanctions and other measures, that could adversely affect the Company and/or our supply chain, business partners, or customers.

Coronavirus Disease 2019 (COVID-19) Pandemic. The COVID-19 pandemic caused continuing negative effects on the global economy, our business and operations, the labor market, supply chains, inflation, and the industries in which we operate. Commercial air travel continues to recover to varying degrees. While we believe that the long-term outlook for the aerospace industry remains positive due to the fundamental drivers of air travel demand, uncertainty continues with respect to when commercial air traffic capacity will fully return to and/or exceed pre-pandemic levels. Our expectations regarding the negative effects of 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.

9

Note 2: Acquisitions, Dispositions, Goodwill and Intangible Assets

Goodwill. Changes in our goodwill balances for the quarter ended March 31, 2023 were as follows:

(dollars in millions)	Balance as of December 31, 2022		Acquisitions and Divestitures		Foreign Currency Translation and Other		Balance as of March 31, 2023
Collins Aerospace	$	30,719	$	—	$	65	$	30,784
Pratt & Whitney	1,563		—		—		1,563
Raytheon Intelligence & Space	9,841		—		—		9,841
Raytheon Missiles & Defense	11,700		—		(1)		11,699
Total Segments	53,823		—		64		53,887
Eliminations and other	17		—		—		17
Total	$	53,840	$	—	$	64	$	53,904

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

	March 31, 2023				December 31, 2022
(dollars in millions)	Gross Amount		Accumulated Amortization		Gross Amount		Accumulated Amortization
Amortized:
Collaboration assets	$	5,595	$	(1,470)	$	5,536	$	(1,408)
Exclusivity assets	3,002		(325)		2,911		(323)
Developed technology and other	1,204		(567)		1,202		(544)
Customer relationships	29,788		(9,394)		29,775		(8,967)
	39,589		(11,756)		39,424		(11,242)
Indefinite-lived:
Trademarks and other	8,644		—		8,641		—
Total	$	48,233	$	(11,756)	$	48,065	$	(11,242)

Amortization of intangible assets for the quarters ended March 31, 2023 and 2022 was $509 million and $487 million, respectively. The following is the expected amortization of intangible assets for the remainder of 2023 through 2028: 

(dollars in millions)	Remaining 2023		2024		2025		2026		2027		2028
Amortization expense	$	1,539	$	2,183	$	2,072	$	1,986	$	1,870	$	1,765

10

Note 3: Earnings Per Share

	Quarter Ended March 31,
(dollars and shares in millions, except per share amounts)	2023		2022
Net income attributable to common shareowners:
Income from continuing operations	$	1,426	$	1,103
Loss from discontinued operations	—		(19)
Net income attributable to common shareowners	$	1,426	$	1,084
Basic weighted average number of shares outstanding	1,462.2		1,486.8
Stock awards and equity units (share equivalent)	12.0		11.1
Diluted weighted average number of shares outstanding	1,474.2		1,497.9
Earnings (Loss) Per Share attributable to common shareowners - Basic:
Income from continuing operations	$	0.98	$	0.74
Loss from discontinued operations	—		(0.01)
Net income attributable to common shareowners	$	0.98	$	0.73
Earnings (Loss) Per Share attributable to common shareowners - Diluted:
Income from continuing operations	$	0.97	$	0.74
Loss from discontinued operations	—		(0.02)
Net income attributable to common shareowners	$	0.97	$	0.72

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 release or 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, 2023 and 2022, the number of stock awards excluded from the computation was 4.1 million and 7.5 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 including any impact from rising costs or inflation, 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. In particular, fixed-price development programs involve significant management judgment, as development contracts by nature have elements that have not been done before and thus, are highly subject to future unexpected cost changes. 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. 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 and changes to 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)	2023		2022
Total net sales	$	(40)	$	97
Operating profit	(124)		36
Income from continuing operations attributable to common shareowners(1)	(98)		28
Diluted earnings per share from continuing operations attributable to common shareowners (1)	$	(0.07)	$	0.02

(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, 2023		December 31, 2022
Accounts receivable	$	10,460	$	9,560
Allowance for expected credit losses	(391)		(452)
Total accounts receivable, net	$	10,069	$	9,108

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, 2023		December 31, 2022
Contract assets	$	12,729	$	11,534
Contract liabilities	(14,870)		(14,598)
Net contract liabilities	$	(2,141)	$	(3,064)

Contract assets increased $1,195 million during the quarter ended March 31, 2023 primarily due to sales in excess of billings on certain contracts at RMD, Pratt & Whitney, and RIS. Contract liabilities increased $272 million during the quarter ended March 31, 2023 primarily due to billings in excess of sales on certain contracts at Pratt & Whitney and RMD. We recognized revenue of $1.9 billion during the quarter ended March 31, 2023, related to contract liabilities as of January 1, 2023 and $1.8 billion during the quarter ended March 31, 2022, related to contract liabilities as of January 1, 2022.

As of March 31, 2023, our Contract liabilities include approximately $395 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.

Contract assets include an allowance for credit losses of $330 million and $318 million as of March 31, 2023 and December 31, 2022, respectively.

Note 7: Inventory, net

Inventory, net consisted of the following:

(dollars in millions)	March 31, 2023		December 31, 2022
Raw materials	$	3,841	$	3,477
Work-in-process	3,994		3,839
Finished goods	3,492		3,301
Total inventory, net	$	11,327	$	10,617

Note 8: Borrowings and Lines of Credit

As of March 31, 2023, 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

12

credit agreement, which expires in September 2023. As of March 31, 2023, there were no borrowings outstanding under these agreements.

From time to time, we use commercial paper borrowings for general corporate purposes, including the funding of potential acquisitions, pension contributions, debt refinancing, dividend payments, and repurchases of our common stock. The commercial paper notes have original maturities of not more than 364 days from the date of issuance. As of March 31, 2023, 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 $100 million and $524 million of commercial paper outstanding at March 31, 2023 and December 31, 2022, respectively, which is reflected in Short-term borrowings in our Condensed Consolidated Balance Sheet. At March 31, 2023 and December 31, 2022, short-term commercial paper borrowings outstanding had a weighted-average interest rate of 4.3% and 4.4%, respectively.

During the quarter ended March 31, 2023, we had no new commercial paper borrowings with maturities greater than 90 days. During the quarter ended March 31, 2023, we made $100 million in repayments of commercial paper with maturities greater than 90 days. During the quarter ended March 31, 2022, we had no commercial paper borrowings or repayments with original maturities more than 90 days from the date of issuance.

There were no repayments of long-term debt during the quarters ended March 31, 2023 and 2022, and there were no issuances of long-term debt during the quarter ended March 31, 2022. We had the following issuances of long-term debt during the quarter ended March 31, 2023:

Issuance Date	Description of Notes	Aggregate Principal Balance (in millions)
February 27, 2023	5.000% notes due 2026	$	500
	5.150% notes due 2033	1,250
	5.375% notes due 2053	1,250

Long-term debt consisted of the following:

(dollars in millions)	March 31, 2023		December 31, 2022
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
5.000% notes due 2026 (1)	500		—
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)	537		531
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
5.150% notes due 2033 (1)	1,250		—
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

13

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
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
5.375% notes due 2053 (1)	1,250	—
Other (including finance leases)	252	253
Total principal long-term debt	34,254	31,249
Other (fair market value adjustments, (discounts)/premiums, and debt issuance costs)	8	40
Total long-term debt	34,262	31,289
Less: current portion	1,545	595
Long-term debt, net of current portion	$