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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, 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

____________________________________ 

RTX 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)

Raytheon Technologies Corporation

(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  ☐.

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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, 2023 there were 1,455,514,944 shares of Common Stock outstanding.

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RTX CORPORATION

AND SUBSIDIARIES

CONTENTS OF QUARTERLY REPORT ON FORM 10-Q

Quarter Ended June 30, 2023

 

	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, 2023 and 2022	4
Condensed Consolidated Statement of Comprehensive Income for the quarters and six months ended June 30, 2023 and 2022	5
Condensed Consolidated Balance Sheet at June 30, 2023 and December 31, 2022	6
Condensed Consolidated Statement of Cash Flows for the six months ended June 30, 2023 and 2022	7
Condensed Consolidated Statement of Changes in Equity for the quarters and six months ended June 30, 2023 and 2022	8
Notes to Condensed Consolidated Financial Statements	9
Report of Independent Registered Public Accounting Firm	30
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	31
Item 3. Quantitative and Qualitative Disclosures About Market Risk	51
Item 4. Controls and Procedures	51
PART II – OTHER INFORMATION	53
Item 1. Legal Proceedings	53
Item 1A. Risk Factors	53
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	55
Item 5. Other Information	55
Item 6. Exhibits	56
SIGNATURES	57

RTX Corporation and its subsidiaries’ names, abbreviations thereof, logos, and products and services designators are all either the registered or unregistered trademarks or tradenames of RTX 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

RTX 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)	2023		2022		2023		2022
Net Sales:
Products sales	$	13,411	$	12,258	$	26,198	$	24,120
Services sales	4,904		4,056		9,331		7,910
Total net sales	18,315		16,314		35,529		32,030
Costs and Expenses:
Cost of sales - products	11,089		10,040		21,789		19,860
Cost of sales - services	3,429		2,816		6,374		5,556
Research and development	729		698		1,336		1,333
Selling, general and administrative	1,635		1,424		3,033		2,893
Total costs and expenses	16,882		14,978		32,532		29,642
Other income, net	25		17		113		45
Operating profit	1,458		1,353		3,110		2,433
Non-operating expense (income), net:
Non-service pension income	(447)		(474)		(891)		(954)
Interest expense, net	333		329		648		647
Total non-operating expense (income), net	(114)		(145)		(243)		(307)
Income from continuing operations before income taxes	1,572		1,498		3,353		2,740
Income tax expense	213		160		513		276
Net income from continuing operations	1,359		1,338		2,840		2,464
Less: Noncontrolling interest in subsidiaries’ earnings from continuing operations	32		34		87		57
Net income from continuing operations attributable to common shareowners	1,327		1,304		2,753		2,407
Loss from discontinued operations attributable to common shareowners	—		—		—		(19)
Net income attributable to common shareowners	$	1,327	$	1,304	$	2,753	$	2,388
Earnings (loss) Per Share attributable to common shareowners - Basic:
Income from continuing operations	$	0.91	$	0.88	$	1.89	$	1.62
Loss from discontinued operations	—		—		—		(0.01)
Net income attributable to common shareowners	$	0.91	$	0.88	$	1.89	$	1.61
Earnings (loss) Per Share attributable to common shareowners - Diluted:
Income from continuing operations	$	0.90	$	0.88	$	1.87	$	1.61
Loss from discontinued operations	—		—		—		(0.01)
Net income attributable to common shareowners	$	0.90	$	0.88	$	1.87	$	1.60

See accompanying Notes to Condensed Consolidated Financial Statements

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RTX CORPORATION

AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

(Unaudited)

	Quarter Ended June 30,				Six Months Ended June 30,
(dollars in millions)	2023		2022		2023		2022
Net income from continuing and discontinued operations	$	1,359	$	1,338	$	2,840	$	2,445
Other comprehensive income (loss), before tax:
Foreign currency translation adjustments	404		(708)		526		(948)
Pension and postretirement benefit plans adjustments	(183)		47		(329)		68
Change in unrealized cash flow hedging	285		(182)		297		(145)
Other comprehensive income (loss), before tax	506		(843)		494		(1,025)
Income tax (expense) benefit related to items of other comprehensive income (loss)	(19)		27		22		9
Other comprehensive income (loss), net of tax	487		(816)		516		(1,016)
Comprehensive income	1,846		522		3,356		1,429
Less: Comprehensive income attributable to noncontrolling interest	32		34		87		57
Comprehensive income attributable to common shareowners	$	1,814	$	488	$	3,269	$	1,372

See accompanying Notes to Condensed Consolidated Financial Statements

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RTX CORPORATION

AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEET

(Unaudited)

(dollars in millions)	June 30, 2023		December 31, 2022
Assets
Current Assets
Cash and cash equivalents	$	5,391	$	6,220
Accounts receivable, net	9,903		9,108
Contract assets	12,970		11,534
Inventory, net	11,997		10,617
Other assets, current	5,654		4,964
Total current assets	45,915		42,443
Customer financing assets	2,457		2,603
Fixed assets	30,175		29,116
Accumulated depreciation	(14,880)		(13,946)
Fixed assets, net	15,295		15,170
Operating lease right-of-use assets	1,812		1,829
Goodwill	54,122		53,840
Intangible assets, net	36,234		36,823
Other assets	6,326		6,156
Total assets	$	162,161	$	158,864
Liabilities, Redeemable Noncontrolling Interest and Equity
Current Liabilities
Short-term borrowings	$	1,076	$	625
Accounts payable	10,128		9,896
Accrued employee compensation	2,121		2,401
Other accrued liabilities	11,719		10,999
Contract liabilities	15,162		14,598
Long-term debt currently due	1,554		595
Total current liabilities	41,760		39,114
Long-term debt	32,723		30,694
Operating lease liabilities, non-current	1,570		1,586
Future pension and postretirement benefit obligations	4,579		4,807
Other long-term liabilities	7,442		8,449
Total liabilities	88,074		84,650
Commitments and contingencies (Note 15)
Redeemable noncontrolling interest	31		36
Shareowners’ Equity:
Common stock	38,228		37,939
Treasury stock	(16,713)		(15,530)
Retained earnings	52,489		52,269
Unearned ESOP shares	(22)		(28)
Accumulated other comprehensive loss	(1,502)		(2,018)
Total shareowners’ equity	72,480		72,632
Noncontrolling interest	1,576		1,546
Total equity	74,056		74,178
Total liabilities, redeemable noncontrolling interest and equity	$	162,161	$	158,864

See accompanying Notes to Condensed Consolidated Financial Statements

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RTX CORPORATION

AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

(Unaudited)

	Six Months Ended June 30,
(dollars in millions)	2023		2022
Operating Activities:
Net income from continuing operations	$	2,840	$	2,464
Adjustments to reconcile net income from continuing operations to net cash flows (used in) provided by operating activities:
Depreciation and amortization	2,078		2,013
Deferred income tax benefit	(700)		(1,147)
Stock compensation cost	212		212
Net periodic pension and other postretirement income	(778)		(714)
Change in:
Accounts receivable	(699)		(790)
Contract assets	(1,430)		(525)
Inventory	(1,322)		(1,033)
Other current assets	(634)		(353)
Accounts payable and accrued liabilities	(149)		2,109
Contract liabilities	255		(309)
Other operating activities, net	183		(165)
Net cash flows (used in) provided by operating activities from continuing operations	(144)		1,762
Investing Activities:
Capital expenditures	(1,046)		(918)
Dispositions of businesses, net of cash transferred	—		88
Customer financing assets receipts (payments), net	42		(7)
Increase in other intangible assets	(314)		(185)
Receipts (payments) from settlements of derivative contracts, net	45		(151)
Other investing activities, net	71		37
Net cash flows used in investing activities from continuing operations	(1,202)		(1,136)
Financing Activities:
Issuance of long-term debt	2,974		—
Repayment of long-term debt	(3)		(2)
Change in commercial paper, net (Note 8)	470		—
Change in other short-term borrowings, net	(24)		(17)
Dividends paid on common stock	(1,634)		(1,543)
Repurchase of common stock	(1,158)		(1,779)
Other financing activities, net	(157)		(286)
Net cash flows provided by (used in) financing activities from continuing operations	468		(3,627)
Effect of foreign exchange rate changes on cash and cash equivalents	19		(20)
Net decrease in cash, cash equivalents and restricted cash	(859)		(3,021)
Cash, cash equivalents and restricted cash, beginning of period	6,291		7,853
Cash, cash equivalents and restricted cash, end of period	5,432		4,832
Less: Restricted cash, included in Other assets, current and Other assets	41		65
Cash and cash equivalents, end of period	$	5,391	$	4,767

See accompanying Notes to Condensed Consolidated Financial Statements

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RTX 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)	2023		2022		2023		2022
Equity beginning balance	$	74,347	$	73,986	$	74,178	$	74,664
Common Stock
Beginning balance	38,031		37,504		37,939		37,483
Common stock plans activity	198		169		290		203
Purchase of subsidiary shares from noncontrolling interest, net	(1)		—		(1)		(13)
Ending balance	38,228		37,673		38,228		37,673
Treasury Stock
Beginning balance	(16,112)		(13,483)		(15,530)		(12,727)
Common stock repurchased	(601)		(1,056)		(1,183)		(1,812)
Ending balance	(16,713)		(14,539)		(16,713)		(14,539)
Retained Earnings
Beginning balance	52,891		50,592		52,269		50,265
Net income	1,327		1,304		2,753		2,388
Dividends on common stock	(1,687)		(1,597)		(2,477)		(2,342)
Dividends on ESOP common stock	(29)		(27)		(42)		(40)
Other	(13)		(1)		(14)		—
Ending balance	52,489		50,271		52,489		50,271
Unearned ESOP Shares
Beginning balance	(26)		(36)		(28)		(38)
Common stock plans activity	4		3		6		5
Ending balance	(22)		(33)		(22)		(33)
Accumulated Other Comprehensive Loss
Beginning balance	(1,989)		(2,115)		(2,018)		(1,915)
Other comprehensive income (loss), net of tax	487		(816)		516		(1,016)
Ending balance	(1,502)		(2,931)		(1,502)		(2,931)
Noncontrolling Interest
Beginning balance	1,552		1,524		1,546		1,596
Net income	32		34		87		57
Less: Redeemable noncontrolling interest net income	(1)		(2)		(3)		(3)
Dividends attributable to noncontrolling interest	(7)		(11)		(51)		(75)
Purchase of subsidiary shares from noncontrolling interest, net	—		—		—		(19)
Disposition of noncontrolling interest, net	—		(2)		(3)		(13)
Capital contributions	—		6		—		6
Ending balance	1,576		1,549		1,576		1,549
Equity at June 30	$	74,056	$	71,990	$	74,056	$	71,990
Supplemental share information
Shares of common stock issued under employee plans, net	410		463		1,230		2,280
Shares of common stock repurchased	6,036		11,163		11,954		19,046
Dividends declared per share of common stock	$	1.180	$	1.100	$	1.730	$	1.610

See accompanying Notes to Condensed Consolidated Financial Statements

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RTX CORPORATION

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Note 1: Basis of Presentation

The Condensed Consolidated Financial Statements at June 30, 2023 and for the quarters and six months ended June 30, 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.

Effective July 17, 2023, we changed our legal name from Raytheon Technologies Corporation to RTX Corporation.

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 June 30, 2023 and 2022 with respect to RIS or RMD, we are referring to their July 2, 2023 and July 3, 2022 fiscal quarter ends, respectively.

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

Effective July 1, 2023, we streamlined the structure of our core businesses from four principal business segments to three principal business segments: Collins Aerospace, Pratt & Whitney, and Raytheon. All segment information included in this Form 10-Q is reflective of the four segments of Collins, Pratt & Whitney, RIS, and RMD in accordance with the management structure in place as of June 30, 2023. See “Note 20: Subsequent Events” for additional information.

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 receivable 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. We believe the long-term outlook for the aerospace industry remains positive due to the fundamental drivers of air travel demand, and expect to fully return to and/or exceed pre-pandemic levels as we exit 2023. 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.

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Note 2: Acquisitions, Dispositions, Goodwill and Intangible Assets

Goodwill. Changes in our goodwill balances for the six months ended June 30, 2023 were as follows:

(dollars in millions)	Balance as of December 31, 2022		Acquisitions and Divestitures		Foreign Currency Translation and Other		Balance as of June 30, 2023
Collins Aerospace	$	30,719	$	—	$	282	$	31,001
Pratt & Whitney	1,563		—		—		1,563
Raytheon Intelligence & Space	9,841		—		—		9,841
Raytheon Missiles & Defense	11,700		—		—		11,700
Total Segments	53,823		—		282		54,105
Eliminations and other	17		—		—		17
Total	$	53,840	$	—	$	282	$	54,122

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

	June 30, 2023				December 31, 2022
(dollars in millions)	Gross Amount		Accumulated Amortization		Gross Amount		Accumulated Amortization
Amortized:
Collaboration assets	$	5,663	$	(1,531)	$	5,536	$	(1,408)
Exclusivity assets	3,151		(343)		2,911		(323)
Developed technology and other	1,220		(593)		1,202		(544)
Customer relationships	29,839		(9,836)		29,775		(8,967)
	39,873		(12,303)		39,424		(11,242)
Indefinite-lived:
Trademarks and other	8,664		—		8,641		—
Total	$	48,537	$	(12,303)	$	48,065	$	(11,242)

Amortization of intangible assets for the quarters and six months ended June 30, 2023 and 2022 was $510 million and $1,019 million and $467 million and $954 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	$	973	$	2,203	$	2,089	$	2,007	$	1,891	$	1,776

On July 20, 2023, we entered into a definitive agreement to sell our actuation systems portfolio within our Collins segment for approximately $1.8 billion in cash. The closing of the transaction is subject to regulatory approvals and other customary closing conditions.

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Note 3: Earnings Per Share

	Quarter Ended June 30,				Six Months Ended June 30,
(dollars and shares in millions, except per share amounts)	2023		2022		2023		2022
Net income attributable to common shareowners:
Income from continuing operations	$	1,327	$	1,304	$	2,753	$	2,407
Loss from discontinued operations	—		—		—		(19)
Net income attributable to common shareowners	$	1,327	$	1,304	$	2,753	$	2,388
Basic weighted average number of shares outstanding	1,457.5		1,479.2		1,459.9		1,482.9
Stock awards and equity units (share equivalent)	11.2		10.4		11.6		10.8
Diluted weighted average number of shares outstanding	1,468.7		1,489.6		1,471.5		1,493.7
Earnings (Loss) Per Share attributable to common shareowners - Basic:
Income from continuing operations	$	0.91	$	0.88	$	1.89	$	1.62
Loss from discontinued operations	—		—		—		(0.01)
Net income attributable to common shareowners	$	0.91	$	0.88	$	1.89	$	1.61
Earnings (Loss) Per Share attributable to common shareowners - Diluted:
Income from continuing operations	$	0.90	$	0.88	$	1.87	$	1.61
Loss from discontinued operations	—		—		—		(0.01)
Net income attributable to common shareowners	$	0.90	$	0.88	$	1.87	$	1.60

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 both the quarter and six months ended June 30, 2023, the number of stock awards excluded from the computation was 4.0 million. For the quarter and six months ended June 30, 2022, the number of stock awards excluded from the computation was 3.4 million and 5.4 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 changing 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

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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.

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

	Quarter Ended June 30,				Six Months Ended June 30,
(dollars in millions, except per share amounts)	2023		2022		2023		2022
Total net sales	$	(29)	$	(19)	$	(69)	$	78
Operating profit	(30)		(41)		(154)		(5)
Income from continuing operations attributable to common shareowners(1)	(24)		(32)		(122)		(4)
Diluted earnings per share from continuing operations attributable to common shareowners (1)	$	(0.02)	$	(0.02)	$	(0.08)	$	—

(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)	June 30, 2023		December 31, 2022
Accounts receivable	$	10,289	$	9,560
Allowance for expected credit losses	(386)		(452)
Total accounts receivable, net	$	9,903	$	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)	June 30, 2023		December 31, 2022
Contract assets	$	12,970	$	11,534
Contract liabilities	(15,162)		(14,598)
Net contract liabilities	$	(2,192)	$	(3,064)

Contract assets increased $1,436 million during the six months ended June 30, 2023 primarily due to sales in excess of billings on certain contracts at RMD and Pratt & Whitney, partially offset by a decrease in contract assets driven by a customer insolvency charge at Pratt & Whitney. Contract liabilities increased $564 million during the six months ended June 30, 2023 primarily due to billings in excess of sales on certain contracts at Pratt & Whitney. We recognized revenue of $1.5 billion and $3.4 billion during the quarter and six months ended June 30, 2023, respectively, related to contract liabilities as of January 1, 2023 and $1.2 billion and $3.0 billion during the quarter and six months ended June 30, 2022, respectively, related to contract liabilities as of January 1, 2022.

As of June 30, 2023, our Contract liabilities include approximately $405 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 expected credit losses of $256 million and $318 million as of June 30, 2023 and December 31, 2022, respectively.

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Note 7: Inventory, net

Inventory, net consisted of the following:

(dollars in millions)	June 30, 2023		December 31, 2022
Raw materials	$	3,931	$	3,477
Work-in-process	4,186		3,839
Finished goods	3,880		3,301
Total inventory, net	$	11,997	$	10,617

Note 8: Borrowings and Lines of Credit

As of June 30, 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 credit agreement, which expires in September 2023. As of June 30, 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 June 30, 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 $1.0 billion and $0.5 billion of commercial paper borrowings outstanding at June 30, 2023 and December 31, 2022, respectively, which is reflected in Short-term borrowings in our Condensed Consolidated Balance Sheet. At June 30, 2023 and December 31, 2022, short-term commercial paper borrowings outstanding had a weighted-average interest rate of 5.5% and 4.4%, respectively.

During the six months ended June 30, 2023, we had no new commercial paper borrowings with maturities greater than 90 days. During the six months ended June 30, 2023, we made $200 million in repayments of commercial paper with maturities greater than 90 days. During the six months ended June 30, 2022, we had no commercial paper borrowings or repayments with original maturities more than 90 days from the date of issuance.

We had the following issuances of long-term debt during the six months ended June 30, 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)	June 30, 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

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7.500% notes due 2029 (1)	414		414
2.150% notes due 2030 (€500 million principal value) (1)	544		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
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)	262		253
Total principal long-term debt	34,271		31,249
Other (fair market value adjustments, (discounts)/premiums, and debt issuance costs)	6		40
Total long-term debt	34,277		31,289
Less: current portion	1,554		595
Long-term debt, net of current portion	$	32,723	$	30,694

(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 June 30, 2023 is approximately 14 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.

Contributions to our plans were as follows:

	Quarter Ended June 30,				Six Months Ended June 30,
(dollars in millions)	2023		2022		2023		2022
U.S. qualified defined benefit plans	$	—	$	—	$	—	$	—
International defined benefit plans	20		18		28		30
PRB plans	8		4		12		9
Defined contribution plans	317		251		689		562

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In December 2020, we approved a change to the Raytheon Company domestic defined benefit pension plans for non-union participants to cease future benefit accruals based on an employee’s years of service and compensation under the historical formula effective December 31, 2022. The plan change does not impact participants’ historical benefit accruals. Benefits for service after December 31, 2022 are based on a cash balance formula. This plan change resulted in lower pension service cost beginning January 1, 2023.

The amounts recognized in the Condensed Consolidated Balance Sheet consist of:

(dollars in millions)	June 30, 2023		December 31, 2022
Noncurrent pension assets (included in Other assets)	$	3,770	$	3,301
Current pension and PRB liabilities (included in Accrued employee compensation)	307		307
Future pension and postretirement benefit obligations