Segment Financial Data

3 Months Ended

Mar. 31, 2024

Segment Reporting [Abstract]

Segment Reporting Disclosure

Note 18: Segment Financial Data

Our operations, for the periods presented herein, are classified into three principal segments: Collins, Pratt & Whitney, and Raytheon. Our 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 Raytheon segment. 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 Raytheon 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, the amortization of customer contractual obligations related to loss making or below market contracts acquired, and goodwill impairment, if applicable. 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 March 31, 2024 and 2023 are as follows:

	Net Sales				Operating Profit				Operating Profit Margins
(dollars in millions)	2024		2023		2024		2023		2024		2023
Collins Aerospace	$	6,673	$	6,120	$	849	$	897	12.7	%	14.7	%
Pratt & Whitney	6,456		5,230		412		415		6.4	%	7.9	%
Raytheon (2)	6,659		6,292		996		571		15.0	%	9.1	%
Total segment	19,788		17,642		2,257		1,883		11.4	%	10.7	%
Eliminations and other (1)	(483)		(428)		(5)		51
Corporate expenses and other unallocated items	—		—		(96)		(43)
FAS/CAS operating adjustment	—		—		214		289
Acquisition accounting adjustments	—		—		(500)		(493)
Consolidated	$	19,305	$	17,214	$	1,870	$	1,687	9.7	%	9.8	%

(1)    Includes the operating results of certain smaller operations.

(2)    Operating Profit includes a $0.4 billion gain, net of transaction and other related costs, related to the sale of our CIS business. See “Note 2: Acquisitions and Dispositions” for additional information.

We disaggregate our contracts from customers by geographic region based on customer location, by type of 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, uses “ship to” location as the customer location. In addition, for our Raytheon segment, 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 based on customer location for the quarters ended March 31, 2024 and 2023 are as follows:

	2024										2023
(dollars in millions)	Collins Aerospace		Pratt & Whitney		Raytheon		Other		Total		Collins Aerospace		Pratt & Whitney		Raytheon		Other		Total
United States	$	3,321	$	3,010	$	4,982	$	48	$	11,361	$	3,097	$	2,631	$	4,776	$	44	$	10,548
Europe	1,615		1,670		547		1		3,833		1,479		1,120		390		1		2,990
Asia Pacific	691		1,194		541		1		2,427		591		905		554		—		2,050
Middle East and North Africa	181		138		530		—		849		163		110		490		—		763
Other regions	361		444		30		—		835		349		463		51		—		863
Consolidated net sales	6,169		6,456		6,630		50		19,305		5,679		5,229		6,261		45		17,214
Inter-segment sales	504		—		29		(533)		—		441		1		31		(473)		—
Business segment sales	$	6,673	$	6,456	$	6,659	$	(483)	$	19,305	$	6,120	$	5,230	$	6,292	$	(428)	$	17,214

Segment sales disaggregated by type of customer for the quarters ended March 31, 2024 and 2023 are as follows:

	2024										2023
(dollars in millions)	Collins Aerospace		Pratt & Whitney		Raytheon		Other		Total		Collins Aerospace		Pratt & Whitney		Raytheon		Other		Total
Sales to the U.S. government (1)	$	1,564	$	1,558	$	4,957	$	48	$	8,127	$	1,594	$	1,222	$	4,698	$	43	$	7,557
Foreign military sales through the U.S. government	81		310		858		—		1,249		83		332		847		—		1,262
Foreign government direct commercial sales	309		158		740		1		1,208		260		118		625		1		1,004
Commercial aerospace and other commercial sales	4,215		4,430		75		1		8,721		3,742		3,557		91		1		7,391
Consolidated net sales	6,169		6,456		6,630		50		19,305		5,679		5,229		6,261		45		17,214
Inter-segment sales	504		—		29		(533)		—		441		1		31		(473)		—
Business segment sales	$	6,673	$	6,456	$	6,659	$	(483)	$	19,305	$	6,120	$	5,230	$	6,292	$	(428)	$	17,214

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

Segment sales disaggregated by sales type for the quarters ended March 31, 2024 and 2023 are as follows:

	2024										2023
(dollars in millions)	Collins Aerospace		Pratt & Whitney		Raytheon		Other		Total		Collins Aerospace		Pratt & Whitney		Raytheon		Other		Total
Products	$	4,833	$	3,957	$	5,467	$	46	$	14,303	$	4,450	$	3,052	$	5,242	$	43	$	12,787
Services	1,336		2,499		1,163		4		5,002		1,229		2,177		1,019		2		4,427
Consolidated net sales	6,169		6,456		6,630		50		19,305		5,679		5,229		6,261		45		17,214
Inter-segment sales	504		—		29		(533)		—		441		1		31		(473)		—
Business segment sales	$	6,673	$	6,456	$	6,659	$	(483)	$	19,305	$	6,120	$	5,230	$	6,292	$	(428)	$	17,214

Raytheon segment sales disaggregated by contract type for the quarters ended March 31, 2024 and 2023 are as follows:

(dollars in millions)	2024		2023
Fixed-price	$	3,293	$	3,237
Cost-type	3,337		3,024
Consolidated net sales	6,630		6,261
Inter-segment sales	29		31
Business segment sales	$	6,659	$	6,292