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, 2024

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)

(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 June 30, 2024 there were 1,330,239,366 shares of Common Stock outstanding.

2

RTX CORPORATION

AND SUBSIDIARIES

CONTENTS OF QUARTERLY REPORT ON FORM 10-Q

Quarter Ended June 30, 2024

 

	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, 2024 and 2023	4
Condensed Consolidated Statement of Comprehensive Income for the quarters and six months ended June 30, 2024 and 2023	5
Condensed Consolidated Balance Sheet at June 30, 2024 and December 31, 2023	6
Condensed Consolidated Statement of Cash Flows for the six months ended June 30, 2024 and 2023	7
Condensed Consolidated Statement of Changes in Equity for the quarters and six months ended June 30, 2024 and 2023	8
Notes to Condensed Consolidated Financial Statements	9
Report of Independent Registered Public Accounting Firm	31
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	32
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	54
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	54
Item 5. Other Information	55
Item 6. Exhibits	55
SIGNATURES	56

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.

3

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)	2024		2023		2024		2023
Net Sales:
Products sales	$	14,562	$	13,411	$	28,865	$	26,198
Services sales	5,159		4,904		10,161		9,331
Total net sales	19,721		18,315		39,026		35,529
Costs and Expenses:
Cost of sales - products	12,625		11,089		24,841		21,789
Cost of sales - services	3,516		3,429		7,044		6,374
Research and development	706		729		1,375		1,336
Selling, general, and administrative	1,449		1,600		2,843		2,963
Total costs and expenses	18,296		16,847		36,103		32,462
Other income (expense), net	(896)		25		(524)		113
Operating profit	529		1,493		2,399		3,180
Non-operating expense (income), net:
Non-service pension income	(374)		(447)		(760)		(891)
Interest expense, net	475		333		880		648
Total non-operating expense (income), net	101		(114)		120		(243)
Income before income taxes	428		1,607		2,279		3,423
Income tax expense	253		248		361		583
Net income	175		1,359		1,918		2,840
Less: Noncontrolling interest in subsidiaries’ earnings	64		32		98		87
Net income attributable to common shareowners	$	111	$	1,327	$	1,820	$	2,753
Earnings Per Share attributable to common shareowners:
Basic	$	0.08	$	0.91	$	1.37	$	1.89
Diluted	0.08		0.90		$	1.36	$	1.87

See accompanying Notes to Condensed Consolidated Financial Statements

4

RTX CORPORATION

AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

(Unaudited)

	Quarter Ended June 30,				Six Months Ended June 30,
(dollars in millions)	2024		2023		2024		2023
Net income	$	175	$	1,359	$	1,918	$	2,840
Other comprehensive income (loss), before tax:
Foreign currency translation adjustments	(68)		404		(189)		526
Pension and postretirement benefit plans adjustments	(46)		(183)		(97)		(329)
Change in unrealized cash flow hedging	21		285		(52)		297
Other comprehensive income (loss), before tax	(93)		506		(338)		494
Income tax benefit related to items of other comprehensive income (loss)	10		(19)		39		22
Other comprehensive income (loss), net of tax	(83)		487		(299)		516
Comprehensive income	92		1,846		1,619		3,356
Less: Comprehensive income attributable to noncontrolling interest	64		32		98		87
Comprehensive income attributable to common shareowners	$	28	$	1,814	$	1,521	$	3,269

See accompanying Notes to Condensed Consolidated Financial Statements

5

RTX CORPORATION

AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEET

(Unaudited)

(dollars in millions)	June 30, 2024		December 31, 2023
Assets
Current Assets
Cash and cash equivalents	$	6,011	$	6,587
Accounts receivable, net	10,252		10,838
Contract assets	13,581		12,139
Inventory, net	13,047		11,777
Other assets, current	6,334		7,076
Total current assets	49,225		48,417
Customer financing assets	2,320		2,392
Fixed assets	32,062		31,392
Accumulated depreciation	(16,369)		(15,644)
Fixed assets, net	15,693		15,748
Operating lease right-of-use assets	1,664		1,638
Goodwill	53,347		53,699
Intangible assets, net	34,503		35,399
Other assets	4,417		4,576
Total assets	$	161,169	$	161,869
Liabilities, Redeemable Noncontrolling Interest, and Equity
Current Liabilities
Short-term borrowings	$	231	$	189
Accounts payable	10,939		10,698
Accrued employee compensation	2,065		2,491
Other accrued liabilities	17,048		14,917
Contract liabilities	17,665		17,183
Long-term debt currently due	1,617		1,283
Total current liabilities	49,565		46,761
Long-term debt	40,303		42,355
Operating lease liabilities, non-current	1,415		1,412
Future pension and postretirement benefit obligations	2,264		2,385
Other long-term liabilities	6,941		7,511
Total liabilities	100,488		100,424
Commitments and contingencies (Note 16)
Redeemable noncontrolling interest	31		35
Shareowners’ Equity:
Common stock	37,302		37,055
Treasury stock	(27,080)		(26,977)
Retained earnings	51,488		52,154
Unearned ESOP shares	(7)		(15)
Accumulated other comprehensive loss	(2,718)		(2,419)
Total shareowners’ equity	58,985		59,798
Noncontrolling interest	1,665		1,612
Total equity	60,650		61,410
Total liabilities, redeemable noncontrolling interest, and equity	$	161,169	$	161,869

See accompanying Notes to Condensed Consolidated Financial Statements

6

RTX CORPORATION

AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

(Unaudited)

	Six Months Ended June 30,
(dollars in millions)	2024		2023
Operating Activities:
Net income	$	1,918	$	2,840
Adjustments to reconcile net income to net cash flows provided by (used in) operating activities:
Depreciation and amortization	2,131		2,078
Deferred income tax provision (benefit)	185		(700)
Stock compensation cost	223		212
Net periodic pension and other postretirement income	(666)		(778)
Gain on sale of business, net of transaction costs (Note 2)	(415)		—
Change in:
Accounts receivable	587		(699)
Contract assets	(1,457)		(1,430)
Inventory	(1,361)		(1,322)
Other current assets	217		(634)
Accounts payable and accrued liabilities	1,245		(149)
Contract liabilities	512		255
Other operating activities, net	(44)		183
Net cash flows provided by (used in) operating activities	3,075		(144)
Investing Activities:
Capital expenditures	(1,004)		(1,046)
Dispositions of businesses, net of cash transferred	1,283		—
Increase in other intangible assets	(318)		(314)
(Payments) receipts from settlements of derivative contracts, net	(29)		45
Other investing activities, net	28		113
Net cash flows used in investing activities	(40)		(1,202)
Financing Activities:
Proceeds from long-term debt	—		2,974
Repayment of long-term debt	(1,700)		(3)
Change in commercial paper, net (Note 9)	—		470
Change in other short-term borrowings, net	43		(24)
Dividends paid on common stock	(1,592)		(1,634)
Repurchase of common stock	(100)		(1,158)
Other financing activities, net	(242)		(157)
Net cash flows (used in) provided by financing activities	(3,591)		468
Effect of foreign exchange rate changes on cash and cash equivalents	(12)		19
Net decrease in cash, cash equivalents, and restricted cash	(568)		(859)
Cash, cash equivalents, and restricted cash, beginning of period	6,626		6,291
Cash, cash equivalents, and restricted cash, end of period	6,058		5,432
Less: Restricted cash, included in Other assets, current and Other assets	47		41
Cash and cash equivalents, end of period	$	6,011	$	5,391

See accompanying Notes to Condensed Consolidated Financial Statements

7

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)	2024		2023		2024		2023
Equity beginning balance	$	62,100	$	74,347	$	61,410	$	74,178
Common Stock
Beginning balance	37,108		38,031		37,055		37,939
Common stock plans activity	194		198		247		290
Purchase of subsidiary shares from noncontrolling interest, net	—		(1)		—		(1)
Ending balance	37,302		38,228		37,302		38,228
Treasury Stock
Beginning balance	(27,029)		(16,112)		(26,977)		(15,530)
Common stock repurchased	(51)		(601)		(103)		(1,183)
Ending balance	(27,080)		(16,713)		(27,080)		(16,713)
Retained Earnings
Beginning balance	53,052		52,891		52,154		52,269
Net income attributable to common shareholders	111		1,327		1,820		2,753
Dividends on common stock	(1,646)		(1,687)		(2,415)		(2,477)
Dividends on ESOP common stock	(30)		(29)		(44)		(42)
Other	1		(13)		(27)		(14)
Ending balance	51,488		52,489		51,488		52,489
Unearned ESOP Shares
Beginning balance	(11)		(26)		(15)		(28)
Common stock plans activity	4		4		8		6
Ending balance	(7)		(22)		(7)		(22)
Accumulated Other Comprehensive Loss
Beginning balance	(2,635)		(1,989)		(2,419)		(2,018)
Other comprehensive income (loss), net of tax	(83)		487		(299)		516
Ending balance	(2,718)		(1,502)		(2,718)		(1,502)
Noncontrolling Interest
Beginning balance	1,615		1,552		1,612		1,546
Net income	64		32		98		87
Less: Redeemable noncontrolling interest net income	(4)		(1)		(4)		(3)
Dividends attributable to noncontrolling interest	(10)		(7)		(41)		(51)
Disposition of noncontrolling interest, net	—		—		—		(3)
Ending balance	1,665		1,576		1,665		1,576
Equity at June 30	$	60,650	$	74,056	$	60,650	$	74,056
Supplemental share information
Shares of common stock issued under employee plans, net	1,219		410		4,378		1,230
Shares of common stock repurchased	486		6,036		1,046		11,954
Dividends declared per share of common stock	$	1.260	$	1.180	$	1.850	$	1.730

See accompanying Notes to Condensed Consolidated Financial Statements

8

RTX CORPORATION

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Note 1: Basis of Presentation

The Condensed Consolidated Financial Statements at June 30, 2024 and for the quarters and six months ended June 30, 2024 and 2023 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 2023 Annual Report on Form 10-K.

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

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

Effective July 1, 2023, we streamlined the structure of our core businesses to three principal business segments: Collins Aerospace (Collins), Pratt & Whitney, and Raytheon. Prior period information has been recast to conform to our current period presentation.

Raytheon follows a 4-4-5 fiscal calendar while Collins and Pratt & Whitney use a quarter calendar end. Throughout this Form 10-Q, when we refer to the quarters and six months ended June 30, 2024 and 2023 with respect to Raytheon, we are referring to their June 30, 2024 and July 2, 2023 fiscal quarter ends, respectively.

Legal Matters. The Company has made progress in the quarter ended June 30, 2024 toward resolving several outstanding legal matters, herein referred to as “Expected Resolution of Certain Legal Matters.” The Company expects to enter into a deferred prosecution agreement with the Department of Justice (DOJ) and to be subject to an administrative order with the Securities and Exchange Commission (SEC) to resolve the previously disclosed criminal and civil government investigations into improper payments made by Raytheon Company and its joint venture, Thales-Raytheon Systems (TRS), in connection with certain Middle East contracts since 2012 (Thales-Raytheon Systems and Related Matters); the Company also expects to enter into a deferred prosecution agreement and a False Claims Act (FCA) settlement agreement with the DOJ to resolve previously disclosed criminal and civil government investigations into defective pricing claims for certain legacy Raytheon Company contracts entered into between 2011 and 2013 and in 2017 (DOJ Investigation and Contract Pricing Disputes). In addition, the Company has made progress in the quarter ended June 30, 2024 toward resolving certain voluntarily disclosed export controls violations primarily identified in connection with the integration of Rockwell Collins and, to a lesser extent, Raytheon Company, including certain violations expected to be resolved pursuant to a consent agreement with the Department of State (DOS) (Trade Compliance Matters). As a result of the progress made, we recorded a combined pre-tax charge of $918 million during the quarter ended June 30, 2024, which included an accrual of $269 million related to the DOJ Investigation and Contract Pricing Disputes (in addition to amounts previously accrued), an accrual of $364 million related to Thales-Raytheon Systems and Related Matters (in addition to amounts previously accrued), and an accrual of $285 million related to Trade Compliance Matters. See “Note 16: Commitments and Contingencies” for additional information.

Pratt & Whitney Powder Metal Matter. As previously disclosed, Pratt & Whitney has determined that a rare condition in powder metal used to manufacture certain engine parts requires accelerated inspection of the PW1100G-JM (PW1100) Geared Turbofan (GTF) fleet, which powers the A320neo family of aircraft (A320neo) (herein referred to as the “Powder Metal Matter”). See “Note 16: Commitments and Contingencies” for additional information.

Russia Sanctions. In response to Russia’s invasion of Ukraine, the U.S. government and the governments of various jurisdictions in which we operate, have imposed broad economic sanctions and export controls targeting specific industries, entities, and individuals in Russia. As a result of the Canadian government’s imposition of sanctions in February 2024, including those imposed on U.S.- and German-based Russian-owned entities from which we source titanium for use in our Canadian operations, we recorded charges of $175 million in the first quarter of 2024 within our Collins segment. These charges are primarily related to the recognition of unfavorable purchase commitments and an impairment of contract fulfillment costs that are no longer recoverable as a result of initiating alternative titanium sources. We continue to monitor developments, including additional sanctions and other measures, that could adversely affect the Company and/or our supply chain, business partners, or customers.

9

Note 2: Acquisitions and Dispositions

Dispositions. On March 29, 2024, we completed the sale of our Cybersecurity, Intelligence and Services (CIS) business within our Raytheon segment for proceeds of approximately $1.3 billion in cash, resulting in an aggregate pre-tax gain, net of transaction and other related costs, of $0.4 billion ($0.2 billion after tax), primarily recognized in Other income (expense), net within the Condensed Consolidated Statement of Operations.

As previously disclosed, on July 20, 2023, we entered into a definitive agreement to sell the actuation and flight control business within our Collins segment to Safran S.A. for gross proceeds of approximately $1.8 billion. On November 16, 2023, the Italian government notified RTX that it had denied Safran’s proposed acquisition of the portion of the Collins business conducted by Microtecnica S.r.l. On June 4, 2024, the Italian government notified RTX that it will now approve the proposed transaction in response to additional commitments Safran has agreed to make in respect of the proposed transaction. The closing of the transaction is subject to other regulatory approvals and other customary closing conditions.

On July 1, 2024, we entered into a definitive agreement to sell our Goodrich Hoist & Winch business within our Collins segment for approximately $0.5 billion in cash. The closing of the transaction is subject to regulatory approvals and other customary closing conditions.

Note 3: Goodwill and Intangible Assets

Goodwill. Changes in our goodwill balances for the six months ended June 30, 2024 were as follows:

(dollars in millions)	Balance as of December 31, 2023		Acquisitions and Divestitures		Foreign Currency Translation and Other		Balance as of June 30, 2024
Collins Aerospace (1)	$	33,135	$	(263)	$	(91)	$	32,781
Pratt & Whitney	1,563		—		—		1,563
Raytheon	18,984		—		2		18,986
Total Segments	53,682		(263)		(89)		53,330
Eliminations and other	17		—		—		17
Total	$	53,699	$	(263)	$	(89)	$	53,347

(1)    The reduction in Acquisitions and Divestitures includes the reclassification of goodwill to held for sale assets.

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

	June 30, 2024				December 31, 2023
(dollars in millions)	Gross Amount		Accumulated Amortization		Gross Amount		Accumulated Amortization
Amortized:
Collaboration assets	$	5,947	$	(1,816)	$	5,810	$	(1,688)
Exclusivity assets	3,581		(365)		3,460		(352)
Developed technology and other	1,203		(670)		1,219		(635)
Customer relationships	29,516		(11,547)		29,605		(10,683)
	40,247		(14,398)		40,094		(13,358)
Indefinite-lived:
Trademarks and other	8,654		—		8,663		—
Total	$	48,901	$	(14,398)	$	48,757	$	(13,358)

Amortization of intangible assets for the quarters and six months ended June 30, 2024 and 2023 was $534 million and $1,060 million and $510 million and $1,019 million, respectively. The following is the expected amortization of intangible assets for the remainder of 2024 through 2029: 

(dollars in millions)	Remaining 2024		2025		2026		2027		2028		2029
Amortization expense	$	1,157	$	2,074	$	1,993	$	1,878	$	1,795	$	1,616

10

Note 4: Earnings Per Share

	Quarter Ended June 30,				Six Months Ended June 30,
(dollars and shares in millions, except per share amounts)	2024		2023		2024		2023
Net income attributable to common shareowners	$	111	$	1,327	$	1,820	$	2,753
Basic weighted average number of shares outstanding	1,331.8		1,457.5		1,330.5		1,459.9
Stock awards and equity units (share equivalent)	10.3		11.2		9.2		11.6
Diluted weighted average number of shares outstanding	1,342.1		1,468.7		1,339.7		1,471.5
Earnings Per Share attributable to common shareowners:
Basic	$	0.08	$	0.91	$	1.37	$	1.89
Diluted	0.08		0.90		1.36		1.87

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 quarter and six months ended June 30, 2024, the number of stock awards excluded from the computation was 3.9 million and 9.6 million, respectively. For both the quarter and six months ended June 30, 2023, the number of stock awards excluded from the computation was 4.0 million.

Note 5: 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 inputs, 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 revenues 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 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 June 30,				Six Months Ended June 30,
(dollars in millions, except per share amounts)	2024		2023		2024		2023
Total net sales	$	3	$	(29)	$	(15)	$	(69)
Operating profit	(62)		(30)		(224)		(154)
Income attributable to common shareowners (1)	(49)		(24)		(177)		(122)
Diluted earnings per share attributable to common shareowners (1)	$	(0.04)	$	(0.02)	$	(0.13)	$	(0.08)

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

In addition to the amounts included in the table above, during the quarter ended June 30, 2024, Raytheon initiated the termination of a fixed price development contract with a foreign customer, herein referred to as “Raytheon Contract Termination.” As a result of this action, Raytheon recognized a $575 million charge related to the estimated impact of this termination. This charge includes the write-off of remaining contract assets and our best estimate of the expected settlement in conjunction with this termination.

Note 6: Accounts Receivable, Net

Accounts receivable, net consisted of the following:

(dollars in millions)	June 30, 2024		December 31, 2023
Accounts receivable	$	10,561	$	11,154
Allowance for expected credit losses	(309)		(316)
Total accounts receivable, net	$	10,252	$	10,838

Note 7: Contract Assets and Liabilities

Contract assets reflect revenue recognized and performance obligations satisfied in advance of customer billings. 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, 2024		December 31, 2023
Contract assets	$	13,581	$	12,139
Contract liabilities	(17,665)		(17,183)
Net contract liabilities	$	(4,084)	$	(5,044)

Contract assets increased $1.4 billion during the six months ended June 30, 2024 primarily due to sales in excess of billings on certain contracts at Pratt & Whitney and Raytheon. Contract liabilities increased $0.5 billion during the six months ended June 30, 2024 primarily due to billings in excess of sales on certain contracts at Raytheon. We recognized revenue of $1.8 billion and $4.4 billion during the quarter and six months ended June 30, 2024, respectively, related to contract liabilities outstanding as of January 1, 2024 and 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 outstanding as of January 1, 2023.

As of June 30, 2024, 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 are net of an allowance for expected credit losses of $203 million and $197 million as of June 30, 2024 and December 31, 2023, respectively.

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Note 8: Inventory, net

Inventory, net consisted of the following:

(dollars in millions)	June 30, 2024		December 31, 2023
Raw materials	$	4,250	$	3,911
Work-in-process	4,686		4,162
Finished goods	4,111		3,704
Total inventory, net	$	13,047	$	11,777

Note 9: Borrowings and Lines of Credit

As of June 30, 2024, we had a revolving credit agreement with various banks permitting aggregate borrowings of up to $5.0 billion, which expires in August 2028. As of June 30, 2024, there were no borrowings outstanding under this agreement.

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, 2024, our maximum commercial paper borrowing limit was $5.0 billion as the commercial paper is backed by our $5.0 billion revolving credit agreement. At June 30, 2024 and December 31, 2023, we had no commercial paper borrowings outstanding. During the six months ended June 30, 2024, we had no new borrowings or repayments of commercial paper with maturities greater than 90 days. During the six months ended June 30, 2023, we had no new borrowings and $200 million in repayments of commercial paper with maturities greater than 90 days.

There were no issuances of long-term debt during the six months ended June 30, 2024. We had the following issuances of long-term debt during the six months ended June 30, 2023:

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

There were no repayments of long-term debt during the six months ended June 30, 2023. We made the following repayments of long-term debt during the six months ended June 30, 2024:

Date	Description of Notes	Aggregate Principal Balance (in millions)
May 7, 2024	3 Month SOFR plus 1.225% Term Loan due 2025	$	250
April 17, 2024	3 Month SOFR plus 1.225% Term Loan due 2025	250
April 4, 2024	3 Month SOFR plus 1.225% Term Loan due 2025	250
March 15, 2024	3.200% notes due 2024	950

(dollars in millions)	June 30, 2024		December 31, 2023
3.200% notes due 2024 (1)	$	—	$	950
3.150% notes due 2024 (1)	300		300
3 Month SOFR plus 1.225% term loan due 2025	1,250		2,000
3.950% notes due 2025 (1)	1,500		1,500
5.000% notes due 2026 (1)	500		500
2.650% notes due 2026 (1)	719		719
3 Month SOFR plus 1.225% term loan due 2026	2,000		2,000
5.750% notes due 2026 (1)	1,250		1,250
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

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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
5.750% notes due 2029 (1)	500		500
7.500% notes due 2029 (1)	414		414
2.150% notes due 2030 (€500 million principal value) (1)	535		548
2.250% notes due 2030 (1)	1,000		1,000
6.000% notes due 2031 (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		1,250
6.100% notes due 2034 (1)	1,500		1,500
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		1,250
6.400% notes due 2054 (1)	1,750		1,750
Other (including finance leases)	254		255
Total principal long-term debt	41,983		43,697
Other (fair market value adjustments, (discounts)/premiums, and debt issuance costs)	(63)		(59)
Total long-term debt	41,920		43,638
Less: current portion	1,617		1,283
Long-term debt, net of current portion	$	40,303	$	42,355

(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 as of June 30, 2024 is approximately 13 years.

Note 10: 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.

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Contributions to our plans were as follows:

	Quarter Ended June 30,				Six Months Ended June 30,
(dollars in millions)	2024		2023		2024		2023
U.S. qualified defined benefit plans	$	—	$	—	$	—	$	—
International defined benefit plans	10		20		12		28
PRB plans	4		8		13		12
Defined contribution plans	339		317		734		689

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

(dollars in millions)	June 30, 2024		December 31, 2023
Noncurrent pension assets (included in Other assets)	$	1,906	$	1,296
Current pension and PRB liabilities (included in Accrued employee compensation)	270		270
Future pension and postretirement benefit obligations	2,264		2,385

The amounts recognized in Future pension and postretirement benefit obligations consist of:

(dollars in millions)	June 30, 2024		December 31, 2023
Noncurrent pension liabilities	$	1,634	$	1,737
Noncurrent PRB liabilities	568		582
Other pension and PRB related items	62		66
Future pension and postretirement benefit obligations	$	2,264	$	2,385

The components of net periodic (income) expense for our defined pension and PRB plans were as follows:

	Pension Benefits Quarter Ended June 30,				PRB Quarter Ended June 30,
(dollars in millions)	2024		2023		2024		2023
Operating expense
Service cost	$	47	$	56	$	1	$	1
Non-operating expense
Interest cost	596		627		11		12
Expected return on plan assets	(936)		(938)		(5)		(5)
Amortization of prior service credit	(42)		(40)		—		—
Recognized actuarial net (gain) loss	5		(95)		(6)		(8)
Net settlement, curtailment, and special termination benefit (gain) loss	3		—		—		—
Non-service pension income	(374)		(446)		—		(1)
Total net periodic (income) expense	$	(327)	$	(390)	$	1	$	—

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