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What changed in RTX Corporation's 10-K — 2024 vs 2025

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Paragraph-level year-over-year comparison of RTX Corporation's 2024 and 2025 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2025 report.

+425 added−511 removedSource: 10-K (2026-02-06) vs 10-K (2025-02-03)

Top changes in RTX Corporation's 2025 10-K

425 paragraphs added · 511 removed · 349 edited across 9 sections

Item 1. Business

Business — how the company describes what it does

54 edited+13 added−23 removed61 unchanged
Biggest changeSuch risks, uncertainties, and other factors include, without limitation: • the effect of changes in economic, capital market, and political conditions in the U.S. and globally, such as from the global sanctions and export controls with respect to Russia, and any changes therein, and including changes related to financial market conditions, banking industry disruptions, fluctuations in commodity prices or supply (including energy supply), inflation, interest rates and foreign currency exchange rates, disruptions in global supply chain and labor markets, levels of consumer and business confidence, the imposition of tariffs, and geopolitical risks, including, without limitation, in the Middle East and Ukraine; • risks associated with U.S. government sales, including changes or shifts in defense spending due to budgetary constraints, spending cuts resulting from sequestration, a continuing resolution, a government shutdown, the debt ceiling or measures taken to avoid default, or otherwise, and uncertain funding of programs; • risks relating to our performance on our contracts and programs, including our ability to control costs, the mix of our contracts and programs, and our inability to pass some or all of our costs on fixed price contracts to the customer, and risks related to our dependence on U.S. government approvals for international contracts; • challenges in the development, certification, production, delivery, support, and performance of RTX advanced technologies and new products and services and the realization of the anticipated benefits (including our expected returns under customer contracts), as well as the challenges of operating in RTX’s highly-competitive industries both domestically and abroad; • risks relating to RTX’s reliance on U.S. and non-U.S. suppliers and commodity markets, including the effect of sanctions, tariffs, delays, and disruptions in the delivery of materials and services to RTX or its suppliers and cost increases; • risks relating to RTX’s international operations from, among other things, changes in trade policies and implementation of sanctions, foreign currency fluctuations, economic conditions, political factors, sales methods, U.S. or local government regulations, and our dependence on U.S. government approvals for international contracts; • the condition of the aerospace industry; 11 Table of Contents • potential changes in U.S. government policy positions, including changes in DoD policies or priorities; • the ability of RTX to attract, train, qualify, and retain qualified personnel and maintain its culture and high ethical standards, and the ability of our personnel to continue to operate our facilities and businesses around the world; • the scope, nature, timing, and challenges of managing acquisitions, investments, divestitures (including the pending disposition of Collins' actuation and flight control business), and other transactions, including the realization of synergies and opportunities for growth and innovation, the assumption of liabilities, and other risks and incurrence of related costs and expenses, and risks related to completion of announced divestitures; • compliance with legal, environmental, regulatory, and other requirements, including, among other things, obtaining regulatory approvals for new technologies and products, and export and import requirements such as ITAR and EAR, anti-bribery and anticorruption requirements, such as the Foreign Corrupt Practices Act (FCPA), industrial cooperation agreement obligations, and procurement and other regulations in the U.S. and other countries in which RTX and its businesses operate; • the outcome of pending, threatened, and future legal proceedings, investigations, and other contingencies, including those related to U.S. government audits and disputes and the potential for suspension or debarment of U.S. government contracting or export privileges as a result thereof; • risks related to the Deferred Prosecution Agreements, SEC Administrative Order, the Consent Agreement; and the related investigations by the SEC and the DOJ; • factors that could impact RTX’s ability to engage in desirable capital-raising or strategic transactions, including its credit rating, capital structure, levels of indebtedness, and related obligations, capital expenditures, and research and development spending, and capital deployment strategy including with respect to share repurchases, and the availability of credit, borrowing costs, credit market conditions, and other factors; • uncertainties associated with the timing and scope of future repurchases by RTX of its common stock, or declarations of cash dividends, which may be discontinued, accelerated, suspended, or delayed at any time due to various factors, including market conditions and the level of other investing activities and uses of cash; • risks relating to realizing expected benefits from, incurring costs for, and successfully managing strategic initiatives such as cost reduction, restructuring, digital transformation, and other operational initiatives; • risks of additional tax exposures due to new tax legislation or other developments in the U.S. and other countries in which RTX and its businesses operate; • risks relating to addressing the Powder Metal Matter, including, without limitation, the number and expected timing of shop visits, inspection results and scope of work to be performed, turnaround time, availability of parts, available capacity at overhaul facilities, outcomes of negotiations with impacted customers, and risks related to other engine models that may be impacted by the Powder Metal Matter, and in each case the timing and costs relating thereto, as well as other issues that could impact RTX product performance, including quality, reliability, or durability; • changes in production volumes of one or more of our significant customers as a result of business, labor, or other challenges, and the resulting effect on its or their demand for our products and services; • risks relating to an RTX product safety failure, quality issue, or other failure affecting RTX’s or its customers’ or suppliers’ products or systems; • risks relating to cybersecurity, including cyber-attacks on RTX’s IT infrastructure, products, suppliers, customers and partners, and cybersecurity-related regulations; • risks related to insufficient indemnity or insurance coverage; • risks related to artificial intelligence; • risks relating to our intellectual property and certain third-party intellectual property; • threats to RTX facilities and personnel, as well as other events outside of RTX’s control such as public health crises, damaging weather, or other acts of nature; • the effect of changes in accounting estimates for our programs on our financial results; • the effect of changes in pension and other postretirement plan estimates and assumptions and contributions; • risks relating to an impairment of goodwill and other intangible assets; • the effects of climate change and changing or new climate-related regulations, customer and market demands, products and technologies; and • the intended qualification of (1) the Raytheon merger as a tax-free reorganization and (2) the separation transactions and other internal restructurings as tax-free to us (formerly known as United Technologies Corporation (UTC)) and former UTC shareowners, in each case, for U.S. federal income tax purposes.
Biggest changeSuch risks, uncertainties, and other factors include, without limitation: • changes in economic, capital market, and political conditions in the U.S. and globally; • changes in U.S. government defense spending, national priorities, and policy positions; • our performance on our contracts and programs, including our ability to control costs, and our dependence on U.S. government approvals for certain international contracts; • challenges in the development, certification, production, delivery, support, and performance of RTX’s advanced technologies and new products and services and the realization of anticipated benefits; • the challenges of operating in RTX’s highly-competitive industries both domestically and abroad; • our reliance on U.S. and non-U.S. suppliers and commodity markets, including cost increases and disruptions in the delivery of materials and services to RTX or our suppliers; • changes in trade policies, implementation of sanctions, imposition of tariffs (and counter-tariffs), and other trade measures and restrictions, foreign currency fluctuations, and sales methods; • the economic condition of the aerospace industry; • the ability of RTX to attract, train, qualify, and retain qualified personnel and maintain its culture and high ethical standards, and the ability of our personnel to continue to operate our facilities and businesses around the world; • the scope, nature, timing, and challenges of managing and completing acquisitions, investments, divestitures, and other transactions; • compliance with legal, environmental, regulatory, and other requirements in the U.S. and other countries in which RTX and its businesses operate; • pending, threatened, and future legal proceedings, investigations, audits, and other contingencies; • the Deferred Prosecution Agreements, SEC Administrative Order, the Consent Agreement; and the related investigations by the SEC and the DOJ; • RTX’s ability to engage in desirable capital-raising or strategic transactions; • repurchases by RTX of its common stock, or declarations of cash dividends, which may be discontinued, accelerated, suspended, or delayed at any time due to various factors; • realizing expected benefits from, incurring costs for, and successfully managing strategic initiatives such as cost reduction, restructuring, digital transformation, and other operational initiatives; • additional tax exposures due to new tax legislation or other developments in the U.S. and other countries in which RTX and its businesses operate; • the Powder Metal Matter; • changes in production volumes of one or more of our significant customers as a result of business, labor, or other challenges, and the resulting effect on its or their demand for our products and services; • an RTX product safety failure, quality issue, or other failure affecting RTX’s or its customers’ or suppliers’ products or systems; • cybersecurity, including cyber-attacks on RTX’s information technology (IT) infrastructure, products, suppliers, customers and partners, and cybersecurity-related regulations; • insufficient indemnity or insurance coverage; • our intellectual property and certain third-party intellectual property; • threats to RTX facilities and personnel, or those of its suppliers or customers, as well as public health crises, damaging weather, acts of nature, or other similar events outside of RTX’s control that may affect RTX or its suppliers or customers; 11 Table of Contents • changes in accounting estimates for our programs on our financial results; • changes in pension and other postretirement plan estimates and assumptions and contributions; • an impairment of goodwill and other intangible assets; and • climate change and climate-related regulations, and any related customer and market demands, products and technologies.
We regularly conduct talent reviews and develop succession plans to ensure that we continue to cultivate the leadership pipeline of talent needed to execute our business strategy. We solicit employee feedback on RTX’s performance as an employer via confidential surveys in the pre-hire, active, and exit stages of employment, and use those results to improve our workplace and employee experience.
We regularly conduct talent reviews and develop succession plans to ensure that we continue to cultivate the leadership pipeline of talent needed to execute our business strategy. We solicit employee feedback on RTX’s performance as an employer via surveys in the pre-hire, active, and exit stages of employment, and use those results to improve our workplace and employee experience.
Collins designs, manufactures, and supplies electric power generation, management and distribution systems, environmental control systems, flight control systems, air data and aircraft sensing systems, engine control systems, engine components, engine nacelle systems, including thrust reversers and mounting pylons, interior and exterior aircraft lighting, aircraft cargo systems, evacuation systems, landing systems (including landing gear, wheels, and braking systems), communication, navigation, surveillance systems, fire and ice detection and protection systems, actuation systems, integrated avionics, and propeller systems.
Collins designs, manufactures, and supplies electric power generation, management and distribution systems, environmental control systems, flight control systems, air data and aircraft sensing systems, engine control systems, engine components, engine nacelle systems, including thrust reversers and mounting pylons, interior and exterior aircraft lighting, aircraft cargo systems, evacuation systems, landing systems (including landing gear, wheels, and braking systems), communication, navigation, surveillance systems, fire and ice detection and protection systems, integrated avionics, and propeller systems.
We invest in our workforce through internal and external education, training and development programs, and tuition assistance benefits. We also provide market competitive compensation and benefits. We recognize and reward performance during our annual review process.
We invest in our workforce through internal and external education, training and development programs, and tuition assistance benefits. We also provide competitive compensation and benefits. We recognize and reward performance during our annual review process.
Our U.S. government contracts generally are subject to the Federal Acquisition Regulation (FAR), which sets forth policies, procedures, and requirements for the acquisition of goods and services by the U.S. government; department-specific regulations that implement or supplement the FAR, such as the DoD’s Defense Federal Acquisition Regulation Supplement (DFARS); and other applicable laws and regulations.
Our U.S. government contracts generally are subject to the Federal Acquisition Regulation (FAR), which sets forth policies, procedures, and requirements for the acquisition of goods and services by the U.S. government; department-specific regulations that implement or supplement the FAR, such as the DoW’s Defense Federal Acquisition Regulation Supplement (DFARS); and other applicable laws and regulations.
Forward-looking statements can be identified by the use of words such as “believe,” “expect,” “expectations,” “plans,” “strategy,” “prospects,” “estimate,” “project,” “target,” “commit,” “commitment,” “anticipate,” “will,” “should,” “see,” “guidance,” “outlook,” “goals,” “objectives,” “confident,” “on track,” and other words of similar meaning.
Forward-looking statements can be identified by the use of words such as “believe,” “expect,” “expectations,” “plans,” “strategy,” “prospects,” “estimate,” “project,” “target,” “commit,” “commitment,” “anticipate,” “will,” “should,” “see,” “guidance,” “outlook,” “goals,” “objectives,” “confident,” “on track,” “designed to,” and other words of similar meaning.
We regularly pursue cost 8 Table of Contents reductions through a number of mechanisms, including consolidating or re-sourcing our purchases, expanding the use of long-term agreements, reducing the number of suppliers generally (except as described above for important supply alternatives), strategic sourcing in cost competitive regions, capitalizing on competitions among suppliers and other low-cost sourcing initiatives, and extending our contractually negotiated raw material pricing to higher-tier suppliers in our supply chain.
We regularly pursue cost reductions through a number of mechanisms, including consolidating or re-sourcing our purchases, expanding the use of long-term agreements, reducing the number of suppliers generally (except as described above for important supply alternatives), strategic sourcing in cost competitive regions, capitalizing on competitions among suppliers and other low-cost sourcing initiatives, and extending our contractually negotiated raw material pricing to higher-tier suppliers in our supply chain.
Additional information as to factors that may cause actual results to differ materially from those expressed or implied in the forward-looking statements is disclosed from time to time in our other filings with the SEC . 13 Table of Contents
Additional information as to factors that may cause actual results to differ materially from those expressed or implied in the forward-looking statements is disclosed from time to time in our other filings with the SEC . 12 Table of Contents
“Management’s Discussion and Analysis of Financial Condition and Results of Operations,” in “Cautionary Note Concerning Factors That May Affect Future Results and Risk Factor Summary,” and in Item 1A. “Risk Factors” of this Form 10-K. Regulatory Matters Our businesses are subject to extensive regulation in the industries we serve.
“Management’s Discussion and Analysis of Financial Condition and Results of Operations,” in “Cautionary Note Concerning Factors That May Affect Future Results and Risk Factor Summary,” and in Item 1A. “Risk Factors” of this Form 10-K. 8 Table of Contents Regulatory Matters Our businesses are subject to extensive regulation in the industries we serve.
Pratt & Whitney also continues to enhance its programs through performance improvement measures and product base expansion, utilizing similar collaboration arrangements. 5 Table of Contents Raytheon is a leading provider of defensive and offensive threat detection, tracking and mitigation capabilities for U.S. and foreign government and commercial customers.
Pratt & Whitney also continues to enhance its programs through performance improvement measures and product base expansion, utilizing similar collaboration arrangements. Raytheon is a leading provider of defensive and offensive threat detection, tracking and mitigation capabilities for U.S. and foreign government and commercial customers.
In recent years, we have experienced supply chain disruptions that have impacted our ability to procure raw materials, microelectronics, and certain commodities, resulting in delays and increased costs. These disruptions have been driven by supply chain market constraints and macroeconomic conditions, including inflation and labor market shortages.
In recent years, we have experienced supply chain disruptions that have impacted our ability to procure raw materials, including certain rare earth elements, microelectronics, and certain commodities, resulting in delays and increased costs. These disruptions have been driven by supply chain market constraints and macroeconomic conditions, including inflation and labor market shortages.
The high inflationary environment has increased material and component prices, labor rates and supplier costs, which has negatively impacted our costs. Current geopolitical conditions, including conflicts and other causes of strained intercountry relations, as well as sanctions and other trade restrictive activities, are continuing to contribute to these supply chain issues.
The high inflationary environment has increased material and component prices, labor rates and supplier costs, which has negatively impacted our costs. Current geopolitical conditions, including conflicts and other causes of strained intercountry relations, as well as sanctions and other trade restrictive activities, such as tariffs and export controls, are continuing to contribute to these supply chain issues.
Pratt & Whitney sells products and services principally to aircraft manufacturers, airlines and other aircraft operators, aircraft leasing companies, and the U.S. and foreign governments. Pratt & Whitney’s largest commercial customer by sales is Airbus, with sales, prior to discounts and incentives, of 31%, 48%, and 33% of total Pratt & Whitney segment sales in 2024, 2023, and 2022, respectively.
Pratt & Whitney sells products and services principally to aircraft manufacturers, airlines and other aircraft operators, aircraft leasing companies, and the U.S. and foreign governments. Pratt & Whitney’s largest commercial customer by sales is Airbus, with sales, prior to discounts and incentives, of 29%, 31%, and 48% of total Pratt & Whitney segment sales in 2025, 2024, and 2023, respectively.
These surveys cover various topics related to employee engagement and culture. We have industry-leading health and safety programs to help maintain a safe work environment for all employees and mitigate workplace incidents, risks, and hazards. We review and monitor our performance and encourage employee input to identify opportunities to reduce incidents.
These surveys cover various topics related to employee engagement and culture. 7 Table of Contents We have industry-leading health and safety programs to help maintain a safe work environment for all employees and mitigate workplace incidents, risks, and hazards. We review and monitor our performance and encourage employee input to identify opportunities to reduce incidents.
Forward-looking statements may include, among other things, statements relating to future sales, earnings, cash flow, results of operations, uses of cash, share repurchases, tax payments and rates, research and development spending, cost savings, other measures of financial performance, potential future plans, strategies or transactions, credit ratings and net indebtedness, the Powder Metal Matter and related matters and activities, including without limitation other engine models that may be impacted, the pending disposition of Collins’ actuation and flight control business, targets and commitments (including for share repurchases or otherwise), and other statements which are not solely historical facts.
Forward-looking statements may include, among other things, statements relating to future sales, earnings, cash flow, results of operations, uses of cash, share repurchases, tax payments and rates, research and development spending, cost savings, other measures of financial performance, potential future plans, strategies or transactions, credit ratings and net indebtedness, the Powder Metal Matter and related matters and activities, including without limitation other engine models that may be impacted, targets and commitments (including for share repurchases or otherwise), and other statements which are not solely historical facts.
We manufacture and service our products in approximately 230 manufacturing, production, or overhaul facilities in approximately 30 countries, including the U.S. Intellectual Property We maintain a robust portfolio of patents, trademarks, copyrights, trade secrets, licenses, and franchises related to our businesses.
We manufacture and service our products in approximately 225 manufacturing, production, or overhaul facilities in approximately 25 countries, including the U.S. Intellectual Property We maintain a robust portfolio of patents, trademarks, copyrights, trade secrets, licenses, and franchises related to our businesses.
Foreign policy of the U.S. or other licensing jurisdictions may affect the licensing process or otherwise prevent us from engaging in business dealings with 9 Table of Contents certain individuals, entities, or countries.
Foreign policy of the U.S. or other licensing jurisdictions may affect the licensing process or otherwise prevent us from engaging in business dealings with certain individuals, entities, or countries.
Total backlog was $218 billion and $196 billion as of December 31, 2024 and 2023, respectively. Of the total RPO as of December 31, 2024, we expect approximately 25% will be recognized as revenue over the next 12 months. Competition All of our businesses are subject to significant competition.
Total backlog was $268 billion and $218 billion as of December 31, 2025 and 2024, respectively. Of the total RPO as of December 31, 2025, we expect approximately 25% will be recognized as revenue over the next 12 months. Competition All of our businesses are subject to significant competition.
We deal with numerous U.S. government agencies and entities, including but not limited to all of the branches of the DoD and the FAA. Similar government authorities exist in all of the countries in which we do business. U.S. Government Contracts. As previously discussed, the U.S. government is our largest customer, representing a substantial majority of our total defense sales.
We deal with numerous U.S. government agencies and entities, including but not limited to all of the branches of the DoW and the FAA. Similar government authorities exist in all of the countries in which we do business. U.S. Government Contracts. The U.S. government is our largest customer, representing a substantial majority of our total defense sales.
Pratt & Whitney produces and services the PW1000G Geared Turbofan (GTF) engine family. GTF engine models have demonstrated a significant reduction in fuel burn and noise levels and lower environmental emissions compared to prior-generation engines. The GTF aftermarket network expanded to 18 facilities worldwide, increasing PW1100G-JM shop visit output by approximately 30% year over year in 2024.
Pratt & Whitney produces and services the PW1000G Geared Turbofan (GTF) engine family. GTF engine models have demonstrated a significant reduction in fuel burn and noise levels and lower environmental emissions compared to prior-generation engines. The GTF aftermarket network expanded to 21 facilities worldwide, increasing PW1100G-JM shop visit output by approximately 26% year over year in 2025.
Attracting, developing, advancing, and retaining the best talent is critical for us to execute our strategy and grow our business. Individuals with technical, engineering, and science backgrounds, experience, or interests are particularly important for us to succeed in the industries in which we compete.
Attracting, developing, advancing, and retaining the best talent while promoting trust, accountability and shared purpose, is critical for us to execute our strategy and grow our business. Individuals with technical, engineering, and science backgrounds, experience, or interests are particularly important for us to succeed in the industries in which we compete.
Under DPA-1, DPA-2, and the SEC Administrative Order, Raytheon Company and the Company are required, among other things, to retain an independent compliance monitor satisfactory to the DOJ and the SEC (for a term ending three years from the date on which the monitor is engaged) and are required to undertake certain cooperation and disclosure obligations (for a term commencing on the effective date of DPA-1 and the SEC Administrative Order, as applicable, and ending three years from the date on which the monitor is engaged).
Under DPA-1, DPA-2, and the SEC Administrative Order, Raytheon Company and the Company are required to undertake certain cooperation and disclosure obligations (for a term commencing on the effective date of DPA-1 and the SEC Administrative Order, as applicable, and ending three years from the date on which Raytheon Company and the Company engage an independent compliance monitor satisfactory to the DOJ and SEC).
We continuously monitor the hiring, retention, and management of our employees by business and function with a focus to attract, develop, engage, advance, and 7 Table of Contents retain the best talent in the industry. We aim to identify and hire quality external talent with skills matched to our Company’s business needs.
Talent Acquisition, Development, and Retention; Employee Health and Safety. We continuously monitor the hiring, retention, and management of our employees by business and function with a focus to attract, develop, engage, advance, and retain the best talent in the industry. We aim to identify and hire quality external talent with skills matched to our Company’s business needs.
Department of Defense (DoD), including the U.S. Navy, U.S. Army, Missile Defense Agency, U.S. Air Force, and U.S. Space Force, as well as programs with U.S. federal civil customers, and other international and classified customers.
Department of War (DoW) (formerly referred to as the U.S. Department of Defense), including the U.S. Navy, U.S. Army, Missile Defense Agency, U.S. Air Force, and U.S. Space Force, as well as programs with U.S. federal civil customers, and other international and classified customers.
Our U.S. government sales were as follows: (dollars in millions) 2024 2023 2022 Sales to the U.S. government (1) $ 32,246 $ 31,628 $ 30,317 Sales to the U.S. government as a percentage of total net sales (1) (2) 40 % 46 % 45 % (1) Excludes foreign military sales through the U.S. government.
Our U.S. government sales were as follows: (dollars in millions) 2025 2024 2023 Sales to the U.S. government (1) $ 33,279 $ 32,246 $ 31,628 Sales to the U.S. government as a percentage of total net sales (1) (2) 38 % 40 % 46 % (1) Excludes foreign military sales through the U.S. government.
Raytheon has experienced increased global demand for the combat-proven Coyote system, a low-cost, expendable, unmanned aircraft system with the capability of operating in autonomous swarms. Sales and Customers We have substantial U.S. government sales, which we conduct through all three of our business segments. In addition, as a global company, all three of our business segments have substantial international sales.
Army and international customers. In 2025, Raytheon also continued to experience increased global demand for the combat-proven Coyote system, a low-cost, expendable, unmanned aircraft system with the capability of operating in autonomous swarms. Sales and Customers We have substantial U.S. government sales, which we conduct through all three of our business segments.
As a result, our businesses and operations are subject to both U.S. and non-U.S. government laws, regulations, and procurement policies and practices, including regulations relating to export and import controls, tariffs, taxes, investment, sanctions, exchange controls, anti-corruption, privacy, and cash repatriation. Our international sales are also subject to varying currency, political, and economic risks.
As a result, our businesses and operations are subject to both U.S. and non-U.S. government laws, regulations, and procurement policies and practices, including regulations relating to tariffs, taxes, investment, sanctions, exchange controls, anti-corruption, privacy, and cash repatriation.
In addition, this Form 10-K includes important information as to risks, uncertainties, and other factors that may cause actual results to differ materially from those expressed or implied in the forward-looking statements.
In addition, this Form 10-K includes important information as to risks, uncertainties, and other factors that may cause actual results to differ materially from those expressed or implied in the forward-looking statements. The forward-looking statements speak only as of the date of this report or, in the case of any document incorporated by reference, the date of that document.
Workforce Demographics. As of December 31, 2024, our global employee population consisted of a total of approximately 186,000 employees, including approximately 57,000 engineering professionals and approximately 34,000 employees represented by labor unions and other employee representative bodies. Our employees were located in 52 countries, with 68% of our employees located in the U.S. We have published our U.S.
Workforce Demographics. As of December 31, 2025, our global employee population consisted of a total of approximately 180,000 employees, including approximately 54,000 engineering professionals and approximately 32,000 employees represented by labor unions and other employee representative bodies. Our employees were located in 52 countries, with 69% of our employees located in the U.S.
Pratt & Whitney’s small engine business, Pratt & Whitney Canada, is among the world’s leading suppliers of engines powering regional airlines, general and business aviation, and helicopters. Pratt & Whitney also produces, sells, and services military and commercial auxiliary power units. Pratt & Whitney provides fleet management services and aftermarket maintenance, repair, and overhaul services in all of these segments.
Pratt & Whitney also designs, manufactures, and services small engines powering regional airlines, general and business aviation, and helicopters. Pratt & Whitney produces, sells, and services military and commercial auxiliary power units. Pratt & Whitney provides fleet management services and aftermarket maintenance, repair, and overhaul services in all of these product segments.
All forward-looking statements involve risks, uncertainties, and other factors that may cause actual results to differ materially from those expressed or implied in the forward-looking statements. For those statements, we claim the protection of the safe harbor for forward-looking statements contained in the U.S. Private Securities Litigation Reform Act of 1995.
All forward-looking statements involve risks, uncertainties, changes in circumstances, and other factors that are hard to predict, and each of which may cause actual results to differ materially from those expressed or implied in the forward-looking statements. For those statements, we claim the protection of the safe harbor for forward-looking statements contained in the U.S.
Our defense business serves both domestic and international customers as a prime contractor or subcontractor on a broad portfolio of defense and related programs for military and government customers. RTX Corporation was incorporated in Delaware in 1934.
We serve commercial and government customers in both the original equipment and aftermarket parts and services segments of the aerospace industry. Our defense business serves both domestic and international customers as a prime contractor or subcontractor on a broad portfolio of defense and related programs for military and government customers. RTX Corporation was incorporated in Delaware in 1934.
The GTF Advantage configuration currently under certification testing is expected to extend the benefits of the current GTF engine, increasing takeoff thrust by 4 to 8 percent and reducing fuel consumption by up to an additional 1 percent, maintaining the engine’s lead as the most efficient powerplant for the A320neo family.
In 2025, the GTF Advantage engine received FAA and European Union Safety Agency (EASA) certification for the Airbus A320 neo family and is expected to extend the benefits of the current GTF engine, increasing takeoff thrust by 4 to 8 percent and reducing fuel consumption by up to an additional 1 percent, maintaining the engine’s lead as the most efficient powerplant for the A320neo family.
These regulations impose a broad range of requirements, many of which are unique to government contracting, including various procurement, import and export, security, contract pricing and cost, contract termination and adjustment, audit, and product integrity requirements.
These regulations provide the U.S. government with various rights, including a broad right to unilaterally terminate contracts for convenience. These regulations further impose a broad range of requirements, many of which are unique to government contracting, including various procurement, import and export, security, contract pricing and cost, contract termination and adjustment, audit, and product integrity requirements.
Our sales to international customers, based on customer end use location, where known, were as follows: (dollars in millions) 2024 2023 2022 Total international sales $ 34,651 $ 29,440 $ 25,884 Total international sales as a percentage of total net sales (1) 43 % 43 % 39 % (1) 2023 total net sales includes the reduction in sales from the Powder Metal Matter. 6 Table of Contents Backlog.
Our sales to international customers were as follows: (dollars in millions) 2025 2024 2023 Total international sales $ 41,312 $ 34,651 $ 29,440 Total international sales as a percentage of total net sales (1) 47 % 43 % 43 % (1) 2023 total net sales includes the reduction in sales from the Powder Metal Matter. 6 Table of Contents Backlog.
If we were convicted of a violation of the federal Clean Air Act or Clean Water Act, the facility or facilities involved in the violation could be deemed ineligible to be used in performing any U.S. government contract we are awarded until the Environmental Protection Agency (EPA) thereafter certifies that the condition giving rise to the violation has been corrected. 10 Table of Contents In addition, we could be affected by future foreign or domestic laws or regulations imposed in response to concerns over climate change, and we monitor developments in environmental and climate-related laws and regulations and their potential impact to our business and financial condition.
If we were convicted of a violation of the federal Clean Air Act or Clean Water Act, the facility or facilities involved in the violation could be deemed ineligible to be used in performing any U.S. government contract we are awarded until the Environmental Protection Agency (EPA) thereafter certifies that the condition giving rise to the violation has been corrected.
In 2024, Raytheon achieved key advancements in, or received contract awards for, the following programs: Global Patriot program; LTAMDS program; SM-3 program; AIM-9X and the AMRAAM programs; and certain advanced technologies, including classified programs and an advanced development program.
In 2025, Raytheon achieved key advancements in, or received contract awards for, the following programs: Patriot, LTAMDS, SM-3, AIM-9X, AMRAAM, Tomahawk, and certain advanced technologies, including classified programs and advanced development programs. Major new contracts awarded in 2025 include contracts to provide AMRAAM missiles to the U.S. Navy, U.S.
In addition, in order to support U.S. government priorities, we may begin performance on an undefinitized contract action prior to completing contract negotiations on the terms, specifications, or price between the parties.
In addition, in order to support U.S. government priorities, we may begin performance on an undefinitized contract action prior to completing contract negotiations on the terms, specifications, or price between the parties. The U.S. government has the ability to unilaterally definitize contracts, which would obligate us to perform under terms and conditions imposed by the U.S. government without our agreement.
See “Note 20: Segment Financial Data” within Item 8 of this Form 10-K for additional information. U.S. Government Sales.
In addition, as a global company, all three of our business segments have substantial international sales. See “Note 20: Segment Financial Data” within Item 8 of this Form 10-K for additional information. U.S. Government Sales.
Collins’ largest commercial customers are Boeing and Airbus with combined sales, prior to discounts and incentives, of 16%, 19%, and 18% of total Collins segment sales in 2024, 2023, and 2022, respectively.
Collins’ largest commercial customers are Boeing and Airbus with combined sales, prior to discounts and incentives, of 16%, 16%, and 19% of total Collins segment sales in 2025, 2024, and 2023, respectively. In 2025, Collins was awarded a contract to deliver satellite communication systems to support survivable communications across multiple frequency bands.
Cautionary Note Concerning Factors That May Affect Future Results and Risk Factor Summary This Form 10-K contains statements which, to the extent they are not statements of historical or present fact, constitute “forward-looking statements” under the securities laws. From time to time, oral or written forward-looking statements may also be included in other information released to the public.
Our international sales are also subject to varying currency, political, and economic risks. 10 Table of Contents Cautionary Note Concerning Factors That May Affect Future Results This Form 10-K contains statements which, to the extent they are not statements of historical or present fact, constitute “forward-looking statements” under the securities laws.
The GTF family now powers more than 2,200 aircraft for 85 operators across three aircraft platforms: Airbus A320neo family, Airbus A220, and Embraer E-Jets E2. In 2024, Pratt & Whitney received FAA certification for the GTF engine that will power the Airbus A321XLR aircraft.
The GTF family now powers more than 2,600 aircraft for over 90 operators across three aircraft platforms: Airbus A320neo family, Airbus A220, and Embraer E-Jets E2.
Collins continues to invest in sustainable technologies, such as electrical power architectures, advanced thermoplastic materials, digital trajectory optimizers, highly efficient cooling systems, and numerous other technologies that provide lower weight, drag, and carbon footprint solutions on aircraft. Collins is also investing in higher efficiency build processes, that reduce chemical and power usage and increase the use of recycling.
Collins will also develop an advanced propeller system for improved fuel efficiency and reduced noise for such engine as part of PHARES. 4 Table of Contents Collins continues to invest in sustainable technologies, such as electrical power architectures, advanced composite materials, digital trajectory optimizers, highly efficient cooling systems, and numerous other technologies that provide lower weight, improved drag, and carbon footprint solutions on aircraft.
F135 engines are also used on all F-35 aircraft purchased by Joint Strike Fighter partner countries and other countries through foreign military sales arrangements. 2024 marked the 50th anniversary since the F-16 Fighting Falcon’s first flight, which was powered by the Pratt & Whitney F100 engine.
Navy’s F-35C jets. F135 engines are also used on all F-35 aircraft purchased by Joint Strike Fighter partner countries and other countries through foreign military sales arrangements.
Moreover, we have industry-leading ethics and compliance programs to help mitigate associated employee risks. We also provide health and wellness benefits and support flexible work arrangements for our employees. Additional information regarding our human capital strategy is available in our “People” section of our ESG Report that can be found on our company website.
Moreover, we have industry-leading ethics and compliance programs to help mitigate associated employee risks. We also provide health and wellness benefits and support flexible work arrangements for our employees. For information on the risks related to our human capital resources, see Item 1A. “Risk Factors” of this Form 10-K.
In 2024, RTX announced it had completed the preliminary design review of the hybrid-electric GTF engine demonstrator for the Clean Aviation SWITCH project. Pratt & Whitney produces and sustains the F135 engine for the U.S. government’s F-35 Joint Program Office to exclusively power the single-engine F-35 Lightning II aircraft (commonly known as the Joint Strike Fighter) produced by Lockheed Martin.
Pratt & Whitney produces and sustains the F135 engine for the U.S. government’s F-35 Joint Program Office to exclusively power the single-engine F-35 Lightning II fifth generation aircraft (commonly known as the Joint Strike Fighter) produced by Lockheed Martin. F135 propulsion system configurations are used for the U.S. Air Force’s F-35A, the U.S. Marine Corps’ F-35B, and the U.S.
In view of the risks and costs associated with developing new engines, Pratt & Whitney has entered into collaboration arrangements in which revenues, costs, and risks are shared with third parties. At December 31, 2024, the interests of third-party collaboration participants in Pratt & Whitney-directed jet engine programs ranged, in the aggregate per program, from 13% to 49%.
The development of new engines and improvements to current production engines present important growth opportunities for Pratt & Whitney. In view of the risks and costs associated with developing new engines, Pratt & Whitney has entered into collaboration arrangements in which revenues, costs, and risks are shared with third parties.
See “Note 1: Basis of Presentation and Summary of Accounting Principles” within Item 8 of this Form 10-K for a description of our accounting for collaboration arrangements.
At December 31, 2025, the interests of third-party collaboration participants in Pratt & Whitney-directed jet engine programs ranged, in the aggregate per 5 Table of Contents program, from 13% to 49%. See “Note 1: Basis of Presentation and Summary of Accounting Principles” within Item 8 of this Form 10-K for a description of our accounting for collaboration arrangements.
Air Force and international customers; a contract to provide Patriot Air Defense systems, including GEM-T missiles, to Romania; a contract to provide AIM-9X Sidewinder short-range air-to-air missiles for the U.S. Navy, U.S. Air Force, and international customers; a contract to produce AN/SPY-6(V) radars for the U.S. Navy; a contract to provide Next Generation Jammer Mid-Band (NGJ-MB) for the U.S.
Air Force, and international customers; SM-3 exoatmospheric missile defense interceptors to the Missile Defense Agency; AN/SPY-6 radars for the U.S. Navy; NASAMS to an international customer; Stinger missiles to the U.S. Army and an international customer; Next Generation Jammer Mid-Band (NGJ-MB) for the U.S. Navy and the Royal Australian Air Force; and Javelin guided munition for the U.S.
The compliance monitor will oversee Raytheon Company’s and the Company’s compliance with their respective obligations under DPA-1, DPA-2, and the SEC’s Administrative Order.
A single independent compliance monitor was selected to oversee Raytheon Company’s and the Company’s compliance with their 9 Table of Contents respective obligations under DPA-1, DPA-2, and the SEC Administrative Order, and that monitor is expected to be in place by the end of the first quarter.
Collins composite structural technology supports optimization of the design of aircraft components and equipment to minimize weight, maximize energy efficiency and reduce fuel burn. Collins works closely with numerous other industry organizations and airframers to explore alternative energy solutions such as sustainable 4 Table of Contents aviation fuel, hydrogen, and hybrid electric power sources.
Collins works closely with numerous other industry organizations and airframers to explore alternative energy solutions such as sustainable aviation fuel, hydrogen, and hybrid electric power sources. Collins also continues to invest in operational capacity in strategic locations in the United States (including Puerto Rico), India, Mexico, Singapore, and the Philippines.
Collins also continues to invest in operational capacity in strategic locations, including in the United States, India, Mexico, Singapore, and Puerto Rico. Pratt & Whitney is among the world’s leading suppliers of aircraft engines for commercial, military, business jet, and general aviation customers.
Pratt & Whitney is among the world’s leading suppliers of aircraft engines for commercial, military, business jet, and general aviation customers. Pratt & Whitney designs, manufactures, and services large engines for widebody, narrowbody, and large regional aircraft for commercial customers and for fighter, bomber, tanker, and transport aircraft for military customers.
Navy and international customers; a contract to provide Guidance Enhanced Missiles (GEM-T) tactical ballistic missiles for NATO Support and Procurement Agency (NSPA); a contract to provide AMRAAM missiles to the U.S. Navy, U.S.
Air Force and international customers; Guidance Enhanced Missiles (GEM-T) for the North Atlantic Treaty Organization (NATO) Support and Procurement Agency (NSPA) and an international customer; low-rate initial production of LTAMDS for the U.S. Army and Poland; Iron Dome Tamir production for an international customer; AIM-9X Sidewinder short-range air-to-air missiles for the U.S. Navy, U.S.
The F135 program also added Greece and Romania as new customers, bringing the total number of global participants to 20. In addition, significant activity continued on military engine development programs including the Next Generation Adaptive Propulsion Program (NGAP). The NGAP team completed a critical assessment of its offering with the U.S.
Additionally, Pratt & Whitney continued design maturation and aircraft integration efforts for the F135 Engine Core Upgrade (ECU). Significant activity continued on Pratt & Whitney’s military engine development programs, including the Next Generation Adaptive Propulsion (NGAP) program. In early 2025, Pratt & Whitney completed the Detailed Design Review of its XA103 engine for the U.S.
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References to “Raytheon Company” mean Raytheon Company, which became a wholly owned subsidiary of RTX on April 3, 2020 through an all-stock merger transaction between United Technologies Corporation and Raytheon Company (the surviving company of which is RTX Corporation). We serve commercial and government customers in both the original equipment and aftermarket parts and services segments of the aerospace industry.
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Collins was also awarded a contract by the Federal Aviation Administration (FAA) to support the Radar System Replacement program as part of the Department of Transportation’s Brand New Air Traffic Control System. Collins was selected to be the primary subcontractor for the U.S.
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In 2024, Collins was awarded expanded contract scope for the Federal Aviation Administration (FAA) air traffic control automation system to implement technical refresh updates aimed at improving the air traffic controller work environment and system security.
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Navy’s solution for engineering design and manufacturing of the Very Low Frequency communication subsystem, as well as mission command, control, and communications infrastructure, Advanced Extremely High Frequency and voice communications.
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Collins was also awarded contracts to supply spare parts for the Army Tactical Navigation System and to design, develop, and deliver systems and products for a new aircraft under the United States Air Force Survivable Airborne Operations Center program.
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In addition, Collins was awarded a follow-on contract from the FAA to continue support of the Standard Terminal Automation Replacement System (STARS) which is used to manage aircraft spacing and sequencing on approach. Collins secured over $4 billion in combined long-term agreements to provide new maintenance, repair and overhaul services, and long-term contracts to provide spare parts, for several airlines.
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Collins was also awarded $2 billion in the aggregate for new maintenance, repair and overhaul, and spares long-term contracts with several airlines.
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Finally, Collins was selected by the European Union’s Clean Aviation Joint Undertaking (Clean Aviation) to collaborate with Pratt & Whitney Canada as well as other consortium members on multiple development projects aimed at increasing fuel efficiency for next-generation regional aircraft, most notably the Powerplant Hybrid Applications Regional Segment (PHARES) project.
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In addition, Collins continued its significant product development activities, including for major systems on the Airbus A321XLR, the Boeing 777X and 737 MAX 10, and systems in support of the Boeing T-7A trainer and the Bell V 280 (FLRAA).
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As part of the PHARES project, Pratt & Whitney Canada will lead the development of a hybrid-electric PW127XT-derivative engine, incorporating a Collins 250kW motor and integrated power controller.
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Pratt & Whitney’s Commercial Engines and Military Engines businesses design, develop, produce, and maintain families of large engines for wide- and narrow-body and large regional aircraft for commercial customers and for fighter, bomber, tanker, and transport aircraft for military customers.
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Collins is also investing in higher efficiency build processes, that reduce chemical and power usage and increase the use of recycling. Collins’ thermoplastic and carbon structural technologies support optimization of the design of aircraft components and equipment to minimize weight, maximize energy efficiency, reduce fuel burn, and extend brake life.
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F135 propulsion system configurations are used for the U.S. Air Force’s F-35A, the U.S. Marine Corps’ F-35B, and the U.S. Navy’s F-35C jets.
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In 2025, Pratt & Whitney’s F135 engine surpassed one million engine flight hours, and the company was awarded a $2.8 billion undefinitized contract action (UCA) for production of Lot 18 and Lot 19 long lead funding for the F135 engines to power all three variants of the F-35 Lightning II aircraft.
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With more than 300 million flight hours, the F100 is a mainstay powerplant for 23 global air forces, powering approximately two-thirds of global F-16s and nearly three-quarters of F-15s. Pratt & Whitney completed the F135 Engine Core Upgrade (ECU) preliminary design review and was awarded a new contract valued at up to $1.3 billion for continued work on the ECU.
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Air Force’s NGAP, allowing it to begin procurement of hardware for the construction of the prototype ground demonstrator. Most recently, Pratt & Whitney announced accelerated XA103 engine development through the use of digital data packages, and continued progress toward the next major program milestone.
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Air Force, moving the program closer to completing its detailed design review. Meanwhile, the B-21 Raider, which is powered by Pratt & Whitney engines, continued to progress its flight test program. 2024 also marked the certification of Pratt & Whitney Canada’s PW545D engine that will power the Cessna Citation Ascend business aircraft from Textron.
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Meanwhile, the B-21 Raider, which is powered by Pratt & Whitney engines, continued to progress its flight test program. In 2025, Pratt & Whitney Canada was selected by the European Union's Clean Aviation to lead the PHARES project, marking the first time a Canadian company will participate in and lead a Clean Aviation program.
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Pratt & Whitney Canada continues to progress testing of the propulsion system for the RTX Hybrid Electric Flight Demonstrator program, which targets a 30% fuel efficiency improvement and CO2 emissions reduction compared to existing advanced regional turboprops.
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As part of the PHARES consortium, Pratt & Whitney Canada will collaborate with Collins, ATR, Airbus, and technology research organizations to design and integrate a hybrid-electric propulsion demonstrator, targeting up to 20% improved fuel efficiency on regional aircraft missions. Finally, in 2025, Pratt & Whitney Canada’s PT6 E-Series™ engine family surpassed 500,000 engine flight hours since entering service.
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In connection with the RTX Hybrid Electric Flight demonstrator program, Pratt & Whitney Canada announced the development of an advanced mobile charging unit (MCU) capable of charging high-power batteries at up to 1500 volts.
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Research and Development and Operations Our innovative products and services incorporate advanced technologies.
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Also in 2024, Airbus Helicopters selected Pratt & Whitney Canada and its PW210 helicopter engine to support the development of a hybrid-propulsion system for its PioneerLab technology demonstrator. The development of new engines and improvements to current production engines present important growth opportunities for Pratt & Whitney.
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In addition, we could be affected by future foreign or domestic laws or regulations imposed in response to concerns over climate change, and we monitor developments in environmental and climate-related laws and regulations and their potential impact to our business and financial condition.
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Major new contracts awarded in 2024 include a contract to provide Patriot Air Defense systems to Germany and Patriot launchers for Poland; a contract for low-rate initial production of LTAMDS defense systems for the U.S. Army and Poland; a contract to provide SM-3 exo-atmospheric missile defense interceptors to the U.S.
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Private Securities Litigation Reform Act of 1995, as amended.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

83 edited+3 added−39 removed211 unchanged
Biggest changeIn addition, as previously disclosed, on August 29, 2024, the Company entered into a Consent Agreement (CA) with the DOS to resolve alleged civil violations of the AECA and the ITAR. The CA, which has a three-year term, requires the Company to implement remedial compliance measures and to conduct an external audit of the Company’s ITAR compliance program.
Biggest changeThe CA, which has a three-year term, requires the Company to implement remedial compliance measures and to conduct an external audit of the Company’s ITAR compliance program. The CA also requires appointment of an external, independent Special Compliance Officer (SCO). The Company appointed its SCO on September 27, 2024.
The expected financial impact of the powder metal issue is based on historical experience and is subject to various assumptions and judgments, including, without limitation, the number and expected timing of shop visits, inspection results and scope of work to be performed, turnaround time, availability of parts, available capacity at overhaul facilities, and outcomes of negotiations with impacted customers, and these assumptions are subject to variability.
The expected financial impact of the powder metal issue is based on historical experience and is subject to various assumptions and judgments, including, without limitation, the number and expected timing of shop visits, inspection results and scope of work to be performed, turnaround time, availability of parts, available capacity at overhaul facilities, and outcomes of negotiations with impacted customers, and these assumptions are subject to variability.
Important factors that could cause us to discontinue, limit, suspend, increase, or delay our quarterly cash dividends or share repurchases include market conditions, the price of our common stock, the nature and timing of other investment opportunities, changes in our business strategy, the terms of our financing arrangements, our outlook as to the ability to obtain financing at attractive rates, the impact on our credit ratings, the availability of domestic cash, and overall business expectations.
Other important factors that could cause us to discontinue, limit, suspend, increase, or delay our quarterly cash dividends or share repurchases include market conditions, the price of our common stock, the nature and timing of other investment opportunities, changes in our business strategy, the terms of our financing arrangements, our outlook as to the ability to obtain financing at attractive rates, the impact on our credit ratings, the availability of domestic cash, and overall business expectations.
We also may not be successful in training or developing qualified personnel with the requisite relevant skills or security clearances. Moreover, some of our employees are covered by collective bargaining agreements. Historically, we have been able to renegotiate expiring agreements without experiencing significant disruptions to business operations.
We also may not be successful in training or developing qualified personnel with the requisite relevant skills or security clearances. Moreover, some of our employees are covered by collective bargaining agreements. Historically, we have been able to renegotiate expiring agreements without experiencing significant prolonged disruptions to business operations.
In addition, as we and our competitors develop increasingly sustainable technologies, demand for our older offerings may decrease or become nonexistent. Our reputation may also be damaged if we or our industry fail, or are perceived to fail, to achieve sustainability goals or commitments or to comply with evolving climate-related regulations.
In addition, as we and our competitors develop increasingly sustainable technologies, demand for our older offerings may decrease or become nonexistent. Our reputation may also be damaged if we or our industry fail, or are perceived to fail, to achieve sustainability goals or commitments or to comply with evolving environmental and climate-related regulations.
Failure to successfully manage potential future acquisitions, investments, divestitures, joint ventures, and other transactions, and other risks associated with these activities could adversely affect our future financial results. In pursuing our business strategies, we continually review, evaluate, and consider potential investments, acquisitions, divestitures, joint ventures, and other teaming and collaborative arrangements.
Failure to successfully manage and execute potential future acquisitions, investments, divestitures, joint ventures, and other transactions, and other risks associated with these activities could adversely affect our future financial results. In pursuing our business strategies, we continually review, evaluate, and consider potential investments, acquisitions, divestitures, joint ventures, and other teaming and collaborative arrangements.
Our programs are subject to U.S. government policies, budget decisions, and appropriation processes, which are driven by numerous factors including U.S. domestic and broader geopolitical events, macroeconomic conditions, and the ability of the U.S. government to enact relevant legislation, such as appropriations bills.
Our programs and contracts are subject to U.S. government policies, budget decisions, and appropriation processes, which are driven by numerous factors including U.S. domestic and broader geopolitical events, macroeconomic conditions, and the ability of the U.S. government to enact relevant legislation, such as appropriations bills.
Our international sales and operations are subject to risks associated with political and economic factors, regulatory requirements, competition, and other risks. A significant portion of our sales are international, including U.S. export sales. Our non-U.S. operations transactions may be denominated in local currencies.
Our international sales and operations are subject to risks associated with political and economic factors, regulatory requirements, competition, and other risks. A significant portion of our sales are international, including U.S. export sales. Transactions related to non-U.S. operations may be denominated in local currencies.
As discussed below and as previously disclosed, in October 2024, the Company entered into certain deferred prosecution agreements and a civil settlement agreement with the DOJ to resolve investigations relating to pricing on certain government contracts.
As discussed below and as previously disclosed, in October 2024, the Company entered into a deferred prosecution agreement and a civil settlement agreement with the DOJ to resolve investigations relating to pricing on certain government contracts.
We may incur unexpected costs for various reasons, including technical and manufacturing challenges, schedule delays, the timeliness and availability of materials, components, or labor, the inaccuracy of initial contract cost estimates, internal and subcontractor performance or product quality issues, inability to achieve the benefits of our expected cost reduction, digital transformation, manufacturing, operating, and other strategic initiatives, inflation, inability to pass on tariff costs, and changing laws or regulations, natural disasters, and public health crises.
We may incur unexpected costs for various reasons, including technical and manufacturing challenges, schedule delays, the timeliness and availability of materials, components, or labor, the inaccuracy of initial contract cost estimates, internal and subcontractor performance or product quality issues, inability to achieve expected cost reduction, digital transformation, manufacturing, operating, and other strategic initiatives, inflation, inability to pass on tariff costs, and changing laws or regulations, natural disasters, and public health crises.
OTAs may use fixed-price contracting during all phases of the contract, or mandated contract cost sharing. They may also require non-traditional subcontractor participation and impose other requirements that differ from our other DoD contracts. Our business may be negatively impacted if we are unable to bid for OTA work and/or perform on our OTA agreements, including any applicable non-traditional requirements.
OTAs may use fixed-price contracting during all phases of the contract, or mandated contract cost sharing. They may also require non-traditional subcontractor participation and impose other requirements that differ from our other DoW contracts. Our business may be negatively impacted if we are unable to bid for OTA work and/or perform on our OTA agreements, including any applicable non-traditional requirements.
Cybersecurity and data security and protection laws and regulations are evolving and present increasing compliance challenges, which may increase our costs, affect our competitiveness, cause reputational harm, and expose us to substantial fines or other penalties. Our business and financial performance may be adversely affected by climate change, including regulations, customer demand, technologies, and extreme weather.
Cybersecurity, artificial intelligence, and data security and protection laws and regulations are evolving and present increasing compliance challenges, which may increase our costs, affect our competitiveness, cause reputational harm, and expose us to substantial fines or other penalties. Our business and financial performance may be adversely affected by climate change, including regulations, customer demand, technologies, and extreme weather.
Any breach of DPA-1, DPA-2, or the SEC Administrative Order could subject Raytheon Company or the Company to criminal prosecutions and/or administrative proceedings, resulting in additional criminal and civil penalties and fines, extension of either DPA’s term(s), including the terms of the monitorship, increased future regulatory and legal scrutiny by U.S. or foreign government agencies, additional reputational harm, additional compliance costs, suspension of export privileges and/ 24 Table of Contents or suspension or debarment from U.S. government contracting or subcontracting for a period of time, any of which could negatively affect our results of operations, financial position, and liquidity.
Any breach of DPA-1, DPA-2, or the SEC Administrative Order could subject Raytheon Company or the Company to criminal prosecutions and/or administrative proceedings, resulting in additional criminal and civil penalties and fines, extension of either DPA’s term(s), including the terms of the monitorship, increased future regulatory and legal scrutiny by U.S. or foreign government agencies, additional reputational harm, additional compliance costs, suspension of export privileges and/or suspension or debarment from U.S. government contracting or subcontracting for a period of time, any of which could negatively affect our results of operations, financial position, and liquidity.
In addition, we may face customer-directed cost reduction targets that could have a material adverse effect on the profitability of our contracts if these targets are not achieved when required. Moreover, bid protests from unsuccessful bidders on new program awards are frequent with respect to DoD awards in particular.
In addition, we may face customer-directed cost reduction targets that could have a material adverse effect on the profitability of our contracts if these targets are not achieved when required. Moreover, bid protests from unsuccessful bidders on new program awards are frequent with respect to DoW awards in particular.
We have outstanding debt and other financial obligations, and we depend, in part, upon the issuance of debt to fund our business requirements. The increased indebtedness of RTX in connection with the $10 billion accelerated share repurchase (ASR) transactions that began in October 2023 and completed at the end of September 2024 may have various negative impacts on our business.
We have outstanding debt and other financial obligations, and we depend, in part, upon the issuance of debt to fund our business requirements. The increased indebtedness of RTX in connection with the $10 billion accelerated share repurchase (ASR) transactions that began in October 2023 and completed in September 2024 may have various negative impacts on our business.
Our business, program performance, and results of operations could be impacted by the resulting disruptions to federal government offices, workers, and operations, including risks relating to the funding of certain programs, stop work orders, as well as delays in contract awards, new program starts, payments for work performed, and other actions.
Our business, program performance, and results of operations could be impacted by the resulting disruptions to federal government offices, workers, and operations, including risks relating to the funding of certain programs or contracts, stop work orders, as well as delays in contract awards, new program starts, payments for work performed, and other actions.
Changes in U.S. government defense spending could negatively impact our financial position, results of operations, liquidity, and overall business. U.S. government sales constitute a significant portion of our consolidated sales. Our U.S. government revenues largely result from contracts awarded under various U.S. government programs, primarily defense-related programs with the U.S.
INDUSTRY RISKS Changes in U.S. government defense spending could negatively impact our financial position, results of operations, liquidity, and overall business. U.S. government sales constitute a significant portion of our consolidated sales. Our U.S. government revenues largely result from contracts awarded under various U.S. government programs, primarily defense-related programs with the U.S.
Moreover, over the past several years, the DoD has increased its use of Other Transaction Authority (OTA) agreements, under which it awards certain prototypes, research, and production contracts without all of the procurement requirements that typically apply to DoD contracts, including justification of sole source awards.
Moreover, over the past several years, the DoW has increased its use of Other Transaction Authority (OTA) agreements, under which it awards certain prototypes, research, and production contracts without all of the procurement requirements that typically apply to DoW contracts, including justification of sole source awards.
For instance, if we or one of our business units were charged with wrongdoing in connection with a U.S. government investigation (including fraud, or violation of certain environmental, FCPA, and other anti-bribery and 23 Table of Contents anti-corruption laws, or export laws, as further described below), the U.S. government could suspend us from bidding on or receiving awards of new U.S. government contracts pending the completion of legal proceedings.
For instance, if we or one of our business units were charged with wrongdoing in connection with a U.S. government investigation (including fraud, or violation of certain environmental, FCPA, and other anti-bribery and anti-corruption laws, or export laws, as further described below), the U.S. government could suspend us from bidding on or receiving awards of new U.S. government contracts pending the completion of legal proceedings.
In addition, our defense businesses are subject to specific procurement requirements that limit the types of materials they use. Our defense businesses also must require suppliers to comply with various DoD requirements, any of which requirements may further limit the suppliers and subcontractors they may utilize.
In addition, our defense businesses are subject to specific procurement requirements that limit the types of materials they use. Our defense businesses also must require suppliers to comply with various DoW requirements, any of which requirements may further limit the suppliers and subcontractors they may utilize.
Furthermore, the existing supply chain issues could be compounded by other events, such as an economic downturn; changes in trade policies, such as tariffs; supplier capacity constraints for other reasons; supplier quality issues (for example, defects or fraudulent parts); supplier closing, bankruptcy, or financial difficulties; price increases for various reasons; and worsening shortages of raw materials or commodities, including as a result of war or other geopolitical actions, natural disaster (including the effects of climate change), health pandemic or other business continuity events, or transport and distribution issues, any of which could further negatively impact our ability to meet our commitments to customers or increase our operating costs and therefore incrementally affect our results of operations, financial condition, and liquidity.
Furthermore, the existing supply chain issues could be compounded by other events, such as an economic downturn; changes in trade policies, such as tariffs; supplier capacity constraints for other reasons; supplier quality issues (for example, defects or fraudulent parts); supplier closing, bankruptcy, or financial difficulties; price increases for various reasons; and worsening shortages of raw materials or commodities, including as a result of war or other geopolitical actions, natural disaster, health pandemics or other business continuity events, or transport and distribution issues, any of which could further negatively impact our ability to meet our commitments to customers or increase our operating costs and therefore incrementally affect our results of operations, financial condition, and liquidity.
For example, an increase in the use of contract structures that shift risk to the contractor (such as fixed-price development contracts and incentive-based fee arrangements), use of novel award fee criteria (such as the evaluation of environmental factors), evaluation of a bidder’s willingness to provide detailed competitively sensitive intellectual property (such as detailed RTX design, manufacturing and process information that would risk loss of competitively sensitive information), or requirements to transfer technology to domestic sources in connection with offset obligations, could adversely affect our profit rates, ability to preserve differentiated product offerings, maintain lower tier suppliers, or make it more difficult to win new contracts.
For example, an increase in the use of contract structures that shift risk to the contractor (such as fixed-price development contracts and incentive-based fee arrangements), use of novel award fee criteria, evaluation of a bidder’s willingness to provide detailed competitively sensitive intellectual property (such as detailed RTX design, manufacturing and process information that would risk loss of competitively sensitive information), or requirements to transfer technology to domestic sources in connection with offset obligations, could adversely affect our profit rates, ability to preserve differentiated product offerings, maintain lower tier suppliers, or make it more difficult to win new 17 Table of Contents contracts.
In addition, if we require additional funding in order to fund outstanding financing commitments or meet other business requirements, a number of factors could cause us to incur increased borrowing costs and to have greater difficulty accessing 26 Table of Contents public and private markets for debt, any of which may adversely affect our ability to fund our business requirements.
In addition, if we require additional funding in order to fund outstanding financing commitments or meet other business requirements, a number of factors could cause us to incur increased borrowing costs and to have greater difficulty accessing public and private markets for debt, any of which may adversely affect our ability to fund our business requirements.
The termination of one or more of our U.S. government contracts, or the occurrence of performance delays, cost overruns (due to inflation or otherwise), product failures, shortages in materials, components, or labor, contract definitization delays, or other failures to perform to customer expectations and contract requirements, could negatively impact our reputation and competitive position, results of operations, financial condition, and liquidity.
The termination of one or more of our U.S. government contracts, or the occurrence of performance delays, cost overruns, product failures, shortages in materials, components, or labor, contract definitization delays, or other failures to perform to customer expectations and contract requirements, could negatively impact our reputation and competitive position, results of operations, financial condition, and liquidity.
Cybersecurity threats also include attacks targeting the security, confidentiality, integrity, and/or availability of the hardware, software, and information installed, stored, or transmitted in our products, including after the purchase of those products and when they are 19 Table of Contents incorporated into third-party products, facilities, or infrastructure. We are also exposed to the risk of insider threat attacks.
Cybersecurity threats also include attacks targeting the security, confidentiality, integrity, and/or availability of the hardware, software, and information installed, stored, or transmitted in our products, including after the purchase of those products and when they are incorporated into third-party products, facilities, or infrastructure. We are also exposed to the risk of insider threat attacks.
Uncertainty relating to laws or regulations may also affect how we conduct our operations and structure our investments and could limit our ability to enforce our rights. We use hazardous substances and generate hazardous wastes in certain of our operations.
Uncertainty relating to laws or regulations may also affect how we conduct our operations and structure our investments and could limit our ability to enforce our rights. We use hazardous substances and generate hazardous wastes in our operations.
Significant changes in U.S. government defense spending or changes in U.S. government priorities, policies, and requirements could have a material adverse effect on our results of operations, financial condition, and liquidity. 14 Table of Contents We face risks relating to our U.S. government contracts and programs, including the mix of our U.S. government contracts and programs, our performance, and our ability to control costs.
Significant changes in U.S. government defense spending or changes in U.S. government priorities, policies, and requirements could have a material adverse effect on our results of operations, financial condition, and liquidity. We face risks relating to our U.S. government contracts and programs, including the mix of our U.S. government contracts and programs, our performance, and our ability to control costs.
As a result of these procurement issues, the production flow in our factories has been negatively impacted, which has, in turn, hindered our ability to perform on our commitments to customers and negatively 20 Table of Contents affected our results of operations, financial condition, and liquidity. Our supply costs have increased due to the above factors.
As a result of these procurement issues, the production flow in our factories has been negatively impacted, which has, in turn, hindered our ability to perform on our commitments to customers and negatively affected our results of operations, financial condition, and liquidity. Our supply costs have increased due to the above factors.
We have been subject to regulatory investigations for alleged violations of anti-bribery and anti-corruption laws, and could be subject to such 25 Table of Contents investigations in the future, which could result in criminal and civil penalties, disgorgement, further changes or enhancements to our procedures, policies and controls, personnel changes, or other remedial actions.
We have been subject to regulatory investigations for alleged violations of anti-bribery and anti-corruption laws, and could be subject to such investigations in the future, which could result in criminal and civil penalties, disgorgement, further changes or enhancements to our procedures, policies and controls, personnel changes, or other remedial actions.
This determination and corresponding fleet actions have resulted in, and are expected to continue to result in, an elevated level of aircraft on ground for the A320neo family of aircraft and significant incremental shop visits necessary to perform inspections on PW1100 GTF engines through the end of 2026.
This 19 Table of Contents determination and corresponding fleet actions have resulted in, and are expected to continue to result in, an elevated level of aircraft on ground for the A320neo family of aircraft and significant incremental shop visits necessary to perform inspections on PW1100 GTF engines through the end of 2026.
Emerging laws and increasing regulatory requirements aimed at global supply chains may impact our ability to access certain materials and components, and otherwise adversely affect our business, and we may not only be held responsible for our compliance, but for that of our suppliers.
Emerging laws and increasing regulatory 18 Table of Contents requirements aimed at global supply chains may impact our ability to access certain materials and components, and otherwise adversely affect our business, and we may not only be held responsible for our compliance, but for that of our suppliers.
Pursuant to DPA-1, among other terms, the DOJ will defer, for a period of three years, criminal prosecution of Raytheon Company related to Raytheon Company’s alleged conspiracy to violate the anti-bribery provisions of the FCPA and alleged conspiracy to violate the AECA by failing to make related disclosures of certain payments that qualified as fees, commissions and/or political contributions under Part 130 of ITAR.
Pursuant to DPA-1, among other terms, the DOJ will defer, for a period of three years, criminal prosecution of Raytheon Company related to one count of conspiracy to violate the anti-bribery provisions of the FCPA and one count of conspiracy to violate the AECA by failing to make related disclosures of certain payments that qualified as fees, commissions and/or political contributions under Part 130 of ITAR.
Such U.S. government investigations often take years to complete and could result in administrative, civil, or criminal liabilities, including repayments, fines, treble and other damages, forfeitures, restitution, or penalties, or could lead to suspension or debarment of U.S. government contracting or of export privileges.
Such U.S. government investigations 21 Table of Contents often take years to complete and could result in administrative, civil, or criminal liabilities, including repayments, fines, treble and other damages, forfeitures, restitution, or penalties, or could lead to suspension or debarment of U.S. government contracting or of export privileges.
Additionally, as our customers demand more mature and proven solutions, we may be required to invest in development prior to contract award with no guarantee of award.
Additionally, as our customers demand more mature solutions, we may be required to invest in development prior to contract award with no guarantee of award.
Development efforts divert resources from other potential investments in our businesses, and these efforts may not lead to the development of new technologies or products on a timely basis or meet the needs of our customers as fully as alternative investments.
Development efforts divert resources from other potential investments in our businesses, and these efforts may not lead to the development of new technologies or products on a timely 16 Table of Contents basis or meet the needs of our customers as fully as alternative investments.
Due to the specialized nature of our business, our future performance is highly 21 Table of Contents dependent upon the continued services of our key technical personnel and executive officers, and the hiring, development, and retention of qualified technical, engineering, manufacturing, marketing, sales, and management personnel for our operations.
Due to the specialized nature of our business, our future performance is highly dependent upon the continued services of our key technical personnel and executive officers, and the hiring, development, and retention of qualified technical, engineering, manufacturing, marketing, sales, and management personnel for our operations.
Additionally, because a substantial portion of product deliveries to commercial aerospace customers are scheduled for delivery in the future, changes in economic conditions may cause customers to request that firm 17 Table of Contents orders be rescheduled or canceled.
Additionally, because a substantial portion of product deliveries to commercial aerospace customers are scheduled for delivery in the future, changes in economic conditions may cause customers to request that firm orders be rescheduled or canceled.
Current and emerging environmental and climate-related laws, regulations, or other policies, including regulations on greenhouse gas emissions, carbon pricing, energy taxes, product efficiency standards, mandatory disclosure obligations, and U.S. government procurement requirements, could increase our operational and compliance expenditures and those of our suppliers, including increased energy and raw materials costs, and costs associated with manufacturing changes, and lead to new or additional investments in product designs and facility upgrades.
Current and emerging environmental and climate-related laws, regulations, or other policies, including regulations on greenhouse gas emissions, carbon pricing, energy taxes, product efficiency standards, and mandatory disclosure obligations, could increase our operational and compliance expenditures and those of our suppliers, including increased energy and raw materials costs, and costs associated with manufacturing changes, and lead to new or additional investments in product designs and facility upgrades.
While these factors and their impact are difficult to predict, any one or more of 16 Table of Contents them could have a material adverse effect on our competitive position, results of operations, financial condition, or liquidity.
While these factors and their impact are difficult to predict, any one or more of them could have a material adverse effect on our competitive position, results of operations, financial condition, or liquidity.
STRATEGIC INITIATIVE AND TRANSACTION RISKS We may be unable to realize expected benefits from strategic initiatives. In order to operate more effectively and efficiently, from time to time we undertake strategic and other operational initiatives. For example, we are undergoing significant, multi-year digital transformation initiatives to improve our business, modernize operations, and reduce costs.
STRATEGIC INITIATIVE AND TRANSACTION RISKS We may be unable to realize expected benefits from strategic initiatives. In order to operate more effectively and efficiently, from time to time we undertake strategic and other operational initiatives. For example, we are undergoing significant, multi- 26 Table of Contents year digital transformation initiatives to improve our business, modernize operations, and reduce costs.
Further, these transactions involve certain other risks and uncertainties including: (1) the risks involved with entering new markets; (2) the difficulty in integrating newly-acquired businesses and managing or monitoring other collaborative business arrangements; (3) the complexity of separating a portion of our business to enable a divestiture; (4) continued financial involvement in divested businesses, such as through continued equity ownership, guarantees, retained assets or liabilities, transition services or other ongoing commercial commitments, indemnities, or other current or contingent financial or commercial commitments, following a divestiture; (5) challenges and failures in achieving strategic objectives and other expected benefits, which may result in certain liabilities to us for guarantees and other commitments; (6) the risk that regulatory authorities may deny our proposed transactions, or may impose on those transactions conditions that undermine the strategic rationale, reduce the financial benefit of, or jeopardize the consummation of those transactions; (7) unidentified issues not discovered in RTX’s due diligence; (8) the diversion of our attention and resources from our operations and other initiatives; (9) the potential impairment of acquired assets; (10) the performance of underlying products, capabilities, or technologies; and (11) the performance or potential loss of key employees and customers of acquired businesses.
Further, these transactions involve certain other risks and uncertainties including: (1) the risks involved with entering new markets; (2) the difficulty in integrating newly-acquired businesses and managing or monitoring other collaborative business arrangements; (3) the complexity of separating a portion of our business to enable a divestiture; (4) the risk that we may be unable to execute potential transactions, if at all, within the expected timeline, on acceptable financial or other terms and conditions; (5) continued financial involvement in divested businesses, such as through continued equity ownership, guarantees, retained assets or liabilities, transition services or other ongoing commercial commitments, indemnities, or other current or contingent financial or commercial commitments, following a divestiture; (6) challenges and failures in achieving strategic objectives and other expected benefits, which may result in certain liabilities to us for guarantees and other commitments; (7) the risk that regulatory authorities may deny our proposed transactions, or may impose on those transactions conditions that undermine the strategic rationale, reduce the financial benefit of, or jeopardize the consummation of those transactions; (8) unidentified issues not discovered in RTX’s due diligence; (9) the diversion of our attention and resources from our operations and other initiatives; (10) the potential impairment of acquired assets; (11) the performance of underlying products, capabilities, or technologies; and (12) the performance or potential loss of key employees and customers of acquired businesses.
Under DPA-1, DPA-2, and the SEC Administrative Order, Raytheon Company and the Company are required to retain an independent compliance monitor satisfactory to the DOJ and the SEC (for a term ending three years from the date on which the monitor is engaged) and are required to undertake certain cooperation and disclosure obligations (for a term commencing on the effective date of DPA-1 and the SEC Administrative Order, as applicable, and ending three years from the date on which the monitor is engaged).
Under DPA-1, DPA-2, and the SEC Administrative Order, Raytheon Company and the Company are required to undertake certain cooperation and disclosure obligations (for a term commencing on the effective date of DPA-1 and the SEC Administrative Order, as applicable, and ending three years from the date on which Raytheon Company and the Company engage an independent compliance monitor satisfactory to the DOJ and SEC).
Certain of our customer relationships outside of the U.S. are with governmental entities and are, therefore, subject to the FCPA and other anti-bribery and anti-corruption laws, including the anti-bribery and anti-corruption laws of non-U.S. countries. Our policies mandate compliance with these anti-bribery and anti-corruption laws.
Certain of our customer relationships outside of the U.S. are with governmental entities and are, therefore, subject to the FCPA and other anti-bribery and anti-corruption laws, including the anti- 23 Table of Contents bribery and anti-corruption laws of non-U.S. countries. Our policies mandate compliance with these anti-bribery and anti-corruption laws.
U.S. foreign policy or the foreign policy of other licensing jurisdictions may affect the licensing process or otherwise prevent us from engaging in business dealings with certain individuals, entities, or countries. From time to time, we identify, investigate, remediate and voluntarily disclose violations or potential violations of the ITAR and EAR.
U.S. foreign policy or the foreign policy of other licensing jurisdictions may affect the licensing process or otherwise prevent us from engaging in business dealings with certain individuals, entities, or countries. From time to time, we identify, investigate, remediate and voluntarily disclose violations or potential violations of the ITAR, EAR, or other global trade laws and regulations.
Additionally, in the ordinary course of business, we are subject to examinations by various tax authorities. In addition to ongoing examinations, there could be additional examinations launched in the future by governmental authorities in various jurisdictions, and existing examinations could be expanded.
Additionally, in the ordinary course of business, we are subject to examinations by various tax authorities. In addition to ongoing examinations, there could be additional 25 Table of Contents examinations launched in the future by governmental authorities in various jurisdictions, and existing examinations could be expanded.
Fixed-price contracts are predominantly either firm fixed-price (FFP) contracts or fixed-price incentive (FPI) contracts. Under FFP contracts, we receive a fixed price irrespective of the actual costs we incur, and we therefore carry the burden of any cost overruns.
Fixed-price contracts are predominantly either firm fixed-price (FFP) contracts or fixed-price 13 Table of Contents incentive (FPI) contracts. Under FFP contracts, we receive a fixed price irrespective of the actual costs we incur, and we therefore carry the burden of any cost overruns.
In addition, we continue to see ever-increasing demands for offerings focused on addressing climate change, transitioning to lower emission technologies, including low to no carbon products and services, the use of alternative energy sources, and other sustainable aviation technologies, and climate monitoring and adaptation products and services.
In addition, we continue to see ever-increasing demands for offerings focused on addressing long-term climate change, transitioning to lower emission technologies, including low to no carbon products and services, the use of alternative energy sources, and other sustainable aviation technologies, weather and climate monitoring products and services.
These include shifting significant cash flow from operations to debt principal and interest payments, which will reduce funds we have available for other purposes, such as acquisitions, research and development, and other reinvestments in our businesses, and dividends and common stock repurchases.
These include shifting significant cash flow from operations to debt principal and interest payments, which will reduce funds we have available for 24 Table of Contents other purposes, such as acquisitions, research and development, and other reinvestments in our businesses, and dividends and common stock repurchases.
In addition, during the term of the CA, the CA’s transaction-related requirements may impact our ability to execute potential future divestitures within expected timeframes or consistent with expected valuation metrics, which could delay or impair our ability to achieve the expected benefits from our strategic plan, or otherwise harm our competitive position, results of operations, financial condition, or liquidity.
In addition, during the term of the CA, the CA’s transaction-related requirements may impact our ability to execute potential future divestitures within expected timeframes or consistent with expected valuation metrics, and on acceptable terms and conditions, which could delay or impair our ability to achieve the expected benefits from our strategic plan, or otherwise harm our competitive position, results of operations, financial condition, or liquidity.
Our commercial aerospace businesses constitute a substantial portion of our financial results, and the performance of those businesses is directly tied to economic conditions in the commercial aerospace industry, which is cyclical in nature.
Our financial performance is dependent on the condition of the aerospace industry. Our commercial aerospace businesses constitute a substantial portion of our financial results, and the performance of those businesses is directly tied to economic conditions in the commercial aerospace industry, which is cyclical in nature.
In addition, in order to support U.S. government priorities, we may begin performance on an undefinitized contract action with a not-to-exceed price before completing contract 15 Table of Contents negotiations on the terms, specifications, or price between the parties.
In addition, in order to support U.S. government priorities, we may begin performance on an undefinitized contract action with a not-to-exceed price before completing contract negotiations on the terms, specifications, or price between the parties.
Foreign currency exchange rate fluctuations (including their impact on supplier prices) may negatively affect demand for our products and our reported profits, as well as our operating margins. The majority of our commercial aerospace sales are in U.S. Dollars, while the majority of their non-U.S. operating costs are incurred in the applicable local currency.
Foreign currency exchange rate fluctuations (including their impact on supplier prices) may negatively affect demand for our products and our operating profit and margins. The majority of our commercial aerospace sales are in U.S. Dollars, while the majority of our non-U.S. operating costs are incurred in the applicable local currency.
The U.S. government has the ability to unilaterally definitize contracts, which would obligate us to perform under terms and conditions imposed by the U.S. government, affecting our ability to negotiate mutually agreeable contract terms. Uncertainties in final contract price, specifications and terms, or loss of negotiating leverage associated with particularly long delays in contract definitization may negatively affect our profitability.
The U.S. government has the ability to unilaterally definitize contracts, which would obligate us to perform under terms and conditions imposed by the U.S. government without our agreement. Uncertainties in final contract price, specifications and terms, or loss of negotiating leverage associated with particularly long delays in contract definitization may negatively affect our profitability.
We also anticipate companies continuing to enhance their competitive position against our defense businesses as a result of continued domestic and cross-border defense industry consolidation and the expansion of competitors’ capabilities throughout the supply chain through vertical integration. We are also facing increased competition domestically and internationally from foreign and multinational firms.
We also anticipate companies continuing to enhance their competitive position against our defense businesses as a result of continued domestic and cross-border defense industry consolidation and the expansion of competitors’ capabilities. We are also facing increased competition domestically and internationally from foreign and multinational firms.
The SEC Administrative Order further provides that, in the event of a breach of the SEC Administrative Order, the SEC may vacate the Administrative Order and institute proceedings against the Company.
The SEC Administrative Order further provides that, in the event of a breach of the SEC Administrative Order, the SEC may vacate the Administrative Order and institute proceedings 22 Table of Contents against the Company.
Identifying and qualifying second- or third- source suppliers can be difficult, time-consuming, and may result in increased costs. In recent years, global supply chain disruptions have impacted our ability to procure raw materials, microelectronics, and certain commodities. These disruptions were driven by supply chain market constraints and macroeconomic conditions, including inflation and labor market shortages.
Identifying and qualifying second- or third- source suppliers can be difficult, time-consuming, and may result in increased costs. Global supply chain disruptions have impacted our ability to procure raw materials, including certain rare earth elements, microelectronics, and certain commodities. These disruptions have been driven by supply chain market constraints and macroeconomic conditions, including inflation and labor market shortages.
We also continue to engage our Customer Oriented Results and Excellence (CORE) operating system to drive continuing improvement into our processes and facilities.
We also use our Customer Oriented Results and Excellence (CORE) operating system to drive continuing improvement into our processes and facilities.
Department of Defense (DoD), and a broad range of programs with other departments and agencies. Changes in U.S. government defense spending for various reasons, including as a result of potential changes in policy or budgetary positions or priorities, could negatively impact our results of operations, financial condition, and liquidity.
Department of War (DoW) (formerly referred to as the U.S. Department of Defense), and a broad range of programs with other departments and agencies. Changes in U.S. government defense spending for various reasons, including as a result of potential changes in policy or budgetary positions or priorities, could negatively impact our results of operations, financial condition, and liquidity.
Current geopolitical conditions, including conflicts and other causes of strained intercountry relations, as well as sanctions and other trade restrictive activities, have contributed to these issues. In addition, the inflationary environment has increased material and component prices, labor rates, and supplier costs, and negatively impacted costs.
Current geopolitical conditions, including conflicts and other causes of strained intercountry relations, as well as sanctions and other trade restrictive activities, such as tariffs and export controls, are contributing to these issues. In addition, the inflationary environment has increased material and component prices, labor rates, and supplier costs, and negatively impacted costs.
In some instances, foreign companies may be owned by foreign governments or may receive loans, marketing subsidies, and other assistance from their governments that may not be available to U.S. companies or our foreign subsidiaries. In addition, foreign companies may be subject to fewer restrictions on technology transfer than U.S. companies.
In some instances, foreign companies may be owned by foreign governments or may receive loans, marketing subsidies, and other assistance from their governments that may not be available to U.S. companies or our foreign subsidiaries.
Our final allowable incurred costs for each year are subject to audit and have from time to time resulted in disputes between us and the U.S. government, including DCMA claims to recover payments for alleged noncompliance with cost accounting standards. In some cases, the DOJ has conducted investigations or convened grand juries to investigate possible irregularities in our costs.
Our final allowable incurred costs for each year are subject to audit and have from time to time resulted in disputes between us and the U.S. government, including DCMA claims to recover payments for alleged noncompliance with cost accounting standards.
ITEM 1A. RISK FACTORS Our business, operating results, financial condition, and liquidity can be impacted by the factors set forth below, any one of which could cause our actual results to vary materially from recent results or from our anticipated future results. INDUSTRY RISKS Our business may be adversely affected by changes in global economic, capital market, and political conditions.
ITEM 1A. RISK FACTORS Our business, operating results, financial condition, and liquidity can be impacted by the factors set forth below, any one of which could cause our actual results to vary materially from recent results or from our anticipated future results.
Customers, shareholders, and institutional investors are focused on ESG, including our environmental sustainability practices and commitments with respect to our operations, products, and suppliers. As a result, we continue to make additional investments in new technologies and capabilities, and devote management and other resources in response to the foregoing.
Customers, shareholders, and institutional investors may focus on measuring and minimizing environmental impact, including our environmental sustainability practices and commitments with respect to our operations, products, and suppliers. As a result, we continue to evaluate making additional investments in new technologies and capabilities, and devoting management and other resources in response to the foregoing.
These risks relate to, among other things, product safety and reliability, personal injuries, intellectual property rights, contract-related claims, government contracts, taxes, environmental matters, the use of artificial intelligence, export control, sanctions, employment matters, securities laws, competition laws, and laws governing improper business practices. We or one of our businesses could be charged with wrongdoing as a result of such matters.
These risks relate to, among other things, product safety and reliability, personal injuries, intellectual property rights, contract-related claims, government contracts, taxes, environmental matters, the use of chemical substances, the use of artificial intelligence, export control, sanctions, employment matters, securities laws, competition laws, and laws governing improper business practices.
Our international contracts, particularly for sales of defense products and services, may include offset obligations or industrial cooperation obligations requiring specific local purchases, manufacturing agreements, technology transfer agreements, financial support obligations, or other local investments, sometimes in the form of in-country industrial participation (ICIP) agreements.
In addition, foreign companies may be subject to fewer restrictions on technology transfer than U.S. companies. 14 Table of Contents Our international contracts, particularly for sales of defense products and services, may include offset obligations or industrial cooperation obligations requiring specific local purchases, manufacturing agreements, technology transfer agreements, financial support obligations, or other local investments, sometimes in the form of in-country industrial participation (ICIP) agreements.
In addition, we continue to invest in structural cost reduction in our facilities, including aligning work to more efficient manufacturing centers, implementing advanced manufacturing capabilities including Industry 4.0 digital initiatives and automation, and closing facilities that are not required to meet future capacity and work needs.
In addition, we continue to invest in structural cost reduction in our facilities, including aligning work to more efficient manufacturing centers, implementing advanced manufacturing capabilities including digital initiatives and automation, and closing facilities that are not required to meet future capacity and work needs. Other initiatives include the pursuit of advanced technologies and new business acquisitions and subsequent integrations.
Our goodwill and indefinite-lived intangible assets are subject to an impairment test annually and are also tested for impairment whenever facts and circumstances indicate that goodwill or indefinite-lived intangible assets may be impaired.
We may subsequently experience unforeseen events that could adversely affect the value of our goodwill or intangible assets. Our goodwill and indefinite-lived intangible assets are subject to an impairment test annually and are also tested for impairment whenever facts and circumstances indicate that goodwill or indefinite-lived intangible assets may be impaired.
In addition, in July 2023 Pratt & Whitney determined that a rare condition in powder metal used to manufacture certain engine parts requires accelerated inspection of the PW1100G-JM (PW1100) GTF fleet, which powers the A320neo family of aircraft.
In addition, in July 2023 Pratt & Whitney determined that a rare condition in powder metal used to manufacture certain engine parts requires accelerated inspection of the PW1100G-JM (PW1100) GTF fleet, which powers the A320neo family of aircraft. This issue has resulted in increased engine removals and inspections, shop visits, aircraft on ground levels, and costs to the Company.
As a global business, we are subject to complex laws and regulations in the U.S. and in other countries in which we operate. Those laws and regulations may be interpreted in different ways. They may also change from time to time, as may related interpretations and other guidance. Changes in laws or regulations could result in higher expenses.
Those laws and regulations may be interpreted in different ways. They may also change from time to time, as may related interpretations and other guidance. Changes in laws or regulations could result in higher expenses.
If we do not successfully manage our current or future strategic initiatives, expected efficiencies and benefits might be delayed or not realized, and our operations and business could be disrupted.
These strategic activities are complex and require the investment of resources including in personnel and systems. If we do not successfully manage our current or future strategic initiatives, expected efficiencies and benefits might be delayed or not realized, and our operations and business could be disrupted.
We have experienced, and continue to experience, challenges hiring highly qualified personnel including engineers, skilled laborers, and security clearance holders. We expect these difficulties to continue in the future. In addition, the cost of labor remains high. Some candidates and new personnel may have job-related expectations that differ from our current workforce and are inconsistent with our corporate culture.
We have experienced, and continue to experience, challenges hiring highly qualified personnel including engineers, skilled laborers, and security clearance holders. We expect these difficulties to continue in the future. In addition, the cost of labor remains high.
Any costs found to be improperly allocated to a specific contract will not be reimbursed by the U.S. government or must be refunded by us to the U.S. government if already reimbursed.
Any costs found to be improperly allocated to a specific contract will not be reimbursed by the U.S. government or must be refunded by us to the U.S. government if already reimbursed. In some cases, the DOJ has conducted investigations or convened grand juries to investigate possible irregularities in our costs.
Additionally, some customers, including the DoD, are increasingly turning to commercial contractors, rather than traditional defense contractors, for space and data science work, and we are also seeing increased activity from other non-traditional defense contractors and startups. For example, the U.S. government may award large competitive contracts to other suppliers to maintain a broad industrial base.
Additionally, some customers, including the DoW, are increasingly turning to commercial contractors, other non-traditional defense contractors, and startups. For example, the U.S. government may award large competitive contracts to other suppliers to maintain a broad industrial base. In addition, U.S. government procurement policies and procedures and the application thereof are regularly changing.
The 22 Table of Contents CA also requires appointment of an external, independent Special Compliance Officer (SCO). The Company appointed its SCO on September 27, 2024. If we are unable to satisfy the requirements of the CA within three years as determined by the DOS, we may face a continuation of the CA, additional fines, or other adverse impacts.
If we are unable to satisfy the requirements of the CA within three years as determined by the DOS, we may face a continuation of the CA, additional fines, or other adverse impacts.
The global and diverse nature of our operations means that these risks will continue to exist and additional examinations, proceedings, and contingencies will arise from time to time.
The global and diverse nature of our operations means that these risks will continue to exist and additional examinations, proceedings, and contingencies will arise from time to time. Our results of operations, financial condition, or liquidity could be negatively impacted by any of the above factors, the outcome of any one of which cannot be predicted with certainty.
A significant portion of our assets consists of goodwill and other intangible assets, primarily recorded as the result of historical acquisitions or investments in businesses. We may subsequently experience unforeseen events that could adversely affect the value of our goodwill or intangible assets.
Goodwill and other intangible assets represent a significant portion of our assets, and any impairment of these assets could negatively impact our results of operations and financial condition. A significant portion of our assets consists of goodwill and other intangible assets, primarily recorded as the result of historical acquisitions or investments in businesses.
While we have robust policies and controls in place, these engagements expose us to various challenges including risks associated with the Foreign Corrupt Practices Act (FCPA) and local antibribery laws and regulations. From time to time, we have disputes with such representatives regarding claimed commissions and other matters which can result in litigation or arbitration.
While we have robust policies and controls in place, these engagements expose us to various risks including those associated with the Foreign Corrupt Practices Act (FCPA) and local antibribery laws and regulations. Our international business faces substantial competition from both U.S. companies and foreign companies.
If convicted or found liable, we could be subject to significant fines, penalties, repayments, or other damages (in certain cases, treble damages). Product recalls and product liability and warranty claims can result in significant damages and costs, including fines, as well as other harm to our business as discussed above.
Product recalls or other supply disruptions and product liability and warranty claims can result in significant damages and costs, including fines, as well as other harm to our business as discussed above. As a global business, we are subject to complex laws and regulations in the U.S. and in other countries in which we operate.
Other initiatives include the pursuit of advanced technologies and new business acquisitions and subsequent integrations. For example, we continue to invest in the integration of artificial intelligence technologies into our processes and business operations. We realigned our business segment structure in 2023, and we also implement restructuring plans from time to time.
For example, we continue to invest in the integration of artificial intelligence technologies into our processes and business operations. We also implement restructuring plans from time to time. Restructuring activities include or may result in reductions of the workforce, the number of global facilities, procurement costs, legal entity and operational reorganizations, and other cost reduction initiatives.
Any restrictions on the export or import of our products or product lines could have a material adverse effect on our competitive position, results of operations, financial condition, or liquidity.
Any restrictions on the export or import of our products or product lines could have a material adverse effect on our competitive position, results of operations, financial condition, or liquidity. 20 Table of Contents In addition, as previously disclosed, on August 29, 2024, the Company entered into a Consent Agreement (CA) with the DOS to resolve alleged civil violations of the AECA and the ITAR.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeCybersecurity threats also include attempts to infiltrate our products or services, such as attacks targeting the security, confidentiality, integrity or availability of the hardware, software and information installed, stored, or transmitted in our products, which may occur after the purchase of those products or when they are incorporated into third-party products, facilities, or infrastructure.
Biggest changeCybersecurity threats include attacks on, or other attempts to infiltrate, our IT infrastructure and the IT infrastructure of our customers, suppliers, subcontractors, and other third parties, attempting to gain unauthorized access to our confidential or other proprietary information, classified information, or information relating to our employees, customers, and other third parties, or to disrupt our systems or the systems of our customers, suppliers, subcontractors, and other third parties. 27 Table of Contents Cybersecurity threats also include attempts to infiltrate our products or services, such as attacks targeting the security, confidentiality, integrity or availability of the hardware, software and information installed, stored, or transmitted in our products, which may occur after the purchase of those products or when they are incorporated into third-party products, facilities, or infrastructure.
Our PCO is an experienced embedded systems engineer and chief engineer with nearly 20 years’ experience in the development, product assurance, and security of critical and highly regulated embedded and other computer systems in medical, aviation, and military products and services.
Our PCO is an experienced embedded systems engineer and chief engineer with 20 years’ experience in the development, product assurance, and security of critical and highly regulated embedded and other computer systems in medical, aviation, and military products and services.
Cybersecurity for Systems used in Support of U.S. Government Customers. With respect to products and services provided to, and IT systems used in connection with programs for, the U.S. government, our cybersecurity program aligns with the NIST standards and meets the requirements of 32 CFR Part 117 and other applicable U.S. government guidance.
With respect to products and services provided to, and IT systems used in connection with programs for, the U.S. government, our cybersecurity program aligns with the NIST standards and meets the requirements of 32 CFR Part 117 and other applicable U.S. government guidance.
Several external organizations also evaluate our enterprise cybersecurity program, including the Defense Contract Management Agency (DCMA) and Cybersecurity Maturity Model Certification Third-Party Assessment Organization. Moreover, some of our products are audited or reviewed for regulatory compliance certification pursuant to the relevant DoD risk management framework. Board Oversight and Management’s Role Enterprise Cybersecurity.
Several external organizations also evaluate our enterprise cybersecurity program, including the Defense Contract Management Agency (DCMA) and Cybersecurity Maturity Model Certification Third-Party Assessment Organizations. Moreover, some of our products are audited or reviewed for regulatory compliance certification pursuant to the relevant DoW risk management framework. Board Oversight and Management’s Role Enterprise Cybersecurity.
The program includes authorization and assessment of new and existing IT systems by our customers and third parties. We monitor use on these systems, including vulnerability management through patching and configuration. In addition, we restrict user access and require authorized users to complete additional user and cybersecurity training. 30 Table of Contents Incident Response.
The program includes authorization and assessment of new and existing IT systems by our customers and third parties. We monitor use on these systems, including vulnerability management through patching and configuration. In addition, we restrict user access and require authorized users to complete additional user and cybersecurity training. Incident Response.
Additionally, our Internal Audit function regularly assesses our program effectiveness through audits of our systems and processes to help maintain compliance with policies. As cybersecurity threats are continuously evolving, we also periodically engage with third parties to perform maturity assessments of our program to identify potential risk areas and improvement opportunities.
Additionally, our Internal Audit function regularly assesses our program effectiveness through audits of our systems and processes to help 28 Table of Contents maintain compliance with policies. As cybersecurity threats are continuously evolving, we also periodically engage with third parties to perform maturity assessments of our program to identify potential risk areas and improvement opportunities.
In addition, we strive to meet all security requirements mandated by government and commercial customers and adhere to regulatory guidance and standards for system security engineering. Many of our products also undergo industry audits and regulatory compliance certifications, and our products delivered to the Department of Defense (DoD) must comply with DoD risk management requirements.
In addition, we strive to meet all security requirements mandated by government and commercial customers and adhere to regulatory guidance and standards for system security engineering. Many of our products also undergo industry audits and regulatory compliance certifications, and our products delivered to the U.S. Department of War (DoW) (formerly referred to as the U.S.
The Audit Committee also considers product and services cybersecurity risks in connection with its financial and compliance risk oversight role. 31 Table of Contents Our product cybersecurity officer (PCO), under the direction of our chief technology officer, leads our cybersecurity program for our products and services and is responsible for assessing and managing related cybersecurity risks.
Our product cybersecurity officer (PCO), under the direction of our chief technology officer, leads our cybersecurity program for our products and services and is responsible for assessing and managing related cybersecurity risks.
The full Board of Directors also receives periodic briefings from management regarding the Company’s products and services cybersecurity risks.
The full Board of Directors also receives periodic briefings from management regarding the Company’s products and services cybersecurity risks. The Audit Committee also considers product and services cybersecurity risks in connection with its financial and compliance risk oversight role.
Removed
Cybersecurity threats include attacks on, or other attempts to infiltrate, our IT infrastructure and the IT infrastructure of our customers, suppliers, subcontractors, and other third parties, attempting to gain unauthorized access to our confidential or other proprietary information, classified information, or information relating to our employees, customers, and other third parties, or to disrupt our systems or the systems of our customers, suppliers, subcontractors, and other third parties.
Added
Department of Defense) must comply with DoW risk management requirements. Cybersecurity for Systems used in Support of U.S. Government Customers.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeITEM 2. PROPERTIES We have significant properties in approximately 25 countries, with approximately 450 significant properties comprising approximately 75 million square feet of productive space. Approximately 30% of our square footage related to our significant properties is leased, and 70% is owned. Approximately 70% of our square footage related to our significant properties is located in the United States.
Biggest changeITEM 2. PROPERTIES We have significant properties in approximately 25 countries, with approximately 450 significant properties comprising approximately 75 million square feet of productive space. Approximately 30% of our square footage related to our significant 29 Table of Contents properties is leased, and 70% is owned.
Our fixed assets as of December 31, 2024 include manufacturing facilities and non-manufacturing facilities such as warehouses, laboratories, office space, and a substantial quantity of machinery and equipment, including general purpose machinery and equipment using special jigs, tools, and fixtures and in many instances having automatic control features and special adaptations.
Our fixed assets as of December 31, 2025 include manufacturing facilities and non-manufacturing facilities such as warehouses, laboratories, office space, and a substantial quantity of machinery and equipment, including general purpose machinery and equipment using special jigs, tools, and fixtures and in many instances having automatic control features and special adaptations.
The facilities, warehouses, machinery, and equipment in use as of December 31, 2024 are in good operating condition and are well-maintained.
The facilities, warehouses, machinery, and equipment in use as of December 31, 2025 are in good operating condition and are well-maintained.
Added
Approximately 70% of our square footage related to our significant properties is located in the United States.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeWe do not expect liability related to this matter to have a material adverse impact on our results of operations, financial condition, or liquidity. 737 MAX Aircraft Litigation Multiple lawsuits have been filed in U.S. courts relating to the October 29, 2018 Lion Air Flight 610 and the March 10, 2019 Ethiopian Airlines Flight 302 accidents.
Biggest changeRaytheon Company paid the civil penalties in the fourth quarter of 2025. 737 MAX Aircraft Litigation Multiple lawsuits were filed in U.S. courts relating to the October 29, 2018 Lion Air Flight 610 and the March 10, 2019 Ethiopian Airlines Flight 302 accidents.
On March 27, 2024, the CDPHE informed Raytheon Company that it is seeking a penalty in the amount of approximately $1 million in connection with the alleged violations and is requiring Raytheon Company to undertake a compliance program.
On March 27, 2024, the CDPHE informed Raytheon Company that it was seeking a penalty in the amount of approximately $1 million in connection with the alleged violations and was requiring Raytheon Company to undertake a compliance program.
Collins Aerospace (Collins) sold certain aircraft parts and systems to The Boeing Company for the 737 MAX aircraft involved in these accidents. Certain of our Collins businesses have been named, along with other third parties, as parties in many of these lawsuits. We have also fully supported all governmental investigations and inquiries relating to the accidents.
Collins Aerospace (Collins) sold certain aircraft parts and systems to The Boeing Company for the 737 MAX aircraft involved in these accidents. Certain of our Collins businesses were named, along with other third parties, as parties in many of these lawsuits.
Removed
Raytheon Company is contesting the alleged violations and the penalty demand, 32 Table of Contents and has the right to appeal the NOV/CDO and any associated penalty.
Added
In order to resolve the NOV/CDO, on October 6, 2025, Raytheon Company signed a Compliance Order on Consent (COC) with the CDPHE under which, without any admission of fault or liability, it agreed to pay $458,211 in civil penalties and to perform certain remediation work at the former facility under an agreed upon compliance schedule.
Removed
We do not expect that the lawsuits or governmental investigations or inquiries will have a material adverse effect on our results of operations, financial condition, or liquidity. ITEM 4. MINE SAFETY DISCLOSURE Not applicable. 33 Table of Contents PART II
Added
All lawsuits related to the Lion Air flight have been resolved, and the Collins businesses have obtained a full release. Only one lawsuit related to the Ethiopian Airlines flight remains pending, and we anticipate during 2026 the lawsuit will either be resolved or the claims against the Collins businesses will be dismissed. ITEM 4.
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MINE SAFETY DISCLOSURE Not applicable. 30 Table of Contents PART II

Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

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Biggest changeItem 4. Mine Safety Disclosures 33 PART II Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities 34 Item 6. Reserved 35 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 36 Item 7A. Quantitative and Qualitative Disclosures About Market Risk 64 Item 8.
Biggest changeItem 4. Mine Safety Disclosures 30 PART II Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities 31 Item 6. Reserved 32 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 33 Item 7A. Quantitative and Qualitative Disclosures About Market Risk 59 Item 8.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeComparison of Cumulative Five Year Total Return Annual Return Percentage Years Ending Company/Index 12/31/2020 12/31/2021 12/31/2022 12/31/2023 12/31/2024 RTX Common Stock (16.73) 23.27 20.01 (14.44) 40.76 S&P 500 Index 18.40 28.71 (18.11) 26.29 25.02 S&P 500 Aerospace & Defense Index (16.06) 13.22 17.37 6.77 14.40 Indexed Returns Years Ending Company/Index Base Period 12/31/2019 12/31/2020 12/31/2021 12/31/2022 12/31/2023 12/31/2024 RTX Common Stock $ 100.00 $ 83.27 $ 102.65 $ 123.19 $ 105.41 $ 148.37 S&P 500 Index 100.00 118.40 152.39 124.79 157.59 197.02 S&P 500 Aerospace & Defense Index 100.00 83.94 95.03 111.54 119.09 136.24 34 Table of Contents Issuer Purchases of Equity Securities The following table provides information about our purchases of equity securities that are registered by us pursuant to Section 12 of the Exchange Act during the quarter ended December 31, 2024. 2024 Total Number of Shares Purchased (000’s) Average Price Paid per Share Total Number of Shares Purchased as Part of a Publicly Announced Program (000’s) Approximate Dollar Value of Shares that May Yet Be Purchased Under the Program (dollars in millions) October 1 - October 31 — $ — — $ 715 November 1 - November 30 416 120.05 416 665 December 1 - December 31 — — — 665 Total 416 $ 120.05 416 On October 21, 2023, our Board of Directors authorized a share repurchase program for up to $11 billion of our common stock, replacing the previous program announced on December 12, 2022.
Biggest changeComparison of Cumulative Five Year Total Return Annual Return Percentage Years Ending Company/Index 12/31/2021 12/31/2022 12/31/2023 12/31/2024 12/31/2025 RTX Common Stock 23.27 20.01 (14.44) 40.76 61.44 S&P 500 Index 28.71 (18.11) 26.29 25.02 17.88 S&P 500 Aerospace & Defense Index 13.22 17.37 6.77 14.40 41.98 Indexed Returns Years Ending Company/Index Base Period 12/31/2020 12/31/2021 12/31/2022 12/31/2023 12/31/2024 12/31/2025 RTX Common Stock $ 100.00 $ 123.27 $ 147.94 $ 126.58 $ 178.17 $ 287.64 S&P 500 Index 100.00 128.71 105.40 133.10 166.40 196.16 S&P 500 Aerospace & Defense Index 100.00 113.22 132.89 141.88 162.31 230.45 31 Table of Contents Issuer Purchases of Equity Securities The following table provides information about our purchases of equity securities that are registered by us pursuant to Section 12 of the Exchange Act during the quarter ended December 31, 2025. 2025 Total Number of Shares Purchased (000’s) Average Price Paid per Share Total Number of Shares Purchased as Part of a Publicly Announced Program (000’s) Approximate Dollar Value of Shares that May Yet Be Purchased Under the Program (dollars in millions) October 1 - October 31 — $ — — $ 615 November 1 - November 30 — — — 615 December 1 - December 31 — — — 615 Total — $ — — On October 21, 2023, our Board of Directors authorized a share repurchase program for up to $11 billion of our common stock, replacing the previous program announced on December 12, 2022.
Stock Performance Graph The following graph presents the cumulative total shareowner return for the five years ending December 31, 2024 for our common stock as compared to the Standard & Poor’s 500 Stock Index and the S&P 500 Aerospace & Defense (A&D) Index.
Stock Performance Graph The following graph presents the cumulative total shareowner return for the five years ending December 31, 2025 for our common stock as compared to the Standard & Poor’s 500 Stock Index and the S&P 500 Aerospace & Defense (A&D) Index.
These figures assume that all dividends paid over the five-year period were reinvested, and that the starting value of each index and the investment in common stock was $100.00 on December 31, 2019.
These figures assume that all dividends paid over the five-year period were reinvested, and that the starting value of each index and the investment in common stock was $100.00 on December 31, 2020.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS, AND ISSUER PURCHASES OF EQUITY SECURITIES RTX Corporation’s common stock is listed on the New York Stock Exchange under the ticker symbol “RTX.” There were 37,447 registered shareowners at December 31, 2024.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS, AND ISSUER PURCHASES OF EQUITY SECURITIES RTX Corporation’s common stock is listed on the New York Stock Exchange under the ticker symbol “RTX.” There were 35,327 registered shareowners at December 31, 2025.
The final average price under the ASR was $94.28 per share. We may also reacquire shares outside of the program in connection with the surrender of shares to cover taxes on vesting of restricted stock. Our ability to repurchase shares is subject to applicable law.
We may also reacquire shares outside of the program in connection with the surrender of shares to cover taxes on vesting of restricted stock. Our ability to repurchase shares is subject to applicable law. During the quarter ended December 31, 2025, we did not repurchase shares outside of the program.
Removed
On October 24, 2023, we entered into accelerated share repurchase (ASR) agreements with certain financial institution counterparties to repurchase shares of our common stock for an aggregate purchase price of $10 billion.
Removed
The ASR agreements provided for the repurchase of our common stock based on the average of the daily volume-weighted average prices of our common stock during the term of such ASR agreements, less a discount and subject to adjustments pursuant to the terms and conditions of the ASR agreements.
Removed
Pursuant to the ASR agreements, we made aggregate payments of $10 billion on October 26, 2023, and received initial deliveries of approximately 108.4 million shares of our common stock at a price of $78.38 per share, which, on that date, represented approximately 85% of the shares expected to be repurchased.
Removed
The shares associated with the remaining portion of the aggregate purchase price have been settled over two tranches. In July 2024, the first tranche was settled upon final delivery to us of 0.4 million shares of common stock.
Removed
In September 2024, with respect to the second tranche, we owed 2.2 million shares of common stock that we elected to cash settle for $261 million. The cash payment required as a result of the second tranche settlement was due to the significant increase in the price of our common stock during the ASR term.
Removed
During the quarter ended December 31, 2024, we did not repurchase shares outside of the program.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeCash Flow - Investing Activities (dollars in millions) 2024 2023 2022 Net cash flows used in investing activities from continuing operations $ (1,534) $ (3,039) $ (2,829) Our investing activities primarily include capital expenditures, cash investments in customer financing assets, investments in and dispositions of businesses, payments related to our collaboration intangible assets and contractual rights to provide product on new aircraft platforms, and settlements of derivative contracts not designated as hedging instruments. 2024 Compared with 2023 Investing Activities The $1.5 billion change in cash flows used in investing activities from continuing operations in 2024 compared to 2023 primarily related to the cash proceeds from the sale of our CIS business within our Raytheon segment and the sale of our Goodrich Hoist & Winch business within our Collins segment of approximately $1.3 billion and $0.5 billion, respectively. 2023 Compared with 2022 Investing Activities The $0.2 billion change in cash flows used in investing activities from continuing operations in 2023 compared to 2022 primarily related to an increase in payments for intangible assets discussed below and capital expenditures primarily due to investments in production facilities at Pratt & Whitney and Raytheon, partially offset by the timing of our derivative contract settlements.
Biggest changeWe currently estimate a full year 2026 cash impact related to the Powder Metal Matter of approximately $0.7 billion, which includes the impact of cash paid, customer credits applied and the timing of partner recovery. 52 Table of Contents Cash Flow - Investing Activities (dollars in millions) 2025 2024 2023 Net cash flows used in investing activities $ (1,265) $ (1,534) $ (3,039) Our investing activities primarily include capital expenditures, cash investments in customer financing assets, investments in and dispositions of businesses, payments related to our collaboration intangible assets and contractual rights to provide product on new aircraft platforms, and settlements of derivative contracts not designated as hedging instruments and designated net investment hedges. 2025 Compared with 2024 Investing Activities The $0.3 billion change in cash flows used in investing activities in 2025 compared to 2024 primarily related to higher receipts from settlements of derivative contracts of $0.3 billion.
This was partially offset by a $0.4 billion gain on the sale of Raytheon’s CIS business in the first quarter of 2024, a $0.2 billion benefit from a tax related indemnity receivable recorded in the third quarter of 2024, a $0.1 billion gain on the sale of Collins’ Goodrich Hoist & Winch business in the fourth quarter of 2024, and an insurance recovery at Pratt & Whitney of approximately $0.1 billion in the fourth quarter of 2024.
This was partially offset by a $0.4 billion gain on sale of Raytheon’s CIS business in the first quarter of 2024, a $0.2 billion benefit from a tax related indemnity receivable recorded in the third quarter of 2024, a $0.1 billion gain on sale of Collins’ Goodrich Hoist & Winch business in the fourth quarter of 2024, and an insurance recovery at Pratt & Whitney of approximately $0.1 billion in the fourth quarter of 2024.
A reconciliation of these measures to reported U.S.
A reconciliation of these measures to reported U.S.
A reconciliation of these measures to reported U.S.
A reconciliation of these measures to reported U.S.
A reconciliation of these measures to reported U.S.
A reconciliation of these measures to reported U.S.
In addition to the amounts included in the table above, during the fourth quarter of 2024, as a result of obtaining critical licenses and further regulatory approvals, we restarted work under certain contracts with a Middle East customer and began recognizing revenue on these contracts.
In addition to the amounts included in the table above, during the fourth quarter of 2024, as a result of obtaining critical licenses and further regulatory approvals, we restarted work under certain contracts with a Middle East customer and began recognizing revenue on these contracts.
Net products sales increased $10.0 billion in 2024 compared to 2023, primarily driven by the absence of the net sales charge of $5.3 billion associated with the Powder Metal Matter, and increases in external products sales of $2.4 billion at Pratt & Whitney, $1.2 billion at Collins, and $1.0 billion at Raytheon.
Net products sales increased $10.0 billion in 2024 compared to 2023, primarily driven by the absence of the net sales charge of $5.3 billion associated with the Powder Metal Matter, and increases in external product sales of $2.4 billion at Pratt & Whitney, $1.2 billion at Collins, and $1.0 billion at Raytheon.
The organic operating profit increase of $0.6 billion in 2024 compared to 2023 reflects higher commercial aerospace operating profit of $0.4 billion driven by favorable mix on higher large commercial OEM volume which was partially offset by higher OEM production costs.
The organic operating profit (loss) increase of $0.6 billion in 2024 compared to 2023 reflects higher commercial aerospace operating profit of $0.4 billion driven by favorable mix on higher large commercial OEM volume which was partially offset by higher OEM production costs.
In addition, as described in “Note 1: Basis of Presentation and Summary of Accounting Principles” within Item 8 of this Form 10-K, in 2024, the Company entered into a deferred prosecution agreement (DPA) with the DOJ and the Company settled an administrative proceeding with the SEC (the SEC Administrative Order) to resolve the previously disclosed criminal and civil government investigations into payments made by Raytheon Company and its joint venture, Thales-Raytheon Systems (TRS) since 2012, in connection with certain Middle East contracts.
In addition, as described in “Note 1: Basis of Presentation and Summary of Accounting Principles” within Item 8 of this Form 10-K, in 2024, the Company entered into a deferred prosecution agreement (DPA) with the Department of Justice (DOJ) and the Company settled an administrative proceeding with the SEC (the SEC Administrative Order) to resolve the previously disclosed criminal and civil government investigations into payments made by Raytheon Company and its joint venture, Thales-Raytheon Systems (TRS) since 2012, in connection with certain Middle East contracts.
Eliminations and other operating profit in 2024 was relatively consistent with 2023. The increase in eliminations and other net sales of $0.3 billion in 2023 compared to 2022 was primarily due to an increase in intersegment eliminations, principally driven by Collins. Eliminations and other operating profit in 2023 was relatively consistent with 2022.
The increase in eliminations and other net sales of $0.3 billion in 2024 compared to 2023 was primarily due to an increase in intersegment eliminations, principally driven by Collins. Eliminations and other operating profit in 2024 was relatively consistent with 2023.
Additionally, a favorable impact from accounts receivable collections, including the related impact of factoring as discussed below, and a favorable change in accounts payable and other accrued liabilities driven by timing of payments and an increase in material purchases, partially offset by the net change in contract assets and contract liabilities, primarily at Pratt & Whitney, due to sales in excess of billings, contributed to an increase in net cash flows provided by operating activities from continuing operations in 2024 compared to 2023.
Additionally, a favorable impact from accounts receivable collections, including the related impact of factoring as discussed below, and a favorable change in accounts payable and other accrued liabilities driven by timing of payments and an increase in material purchases, partially offset by the net change in contract assets and contract liabilities, primarily at Pratt & Whitney, due to sales in excess of billings, contributed to an increase in net cash flows provided by operating activities in 2024 compared to 2023.
Department of Defense (DoD) budget and spending levels, changes in demand, changes in policy positions or priorities, the domestic and global political and economic environment, and the evolving nature of the global and national security threat environment.
Department of Defense) budget and spending levels, changes in demand, changes in policy positions or priorities, the domestic and global political and economic environment, and the evolving nature of the global and national security threat environment.
“Risk Factors.” BUSINESS OVERVIEW W e are a global premier systems provider of high technology products and services to the aerospace and defense industries. We operate in three principal business segments: Collins Aerospace (Collins), Pratt & Whitney, and Raytheon. Unless the context otherwise requires, the terms “we,” “our,” “us,” “the Company,” and “RTX” mean RTX Corporation and its subsidiaries.
“Risk Factors.” BUSINESS OVERVIEW We are a global premier systems provider of high technology products and services to the aerospace and defense industries. We operate in three principal business segments: Collins Aerospace (Collins), Pratt & Whitney, and Raytheon. Unless the context otherwise requires, the terms “we,” “our,” “us,” “the Company,” and “RTX” mean RTX Corporation and its subsidiaries.
Though the Company expects to continue having adequate access to funds, declines in our credit ratings or Company outlook could result in higher borrowing costs. As of December 31, 2024, we had a revolving credit agreement with various banks permitting aggregate borrowings of up to $5.0 billion, which expires in August 2028.
Though the Company expects to continue having adequate access to funds, declines in our credit ratings or Company outlook could result in higher borrowing costs. As of December 31, 2025, we had a revolving credit agreement with various banks permitting aggregate borrowings of up to $5.0 billion, which expires in August 2028.
The charge recorded in the third quarter of 2023 resulted in a net increase in Other accrued liabilities of $2.8 billion, which principally related to our 51% share of an accrual for expected customer compensation. At December 31, 2024 and 2023, we had other accrued liabilities of $1.7 billion and $2.8 billion, respectively, primarily related to expected compensation to customers.
The charge recorded in the third quarter of 2023 resulted in a net increase in Other accrued liabilities of $2.8 billion, which principally related to our 51% share of an accrual for expected customer compensation. At December 31, 2025 and 2024, we had other accrued liabilities of $0.7 billion and $1.7 billion, respectively, primarily related to expected compensation to customers.
The decrease in the accrual during 2024 was primarily due to customer compensation in the form of credits issued and cash paid to customers during the period.
The decrease in the accrual in 2025 and 2024 was primarily due to customer compensation in the form of credits issued and cash paid to customers during the period.
We also completed our annual indefinite-lived intangible assets impairment testing using a qualitative approach as of October 1, 2024 and determined that no adjustments to the carrying value of these assets were necessary. As noted above, our indefinite-lived intangible assets impairment analysis involves significant assumptions that are subject to variability.
We also completed our annual indefinite-lived intangible assets impairment testing using a qualitative approach as of October 1, 2025 and determined that no adjustments to the carrying value of these assets were necessary. As noted above, our indefinite-lived intangible assets impairment analysis involves significant assumptions that are subject to variability.
Such assumptions are subject to variability from year to year and are directly impacted by, among other things, global market conditions. We completed our annual goodwill impairment testing as of October 1, 2024 and determined that no adjustments to the carrying value of goodwill were necessary.
Such assumptions are subject to variability from year to year and are directly impacted by, among other things, global market conditions. We completed our annual goodwill impairment testing as of October 1, 2025 and determined that no adjustments to the carrying value of goodwill were necessary.
The increase in Other cost of sales of $3.2 billion in 2024 compared to 2023 was primarily driven by the absence of the Powder Metal Matter charge recorded in the third quarter of 2023, which resulted in a $2.5 billion net reduction in cost of sales primarily reflecting our partners’ 49% share of the impact.
The increase in Other cost of sales of $3.2 billion in 2024 was primarily driven by the absence of the Powder Metal Matter charge recorded in the third quarter of 2023, which resulted in a $2.5 billion net reduction in cost of sales primarily reflecting our partners’ 49% share of the impact.
In addition to operating cash flows, other significant factors that affect our overall management of liquidity include: capital expenditures, customer financing requirements, investments in and divestitures of businesses, dividends, common stock repurchases, pension funding, access to 54 Table of Contents the commercial paper markets, adequacy of available bank lines of credit, redemptions of debt, and the ability to attract long-term capital at satisfactory terms.
In addition to operating cash flows, other significant factors that affect our overall management of liquidity include: capital expenditures, customer financing requirements, investments in and divestitures of businesses, dividends, common stock repurchases, pension funding, access to the commercial paper markets, adequacy of available bank lines of credit, redemptions of debt, and the ability to attract long-term capital at satisfactory terms.
Net income from continuing operations attributable to common shareowners for 2023 includes the following: • charge associated with the Powder Metal Matter of $2.2 billion, net of tax and partner share, which had an unfavorable impact on diluted EPS from continuing operations of $1.55; • acquisition accounting adjustments of $1.6 billion, net of tax, which had an unfavorable impact on diluted EPS from continuing operations of $1.09; • restructuring charges of $0.2 billion, net of tax, which had an unfavorable impact on diluted EPS from continuing operations of $0.13; and • charges related to a customer insolvency of $0.1 billion, net of tax and noncontrolling interest, which had an unfavorable impact on diluted EPS from continuing operations of $0.08.
Net income attributable to common shareowners for 2023 includes the following: • charge associated with the Powder Metal Matter of $2.2 billion, net of tax and partner share, which had an unfavorable impact on diluted EPS of $1.55; • acquisition accounting adjustments of $1.6 billion, net of tax, which had an unfavorable impact on diluted EPS of $1.09; • restructuring charges of $0.2 billion, net of tax, which had an unfavorable impact on diluted EPS of $0.13; and • charges related to a customer insolvency of $0.1 billion, net of tax and noncontrolling interest, which had an unfavorable impact on diluted EPS of $0.08.
We regularly assess capitalized contract fulfillment costs for impairment. In 2024, we recognized impairment charges of $0.2 billion and $0.1 billion at Collins due to a contract cancellation and as a result of the impact of initiating alternative titanium sources, respectively.
We regularly assess capitalized contract fulfillment costs for impairment. In 2024, we recognized impairment charges at Collins of approximately $0.2 billion due to a contract cancellation and $0.1 billion as a result of the impact of initiating alternative titanium sources.
Geopolitical Matters. 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.
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.
The increase in Other net sales of $5.3 billion in 2024 compared to 2023, was primarily driven by the absence of the net sales charge of $5.4 billion associated with the Powder Metal Matter recognized in the third quarter of 2023.
The increase in Other net sales of $5.3 billion in 2024 was primarily driven by the absence of the net sales charge of $5.4 billion associated with the Powder Metal Matter recognized in the third quarter of 2023.
In the event we were to determine that we would not be able to realize all or a portion of our deferred tax assets in the future, we would reduce such amounts through an increase to tax expense in the period in which that determination is made or when tax law changes are enacted.
In the event we were to determine that we would not be able to realize all or a portion of our deferred tax assets in the future, we would 55 Table of Contents reduce such amounts through an increase to tax expense in the period in which that determination is made or when tax law changes are enacted.
In addition, the increase in Operating profit was driven by the increased operating performance of our segments of approximately $1.5 billion, a $0.4 43 Table of Contents billion gain on sale of the CIS business recorded in the first quarter of 2024, and a $0.2 billion benefit from a tax related indemnity receivable recorded in the third quarter of 2024.
In addition, the increase in Operating profit was driven by the increased operating performance of our segments of approximately $1.5 billion, a $0.4 billion gain on sale of the CIS business recorded in the first quarter of 2024, and a $0.2 billion benefit from a tax related indemnity receivable recorded in the third quarter of 2024.
Military sales increased $1.1 billion, primarily due to higher sustainment and production volume across multiple platforms. The Other net sales increase of $5.4 billion in 2024 compared to 2023 primarily relates to the absence of a charge recognized in the third quarter of 2023 related to the Powder Metal Matter.
Military sales increased $1.1 billion, primarily due to higher sustainment and production volume across multiple platforms. The Other net sales decrease of $5.4 billion in 2024 compared to 2023 was primarily relates to the absence of a charge recognized in the third quarter of 2023 related to the Powder Metal Matter.
Corporate and Eliminations and other Eliminations and other reflects the elimination of sales, other income, and operating profit transacted between segments, as well as the operating results of certain smaller operations. Corporate expenses and other unallocated items consists of costs not considered part of management’s evaluation of reportable segment operating performance, including certain unallowable costs and reserves.
Corporate and Eliminations and other Eliminations and other reflects the elimination of sales, other income, and operating profit transacted between segments, as well as the operating results of certain smaller operations. 48 Table of Contents Corporate expenses and other unallocated items consists of costs not considered part of management’s evaluation of reportable segment operating performance, including certain unallowable costs and reserves.
The decrease in Other net sales in 2024 compared to 2023 was primarily driven by $0.1 billion related to the Raytheon Contract Termination initiated in the second quarter of 2024.
The decrease in Other net sales in 2025 compared to 2024 was primarily driven by $0.1 billion related to the Raytheon Contract Termination initiated in the second quarter of 2024.
The CA, which has a three-year term, requires the Company to implement remedial compliance measures and to conduct an external audit of the Company’s ITAR compliance program. The CA also requires appointment of an external, independent Special Compliance 63 Table of Contents Officer (SCO). The Company appointed its SCO on September 27, 2024.
The CA, which has a three-year term, requires the Company to implement remedial compliance measures and to conduct an external audit of the Company’s ITAR compliance program. The CA also requires appointment of an external, independent Special Compliance Officer (SCO). The Company appointed its SCO on September 27, 2024.
These disruptions impacted our ability to procure raw materials, microelectronics, and certain commodities on a timely basis and/or at expected prices, and are driven by supply chain market constraints and macroeconomic conditions, including inflation and labor market shortages.
These disruptions impacted our ability to procure raw materials, including certain rare earth elements, microelectronics, and certain commodities on a timely basis and/or at expected prices, and are driven by supply chain market constraints and macroeconomic conditions, including inflation and labor market shortages.
We continue to pursue strategic and operational initiatives to help address these macroeconomic pressures, including our digital transformation, operational modernization, cost reduction, and advanced 37 Table of Contents technology programs, and we apply our Customer Oriented Results and Excellence (CORE) operating platform to the execution of these initiatives.
We continue to pursue strategic and operational initiatives to help address these macroeconomic pressures, including our digital transformation, operational modernization, cost reduction, and advanced technology programs, and we apply our Customer Oriented Results and Excellence (CORE) operating platform to the execution of these initiatives.
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.
Acquisition 36 Table of Contents 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.
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 59 Table of Contents include the establishment of, and changes to, loss provisions for our contracts accounted for on a percentage-of-completion basis.
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.
At December 31, 2024, we had commercial aerospace financing and other contractual commitments, including exclusivity and collaboration payment commitments, of approximately $14.1 billion, on a gross basis before reduction for our collaboration partners’ share. Refer to “Note 17: Commitments and Contingencies” within Item 8 of this Form 10-K for further details on our commercial aerospace financing and other contractual commitments.
At December 31, 2025, we had commercial aerospace financing and other contractual commitments, including exclusivity and collaboration payment commitments, of approximately $13.1 billion, on a gross basis before reduction for our collaboration partners’ share. Refer to “Note 17: Commitments and Contingencies” within Item 8 of this Form 10-K for further details on our commercial aerospace financing and other contractual commitments.
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.
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 54 Table of Contents complex, subject to many inputs, and requires significant judgment by management on a contract by contract basis.
These impacts could be 61 Table of Contents material to the Company’s results of operations, financial condition, and liquidity. Additionally, we have significant contracts with the U.S. government, subject to government oversight and audit, which may require significant adjustment of contract prices.
These impacts could be material to the Company’s results of operations, financial condition, and liquidity. Additionally, we have significant contracts with the U.S. government, subject to government oversight and audit, which may require significant adjustment of contract prices.
An increase or decrease of 25 basis points in the EROA would have increased or decreased our 2024 Net periodic benefit income by approximately $131 million. Refer to “Note 10: Employee Benefit Plans” within Item 8 of this Form 10-K for discussion of current and prior year discount rate and EROA assumptions.
An increase or decrease of 25 basis points in the EROA would have increased or decreased our 2025 net periodic benefit income by approximately $130 million. Refer to “Note 10: Employee Benefit Plans” within Item 8 of this Form 10-K for discussion of current and prior year discount rate and EROA assumptions.
Other Matters Global, economic, and political conditions, changes in raw material and commodity prices and supply, labor availability and costs, inflation, interest rates, potential changes in U.S. government policy positions, including changes in DoD policies or priorities, geopolitical conflicts and strained intercountry relations, U.S. and non-U.S. tax law changes, foreign currency exchange rates, sanctions, tariffs, energy costs and supply, levels of air travel, the financial condition of commercial airlines, and the impact from natural disasters and weather conditions create uncertainties that could impact our businesses. 36 Table of Contents Legal Matters.
Other Matters Global, economic, and political conditions, changes in raw material and commodity prices and supply, labor availability and costs, inflation, interest rates, potential changes in U.S. government policy positions, including changes in DoW policies or priorities, geopolitical conflicts and strained intercountry relations, U.S. and non-U.S. tax law changes, foreign currency exchange rates, sanctions, tariffs, energy costs and supply, levels of air travel, the financial condition of commercial airlines, and the impact from natural disasters and weather conditions create uncertainties that could impact our businesses.
Military operating profit also benefited from the absence of an unfavorable EAC adjustment of approximately $60 million in the fourth quarter of 2023, which was partially offset by an unfavorable EAC adjustment of approximately $50 million in the fourth quarter of 2024.
Military operating profit also benefited from the absence of an unfavorable EAC adjustment 46 Table of Contents of approximately $60 million in the fourth quarter of 2023, which was partially offset by an unfavorable EAC adjustment of approximately $50 million in the fourth quarter of 2024.
In the fourth quarter of 2024, we expanded the use of ESOP shares to fund our matching contributions to additional participants who had previously received matching contributions in cash. We made net income tax payments of $1.2 billion, $1.5 billion, and $2.4 billion in 2024, 2023, and 2022, respectively.
In the fourth quarter of 2024, we expanded the use of ESOP shares to fund our matching contributions to additional participants who had previously received matching contributions in cash. We made net income tax payments of $1.6 billion, $1.2 billion, and $1.5 billion in 2025, 2024, and 2023, respectively.
The Company also entered into a DPA and a 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.
The Company also entered into a DPA and a FCA settlement 58 Table of Contents 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.
In 2024, the Company also resolved 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 that were resolved pursuant to a Consent Agreement (CA) with the DOS.
In 2024, the Company also resolved 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 that were resolved pursuant to a Consent Agreement (CA) with the U.S. Department of State (DOS).
Excluding the charges discussed above, higher net income from continuing operations after adjustments for depreciation and amortization, deferred income tax benefit, stock compensation cost, net periodic pension and other postretirement income, and gain on sale of business also contributed to an increase in net cash flows provided by operating activities from continuing operations in 2024 compared to 2023, primarily driven by the operating performance of our segments.
Excluding the charges discussed above, higher net income after adjustments for depreciation and amortization, deferred income tax benefit, stock compensation cost, net periodic pension and other postretirement income, and gain on sale of CIS business, net of transaction costs also contributed to an increase in net cash flows provided by operating activities in 2024 compared to 2023, primarily driven by the operating performance of our segments.
The increase in commercial aerospace sales was principally driven by continued growth in commercial air traffic, which has resulted in an increase in flight hours and increased OEM volume primarily within wide-body and regional aircraft, partially offset by decreased OEM volume in narrow-body aircraft. The defense sales increase was primarily due to higher volume across multiple programs and platforms.
The increase in commercial aerospace sales was principally driven by continued growth in commercial air traffic, which has resulted in an increase in flight hours and increased OEM volume primarily within widebody and regional aircraft, partially offset by decreased OEM volume in narrowbody aircraft. The defense sales increase was primarily due to higher volume across multiple programs and platforms.
At December 31, 2024, our exclusivity assets, net of accumulated amortization, were approximately $3.3 billion, and our remaining estimated commitments, net of collaborator share, were approximately $5.5 billion.
At December 31, 2025, our exclusivity assets, net of accumulated amortization, were approximately $3.7 billion, and our remaining estimated commitments, net of collaborator share, were approximately $5.5 billion.
We also focus on backlog as a key financial performance measure of our forward-looking sales growth. Total backlog was $218 billion and $196 billion as of December 31, 2024 and 2023, respectively.
We also focus on backlog as a key financial performance measure of our forward-looking sales growth. Total backlog was $268 billion and $218 billion as of December 31, 2025 and 2024, respectively.
Other Income (Expense), Net (dollars in millions) 2024 2023 2022 Other income (expense), net $ (132) $ 86 $ 120 Other income (expense), net includes equity earnings in unconsolidated entities, royalty income, foreign exchange gains and losses, and other ongoing and non-recurring items.
Other Income (Expense), Net (dollars in millions) 2025 2024 2023 Other income (expense), net $ 413 $ (132) $ 86 Other income (expense), net includes equity earnings in unconsolidated entities, royalty income, foreign exchange gains and losses, and other ongoing and non-recurring items.
A reconciliation of this measure to reported U.S. GAAP amounts is provided in the table above. Net sales increased $7.8 billion organically in 2024 compared to 2023, primarily due to higher organic sales of $4.4 billion at Pratt & Whitney, $2.1 billion at Collins, and $1.7 billion at Raytheon.
A reconciliation of this measure to reported U.S. GAAP amounts is provided in the table above. Net sales increased $8.9 billion organically in 2025, primarily due to higher organic sales of $4.8 billion at Pratt & Whitney, $2.6 billion at Collins, and $1.7 billion at Raytheon.
The $1.2 billion decrease in cost of sales related to 41 Table of Contents Acquisitions and divestitures, net in 2024 compared to 2023, was primarily driven by the sale of our CIS business within our Raytheon segment completed in the first quarter of 2024.
The $1.2 billion decrease in cost of sales related to Acquisitions and divestitures, net in 2024 was primarily driven by the sale of our CIS business within our Raytheon segment completed in the first quarter 2024 .
Under these DPAs and the SEC Administrative Order, Raytheon Company and the Company are required to retain, among other things, an independent compliance monitor satisfactory to the DOJ and the SEC (for a term ending three years from the date on which the monitor is engaged) and are required to undertake certain cooperation and disclosure obligations (for a term commencing on the effective date of DPA-1 and the SEC Administrative Order, as applicable, and ending three years from the date on which the monitor is engaged).
Under these DPAs and the SEC Administrative Order, Raytheon Company and the Company are required to undertake certain cooperation and disclosure obligations (for a term commencing on the effective date of DPA-1 and the SEC Administrative Order, as applicable, and ending three years from the date on which Raytheon Company and the Company engage an independent compliance monitor satisfactory to the DOJ and SEC).
The $1.3 billion decrease in net sales related to Acquisitions and divestitures, net in 2024 compared to 2023, was primarily driven by the sale of our Cybersecurity, Intelligence and Services (CIS) business within our Raytheon segment completed in the first quarter of 2024.
The $1.3 billion decrease in net sales related to Acquisitions and divestitures, net in 2024 was primarily driven by the sale of our CIS business within our Raytheon segment completed in the first quarter of 2024.
Interest Expense, Net (dollars in millions) 2024 2023 2022 Interest expense $ 1,970 $ 1,653 $ 1,300 Interest income (102) (100) (70) Other non-operating expense (income) (1) (6) (48) 46 Interest expense, net $ 1,862 $ 1,505 $ 1,276 Total average interest expense rate - average outstanding borrowings during the year: 4.6 % 4.3 % 4.0 % Total average interest expense rate - outstanding borrowings as of December 31: 4.5 % 4.6 % 4.0 % (1) Primarily consists of the gains or losses on assets associated with certain of our nonqualified deferred compensation and employee benefit plans, the gains or losses on liabilities associated with certain of our nonqualified deferred compensation plans, and non-operating dividend income.
Interest Expense, Net (dollars in millions) 2025 2024 2023 Interest expense $ 1,835 $ 1,970 $ 1,653 Interest income (98) (102) (100) Other non-operating expense (income) (1) 12 (6) (48) Interest expense, net $ 1,749 $ 1,862 $ 1,505 Total average interest expense rate - average outstanding borrowings during the year: 4.5 % 4.6 % 4.3 % Total average interest expense rate - outstanding borrowings as of December 31: 4.5 % 4.5 % 4.6 % (1) Primarily consists of the gains or losses on assets associated with certain of our nonqualified deferred compensation and employee benefit plans, the gains or losses on liabilities associated with certain of our nonqualified deferred compensation plans, and non-operating dividend income.
In addition, the increase in Other cost of sales includes a $0.5 billion charge at Raytheon related to the termination of a fixed price development contract with a foreign customer, herein referred to as “Raytheon Contract Termination,” in the second quarter of 2024, and $0.2 billion of charges recorded in the first quarter of 2024 at Collins 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.
In addition, the increase in Other cost of sales includes a $0.5 billion charge related to the Raytheon Contract Termination recorded in the second quarter of 2024, and $0.2 billion of charges recorded in the first quarter of 2024 at Collins 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.
Net Income from Continuing Operations Attributable to Common Shareowners (dollars in millions, except per share amounts) 2024 2023 2022 Net income from continuing operations attributable to common shareowners $ 4,774 $ 3,195 $ 5,216 Diluted earnings per share from continuing operations $ 3.55 $ 2.23 $ 3.51 Net income from continuing operations attributable to common shareowners for 2024 includes the following: • acquisition accounting adjustments of $1.6 billion, net of tax, which had an unfavorable impact on diluted EPS from continuing operations of $1.20; • a charge related to the Resolution of Certain Legal Matters of $0.9 billion, net of tax, which had an unfavorable impact on diluted EPS from continuing operations of $0.65; • a charge of $0.4 billion, net of tax, related to the Raytheon Contract Termination, which had an unfavorable impact on diluted EPS from continuing operations of $0.33; • benefit recognized as a result of the conclusion of the examination phases of the RTX and Rockwell Collins tax audits of $0.3 billion, net of tax, which had a favorable impact on diluted EPS from continuing operations of $0.21; • a gain on sale of the CIS business, net of transaction and other related costs, of $0.2 billion, net of tax, which had a favorable impact on diluted EPS from continuing operations of $0.18; • charges related to initiating alternative titanium sources at our Collins segment of $0.2 billion, which had an unfavorable impact on diluted EPS from continuing operations of $0.13; • restructuring charges of $0.2 billion, net of tax, which had an unfavorable impact on diluted EPS from continuing operations of $0.12; • a charge of $0.1 billion, net of tax, related to a customer bankruptcy, which had an unfavorable impact on diluted EPS from continuing operations of $0.09; and • a charge of $0.1 billion, net of tax, related to impairment of contract fulfillment costs in the fourth quarter of 2024, due to a contract cancellation at our Collins segment, which had an unfavorable impact on diluted EPS from continuing operations of $0.09.
Net income attributable to common shareowners for 2024 includes the following: • acquisition accounting adjustments of $1.6 billion, net of tax, which had an unfavorable impact on diluted EPS of $1.20; • a charge related to the Resolution of Certain Legal Matters of $0.9 billion, net of tax, which had an unfavorable impact on diluted EPS of $0.65; • a charge of $0.4 billion, net of tax, related to the Raytheon Contract Termination, which had an unfavorable impact on diluted EPS of $0.33; • benefit recognized as a result of the conclusion of the examination phases of the RTX and Rockwell Collins tax audits of $0.3 billion, net of tax, which had a favorable impact on diluted EPS of $0.21; • a gain on sale of the CIS business, net of transaction and other related costs, of $0.2 billion, net of tax, which had a favorable impact on diluted EPS of $0.18; • charges related to initiating alternative titanium sources at our Collins segment of $0.2 billion, which had an unfavorable impact on diluted EPS of $0.13; • restructuring charges of $0.2 billion, net of tax, which had an unfavorable impact on diluted EPS of $0.12; • a charge of $0.1 billion, net of tax, related to a customer bankruptcy, which had an unfavorable impact on diluted EPS of $0.09; and • a charge of $0.1 billion, net of tax, related to impairment of contract fulfillment costs in the fourth quarter of 2024, due to a contract cancellation at our Collins segment, which had an unfavorable impact on diluted EPS of $0.09.
At December 31, 2024, we had cash and cash equivalents of $5.6 billion, of which 41% was held by RTX’s foreign subsidiaries. We manage our worldwide cash requirements by reviewing available funds among the many subsidiaries through which we conduct our business and the cost effectiveness with which those funds can be accessed.
At December 31, 2025, we had cash and cash equivalents of $7.4 billion, of which 33% was held by RTX’s foreign subsidiaries. We manage our worldwide cash requirements by reviewing available funds among the many subsidiaries through which we conduct our business and the cost effectiveness with which those funds can be accessed.
Research and Development (dollars in millions) 2024 2023 2022 Company-funded $ 2,934 $ 2,805 $ 2,711 Percentage of net sales 3.6 % 4.1 % 4.0 % Customer-funded (1) $ 4,723 $ 4,456 $ 4,376 Percentage of net sales 5.8 % 6.5 % 6.5 % (1) Included in Cost of sales in our Consolidated Statement of Operations.
Research and Development (dollars in millions) 2025 2024 2023 Company-funded $ 2,807 $ 2,934 $ 2,805 Percentage of net sales 3.2 % 3.6 % 4.1 % Customer-funded (1) $ 4,886 $ 4,723 $ 4,456 Percentage of net sales 5.5 % 5.8 % 6.5 % (1) Included in Cost of sales in our Consolidated Statement of Operations.
We had the following net EAC adjustments for the periods presented: (dollars in millions) 2024 2023 2022 Net EAC adjustments $ (473) $ (648) $ (37) The change in net EAC adjustments of $0.2 billion in 2024 compared to 2023 was primarily due to favorable changes in net EAC adjustments at Pratt & Whitney and Raytheon, partially offset by unfavorable changes in net EAC adjustments at Collins.
We had the following net EAC adjustments for the periods presented: (dollars in millions) 2025 2024 2023 Net EAC adjustments $ (386) $ (473) $ (648) The change in net EAC adjustments of $0.1 billion in 2025 compared to 2024 was primarily due to favorable changes in net EAC adjustments at Raytheon, partially offset by unfavorable changes in net EAC adjustments at Pratt & Whitney.
Net Sales Operating Profit (dollars in millions) 2024 2023 2022 2024 2023 2022 Eliminations and other $ (2,325) $ (1,979) $ (1,684) $ (48) $ (42) $ (23) Corporate expenses and other unallocated items — — — (933) (275) (318) The increase in eliminations and other net sales of $0.3 billion in 2024 compared to 2023 was primarily due to an increase in intersegment eliminations, principally driven by Collins.
Net Sales Operating Profit (dollars in millions) 2025 2024 2023 2025 2024 2023 Eliminations and other $ (2,552) $ (2,325) $ (1,979) $ 54 $ (48) $ (42) Corporate expenses and other unallocated items — — — (248) (933) (275) The increase in eliminations and other net sales of $0.2 billion in 2025 compared to 2024 was primarily due to an increase in intersegment eliminations, principally driven by Collins.
A reconciliation of this measure to reported U.S. GAAP amounts is provided in the table above. The organic increase in Total cost of sales in 2024 compared to 2023 of $6.2 billion was primarily due to the organic net sales increases at Pratt & Whitney, Collins, and Raytheon noted above.
A reconciliation of this measure to reported U.S. GAAP amounts is provided in the table above. The organic increase in total cost of sales in 2025 of $7.1 billion was primarily due to the organic net sales increases at Pratt & Whitney, Collins, and Raytheon noted above.
Our defense operations consist primarily of our Raytheon business and operations in the defense businesses within our Collins and Pratt & Whitney segments. Defense bookings were approximately $61 billion, $51 billion, and $47 billion for 2024, 2023, and 2022 respectively.
Our defense operations consist primarily of our Raytheon business and operations in the defense businesses within our Collins and Pratt & Whitney segments. Defense bookings were approximately $61 billion in both 2025 and 2024 and $51 billion in 2023.
Cash Flow - Financing Activities (dollars in millions) 2024 2023 2022 Net cash flows used in financing activities from continuing operations $ (6,617) $ (4,527) $ (5,859) Our financing activities primarily include the issuance and repayment of commercial paper and other short-term and long-term debt, payment of dividends, and share repurchases. 2024 Compared with 2023 Financing Activities The $2.1 billion increase in cash flows used in financing activities from continuing operations in 2024 compared to the 2023 was primarily driven by higher year-over-year long-term debt repayments of $1.9 billion.
Cash Flow - Financing Activities (dollars in millions) 2025 2024 2023 Net cash flows used in financing activities $ (7,486) $ (6,617) $ (4,527) Our financing activities primarily include the issuance and repayment of commercial paper and other short-term and long-term debt, payment of dividends, and share repurchases. 2025 Compared with 2024 Financing Activities The $0.9 billion increase in cash flows used in financing activities in 2025 compared to the 2024 was primarily driven by higher year-over-year long-term debt repayments of $0.9 billion.
Many of our aerospace customers are covered under long-term aftermarket service agreements at both Collins and Pratt & Whitney, which are inclusive of both spare parts and services. Our defense operations are affected by U.S.
Many of our aerospace customers are covered under long-term aftermarket service agreements at both Collins and Pratt & Whitney, which are inclusive of both spare parts and services. Our defense operations are affected by U.S. Department of War (DoW) (formerly referred to as the U.S.
(dollars in millions) 2024 2023 2022 Total net sales $ 80,738 $ 68,920 $ 67,074 Operating profit 6,538 3,561 5,504 Operating profit margin 8.1 % 5.2 % 8.2 % Operating cash flow from continuing operations $ 7,159 $ 7,883 $ 7,168 In order to better assess the underlying performance of our business, we also focus on the change in organic net sales on both a consolidated basis and business segment basis, and the change in organic operating profit on a business segment basis, which allows for better year-over-year comparability.
(dollars in millions) 2025 2024 2023 Total net sales $ 88,603 $ 80,738 $ 68,920 Operating profit 9,300 6,538 3,561 Operating profit margin 10.5 % 8.1 % 5.2 % Operating cash flow $ 10,567 $ 7,159 $ 7,883 In order to better assess the underlying performance of our business, we also focus on the change in organic net sales on both a consolidated basis and business segment basis, and the change in organic operating profit on a business segment basis, which allows for better year-over-year comparability.
The increase in customer-funded research and development of $0.3 billion in 2024 compared to 2023, was primarily driven by higher expenses on various military and commercial programs at Collins and increased spending at Pratt & Whitney on military programs primarily driven by the F135 Engine Core Upgrade (ECU), partially offset by lower expenses at Raytheon primarily related to the Next Generation Interceptor (NGI) program.
The increase in customer-funded research and development of $0.2 billion in 2025 compared to 2024, was primarily driven by higher development spend on various military and commercial programs at Collins and increased spending at Pratt & Whitney on military development programs, partially offset by lower spending on customer-funded expenses at Raytheon on military development programs, specifically related to the Next Generation Interceptor (NGI) program.
Net EAC adjustments had the following impact on our operating results: (dollars in millions, except per share amounts) 2024 2023 2022 Total net sales $ (144) $ (452) $ 152 Operating profit (loss) (473) (648) (37) Income (loss) from continuing operations attributable to common shareowners (1) (374) (512) (29) Diluted earnings (loss) per share from continuing operations attributable to common shareowners (1) $ (0.28) $ (0.36) $ (0.02) (1) Amounts reflect a U.S. statutory tax rate of 21%, which approximates our tax rate on our EAC adjustments.
Net EAC adjustments had the following impact on our operating results: (dollars in millions, except per share amounts) 2025 2024 2023 Total net sales $ (208) $ (144) $ (452) Operating profit (386) (473) (648) Net income attributable to common shareowners (1) (305) (374) (512) Diluted earnings per share attributable to common shareowners (1) $ (0.22) $ (0.28) $ (0.36) (1) Amounts reflect a U.S. statutory tax rate of 21%, which approximates our tax rate on our EAC adjustments.
A change in any of these assumptions or actual experience that differs from these assumptions are subject to recognition in pension and postretirement net periodic benefit (income) expense reported in the Consolidated Financial Statements. Assumptions used in the accounting for these employee benefit plans require judgement. Major assumptions include the discount rate and EROA.
A change in any of these assumptions 57 Table of Contents or actual experience that differs from these assumptions are subject to recognition in pension and postretirement net periodic benefit (income) expense reported in the Consolidated Financial Statements. Assumptions used in the accounting for these employee benefit plans require judgment.
Material changes in these assumptions could occur and result in impairments in future periods. Contingent Liabilities.
Material changes in these assumptions could occur and result in impairments in future periods. 56 Table of Contents Contingent Liabilities.
See “Segment Review” below for further information by segment. 40 Table of Contents % of Total Net Sales (dollars in millions) 2024 2023 2022 2024 2023 2022 Net sales Products $ 59,612 $ 49,571 $ 50,773 74 % 72 % 76 % Services 21,126 19,349 16,301 26 % 28 % 24 % Total net sales $ 80,738 $ 68,920 $ 67,074 100 % 100 % 100 % Refer to “Note 20: Segment Financial Data” within Item 8 of this Form 10-K for the composition of external net sales by products and services by segment.
See “Segment Review” below for further information by segment. % of Total Net Sales (dollars in millions) 2025 2024 2023 2025 2024 2023 Net sales Products $ 64,171 $ 59,612 $ 49,571 72 % 74 % 72 % Services 24,432 21,126 19,349 28 % 26 % 28 % Total net sales $ 88,603 $ 80,738 $ 68,920 100 % 100 % 100 % Refer to “Note 20: Segment Financial Data” within Item 8 of this Form 10-K for the composition of external net sales by products and services by segment.
FINANCIAL SUMMARY We use the following key financial performance measures to manage our business on a consolidated basis and by business segment, and to monitor and assess our results of operations: • Net sales: a metric that measures our revenue for the current year; • Operating profit: a measure of our profit for the year, before non-operating expenses (income), net and income tax expense; • Operating profit margin: a measure of our Operating profit as a percentage of Total net sales; and • Operating cash flow from continuing operations: a measure of the amount of cash generated by our business operations.
“Risk Factors” within Part I of this Form 10-K for further discussion. 35 Table of Contents FINANCIAL SUMMARY We use the following key financial performance measures to manage our business on a consolidated basis and by business segment, and to monitor and assess our results of operations: • Net sales: a metric that measures our revenue for the current year; • Operating profit: a measure of our profit for the year, before non-operating expenses (income), net and income tax expense; • Operating profit margin: a measure of our Operating profit as a percentage of Total net sales; and • Operating cash flow: a measure of the amount of cash generated by our business operations.
Our ability to repurchase shares is subject to applicable law. 58 Table of Contents Our share repurchases were as follows for the years ended December 31: (dollars in millions; shares in thousands) 2024 2023 2022 $ Shares $ Shares $ Shares Shares of common stock repurchased (1) $ 186 1,781 $ 12,870 141,696 $ 2,803 29,943 ASR Tranche 1 settlement - shares received (2) — 391 — — — — ASR Tranche 2 settlement - financing cash paid (2) (3) 258 — — — — — Total shares of common stock repurchased $ 444 2,172 $ 12,870 141,696 $ 2,803 29,943 (1) Relates to share repurchases that were settled in cash during the year.
Our share repurchases were as follows for the years ended December 31: (dollars in millions; shares in thousands) 2025 2024 2023 $ Shares $ Shares $ Shares Shares of common stock repurchased (1) $ 50 396 $ 186 1,781 $ 12,870 141,696 ASR Tranche 1 settlement - shares received (2) — — — 391 — — ASR Tranche 2 settlement - financing cash paid (2) (3) — — 258 — — — Total shares of common stock repurchased $ 50 396 $ 444 2,172 $ 12,870 141,696 (1) Relates to share repurchases that were settled in cash during the year.
Moreover, volatility in interest rates and financial markets can lead to economic uncertainty, an economic downturn or recession, and impact the demand for our products and services as well as our supply chain.
Moreover, changes in the macroeconomic environment, including volatility with respect to global trade policy, interest rates, and financial markets, can lead to economic uncertainty, an economic downturn or recession and impact the demand for our products and services as well as our supply chain.
The increase in customer-funded research and development of $0.1 billion in 2023 compared to 2022, was primarily driven by higher expenses on various commercial and military programs at Collins and increased spending at Pratt & Whitney on military programs, partially offset by lower expenses on various programs at Raytheon.
The decrease in company-funded research and development of $0.1 billion in 2025 compared to 2024, was primarily driven by lower spending on military and commercial programs at Collins and Pratt & Whitney, partially offset by higher expenses on development programs at Raytheon.
Net sales increased $7.3 billion organically in 2023 compared to 2022, primarily due to higher organic sales of $3.2 billion at Collins, $3.1 billion at Pratt & Whitney, and $1.3 billion at Raytheon.
Net sales increased $7.8 billion organically in 2024, primarily due to higher organic sales of $4.4 billion at Pratt & Whitney, $2.1 billion at Collins, and $1.7 billion at Raytheon.
GAAP amounts is provided in the table above. 2024 Compared with 2023 The organic net sales increase of $1.7 billion in 2024 compared to 2023 was primarily due to higher net sales of $1.4 billion from land and air defense systems programs driven by higher net sales on certain international Patriot programs, certain international National Advanced Surface-to-Air Missile System (NASAMS) programs, and Counter-Unmanned Aircraft Systems (C-UAS) programs.
GAAP amounts is provided in the table above. 2025 Compared with 2024 The organic net sales increase of $1.7 billion in 2025 compared to 2024 was primarily due to higher net sales of $1.6 billion from land and air defense systems programs driven by higher net sales on Patriot programs, international National Advanced Surface-to-Air Missile System (NASAMS) programs, and Lower Tier Air and Missile Defense Sensor (LTAMDS) programs.
During 2024, we made the following repayments of long-term debt: Date Description of Notes Aggregate Principal Balance (in millions) December 24, 2024 3 Month Secured Overnight Financing Rate (SOFR) plus 1.225% Term Loan due 2025 $ 500 December 15, 2024 3.150% notes due 2024 300 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 We have an existing universal shelf registration statement, which we filed with the SEC on September 22, 2022, for an indeterminate amount of debt and equity securities for future issuance, subject to our internal limitations on the amount of debt to be issued under this shelf registration statement.
During 2025, we made the following repayments of long-term debt: Date Description of Notes Aggregate Principal Balance (in millions) December 17, 2025 3 Month SOFR plus 1.225% Term Loan due 2026 $ 1,100 August 18, 2025 3.950% notes due 2025 1,500 May 7, 2025 3 Month SOFR plus 1.225% term loan due 2025 750 We have an existing universal shelf registration statement, which we filed with the SEC on September 18, 2025, for an indeterminate amount of debt and equity securities for future issuance, subject to our internal limitations on the amount of debt to be issued under this shelf registration statement.
The organic increase in Total cost of sales in 2023 compared to 2022 of $5.7 billion was primarily due to the organic net sales increases at Pratt & Whitney, Collins, and Raytheon noted above.
The organic increase in total cost of sales in 2024 of $6.2 billion was primarily due to the organic net sales increases at Pratt & Whitney, Collins, and Raytheon noted above.
The charge included the write-off of remaining contract assets and the estimated settlement with the customer. The contract termination was completed and customer settlement occurred during the fourth quarter of 2024, in line with previously accrued amounts.
The contract termination was completed and customer settlement occurred during the fourth quarter of 2024, in line with previously accrued amounts.
We may also reacquire shares outside of the program in connection with the surrender of shares to cover taxes on vesting of restricted stock.
We may also reacquire shares outside of the program in connection with the surrender of shares to cover taxes on vesting of restricted stock. Our ability to repurchase shares is subject to applicable law.
We can contribute cash or RTX shares to our plans at our discretion, subject to applicable regulations. As of December 31, 2024, the total investment by the U.S. qualified pension plans in RTX shares was less than 1% of total plan assets. Our domestic defined contribution plan uses an Employee Stock Ownership Plan (ESOP) for certain employer matching contributions.
As of December 31, 2025, the total investment by the U.S. qualified pension plans in RTX shares was less than 1% of total plan assets. Our domestic defined contribution plan uses an Employee Stock Ownership Plan (ESOP) for certain employer matching contributions.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeForeign exchange exposures arising from intercompany loan and deposit transactions are also hedged regularly. The present value of aggregate notional principal of our outstanding foreign currency hedges was $17 billion and $16 billion at December 31, 2024 and 2023, respectively . Foreign currency forward contracts are sensitive to changes in foreign currency exchange rates.
Biggest changeThe present value of aggregate notional principal of our outstanding foreign currency hedges was $26 billion and $17 billion at December 31, 2025 and 2024, respectively . Foreign currency forward contracts are sensitive to changes in foreign currency exchange rates.
We have financial instruments that are subject to interest rate risk, principally fixed-rate debt obligations. A 100 basis point unfavorable interest rate movement would have had an approximate $3 billion i mpact on the fair value of our fixed-rate debt at both December 31, 2024 and 2023.
Interest Rate Risk. We have financial instruments that are subject to interest rate risk, principally fixed-rate debt obligations. A 100 basis point unfavorable interest rate movement would have had an approximate $3 billion i mpact on the fair value of our fixed-rate debt at both December 31, 2025 and 2024.
Currently, we do not hold any derivative contracts that hedge our interest exposures, but may consider such strategies in the future. 64 Table of Contents
Currently, we do not hold any derivative contracts that hedge our interest exposures, but may consider such strategies in the future. 60 Table of Contents
The investors in our fixed-rate debt obligations generally do not have the right to demand we pay off these obligations prior to maturity. Therefore, we believe our exposure to interest rate risk on our fixed-rate debt is not material. We also have variable-rate debt, including $2.75 billion of term loans outstanding, which is affected by changes in market interest rates.
The investors in our fixed-rate debt obligations generally do not have the right to demand we pay off these obligations prior to maturity. Therefore, we believe our exposure to interest rate risk on our fixed-rate debt is not material. We also have variable-rate debt, including $0.9 billion of term loans outstanding, which is affected by changes in market interest rates.
We actively manage foreign currency exposures that are associated with commi tted foreign currency purchases and sales, and other assets and liabilities created in the normal course of business at the operating unit level. More than insignificant exposures that cannot be naturally offset within an operating unit are hedged with foreign currency derivatives.
We actively manage foreign currency exposures that are associated with commi tted foreign currency purchases and sales, and other assets and liabilities created in the normal course of business at the operating unit level. More than insignificant exposures that cannot be naturally offset within or among operating units are hedged with foreign currency derivatives.
A 10% unfavorable exchange rate movement in our portfolio of foreign currency contracts would have resulted in an increase in unrealized losses of $1.0 billion at both December 31, 2024 and 2023, respectively. Such losses or gains would be offset by corresponding gains or losses in the remeasurement of the underlying transactions being hedged.
A 10% unfavorable exchange rate movement in our portfolio of foreign currency contracts would have resulted in an increase in unrealized losses of $0.9 billion and $1.0 billion at December 31, 2025 and 2024, respectively. Such losses or gains would be offset by corresponding gains or losses in the remeasurement of the underlying transactions and balances being hedged.
While the objective of the hedging program is to minimize the foreign curren cy exchange impact on operating results, there are typically variances between the hedging gains or losses and the translational impact due to the length of hedging contracts, changes in the sales profile, volatility in the exchange rates, and other such operational considerations. Interest Rate Risk.
While the objective of the hedging program is to minimize the foreign curren cy exchange impact on operating results, there are typically variances 59 Table of Contents between the hedging gains or losses and the translational impact due to the length of hedging contracts, changes in the sales profile, volatility in the exchange rates, and other such operational considerations.
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The Company also uses net investment hedging to hedge the foreign currency risk of our net investment in foreign operations against adverse movements in exchange rates against the U.S. Dollar . Foreign exchange exposures arising from intercompany loan and deposit transactions are also hedged regularly.

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