narrative.md

Published August 26, 2026

# RTX Corporation — Business, Risks, and Management's Discussion

Sources: Annual Report on Form 10-K for fiscal year 2025, filed February 6, 2026 (accession
0000101829-26-000006); Quarterly Report on Form 10-Q for the quarter ended June 30, 2026, filed
July 23, 2026 (accession 0000101829-26-000027); Current Report on Form 8-K dated July 23, 2026
(accession 0000101829-26-000025).

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## Business

*From the FY2025 Form 10-K, accession 0000101829-26-000006.*

RTX Corporation is an aerospace and defense company that provides advanced systems and services
for commercial, military, and government customers worldwide. It was incorporated in Delaware in
1934 and serves both the original equipment and the aftermarket parts and services segments of
the aerospace industry; its defense business acts as prime contractor or subcontractor on a broad
portfolio of defense and related programs. Operations are classified into three principal
business segments: Collins Aerospace, Pratt & Whitney, and Raytheon.

**Collins Aerospace** is a global provider of aerospace and defense products and aftermarket
services for civil and military aircraft manufacturers, commercial airlines, regional, business
and general aviation, and defense and commercial space operators. Aftermarket services include
spare parts, overhaul and repair, engineering and technical support, training, fleet management,
asset management, and information management. Collins designs and manufactures electric power
generation and distribution, environmental control, flight control, air data and sensing, engine
control and engine components, engine nacelle systems (including thrust reversers and mounting
pylons), interior and exterior lighting, cargo and evacuation systems, landing systems (landing
gear, wheels, braking), communication/navigation/surveillance systems, fire and ice detection,
integrated avionics, and propeller systems. It also builds complete cabin interiors — seating,
oxygen systems, galleys, lavatory and wastewater systems — and supplies environmental control and
power systems and extravehicular activity suits for human space exploration. On the government
side it supplies connected-battlespace systems, test and training range systems, crew escape
systems, and simulation and training.

Collins sells to aircraft manufacturers, airlines, airports and other operators, the U.S. and
foreign governments, defense contractors, MRO providers, and independent distributors. Its
largest commercial customers are Boeing and Airbus, which together accounted for 16%, 16%, and
19% of total Collins segment sales (before discounts and incentives) in 2025, 2024, and 2023.
2025 awards included a satellite communication systems contract for survivable multi-band
communications; an FAA contract supporting the Radar System Replacement program under the
Department of Transportation's Brand New Air Traffic Control System; selection as primary
subcontractor for the U.S. Navy's Very Low Frequency communication subsystem and related mission
command, control and communications infrastructure; a follow-on FAA contract for the Standard
Terminal Automation Replacement System (STARS); and over $4 billion in combined long-term
agreements for new MRO services and spare parts with several airlines. Collins recorded
$12 billion of defense bookings in 2025, comprised of many individual bookings under $0.5 billion.

**Pratt & Whitney** is among the world's leading suppliers of aircraft engines for commercial,
military, business jet, and general aviation customers. It designs, manufactures, and services
large engines for widebody, narrowbody, and large regional aircraft, and for fighter, bomber,
tanker, and transport aircraft; small engines for regional airlines, general and business
aviation, and helicopters; and military and commercial auxiliary power units. It provides fleet
management and aftermarket MRO services across all of those product lines. Customers are
principally aircraft manufacturers, airlines and other operators, aircraft leasing companies, and
the U.S. and foreign governments. Its largest commercial customer by sales is Airbus, at 29%,
31%, and 48% of total Pratt & Whitney segment sales (before discounts and incentives) in 2025,
2024, and 2023.

Pratt & Whitney produces and services the PW1000G Geared Turbofan (GTF) engine family, which now
powers more than 2,600 aircraft for over 90 operators across the Airbus A320neo family, the Airbus
A220, and Embraer E-Jets E2. The GTF aftermarket network expanded to 21 facilities worldwide in
2025, increasing PW1100G-JM shop visit output by approximately 26% year over year. The GTF
Advantage engine received FAA and EASA certification for the A320neo family in 2025; it is
expected to increase takeoff thrust by 4 to 8 percent and reduce fuel consumption by up to an
additional 1 percent. On the military side, Pratt & Whitney produces and sustains the F135 engine
for the F-35 Lightning II (F-35A, F-35B, and F-35C variants) for the U.S. government's F-35 Joint
Program Office and for partner and foreign military sales customers; the F135 surpassed one
million engine flight hours in 2025 and the company was awarded a $2.8 billion undefinitized
contract action for Lot 18 production and Lot 19 long-lead funding. Design maturation continued on
the F135 Engine Core Upgrade, and the XA103 engine for the U.S. Air Force's Next Generation
Adaptive Propulsion program completed its Detailed Design Review in early 2025. Pratt & Whitney
engines also power the B-21 Raider. Because of the risk and cost of new engine development, Pratt
& Whitney uses collaboration arrangements in which revenues, costs, and risks are shared; at
December 31, 2025 third-party collaboration participants' interests in Pratt & Whitney-directed
jet engine programs ranged in the aggregate per program from 13% to 49%. Pratt & Whitney recorded
$9 billion of defense bookings in 2025, including $2.9 billion for F135 production and $2.4
billion for F135 sustainment.

**Raytheon** provides defensive and offensive threat detection, tracking, and mitigation
capabilities to U.S. and foreign government and commercial customers, spanning integrated air and
missile defense, smart weapons, missiles, advanced sensors and radars, interceptors, space-based
systems, hypersonics, and missile defense across land, air, sea, and space. Named products include
AMRAAM, StormBreaker, the Long Range Stand Off Weapon, the Early Warning Radar, the Next
Generation Jammer, Tomahawk, Standard Missile 6, AIM-9X Sidewinder, the SPY-6 radar, the Patriot
air and missile defense system, LTAMDS, NASAMS, Javelin, Excalibur, Stinger, High-Energy Lasers,
the AN/TPY-2 radar, and Standard Missile 3. Raytheon serves as prime contractor or major
subcontractor to the U.S. Department of War (formerly the U.S. Department of Defense) — including
the Navy, Army, Missile Defense Agency, Air Force, and Space Force — as well as U.S. federal civil,
international, and classified customers. 2025 awards included AMRAAM for the U.S. Navy, Air Force
and international customers; GEM-T for the NATO Support and Procurement Agency and an
international customer; LTAMDS low-rate initial production for the U.S. Army and Poland; Iron Dome
Tamir production for an international customer; AIM-9X for the Navy, Air Force and international
customers; SM-3 interceptors for the Missile Defense Agency; AN/SPY-6 radars for the Navy; NASAMS
for an international customer; Stinger for the Army and an international customer; NGJ-MB for the
U.S. Navy and Royal Australian Air Force; and Javelin for the Army and international customers.
Demand also increased for the Coyote system, a low-cost expendable unmanned aircraft system able
to operate in autonomous swarms. Raytheon recorded approximately $40 billion of defense bookings
in 2025 ($39,975 million, versus $39,235 million in 2024), the largest individual items being
$2.5 billion for GEM-T and Patriot launchers, $2.1 billion for AMRAAM, $1.5 billion for LTAMDS
LRIP, $1.2 billion for Iron Dome Tamir, $1.2 billion for Patriot systems for Spain, $1.1 billion
for AIM-9X Block II, $901 million for SM-3, $647 million for SPY-6 hardware production and
sustainment, $581 million for NGJ-MB, $556 million for NASAMS, $529 million for Patriot systems
for the Netherlands, $517 million for Stinger, $513 million for Tomahawk, and $5.9 billion across
classified contracts.

**Customers, backlog, and scale.** Sales to the U.S. government (excluding foreign military sales
made through the U.S. government) were $33,279 million in 2025, $32,246 million in 2024, and
$31,628 million in 2023 — 38%, 40%, and 46% of total net sales. International sales were $41,312
million, $34,651 million, and $29,440 million, or 47%, 43%, and 43% of total net sales. Total
backlog, equivalent to remaining performance obligations, was $268 billion at December 31, 2025
against $218 billion a year earlier; approximately 25% of the 2025 balance is expected to convert
to revenue within twelve months. Company-funded research and development was $2,807 million in
2025 (3.2% of sales) against $2,934 million in 2024, with customer-funded R&D of $4,886 million
and $4,723 million. RTX manufactures and services products at approximately 225 manufacturing,
production, or overhaul facilities in about 25 countries, and employed approximately 180,000
people at December 31, 2025 — including roughly 54,000 engineering professionals and 32,000
employees represented by unions or other employee representative bodies — across 52 countries,
with 69% located in the U.S.

**Competition and inputs.** All three businesses face significant competition on price, delivery
schedule, past performance, reliability, customer service, innovation, and technology; some
non-U.S. competitors receive government R&D assistance and marketing subsidies. In aerospace,
customers may buy parts from suppliers other than the original equipment manufacturer, which
affects spare parts sales, and competitors may offer discounts, financial incentives, performance
and operating cost guarantees, and financing participation to win aftermarket business. In
defense, the competitive set is broadening to include commercial entrants and new business
models, and international awards may be limited by RTX's willingness to accept offset or
in-country industrial participation obligations. RTX depends on a global supply chain, is largely
dependent on foreign sources for cobalt, tantalum, chromium, rhenium, nickel, and titanium, and
relies on foreign single-source suppliers for some components; it has arranged second and third
supply sources in some cases and increased materials and parts inventory.

**Regulation and compliance.** U.S. government contracts are subject to the Federal Acquisition
Regulation, the DoW's DFARS supplement, and other rules that give the government a broad right to
terminate for convenience and impose procurement, import/export, security, pricing, audit, and
product-integrity requirements. Commercial aerospace products are regulated by the FAA, foreign
aviation authorities, and international bodies. Exports and imports are governed by the EAR,
ITAR/AECA, Treasury sanctions rules, and import regulations. Compliance matters carried into the
period include the October 2024 deferred prosecution agreements and SEC administrative order, and
the August 29, 2024 Consent Agreement with the Department of State (discussed under Risks below).
Operations are also subject to environmental regulation in the U.S. and abroad, and RTX has been
named a potentially responsible party under the Superfund law at a number of sites.

**Legal proceedings disclosed in the 10-K** include an environmental enforcement proceeding in
which the Colorado Department of Public Health and Environment issued a Notice of Violation/Cease
and Desist Order to Raytheon Company in January 2023 over a water discharge permit at a former
Boulder, Colorado facility; Raytheon Company signed a Compliance Order on Consent on October 6,
2025, agreeing without admission of fault to pay $458,211 in civil penalties (paid in the fourth
quarter of 2025) and to perform remediation work. Separately, of the 737 MAX accident lawsuits
naming Collins businesses, all Lion Air matters have been resolved with a full release and one
Ethiopian Airlines lawsuit remains pending, which RTX anticipates will be resolved or dismissed as
to Collins during 2026.

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## Risk factors

*From the FY2025 Form 10-K, accession 0000101829-26-000006. The 10-Q for the quarter ended
June 30, 2026 states there have been no material changes from these factors.*

**U.S. government defense spending and contract risk.** U.S. government sales are a significant
portion of consolidated sales, and revenues depend on programs subject to budget decisions and
appropriations processes. In recent years appropriations have been affected by broader budgetary
disputes, with government shutdowns and continuing resolutions funding agencies only at prior-year
levels, creating risk of stop work orders and delays in contract awards, new program starts, and
payments. The U.S. government may terminate contracts for convenience or default without prior
notice, and RTX may be a subcontractor on programs where the prime contract is terminated
regardless of its own performance. Profitability depends on contract mix: under firm fixed-price
contracts RTX bears cost overruns entirely; under fixed-price incentive contracts it bears
overruns above a negotiated ceiling. Increased DoW use of Other Transaction Authority agreements
and undefinitized contract actions — where the government can unilaterally definitize terms —
adds further exposure.

**Pratt & Whitney powder metal / GTF fleet management.** 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 GTF fleet powering the A320neo family. The determination
and corresponding fleet actions have resulted in, and are expected to continue to result in,
elevated aircraft-on-ground levels for the A320neo family and significant incremental shop visits
to perform inspections through the end of 2026, with continuing customer support, mitigation,
labor, and material costs. The matter has caused reputational harm. The expected financial impact
rests on assumptions — the number and timing of shop visits, inspection results and scope of work,
turnaround time, parts availability, overhaul capacity, and the outcome of customer negotiations —
that are subject to variability, and changes could have a material effect on results in the
periods recognized. Other engine models in the fleet contain parts made with affected powder
metal, and the negative impacts could increase if any other model is found to be materially
affected.

**Government audits, investigations, and the outstanding compliance agreements.** U.S. government
investigations often take years and can result in repayments, fines, treble damages, forfeitures,
restitution, penalties, or suspension or debarment from government contracting or export
privileges. On October 15, 2024, Raytheon Company entered a deferred prosecution agreement
(DPA-1) with the DOJ and on October 16, 2024 the Company became subject to an SEC administrative
order, resolving criminal and civil investigations into payments made by Raytheon Company and its
Thales-Raytheon Systems joint venture since 2012 in connection with certain Middle East contracts.
On October 16, 2024, Raytheon also entered DPA-2 and a False Claims Act settlement resolving
investigations into defective pricing on legacy Raytheon contracts from 2011–2013 and 2017. Under
DPA-1 the DOJ will defer for three years prosecution on one count of conspiracy to violate the
FCPA's anti-bribery provisions and one count of conspiracy to violate the AECA; under DPA-2 it
will defer prosecution on two counts of major fraud against the United States. A single
independent compliance monitor oversees compliance with both DPAs and the SEC order. Separately,
the August 29, 2024 Consent Agreement with the Department of State, resolving alleged civil AECA
and ITAR violations, has a three-year term and requires remedial compliance measures, an external
audit of the ITAR compliance program, and an external independent Special Compliance Officer
(appointed September 27, 2024). Any breach could bring prosecution, additional penalties,
extension of the monitorship, suspension of export privileges, or suspension or debarment. Both
the DPAs' and the Consent Agreement's transaction-related requirements may constrain RTX's ability
to execute divestitures within expected timeframes or valuations.

**Supply chain, inflation, and tariffs.** Global supply chain disruptions have impaired RTX's
ability to procure raw materials — including certain rare earth elements, microelectronics, and
commodities — driven by market constraints, inflation, and labor shortages, and compounded by
sanctions, tariffs, and export controls. These issues have negatively affected production flow and
RTX's ability to meet customer commitments, and management expects them to continue, with
prolonged delays for certain critical component parts and sub-systems. Inflation has raised
material, component, labor, and supplier costs, which RTX cannot always offset through contract
value or pricing, particularly on fixed-price contracts. Some raw materials and components have
been sourced from areas now under sanctions such as Russia, or from areas at risk of trade
restrictions such as China.

**International, geopolitical, and export exposure.** A significant portion of sales are
international, exposing RTX to currency movements (Pratt & Whitney Canada is especially
susceptible, since most commercial aerospace sales are in U.S. dollars while non-U.S. operating
costs are in local currency), local laws on investment, taxation, exchange and capital controls,
repatriation, and tariffs, plus FCPA and local anti-bribery risk from foreign representatives and
consultants. International defense contracts may carry offset or in-country industrial
participation obligations whose approval can be subjective and delay awards, and RTX's ability to
transfer technology under them may be limited by U.S. export controls. In February 2023 China
announced sanctions against Raytheon Missiles & Defense — including a fine equal to twice the
value of arms sold to Taiwan since September 2020 — and has since announced additional sanctions
against the Raytheon business and a Collins joint venture; further Chinese action could disrupt
operations or the ability to sell commercial aerospace products in China. Russia-related sanctions
and counter-sanctions, including measures targeting members of management and the Board, continue
to affect RTX, its supply chain, and its partners. RTX also monitors exposure in Israel, the
Middle East, and the wider region.

**Commercial aerospace cyclicality.** Commercial aerospace is a substantial portion of results
and is cyclical, driven by traffic levels, load factors, fuel prices, airline consolidation,
bankruptcies and restructurings, aircraft retirements, credit availability, certification and
regulatory requirements, and general economic conditions. Significant business with Airbus and
Boeing means challenges at either customer can affect results, and customers may request that firm
orders be rescheduled or cancelled.

**Technology, product safety, and quality.** RTX's products incorporate advanced technologies and
must meet strict, evolving safety and performance standards across jurisdictions; delays,
certification failures, or in-service issues can produce cost overruns, liquidated damages, or
lost next-generation program awards in areas such as advanced sensing, next-generation engine
technology, avionics, and hypersonics. A catastrophic product or system failure could cause
injuries or death, property damage, loss of strategic capabilities, recalls, product liability and
warranty claims, fines, and regulatory or environmental liabilities, potentially beyond insurance
or indemnity coverage.

**Cybersecurity.** RTX regularly experiences cyber-based attacks, including advanced persistent
threats from nation states and criminal actors targeting defense contractors, insider threats, and
attacks against the hardware and software embedded in delivered products. Reliance on legacy
systems, an unprecedented number of newly revealed vulnerabilities, and threat actors' use of
artificial intelligence all raise the risk, while expanding cybersecurity regulation increases
compliance cost and enforcement exposure.

**Accounting estimates on long-term contracts.** Revenue recognition on long-term contracts
depends on estimates of total revenue and cost at completion across thousands of contracts,
including labor productivity and availability, scope, material cost and inflation, duration,
subcontractor execution, funding timing, overhead rates, and maintenance cost and frequency;
materially different amounts could be recorded under different assumptions.

**Financial, tax, and capital-return risks.** RTX carries substantial debt — including the
increased indebtedness from the $10 billion accelerated share repurchase transactions begun in
October 2023 and completed in September 2024 — which shifts cash flow to principal and interest and
exposes RTX to refinancing and interest-rate risk, including on variable-rate commercial paper.
Rating downgrades could raise borrowing costs. Pension assumptions (discount rate, expected return
on plan assets) can move earnings, equity, and contributions. Goodwill and other intangibles are a
significant portion of assets and are subject to impairment. Dividends and buybacks are
discretionary; in addition, pursuant to a January 7, 2026 Executive Order, the Secretary of War
could seek to limit RTX's ability to pay dividends or repurchase shares upon a determination that
RTX has underperformed or insufficiently prioritized, invested in, or maintained production speed
under its U.S. government contracts.

**Litigation, environmental, and anti-corruption.** RTX faces litigation risk relating to product
safety and reliability, personal injury, intellectual property, contract claims, government
contracts, taxes, environmental matters, chemical substances, artificial intelligence, export
control, employment, securities, competition, and improper business practices. It uses hazardous
substances and generates hazardous wastes, exposing it to remediation liabilities and "toxic tort"
claims; a criminal violation of the Clean Air Act or Clean Water Act could render a facility
ineligible for U.S. government contract work until the EPA certifies correction.

**Strategy and transactions.** RTX is undertaking multi-year digital transformation, structural
cost reduction, facility consolidation, and restructuring initiatives, and applies its Customer
Oriented Results and Excellence (CORE) operating system; expected efficiencies may be delayed or
unrealized. Acquisitions, divestitures, joint ventures, and other transactions carry integration,
separation, regulatory-approval, valuation, retained-liability, and impairment risks.

---

## Management's discussion — fiscal year 2025

*From the FY2025 Form 10-K, accession 0000101829-26-000006.*

**Business environment.** Commercial aerospace performance tracks revenue passenger miles,
available seat miles, and the financial health of carriers and airframers; defense operations
track DoW budget and spending levels and the global threat environment. Management called out
several 2025 environment factors: continuing global supply chain disruption; an inflationary
environment that raised material, component, labor, and supplier costs and pressured productivity;
and a highly dynamic global trade environment in which, since February 2025, the U.S. has imposed
tariffs on imports from all trading partners and certain countries have responded with tariffs and
non-tariff countermeasures. RTX's 2025 results reflect its best estimate of the tariffs then in
effect, and management stated it did not believe announced tariffs or counter-tariffs would have a
material adverse effect on results, financial condition, or cash flows, while noting the outcome
depends on scope, import values, rates, duration, enforceability, countermeasures, and mitigation.
On the policy side, Congress passed and the President signed a spending package on February 3,
2026 ending a government shutdown and funding the government through the end of the government's
fiscal year except for the Department of Homeland Security. The reconciliation act enacted July 4,
2025 restored full expensing of domestic R&D costs and immediate deductibility of certain capital
expenditures, changed the computation of U.S. taxation on international earnings, and provided a
supplementary $156.2 billion to the DoW for obligations through 2029, including $24.4 billion for
the Golden Dome for America missile-defense project and $25.4 billion for munitions and supply
chain resiliency. Executive orders directing acquisition reform, and a further order that may
limit corporate distributions, share repurchases, and executive compensation incentives during
periods of defense contractor underperformance, were being monitored.

**Consolidated results.** Total net sales were $88,603 million in 2025 against $80,738 million in
2024 and $68,920 million in 2023. The $7.9 billion increase in 2025 comprised $8,894 million of
organic growth, a $1,179 million reduction from acquisitions and divestitures, net, and $150
million of other. Organic growth came from Pratt & Whitney ($4.8 billion), Collins ($2.6 billion),
and Raytheon ($1.7 billion); the divestiture drag reflected the sales of the Collins actuation and
flight control business (closed in the third quarter of 2025), Simmonds Precision Products (fourth
quarter of 2025), Raytheon's Cybersecurity, Intelligence and Services (CIS) business (first
quarter of 2024), and Collins' Goodrich Hoist & Winch business (fourth quarter of 2024). Products
were $64,171 million (72% of sales) and services $24,432 million (28%).

Selling, general, and administrative expense was $6,095 million, or 6.9% of sales, up $0.3 billion
on higher employee-related costs and higher restructuring tied to 2025 workforce reductions at
Collins. Other income, net was $413 million against $(132) million in 2024, an improvement of $0.5
billion driven by a $0.2 billion gain on the actuation and flight control sale, a $0.1 billion
gain on the Simmonds Precision Products sale, and $0.1 billion of investment fair-value gains,
plus the absence of the 2024 $0.9 billion charge for the Resolution of Certain Legal Matters —
partly offset by the absence of prior-year items including a $0.4 billion gain on the CIS sale, a
$0.2 billion tax-related indemnity benefit, a $0.1 billion Goodrich Hoist & Winch gain, and an
approximately $0.1 billion Pratt & Whitney insurance recovery.

Operating profit was $9,300 million (10.5% margin) versus $6,538 million (8.1%) in 2024 and
$3,561 million (5.2%) in 2023. The $2.8 billion increase was driven by $1.5 billion of organic
segment operating improvement, the two 2025 divestiture gains, and the absence of 2024 charges —
the $0.9 billion legal-matters charge, a $0.6 billion charge on the Raytheon Contract Termination,
and $0.2 billion of Collins charges from initiating alternative titanium sources — partly offset by
the absence of the prior-year CIS gain and tax indemnity benefit.

Non-service pension income was $1,182 million, $0.3 billion lower than 2024, primarily because of
a $0.3 billion settlement charge in the fourth quarter of 2025 associated with an annuity buy-out
conversion. Interest expense, net fell $0.1 billion to $1,749 million on 2025 debt repayments; the
average interest expense rate on average outstanding borrowings was 4.5%. The effective tax rate
was 19.1%, unchanged from 2024, with the 2025 rate reflecting a lower Foreign Derived Intangible
Income benefit resulting from the 2025 tax act, offset by benefits from certain legal entity
reorganizations and the tax effects of dispositions.

Net income attributable to common shareowners was $6,732 million, or $4.96 in diluted EPS, against
$4,774 million and $3.55 in 2024 and $3,195 million and $2.23 in 2023. The 2025 figure includes
$1.6 billion after tax of acquisition accounting adjustments ($1.15 of diluted EPS), a $0.2
billion after-tax pension settlement charge ($0.15), and $0.2 billion of after-tax restructuring
charges ($0.14).

**Segment results (2025 vs. 2024).**

| Segment | Net sales 2025 | Net sales 2024 | Change | Operating profit 2025 | Operating profit 2024 | Margin 2025 | Margin 2024 |
|---|---|---|---|---|---|---|---|
| Collins Aerospace | $30,196M | $28,284M | +7% | $4,923M | $4,135M | 16.3% | 14.6% |
| Pratt & Whitney | $32,916M | $28,066M | +17% | $2,596M | $2,015M | 7.9% | 7.2% |
| Raytheon | $28,043M | $26,713M | +5% | $3,227M | $2,594M | 11.5% | 9.7% |

Total segment sales were $91,155 million with $(2,552) million of eliminations and other.
Consolidated operating profit reconciles from $10,746 million of total segment profit through $54
million of eliminations and other, $(248) million of corporate expenses and other unallocated
items, a $753 million FAS/CAS operating adjustment, and $(2,005) million of acquisition accounting
adjustments.

*Collins Aerospace* grew organic sales $2.6 billion on $1.4 billion higher commercial aftermarket
(higher volume across all aftermarket channels), $0.7 billion higher defense, and $0.5 billion
higher commercial OEM (widebody and narrowbody volume). Organic operating profit rose $0.5
billion, with commercial aerospace up $0.3 billion on volume, partly offset by tariffs and
unfavorable commercial OEM mix, and defense up $0.1 billion. Other operating profit improved $0.5
billion on higher net gains on business sales ($0.3 billion in 2025 versus $0.1 billion in 2024)
and the absence of the 2024 titanium-sourcing and contract-cancellation charges.

*Pratt & Whitney* grew organic sales $4.8 billion, led by $2.9 billion higher commercial
aftermarket volume, $1.0 billion higher military sales on F135 production volume, and $0.9 billion
higher commercial OEM on favorable mix and volume. Organic operating profit rose $0.4 billion —
commercial aerospace up $0.5 billion and military up $0.2 billion — as aftermarket volume and
favorable OEM mix more than offset unfavorable aftermarket mix, higher tariffs and production
costs, $0.2 billion of higher SG&A, and the absence of a fourth-quarter 2024 insurance recovery of
about $0.1 billion.

*Raytheon* grew organic sales $1.7 billion, with $1.6 billion from land and air defense systems
(Patriot, international NASAMS, LTAMDS) and $0.7 billion from naval power (ESSM, SPY-6, certain
classified programs), partly offset by $0.3 billion lower air and space defense systems and the
absence of $0.3 billion of fourth-quarter 2024 sales from restarting certain Middle East customer
contracts. Organic operating profit rose $0.6 billion on $0.3 billion of favorable mix and other
performance (principally increased Patriot production), $0.2 billion of favorable net EAC change,
and roughly $0.1 billion of volume.

Net estimate-at-completion adjustments were $(386) million in 2025 against $(473) million in 2024
and $(648) million in 2023. Segment backlog at December 31, 2025 was Collins $42 billion, Pratt &
Whitney $151 billion, and Raytheon $75 billion, totalling $268 billion — $161 billion commercial
and $107 billion defense. Defense bookings were approximately $61 billion in both 2025 and 2024,
against $51 billion in 2023.

**Liquidity.** Cash and cash equivalents were $7,435 million at December 31, 2025 (33% held by
foreign subsidiaries) against $5,578 million a year earlier; total debt fell to $37,904 million
from $41,261 million, and total debt to total capitalization to 36% from 40%. In March 2025 the
Moody's outlook improved from Baa1/negative to Baa1/stable, and in June 2025 the S&P Global rating
was affirmed with the outlook revised from BBB+/negative to BBB+/stable. RTX held a $5.0 billion
revolving credit agreement expiring in August 2028 with no borrowings outstanding, approximately
$0.6 billion available under short-term lines at international subsidiaries, and no commercial
paper outstanding. Long-term debt repayments in 2025 were $1,100 million of a SOFR-plus-1.225%
term loan due 2026 (December 17), $1,500 million of 3.950% notes due 2025 (August 18), and $750
million of a SOFR-plus-1.225% term loan due 2025 (May 7).

Operating cash flow was $10,567 million in 2025 against $7,159 million in 2024 and $7,883 million
in 2023; the $3.4 billion increase reflected higher net income after reconciling adjustments, an
increase in accounts payable and accrued liabilities on timing of collaborator payables, and lower
inventory growth, partly offset by higher accounts receivable. Investing activities used $1,265
million, including $1.2 billion received from the actuation and flight control divestiture and
$0.7 billion from Simmonds Precision Products; there were no significant acquisitions in 2025,
2024, or 2023. Financing activities used $7,486 million, up $0.9 billion on higher long-term debt
repayments. Share repurchases were $50 million (396 thousand shares) in 2025, against $444 million
in 2024 and $12,870 million in 2023, with approximately $0.6 billion of authority remaining under
the October 21, 2023 program at year end. Global pension and postretirement benefit cash funding
requirements were expected to be approximately $0.3 billion in 2026, and future purchase
obligations approximately $47 billion, of which $29 billion is payable in 2026. For the Powder
Metal Matter, RTX utilized $1.0 billion of the accrual in each of 2025 and 2024 through cash
payments and customer credits, and estimated a full-year 2026 cash impact of approximately $0.7
billion.

---

## Current quarter — three and six months ended June 30, 2026

*From the Form 10-Q for the quarter ended June 30, 2026, accession 0000101829-26-000027, and the
earnings release furnished with the Form 8-K dated July 23, 2026, accession 0000101829-26-000025.*

**Results.** Net sales were $24,708 million in the second quarter of 2026 against $21,581 million
a year earlier, a $3,127 million increase composed of $3,511 million organic, $(391) million from
acquisitions and divestitures, net, and $7 million of other. For the six months, sales were
$46,784 million against $41,887 million, with $5,588 million organic and $(761) million from
acquisitions and divestitures, net. The divestiture drag in both periods came from the Collins
actuation and flight control and Simmonds Precision Products businesses sold in 2025. Quarterly
organic growth was $1.3 billion at Pratt & Whitney, $1.3 billion at Raytheon, and $1.0 billion at
Collins. Sales to the U.S. government were $9,298 million in the quarter, or 37.6% of total net
sales, against $8,273 million and 38.3% a year earlier.

Cost of sales was $19,575 million, or 79.2% of sales, against 79.7% a year earlier. Company-funded
R&D was $726 million (2.9% of sales, versus 3.2%) and customer-funded R&D $1,278 million. SG&A was
$1,658 million, or 6.7% of sales against 7.3%, rising on higher compensation and other costs
across the businesses, partly offset by the absence of a 2025 Pratt & Whitney customer bankruptcy
charge. Other income, net was $62 million.

Operating profit was $2,811 million, an 11.4% margin, against $2,146 million and 9.9%; for the six
months, $5,366 million and 11.5% against $4,181 million and 10.0%. The quarterly increase of $0.7
billion came primarily from roughly $0.5 billion of organic segment operating profit growth and
the absence of the 2025 customer bankruptcy charge. Interest expense, net fell to $417 million
from $457 million on long-term debt repayments. The effective tax rate was 18.0% against 15.4%,
which had benefited from the conclusion of the IRS examination of RTX's 2020 tax year and a larger
stock-compensation benefit; the 2026 quarter includes a net benefit from legal entity
reorganizations. Net income attributable to common shareowners was $2,139 million, or $1.57 in
diluted EPS, against $1,657 million and $1.22; six-month figures were $4,198 million and $3.08
against $3,192 million and $2.36. The quarter included $0.4 billion after tax of acquisition
accounting adjustments, an unfavorable $0.27 of diluted EPS.

**Segments.**

| Segment | Q2 2026 sales | Q2 2025 sales | Change | Q2 2026 operating profit | Q2 2025 operating profit | Margin Q2 2026 | Margin Q2 2025 |
|---|---|---|---|---|---|---|---|
| Collins Aerospace | $8,210M | $7,622M | +8% | $1,306M | $1,173M | 15.9% | 15.4% |
| Pratt & Whitney | $8,889M | $7,631M | +16% | $738M | $492M | 8.3% | 6.4% |
| Raytheon | $8,269M | $7,001M | +18% | $1,042M | $805M | 12.6% | 11.5% |

*Collins* grew organic sales $1.0 billion in the quarter on $0.5 billion higher commercial OEM
(narrowbody and widebody volume), $0.3 billion higher commercial aftermarket (volume across all
channels), and $0.2 billion higher defense. Organic operating profit rose $0.1 billion on
commercial aerospace volume; defense operating profit decreased slightly on mix. For the six
months, higher tariffs partly offset commercial aerospace volume gains. Collins booked $2 billion
of defense orders in the quarter and $5 billion in the half, all in individual amounts under $0.5
billion.

*Pratt & Whitney* grew organic sales $1.3 billion on a $0.9 billion increase in commercial
aftermarket volume and $0.5 billion higher military sales from F135 production volume, including
the benefit of third-quarter 2025 contract award timing, partly offset by $0.1 billion lower
commercial OEM as higher volume was more than offset by mix in large commercial engines. Organic
operating profit rose $0.1 billion, with commercial aerospace and military each contributing about
$0.1 billion, partly offset by $0.1 billion of higher SG&A; other operating profit improved $0.1
billion on the absence of the 2025 customer bankruptcy charge. Pratt & Whitney booked $1 billion
of defense orders in the quarter and $5 billion in the half, including $3.8 billion for F135
production.

*Raytheon* grew organic sales $1.3 billion on $0.5 billion from land and air defense systems
(Patriot), $0.4 billion from naval power (Standard Missile), and $0.2 billion from air and space
defense systems (AMRAAM). Organic operating profit rose $0.2 billion on roughly $0.1 billion of
volume and $0.1 billion of favorable mix and other performance, principally increased Patriot
production including the timing of awards received in the quarter, plus a favorable change in net
EAC adjustments spread across numerous programs. Raytheon recorded $19,898 million of defense
bookings in the quarter, up 112% year over year, including $3.7 billion for Patriot GEM-T
interceptors for Ukraine, $1.1 billion for AIM-9X Sidewinder Block II, $1.1 billion for AMRAAM,
$988 million for Patriot GEM-T interceptors for Poland through the NATO Support and Procurement
Agency, $833 million for ESSM, $827 million for LTAMDS for the U.S. Army, $821 million for NASAMS
for an international customer, $658 million for StormBreaker, $542 million for SM-3, and $4.1
billion across classified and confidential contracts. Raytheon's backlog was $86 billion at
June 30, 2026 against $75 billion at December 31, 2025.

Total net EAC adjustments were $(66) million in the quarter against $(117) million a year earlier.
Total company backlog was $289 billion at June 30, 2026 against $268 billion at December 31, 2025
— $170 billion commercial and $119 billion defense. Company-wide defense bookings were
approximately $23 billion in the quarter against $12 billion a year earlier, and $37 billion in
the half against $21 billion.

**Trade and tariffs.** In February 2026 the U.S. Supreme Court ruled that tariffs imposed under
the International Emergency Economic Powers Act on goods imported into the United States were
unauthorized. RTX is the importer of record for certain products previously subject to IEEPA
tariffs and has paid approximately $0.5 billion of such tariffs since their inception. The U.S.
Court of International Trade ordered U.S. Customs and Border Protection to refund the collected
IEEPA tariffs, and CBP established an online refund-request portal on April 20, 2026; on June 2,
2026 the U.S. government appealed the refund order, with the basis and scope of the appeal not yet
known. As of June 30, 2026 RTX had submitted refund claims and recognized an immaterial amount of
refunds, and expects to submit additional claims. Following the ruling the U.S. government imposed
new and revised tariffs under other regimes that may apply to certain products for which RTX is
the importer of record.

**Budget and policy.** The February 3, 2026 spending package provides full-year funding for most
federal agencies through September 30, 2026. On April 21, 2026 the President's proposed fiscal
2027 defense budget of $1.5 trillion was released — $1.15 trillion of base discretionary budget
and $350 billion of mandatory funding through reconciliation — and on June 24, 2026 a separate
supplemental request was submitted, approximately $67 billion of it for defense including $21
billion for munitions replenishment.

**Powder Metal Matter status.** Pratt & Whitney expects aircraft-on-ground levels for the PW1100
powered A320neo fleet to remain elevated through 2026. Against the $2.9 billion pre-tax charge
recorded in the third quarter of 2023 (reflecting Pratt & Whitney's net 51% program share of the
PW1100 program), other accrued liabilities for expected customer compensation stood at $0.4
billion at June 30, 2026 against $0.7 billion at December 31, 2025, the decrease driven primarily
by credits issued to customers during the period. Management estimates a full-year 2026 cash
impact of approximately $0.7 billion. RTX does not currently believe there will be a significant
financial impact from other engine models containing parts made with affected powder metal.

**Contingencies updated in the quarter.** The independent compliance monitor overseeing compliance
with DPA-1, DPA-2, and the SEC Administrative Order was engaged in April 2026, starting the
three-year clock on the related cooperation and disclosure obligations. Of the $200 million civil
penalty under the Department of State Consent Agreement, $100 million is suspended conditional on
application to approved remedial measures; of the unsuspended $100 million, $34 million was paid
in September 2024, $33 million in August 2025, and $33 million is due by August 29, 2026. RTX had
$218 million accrued in aggregate at June 30, 2026 for the Consent Agreement matters and other
voluntarily disclosed export compliance matters. On the Cost Accounting Standards claims, the
DCMA's April 2019 claim against Pratt & Whitney seeks approximately $1.7 billion plus $1.6 billion
of interest at June 30, 2026, and its September 30, 2024 second claim seeks $1.1 billion plus $461
million of interest; Pratt & Whitney believes both are without merit and has appealed to the
ASBCA. On the older collaborator-parts claims, the Court of Appeals for the Federal Circuit issued
an opinion on December 5, 2025 dismissing the government's appeal in part for lack of
jurisdiction, reversing in part the ASBCA's November 22, 2021 decision as to the enforceability of
a provision in a 2006 DCMA agreement, and remanding for further proceedings. In the powder metal
securities litigation, the District of Connecticut granted the defendants' motion to dismiss the
consolidated class action on September 12, 2025 and plaintiffs filed a notice of appeal to the
Second Circuit on October 14, 2025; shareholder derivative suits remain pending in Delaware, and
RTX continues to cooperate with an SEC investigation into its 2023 powder metal disclosures.
Environmental remediation reserves were $0.8 billion at both June 30, 2026 and December 31, 2025;
letters of credit and surety bonds totalled $4.1 billion; offset and industrial participation
agreements carried an outstanding notional value of approximately $14 billion; and commercial
aerospace financing and other contractual commitments were approximately $13 billion on a gross
basis.

**Liquidity and capital returns.** Cash and cash equivalents were $8,305 million at June 30, 2026
(approximately 27% held by foreign subsidiaries) against $7,435 million at December 31, 2025.
Total debt was $37,383 million and total equity $68,116 million, putting total debt to total
capitalization at 35% against 36%. In February 2026 the Moody's outlook improved from Baa1/stable
to Baa1/positive, and in May 2026 the S&P Global rating was affirmed with the outlook revised from
BBB+/stable to BBB+/positive. The $5.0 billion revolving credit agreement expiring August 2028
remained undrawn, with no commercial paper outstanding. The only long-term debt repayment in the
half was $500 million of 5.000% notes due 2026, repaid February 27, 2026. Operating cash flow for
the six months was $5,402 million against $1,763 million a year earlier — a $3.6 billion increase
on higher net income after reconciling adjustments and favorable working capital changes, with
factoring activity accounting for a $1.5 billion increase year over year. Investing activities
used $1,552 million (against $1,187 million), mainly on $0.2 billion higher capital expenditures,
and financing activities used $2,909 million (against $1,409 million), the $1.5 billion change
driven chiefly by the absence of $1.4 billion of commercial paper proceeds in the prior-year
period. At June 30, 2026 approximately $0.6 billion of repurchase authority remained under the
October 21, 2023 program. The Board declared quarterly dividends of $0.73 per share on April 30,
2026 (paid June 11, 2026) and on June 26, 2026 (payable September 3, 2026), compared with the
$0.68 per share declared on February 6, 2026.

**Outlook.** In the earnings release furnished July 23, 2026, RTX raised its full-year 2026
outlook to adjusted sales of $95.0–$96.0 billion (from $92.5–$93.5 billion), organic sales growth
of 8 to 9 percent (from 5 to 6 percent), adjusted EPS of $7.10–$7.25 (from $6.70–$6.90), and free
cash flow of $8.50–$8.75 billion (from $8.25–$8.75 billion). Adjusted sales, organic sales,
adjusted EPS, and free cash flow are non-GAAP measures as defined in that release. Management
attributed the raise to first-half performance and current backlog.

---

## Subsequent events

The Form 10-Q for the quarter ended June 30, 2026 (accession 0000101829-26-000027) contains no
separate subsequent-events note, and no transaction, financing, or litigation event occurring
after June 30, 2026 is disclosed in it. The items disclosed in that filing that extend past the
quarter end are:

- **Pending sale of Blue Canyon Technologies.** On June 19, 2026, RTX entered into a definitive
  agreement to sell its Blue Canyon Technologies (BCT) business, within the Raytheon segment, for
  proceeds of approximately $0.6 billion — stated as $620 million in the earnings release furnished
  with the Form 8-K dated July 23, 2026 (accession 0000101829-26-000025). Closing is subject to
  regulatory approvals and other customary closing conditions and had not occurred as of the
  filing date. BCT-related goodwill of $207 million was reclassified to assets held for sale
  within other current assets at June 30, 2026.
- **Dividend payable after the quarter end.** The dividend of $0.73 per share declared June 26,
  2026 is payable September 3, 2026 to shareowners of record at the close of business on
  August 14, 2026.
- **Remaining Consent Agreement installment.** The final $33 million installment of the
  unsuspended portion of the $200 million civil penalty under the August 29, 2024 Department of
  State Consent Agreement is due by August 29, 2026.

No debt issuance, redemption, acquisition, or completed divestiture after June 30, 2026 is
disclosed in the quarterly report.