RTX Corp

Previous wording

Raytheon follows a 4-4-5 fiscal calendar while Collins Aerospace (Collins) and Pratt & Whitney use a quarter calendar end. Throughout this Form 10-Q, when we refer to the quarters ended March 31, 2025 and 2024 with respect to Raytheon, we are referring to their March 30, 2025 and March 31, 2024 fiscal quarter ends, respectively.

Current wording

Raytheon follows a 4-4-5 fiscal calendar while Collins Aerospace (Collins) and Pratt & Whitney use a quarter calendar end. Throughout this Form 10-Q, when we refer to the quarters and six months ended June 30, 2025 and 2024 with respect to Raytheon, we are referring to their June 29, 2025 and June 30, 2024 fiscal quarter ends, respectively.

Previous wording

Global Supply Chain. We are dependent on a global supply chain and have experienced supply chain disruptions that resulted in delays and increased costs and adversely affected our performance. 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. Current geopolitical conditions, including conflicts and other causes of strained intercountry relations, as well as sanctions and other trade restrictive activities, such as tariffs, are contributing to these issues. Furthermore, our suppliers and subcontractors have been impacted by these same issues. As a result of the Canadian government’s imposition of sanctions in February 2024, including those imposed on U.S.- and German-based Russian-owned entities from which we source titanium for use in our Canadian operations, we recorded charges of $175 million in the first quarter of 2024 within our Collins segment. These charges were primarily related to the recognition of unfavorable purchase commitments and an impairment of contract fulfillment costs that were no longer recoverable as a result of initiating alternative titanium sources. We have implemented actions and programs to mitigate some of the impacts but anticipate supply chain disruptions to continue.

Current wording

Global Supply Chain. We are dependent on a global supply chain and have experienced supply chain disruptions that resulted in delays and increased costs and adversely affected our performance. 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. Current geopolitical conditions, including conflicts and other causes of strained intercountry relations, as well as sanctions and other trade restrictive activities, such as tariffs, are contributing to these issues. Furthermore, our suppliers and subcontractors have been impacted by these same issues. We have implemented actions and programs to mitigate some of the impacts but anticipate supply chain disruptions to continue.

Previous wording

Economic Environment. The inflationary environment has increased material and component prices, labor rates, and supplier costs and has negatively impacted our performance, including our productivity expectations. Due to the nature of our government and commercial aerospace businesses, and their respective customer and supplier contracts, we are not always able to offset cost increases by increasing our contract value or pricing, in particular on our fixed-price contracts. Increasing material, component, and labor prices could subject us to losses in our fixed price contracts in the event of cost overruns. In addition, higher interest rates have increased the cost of borrowing and tightened the availability of capital. Among other things, these effects can constrain our customers’ purchasing power and decrease orders for our products and services and impact the ability of our customers to make payments and our suppliers to perform. 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. 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

Current wording

Economic Environment. The inflationary environment has increased material and component prices, labor rates, and supplier costs and has negatively impacted our performance, including our productivity expectations. Due to the nature of our government and commercial aerospace businesses, and their respective customer and supplier contracts, we are not always able to offset cost increases by increasing our contract value or pricing, in particular on our fixed-price contracts. Increasing material, component, and labor prices could subject us to losses in our fixed price contracts in the event of cost overruns. In addition, higher interest rates have increased the cost of borrowing and tightened the availability of capital. Among other things, these effects can constrain our customers’ purchasing power and decrease orders for our products and services and impact the ability of our customers to make payments and our suppliers to perform. 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. 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. However, the impact of these pressures and corresponding initiatives is uncertain and subject to a range of factors and future developments.

Previous wording

Since February 2025, the U.S. government has issued several executive orders imposing tariffs on imports from most countries with whom the U.S. engages in trade (the Tariff EOs). In response to the Tariff EOs, China, the European Union and Canada have announced, and in some cases imposed, counter tariffs on goods that are imported from the U.S. Our businesses import goods subject to tariffs from many countries covered by the Tariff EOs and they also import goods into countries which have announced counter tariffs and other actions. We are pursuing a variety of actions to mitigate the potential impact of tariffs, including (i) utilizing available exemptions or exclusions to tariffs, such as trade agreements, treaties or other statutory relief, (ii) evaluating operational and supply chain changes, and (iii) where feasible, increasing the prices of our goods and services. The uncertainties created by these changes in global trade policy and the imposition of tariffs, counter tariffs and non-tariff countermeasures by countries subject to U.S. tariffs may adversely affect our previously issued 2025 outlook with respect to our results of operations and cash flows. If the imposition of current tariff levels is sustained, we expect our profitability, cash flows and estimates inherent in our financial statements to be negatively affected. The actual financial impacts of tariffs are dependent upon various factors, most notably, the scope of goods covered by tariffs, the value of our imports subject to tariffs, the rate of tariffs applied, the timing and duration of tariffs, the implementation of tariff and non-tariff countermeasures by countries subject to U.S. tariffs, and our ability to mitigate the impacts of tariffs. Changes in any of these factors and actual tariff costs incurred could significantly affect the estimates inherent in our financial statements, including those used in our estimates-at-completion (EACs), and estimates supporting the recoverability of our inventories, contract fulfillment costs, deferred tax assets, intangible assets and goodwill, and could have a material effect on our results of operations and cash flows in the periods recognized and paid.

Current wording

The global trade environment is highly dynamic. Since February 2025, the U.S. government has imposed tariffs on imports from all countries with which the U.S. engages in trade. In response, China, the European Union, Canada and other countries have announced, and in some cases imposed, tariffs, and non-tariff countermeasures on goods that are imported from the U.S. Our businesses and suppliers import goods subject to U.S. imposed tariffs, as well as goods subject to counter tariffs imposed by other countries. We continue to pursue available options to mitigate the impact of tariffs and countermeasures, including (i) utilizing available exemptions or exclusions to tariffs, such as trade agreements, treaties or other statutory relief, (ii) evaluating operational and supply chain changes, and (iii) where feasible, increasing the prices of our goods and services. Our results for the quarter ended June 30, 2025, reflect our best estimate of the impact of the tariffs then in effect. As the duration and extent of the tariffs and counter tariffs remain uncertain, we are continuing to evaluate the potential future impacts of the imposition of the announced tariffs to our business and financial condition. Based on current conditions, we do not believe that the tariffs announced by the U.S. or counter tariffs or other actions taken by other countries will have a material adverse effect upon our results of operations, financial condition, or cash flows. However, the actual financial impacts of tariffs are dependent upon various factors, most notably, the scope of goods covered by tariffs, the value of our imports subject to tariffs, the rate of tariffs applied, the timing and duration of tariffs, the implementation of tariff and non-tariff countermeasures by countries subject to U.S. tariffs, and our and our suppliers’ ability to mitigate the impacts of tariffs. Changes in any of these factors and actual tariff costs incurred could significantly affect the estimates inherent in our financial statements, including those used in our estimates-at-completion (EACs), and estimates supporting the recoverability of our inventories, contract fulfillment costs, deferred tax assets, intangible assets and goodwill, and could have a material effect on our results of operations and cash flows in the periods recognized and paid.

Previous wording

U.S. Government’s Budget. On March 15, 2025, the President signed a continuing resolution (CR) under which U.S. government Departments and Agencies will continue to operate through September 30, 2025, the end of the government fiscal year. The CR funds the government at fiscal year 2024 levels with certain exceptions, including the addition of approximately $6 billion to the DoD budget. Although Congress provided guidelines to the Executive Branch, the CR generally permits individual Departments and Agencies to determine the areas and programs to fund. As a result, the impact of the CR on RTX ultimately will depend on those funding decisions, however RTX currently does not expect that the CR will materially impact our business or results of operations.

Current wording

U.S. Government’s Budget & Tax Legislation. On March 15, 2025, the President signed a continuing resolution (CR) under which U.S. government Departments and Agencies will continue to operate through September 30, 2025, the end of the government fiscal year. The CR funds the government at fiscal year 2024 levels with certain exceptions, including the addition of approximately $6 billion to the DoD budget. Although Congress provided guidelines to the Executive Branch, the CR generally permits individual Departments and Agencies to determine the areas and programs to fund. The impact of the CR on RTX ultimately will depend on funding decisions, however, RTX currently does not expect that the CR will materially impact our business or results of operations.

Previous wording

We continue to closely monitor potential impacts to RTX’s business, customers, suppliers, employees, and operations in Israel, the Middle East, and the region at large due to renewed violence in Gaza, resumed Houthi missile attacks against Israel, and uncertainty related to regime change in Syria. RTX’s commercial manufacturing facilities in Israel remain open and operational and have continued exporting products and importing critical items and raw materials. RTX’s defense programs’ ability to receive components from Israel has not been impacted in any material respect, although we could experience future delivery delays of certain products if further escalations arise. To date, the overall impacts to RTX from this situation have been minimal; however, given the volatile nature of the situation, the potential impacts to RTX are subject to change.

Current wording

We continue to closely monitor potential impacts to RTX’s business, customers, suppliers, employees, and operations in Israel, the Middle East, and the region at large due to continuing tensions between Israel and the U.S. with Iran, resumed Houthi missile attacks against Israel, and uncertainty related to regime change in Syria. RTX’s commercial manufacturing facilities in Israel remain open and operational and we continue to reassess operations daily, based upon Israel directives and the local security situation. RTX’s defense programs’ ability to receive components from Israel has not been impacted in any material respect, although we could experience future delivery delays of certain products if further escalations arise. To date, the overall impacts to RTX from this situation have been minimal; however, given the volatile nature of the situation, the potential impacts to RTX are subject to change.

Previous wording

Preparation of our financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, and expenses. Management believes the most complex and sensitive judgments, because of their significance to the Condensed Consolidated Financial Statements, result primarily from the need to make estimates about the effects of matters that are inherently uncertain. See “Critical Accounting Estimates” within Item 7 and “Note 1: Basis of Presentation and Summary of Accounting Principles” within Item 8 of our 2024 Annual Report on Form 10-K, which describe the significant accounting estimates and policies used in preparation of the Consolidated Financial Statements. Actual results in these areas could differ from management’s estimates. There have been no significant changes in our critical accounting estimates during the quarter ended March 31, 2025.

Current wording

Preparation of our financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, and expenses. Management believes the most complex and sensitive judgments, because of their significance to the Condensed Consolidated Financial Statements, result primarily from the need to make estimates about the effects of matters that are inherently uncertain. See “Critical Accounting Estimates” within Item 7 and “Note 1: Basis of Presentation and Summary of Accounting Principles” within Item 8 of our 2024 Annual Report on Form 10-K, which describe the significant accounting estimates and policies used in preparation of the Consolidated Financial Statements. Actual results in these areas could differ from management’s estimates. There have been no significant changes in our critical accounting estimates during the six months ended June 30, 2025.

Previous wording

We provide the organic change in Net sales and Cost of sales for our consolidated results of operations as well as the organic change in Net sales and Operating profit for our segments. We believe that these non-Generally Accepted Accounting Principles (non-GAAP) measures are useful to investors because they provide transparency to the underlying performance of our business, which allows for better year-over-year comparability. The organic change in Net sales, Cost of sales, and Operating profit excludes acquisitions and divestitures, net, and the effect of foreign currency exchange rate translation fluctuations and other significant non-operational items and/or significant operational items that may occur at irregular intervals (Other). Additionally, the organic change in Cost of sales and Operating profit excludes restructuring costs, the FAS/CAS operating adjustment, and costs related to certain acquisition accounting adjustments. Restructuring costs generally arise from severance related to workforce reductions and facility exit costs. We are continuously evaluating our cost structure and implement restructuring actions in an effort to keep our cost structure competitive. The FAS/CAS operating adjustment represents the difference between the service cost component of our pension and postretirement benefit (PRB) expense under the Financial Accounting Standards (FAS) requirements of U.S. GAAP and our pension and PRB expense under U.S. government Cost Accounting Standards (CAS), primarily related to our Raytheon segment. 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.

Current wording

(Other). Additionally, the organic change in Cost of sales and Operating profit excludes restructuring costs, the FAS/CAS operating adjustment, and costs related to certain acquisition accounting adjustments. Restructuring costs generally arise from severance related to workforce reductions and facility exit costs. We are continuously evaluating our cost structure and implement restructuring actions in an effort to keep our cost structure competitive. The FAS/CAS operating adjustment represents the difference between the service cost component of our pension and postretirement benefit (PRB) expense under the Financial Accounting Standards (FAS) requirements of U.S. GAAP and our pension and PRB expense under U.S. government Cost Accounting Standards (CAS), primarily related to our Raytheon segment. 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.

Previous wording

The factors contributing to the change year-over-year in total net sales for the quarter ended March 31, 2025 are as follows:

Current wording

The factors contributing to the change year-over-year in total net sales for the quarter and six months ended June 30, 2025 are as follows:

Previous wording

Net sales increased $1.5 billion organically in the quarter ended March 31, 2025 compared to the quarter ended March 31, 2024 primarily due to higher organic net sales of $0.9 billion at Pratt & Whitney, $0.6 billion at Collins, and $0.1 billion at Raytheon.

Current wording

Net sales increased $1.8 billion organically in the quarter ended June 30, 2025 compared to the quarter ended June 30, 2024 primarily due to higher organic net sales of $0.8 billion at Pratt & Whitney, $0.6 billion at Collins, and $0.4 billion at Raytheon.

Previous wording

The decrease in net sales due to Acquisitions and divestitures, net of $0.5 billion for the quarter ended March 31, 2025 compared to the quarter ended March 31, 2024, 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.

Current wording

The decrease in net sales due to Acquisitions and divestitures, net of $0.5 billion for the six months ended June 30, 2025 compared to the six months ended June 30, 2024 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.

Previous wording

Net products sales increased $0.3 billion in the quarter ended March 31, 2025 compared to the quarter ended March 31, 2024 primarily due to increases in external products sales of $0.3 billion at Collins and $0.1 billion at Pratt & Whitney, partially offset by a decrease in external products sales of $0.1 billion at Raytheon.

Current wording

Net products sales increased $1.0 billion in the quarter ended June 30, 2025 compared to the quarter ended June 30, 2024 primarily due to increases in external products sales of $0.4 billion at Collins, $0.3 billion at Pratt & Whitney, and $0.3 billion at Raytheon.

Previous wording

Net services sales increased $0.7 billion in the quarter ended March 31, 2025 compared to the quarter ended March 31, 2024 primarily due to increases in external services sales of $0.8 billion at Pratt & Whitney and $0.1 billion at Collins, partially offset by a decrease in external services sales of $0.3 billion at Raytheon, primarily driven by the sale of the CIS business completed in the first quarter of 2024.

Current wording

Net services sales increased $1.6 billion in the six months ended June 30, 2025 compared to the six months ended June 30, 2024 primarily due to increases in external services sales of $1.4 billion at Pratt & Whitney and $0.3 billion at Collins, partially offset by a decrease in external services sales of $0.1 billion at Raytheon, primarily driven by the sale of the CIS business within our Raytheon segment completed in the first quarter of 2024.

Previous wording

The factors contributing to the change year-over-year in total cost of sales for the quarter ended March 31, 2025 are as follows:

Current wording

The factors contributing to the change year-over-year in total cost of sales for the quarter and six months ended June 30, 2025 are as follows:

Previous wording

The organic increase in total cost of sales of $1.1 billion for the quarter ended March 31, 2025 compared to the quarter ended March 31, 2024, was primarily driven by the organic net sales increases at Pratt & Whitney, Collins, and Raytheon noted above.

Current wording

The organic increase in total cost of sales of $1.5 billion for the quarter ended June 30, 2025 compared to the quarter ended June 30, 2024, was primarily driven by the organic net sales increases at Pratt & Whitney, Collins, and Raytheon noted above.

Previous wording

Other cost of sales decreased $0.2 billion in the quarter ended March 31, 2025 compared to the quarter ended March 31, 2024, primarily driven by the absence of $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 were no longer recoverable as a result of initiating alternative titanium sources.

Current wording

Other cost of sales decreased $0.7 billion in the six months ended June 30, 2025 compared to the six months ended June 30, 2024, primarily driven by a $0.5 billion charge recorded in the second quarter of 2024 at Raytheon related to the Raytheon Contract Termination 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 were no longer recoverable as a result of initiating alternative titanium sources.

Previous wording

The decrease in total cost of sales due to Acquisitions and divestitures, net of $0.4 billion for the quarter ended March 31, 2025 compared to the quarter ended March 31, 2024, was primarily driven by the sale of the CIS business within our Raytheon segment completed in the first quarter of 2024.

Current wording

The decrease in total cost of sales due to Acquisitions and divestitures, net of $0.5 billion for the six months ended June 30, 2025 compared to the six months ended June 30, 2024, was primarily driven by the sale of the CIS business within our Raytheon segment completed in the first quarter of 2024.

Previous wording

Net products cost of sales increased $0.1 billion in the quarter ended March 31, 2025 compared to the quarter ended March 31, 2024, primarily driven by increases in external products cost of sales at Collins and Pratt & Whitney, partially offset by a decrease in external products cost of sales at Raytheon, each driven by the products sales changes noted above. The increase was also partially offset by the absence of charges recorded during the first quarter of 2024 at Collins as a result of initiating alternative titanium sources.

Current wording

Net products cost of sales increased $0.4 billion in the six months ended June 30, 2025 compared to the six months ended June 30, 2024, primarily driven by increases in external products cost of sales at Collins, Pratt & Whitney, and Raytheon, each driven by the products sales changes noted above. The increase was partially offset by a $0.5 billion charge recorded in the second quarter of 2024 at Raytheon related to the Raytheon Contract Termination and charges of $0.2 billion recorded in the first quarter of 2024 at Collins as a result of initiating alternative titanium sources.

Previous wording

Net services cost of sales increased $0.4 billion in the quarter ended March 31, 2025 compared to the quarter ended March 31, 2024, primarily due to an increase in external services cost of sales at Pratt & Whitney, driven by the services sales change noted above, partially offset by a decrease in external services cost of sales at Raytheon, primarily driven by the sale of the CIS business completed in the first quarter of 2024.

Current wording

Net services cost of sales increased $1.1 billion in the six months ended June 30, 2025 compared to the six months ended June 30, 2024, primarily due to increases in external services cost of sales at Pratt & Whitney and Collins, driven by the services sales changes noted above, partially offset by a decrease in external services cost of sales at Raytheon, primarily driven by the sale of the CIS business completed in the first quarter of 2024.

Previous wording

Company- and customer-funded research and development expenses for the quarter ended March 31, 2025 were relatively consistent with the quarter ended March 31, 2024.

Current wording

Company-funded research and development expenses for the quarter and six months ended June 30, 2025 were relatively consistent with the quarter and six months ended June 30, 2024, respectively.

Previous wording

The increase in other operating profit of $0.2 billion in the quarter ended March 31, 2025 compared to the quarter ended March 31, 2024 was primarily driven by the absence of $0.2 billion of charges recorded in the first quarter of 2024 related to the recognition of unfavorable purchase commitments and an impairment of contract fulfillment costs that were no longer recoverable as a result of initiating alternative titanium sources.

Current wording

The increase in Customer-funded research and development expenses of $0.1 billion for the quarter ended June 30, 2025 compared to the quarter ended June 30, 2024 was primarily driven by higher expenses on various military and commercial programs at Collins and increased spending at Pratt & Whitney on military development programs. These increases were partially offset by lower customer-funded expenses at Raytheon primarily related to the Next Generation Interceptor (NGI) program.

Previous wording

Theincrease in Selling, general, and administrative expenses of $0.1 billion for the quarter ended March 31, 2025 compared to the quarter ended March 31, 2024 was primarily driven by higher restructuring related costs as a result of actions initiated in the first quarter of 2025 at Collins.

Current wording

The increase in Selling, general, and administrative expenses of $0.1 billion for the quarter ended June 30, 2025 compared to the quarter ended June 30, 2024 was primarily driven by a $0.1 billion charge at Pratt & Whitney related to a customer bankruptcy during the second quarter of 2025.

Previous wording

Other income, net includes equity earnings in unconsolidated entities, royalty income, foreign exchange gains and losses, and other ongoing and non-recurring items.

Current wording

Other income (expense), net includes equity earnings in unconsolidated entities, royalty income, foreign exchange gains and losses, and other ongoing and non-recurring items.

Previous wording

The decrease in Other income, net of $0.4 billion for the quarter ended March 31, 2025 compared to the quarter ended March 31, 2024 was primarily due to the absence of a $0.4 billion gain on sale of the CIS business in the first quarter of 2024, which was partially offset by an adjustment to certain tax related indemnity receivables recorded in the same quarter.

Current wording

The increase in Other income (expense), net of $0.6 billion for the six months ended June 30, 2025 compared to the six months ended June 30, 2024 was primarily due to the absence of a $0.9 billion charge recorded in the second quarter of 2024 related to the Resolution of Certain Legal Matters, partially offset by the absence of a $0.4 billion gain on sale of the CIS business net of transaction and other related costs, in the first quarter of 2024.

Previous wording

The increase in Operating profit of $0.2 billion for the quarter ended March 31, 2025 compared to the quarter ended March 31, 2024 was primarily driven by the operating performance of our segments of $0.4 billion, the absence of $0.2 billion of charges at Collins as a result of initiating alternative titanium sources during the first quarter of 2024, and the absence of the $0.1 billion reversal of certain tax related indemnity receivables recorded in the first quarter of 2024. These increases were partially offset by the absence of a $0.4 billion gain on sale of the CIS business recorded in the first quarter of 2024 and an increase in restructuring charges of $0.1 billion.

Current wording

The increase in Operating profit of $1.8 billion for the six months ended June 30, 2025 compared to the six months ended June 30, 2024 was primarily driven by an increase in the operating performance of our segments of $0.7 billion and the absence of charges recorded in the first half of 2024, including a $0.9 billion charge related to the Resolution of Certain Legal Matters, a $0.6 billion charge related to the Raytheon Contract Termination, and charges of $0.2 billion at Collins as a result of initiating alternative titanium sources. These items were partially offset by $0.1 billion of higher restructuring costs, a $0.1 billion charge at Pratt & Whitney related to a customer bankruptcy, and the absence of a $0.4 billion gain on sale of the CIS business, net of transaction and other related costs, in the first quarter of 2024.

Previous wording

The Non-service pension income for the quarter ended March 31, 2025 was relatively consistent with the quarter ended March 31, 2024.

Current wording

The Non-service pension income in the quarter and six months ended June 30, 2025 was relatively consistent with the quarter and six months ended June 30, 2024, respectively.

Previous wording

Interest expense, net increased $38 million in the quarter ended March 31, 2025 compared to the quarter ended March 31, 2024. The increase in Interest expense is primarily due to the reversal of interest accruals as a result of the conclusion of certain tax audits recorded during the first quarter of 2024, partially offset by lower interest expense on long-term debt in the first quarter of 2025.

Current wording

The increase in Interest expense of $0.1 billion for the six months ended June 30, 2025 compared to the six months ended June 30, 2024 was primarily due to the reversal of interest accruals as a result of the conclusion of certain tax audits recorded during the first half of 2024, partially offset by lower net interest expense on long-term debt and short-term borrowings in the first half of 2025.

Previous wording

Our effective tax rate for the quarter ended March 31, 2025 was 17.0% as compared to 5.8% for the quarter ended March 31, 2024. The effective tax rate for the quarter ended March 31, 2024 included tax benefits of $275 million recognized as a result of the conclusion of the examination phases of the RTX and Rockwell Collins Internal Revenue Service (IRS) audits, which was partially offset by the tax cost of $143 million associated with the sale of the CIS business.

Current wording

The effective tax rate for the six months ended June 30, 2025 and June 30, 2024 are relatively consistent. However, the effective tax rate for the six months ended June 30, 2025 includes the impact from the IRS examination noted above and the effective tax rate for the six months ended June 30, 2024 includes a $275 million tax benefit recognized from the conclusion of the examination phases of the RTX and Rockwell Collins audits, a $143 million tax cost associated with the sale of the CIS business, and the impact of the $918 million charge associated with the Resolution of Certain Legal Matters.

Previous wording

•acquisition accounting adjustments of $0.4 billion, net of tax, which had an unfavorable impact on diluted earnings per share (EPS) of $0.27; and

Current wording

•acquisition accounting adjustments of $0.4 billion, net of tax, which had an unfavorable impact on diluted earnings per share (EPS) of $0.28.

Previous wording

•restructuring charges of $0.1 billion, net of tax, which had an unfavorable impact on diluted EPS of $0.07.

Current wording

•restructuring charges of $0.1 billion, net of tax, which had an unfavorable impact on diluted EPS of $0.10.

Previous wording

• a 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;

Current wording

•benefit recognized as a result of the conclusion of the examination phases of the RTX and Rockwell Collins tax audits

Previous wording

• 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; and

Current wording

•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

Previous wording

• 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.

Current wording

•charges related to initiating alternative titanium sources at our Collins segment of $0.2 billion, which had an

Previous wording

(2) The quarter ended March 31, 2024 includes a $0.4 billion gain, net of transaction and other related costs, related to the sale of the CIS business. See “Note 2: Acquisitions and Dispositions” within Item 1 of this Form 10-Q for additional information.

Current wording

(2) Operating Profit and Margin includes a $0.6 billion charge in the second quarter of 2024 related to the Raytheon Contract Termination and a $0.4 billion gain, net of transaction and other related costs, in the first quarter of 2024 related to the sale of our CIS business. See “Note 5: Changes in Contract Estimates at Completion” and “Note 2: Acquisitions and Dispositions,” respectively, within Item 1 of this Form 10-Q for additional information.

Previous wording

Included in segment Operating profit are Estimate at Completion (EAC) adjustments, which relate to changes in Operating profit and margin due to revisions to total estimated revenues and costs at completion. These changes may reflect improved or deteriorated operating performance, as well as changes in facts and assumptions related to contract options, contract modifications, incentive and award fees associated with program performance, customer activity levels, and other customer-directed changes. For a full description of our EAC process, refer to “Note 5: Changes in Contract Estimates at Completion” within Item 1 of this Form 10-Q. Given that we have thousands of individual contracts, and given the types and complexity of the assumptions and estimates we must make on an on-going basis, and the nature of the work required to be performed under our contracts, we have both favorable and unfavorable EAC adjustments in the ordinary course.

Current wording

Included in segment Operating profit are EAC adjustments, which relate to changes in Operating profit and margin due to revisions to total estimated revenues and costs at completion. These changes may reflect improved or deteriorated operating performance, as well as changes in facts and assumptions related to contract options, contract modifications, incentive and award fees associated with program performance, customer activity levels, and other customer-directed changes. For a full description of our EAC process, refer to “Note 5: Changes in Contract Estimates at Completion” within Item 1 of this Form 10-Q. Given that we have thousands of individual contracts, and given the types and complexity of the assumptions and estimates we must make on an on-going basis, and the nature of the work required to be performed under our contracts, we have both favorable and unfavorable EAC adjustments in the ordinary course.

Previous wording

Backlog and Bookings. Total backlog was $217 billion and $218 billion as of March 31, 2025 and December 31, 2024, respectively. Total backlog includes commercial backlog of $125 billion as of both March 31, 2025 and December 31, 2024, and defense backlog of $92 billion and $93 billion as of March 31, 2025 and December 31, 2024, respectively.

Current wording

Backlog and Bookings. Total backlog was $236 billion and $218 billion as of June 30, 2025 and December 31, 2024, respectively. Total backlog includes commercial backlog of $144 billion and $125 billion as of June 30, 2025 and December 31, 2024, and defense backlog of $92 billion and $93 billion as of June 30, 2025 and December 31, 2024, respectively.

Previous wording

We believe bookings are an important measure of future performance for our defense businesses. 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 $9 billion and $11 billion for the quarters ended March 31, 2025 and 2024, respectively.

Current wording

We believe bookings are an important measure of future performance for our defense businesses. 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 $12 billion and $11 billion for the quarters ended June 30, 2025 and 2024, respectively, and approximately $21 billion and $22 billion for the six months ended June 30, 2025 and 2024.

Previous wording

The organic net sales increase of $0.6 billion in the quarter ended March 31, 2025 compared to the quarter ended March 31, 2024 primarily relates to higher commercial aerospace aftermarket sales of $0.3 billion, higher defense sales of $0.2 billion, and a modest increase in commercial aerospace OEM sales. 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 volume. The increase in defense sales was primarily due to higher volume across multiple programs and platforms.

Current wording

The organic net sales increase of $0.6 billion in the quarter ended June 30, 2025 compared to the quarter ended June 30, 2024 primarily relates to higher commercial aerospace aftermarket sales of $0.3 billion, higher defense sales of $0.3 billion, and a slight increase in commercial aerospace OEM sales. The increase in commercial aerospace aftermarket sales was principally driven by continued growth in commercial air traffic, which has resulted in an increase in flight hours and increased volume. The increase in defense sales was primarily due to higher volume across multiple programs and platforms.

Previous wording

Eliminations and other operating profit in the quarter ended March 31, 2025 was relatively consistent with the quarter ended March 31, 2024.

Current wording

The organic operating profit increase of $0.1 billion in the quarter ended June 30, 2025 compared to the quarter ended June 30, 2024 was primarily due to higher defense operating profit of $0.1 billion, principally driven by higher volume and favorable mix. Commercial aerospace operating profit in the quarter ended June 30, 2025 was slightly higher as compared to the prior year as the benefit of higher commercial aftermarket volume was mostly offset by unfavorable OEM mix including the impact of higher tariffs.

Previous wording

The organic operating profit increase of $0.2 billion in the quarter ended March 31, 2025 compared to the quarter ended March 31, 2024 was primarily due to higher commercial aerospace operating profit of $0.2 billion, principally driven by the higher aftermarket sales volume discussed above. Defense operating profit increased $0.1 billion in the quarter ended March 31, 2025 compared to the quarter ended March 31, 2024 due to the higher sales volume discussed above.

Current wording

The organic profit increase of $0.3 billion in the six months ended June 30, 2025 compared to the six months ended June 30, 2024 is primarily due to higher commercial aerospace operating profit of $0.2 billion principally driven by higher commercial aerospace aftermarket sales volume, partially offset by unfavorable OEM mix including the impact of higher tariffs. Defense operating profit increased $0.1 billion in the six months ended June 30, 2025 compared to the six months ended June 30, 2024 due to the higher volume and favorable mix.