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RTX Annual Report, Year Ended Dec 31, 2001

Filing Date
Filed February 11, 2002
Period End
December 31, 2001
Security
RTX
In the record · 2016–202610-K1210-Q338-K139

RTX filed 12 annual reports (10-K), 33 quarterly reports (10-Q) and 139 current reports (8-K) between 2016 and 2026.

  1. Deal closed8-K · Jan ’19Jan ’19
  2. Leadership change8-K · Mar ’21Mar ’21
  3. Leadership change8-K · Feb ’23Feb ’23
  4. FY2024 annual report10-K · Feb ’25Feb ’25

01—Abstract

Summary

Summary of the 10-K filed February 11, 2002. Cited figures are marked; the original filing is the authoritative source.

This is the 2001 Form 10-K of United Technologies Corporation (UTC), the predecessor name of RTX Corp, filed February 11, 2002.

UTC reported 2001 revenues of $27.9 billiona, up 5% (7% excluding currency), and net income of $1.94 billion, up 7%. Diluted EPS rose to $3.83 from $3.55. Results were supported by Pratt & Whitney (operating profit up 9% to $1.31 billion, 17.0% margin) and Flight Systems and Otis.

Carrier was the weak spot, with operating profit down 26% to $590 million, mainly due to $172 millionb of restructuring charges and weak refrigeration and North American HVAC markets. Gross margin fell to 26.9% from 27.6%, largely because of $224 million of 2001 restructuring charges recorded in cost of sales. Management cited the post-September 2001 airline downturn and softer North American economy as headwinds.

Commercial aerospace volume and orders declined in 2001 and were expected to stay weak in 2002. Total backlog was about $20.3 billionc at year-end, with Pratt & Whitney at $11.2 billion. The company took $348 million of pre-tax restructuring charges in 2001, targeting about $300 million of recurring annual savings after a two-year build and about 8,700 workforce reductions.

Balance sheet and cash flow were solid. Operating cash flow rose to $2.885 billiond, cash reached $1.56 billion, and net debt fell to $3.4 billion from $4.1 billion, with debt-to-capitalization at 37%. The company repurchased $599 million of stock and contributed $247 million of treasury stock to its pension plans.

Management described U.S. government contract investigations, qui tam suits, and a Pratt & Whitney accounting dispute (in which the ASBCA ruled for UTC and DoD has appealed) as not expected to have a material adverse effect, though the potential exposure is significant. The filing also disclosed a $1.07 billion additional minimum pension liability.

02—Key points

Key Highlights

  1. Revenue grew 5% to $27.9B and net income rose 7% to $1.94B; diluted EPS reached $3.83 versus $3.55 in 2000.
  2. Pratt & Whitney was the standout segment, with 2001 revenue of $7.7B, operating profit up 9% to $1.31B, and a 17.0% margin, supported by a backlog of $11.2B.
  3. Carrier operating profit fell 26% to $590M (6.6% margin) on $172M of restructuring and weak refrigeration and North American HVAC demand.
  4. Gross margin declined to 26.9% from 27.6%, mainly due to $224M of 2001 restructuring charges, though the company targets about $300M in recurring annual savings from its 2001 actions.
  5. Strong cash generation: operating cash flow of $2.9B (up 15%), net debt reduced to $3.4B, and $599M of share repurchases, with 15.8M shares still authorized.
  6. Commercial aerospace demand weakened after the September 2001 attacks and the airline downturn, with order and volume declines expected to continue into 2002.
  7. Legal and regulatory exposure remains: a DoD appeal of the ASBCA's Pratt & Whitney ruling, qui tam False Claims Act suits, and a $95M+ DOJ complaint, which management does not expect to be material.

03—Questions

Frequently Asked Questions

  1. Is this filing from RTX Corp, and what was the company called in 2001?

    The filing is from United Technologies Corporation (UTC), which later became RTX Corp after its 2020 merger with Raytheon. The entity shares the same CIK lineage, but the name in this 2002 filing is UTC.

  2. How did UTC perform financially in 2001?

    Revenue rose 5% to $27.9 billion, and net income grew 7% to $1.94 billion. Diluted EPS was $3.83, up from $3.55. Return on average shareowners' equity was 23.6%, slightly below 24.4% in 2000.

  3. Why did margins decline, and what restructuring actions were taken?

    Gross margin fell to 26.9% from 27.6%, driven mainly by $224M of 2001 restructuring charges in cost of sales. UTC took $348M of total pre-tax restructuring charges in the second half of 2001, eliminating about 8,700 positions and 2.3 million square feet of facilities. The company expects about $300M in recurring annual pre-tax savings, with the remaining actions to be completed in 2002.

  4. Which segments are driving growth and which are struggling?

    Pratt & Whitney (operating profit up 9%) and Flight Systems (up 9%) delivered growth, and Otis operating profit rose 6%. Carrier was the weak segment, with operating profit down 26% due to restructuring charges, poor refrigeration markets, and softness in North American commercial HVAC. Commercial aerospace volumes were pressured by the airline downturn.

  5. What are the main legal and government contracting risks?

    UTC is subject to a DoD appeal of a favorable ASBCA ruling on Pratt & Whitney's accounting for engine parts, with potential damages larger than the original $157.6M claim if the government prevails. The company also faces qui tam False Claims Act suits and a DOJ complaint seeking at least $95M related to the F100/F110 competition. Management does not believe these will have a material adverse effect, but the company notes it is likely to remain subject to government investigations.

04—Continue

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