RTX Corporation, a prominent player in the aerospace sector, has reached a settlement with the U.S. Department of State over alleged civil violations of the Arms Export Control Act (AECA) and the International Traffic in Arms Regulations (ITAR). The agreement, announced on Thursday, involves a substantial civil penalty of $200 million, with half of that amount suspended for remedial compliance measures.
The settlement stems from voluntary disclosures made by RTX, which highlighted historical jurisdiction and classification errors within ITAR compliance programs of acquired and merged companies. To rectify these issues, the Consent Agreement, effective for three years, mandates the appointment of an external Special Compliance Officer to oversee adherence to the AECA and ITAR. Additionally, RTX will undergo an external audit of its compliance program and implement further remedial compliance measures.
RTX, formerly known as Raytheon Technologies (NYSE:RTX) Corp, will pay the non-suspended portion of the settlement in installments: $34 million in September 2024, followed by payments of $33 million due by August 29 in 2025 and 2026. This financial obligation was accounted for in the second quarter ended June 30, 2024.
In other recent news, RTX Corp has settled a $200 million fine for export law violations, which involved transferring sensitive information to banned countries, including China. In addition, the company announced the resignation of board member Robert K. Ortberg, which will reduce the board size from thirteen to twelve members.
These developments follow RTX Corp's robust second-quarter performance that surpassed consensus estimates, leading to an upward revision of the company's 2024 sales and earnings per share forecast by analysts from JPMorgan, TD Cowen, RBC Capital Markets, Baird, and UBS.
RTX Corp also made headlines with its involvement in the U.S. Navy's deployment of the new AIM-174B air-to-air missile, developed from Raytheon (NYSE:RTN)'s existing SM-6 air defense missile. This missile, with the longest range of any U.S. weapon, potentially alters the dynamics of regional conflict in the Indo-Pacific region.
Furthermore, RTX Corp's business segment, Raytheon, has entered into two Mentor-Protégé Agreement initiatives with the Department of the Navy Office of Small Business Programs. These agreements aim to develop operational Artificial Intelligence for Department of Defense platforms and programs.
This initiative is expected to expedite the creation of next-generation autonomous capabilities, enhancing decision-making for military personnel.
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