ý | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
¨ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
DELAWARE | 06-0570975 | |
10 Farm Springs Road, Farmington, Connecticut 06032 (860) 728-7000 |
Large accelerated filer | ý | Accelerated filer | ¨ |
Non-accelerated filer | ¨ (Do not check if a smaller reporting company) | Smaller reporting company | ¨ |
Emerging growth company | ¨ |
Page | |
Condensed Consolidated Statement of Comprehensive Income for the quarters ended June 30, 2018 and 2017 | |
Condensed Consolidated Balance Sheet at June 30, 2018 and December 31, 2017 | |
Condensed Consolidated Statement of Cash Flows for the quarters ended June 30, 2018 and 2017 | |
Item 1. | Financial Statements |
Quarter Ended June 30, | |||||||
(dollars in millions, except per share amounts) | 2018 | 2017 | |||||
Net Sales: | |||||||
Product sales | $ | 11,520 | $ | 10,661 | |||
Service sales | 5,185 | 4,619 | |||||
16,705 | 15,280 | ||||||
Costs and Expenses: | |||||||
Cost of products sold | 9,154 | 7,957 | |||||
Cost of services sold | 3,268 | 3,207 | |||||
Research and development | 589 | 619 | |||||
Selling, general and administrative | 1,759 | 1,590 | |||||
14,770 | 13,373 | ||||||
Other income, net | 941 | 257 | |||||
Operating profit | 2,876 | 2,164 | |||||
Non-service pension (benefit) | (192 | ) | (126 | ) | |||
Interest expense, net | 234 | 226 | |||||
Income from operations before income taxes | 2,834 | 2,064 | |||||
Income tax expense | 695 | 532 | |||||
Net income from operations | 2,139 | 1,532 | |||||
Less: Noncontrolling interest in subsidiaries' earnings from operations | 91 | 93 | |||||
Net income attributable to common shareowners | $ | 2,048 | $ | 1,439 | |||
Earnings Per Share of Common Stock - Basic: | |||||||
Net income attributable to common shareowners | $ | 2.59 | $ | 1.83 | |||
Earnings Per Share of Common Stock - Diluted: | |||||||
Net income attributable to common shareowners | $ | 2.56 | $ | 1.80 |
Six Months Ended June 30, | |||||||
(dollars in millions, except per share amounts) | 2018 | 2017 | |||||
Net Sales: | |||||||
Product sales | $ | 21,778 | $ | 20,298 | |||
Service sales | 10,169 | 8,797 | |||||
31,947 | 29,095 | ||||||
Costs and Expenses: | |||||||
Cost of products sold | 17,170 | 15,268 | |||||
Cost of services sold | 6,532 | 6,032 | |||||
Research and development | 1,143 | 1,205 | |||||
Selling, general and administrative | 3,470 | 3,127 | |||||
28,315 | 25,632 | ||||||
Other income, net | 1,172 | 845 | |||||
Operating profit | 4,804 | 4,308 | |||||
Non-service pension (benefit) | (383 | ) | (249 | ) | |||
Interest expense, net | 463 | 439 | |||||
Income from operations before income taxes | 4,724 | 4,118 | |||||
Income tax expense | 1,217 | 1,118 | |||||
Net income from operations | 3,507 | 3,000 | |||||
Less: Noncontrolling interest in subsidiaries' earnings from operations | 162 | 175 | |||||
Net income attributable to common shareowners | $ | 3,345 | $ | 2,825 | |||
Earnings Per Share of Common Stock - Basic: | |||||||
Net income attributable to common shareowners | $ | 4.23 | $ | 3.57 | |||
Earnings Per Share of Common Stock - Diluted: | |||||||
Net income attributable to common shareowners | $ | 4.18 | $ | 3.53 |
Quarter Ended June 30, | Six Months Ended June 30, | ||||||||||||||
(dollars in millions) | 2018 | 2017 | 2018 | 2017 | |||||||||||
Net income | $ | 2,139 | $ | 1,532 | $ | 3,507 | $ | 3,000 | |||||||
Other comprehensive income (loss), net of tax (expense) benefit: | |||||||||||||||
Foreign currency translation adjustments | |||||||||||||||
Foreign currency translation adjustments arising during period | (602 | ) | 249 | (193 | ) | 395 | |||||||||
Less: Reclassification adjustments for gain on sale of an investment in a foreign entity recognized in Other income, net | (3 | ) | — | (3 | ) | — | |||||||||
(605 | ) | 249 | (196 | ) | 395 | ||||||||||
Tax (expense) benefit | (74 | ) | — | 56 | — | ||||||||||
(679 | ) | 249 | (140 | ) | 395 | ||||||||||
Pension and postretirement benefit plans | |||||||||||||||
Pension and postretirement benefit plans adjustments during the period | 18 | (5 | ) | 26 | (4 | ) | |||||||||
Amortization of actuarial loss and prior service credit | 88 | 132 | 176 | 263 | |||||||||||
106 | 127 | 202 | 259 | ||||||||||||
Tax expense | (26 | ) | (47 | ) | (49 | ) | (96 | ) | |||||||
80 | 80 | 153 | 163 | ||||||||||||
Unrealized loss on available-for-sale securities | |||||||||||||||
Unrealized holding gain (loss) arising during period | — | 30 | — | (2 | ) | ||||||||||
Reclassification adjustments for loss included in Other income, net | — | (24 | ) | — | (407 | ) | |||||||||
ASU 2016-01 adoption impact | — | — | (5 | ) | — | ||||||||||
— | 6 | (5 | ) | (409 | ) | ||||||||||
Tax (expense) benefit | — | (2 | ) | — | 156 | ||||||||||
— | 4 | (5 | ) | (253 | ) | ||||||||||
Change in unrealized cash flow hedging | |||||||||||||||
Unrealized cash flow hedging (loss) gain arising during period | (245 | ) | 66 | (200 | ) | 130 | |||||||||
(Gain) loss reclassified into Product sales | (1 | ) | 5 | (28 | ) | 10 | |||||||||
(246 | ) | 71 | (228 | ) | 140 | ||||||||||
Tax benefit (expense) | 60 | (17 | ) | 56 | (32 | ) | |||||||||
(186 | ) | 54 | (172 | ) | 108 | ||||||||||
Other comprehensive (loss) income, net of tax | (785 | ) | 387 | (164 | ) | 413 | |||||||||
Comprehensive income | 1,354 | 1,919 | 3,343 | 3,413 | |||||||||||
Less: Comprehensive income attributable to noncontrolling interest | (53 | ) | (111 | ) | (157 | ) | (218 | ) | |||||||
Comprehensive income attributable to common shareowners | $ | 1,301 | $ | 1,808 | $ | 3,186 | $ | 3,195 |
(dollars in millions) | June 30, 2018 | December 31, 2017 | |||||
Assets | |||||||
Cash and cash equivalents | $ | 11,068 | $ | 8,985 | |||
Accounts receivable, net | 11,973 | 12,595 | |||||
Contract assets, current | 3,273 | — | |||||
Inventories and contracts in progress, net | 8,979 | 9,881 | |||||
Other assets, current | 1,263 | 1,397 | |||||
Total Current Assets | 36,556 | 32,858 | |||||
Customer financing assets | 2,763 | 2,372 | |||||
Future income tax benefits | 1,626 | 1,723 | |||||
Fixed assets | 21,597 | 21,364 | |||||
Less: Accumulated depreciation | (11,482 | ) | (11,178 | ) | |||
Fixed assets, net | 10,115 | 10,186 | |||||
Goodwill | 27,699 | 27,910 | |||||
Intangible assets, net | 15,739 | 15,883 | |||||
Other assets | 7,071 | 5,988 | |||||
Total Assets | $ | 101,569 | $ | 96,920 | |||
Liabilities and Equity | |||||||
Short-term borrowings | $ | 985 | $ | 392 | |||
Accounts payable | 9,623 | 9,579 | |||||
Accrued liabilities | 8,730 | 12,316 | |||||
Contract liabilities, current | 5,652 | — | |||||
Long-term debt currently due | 78 | 2,104 | |||||
Total Current Liabilities | 25,068 | 24,391 | |||||
Long-term debt | 27,246 | 24,989 | |||||
Future pension and postretirement benefit obligations | 2,589 | 3,036 | |||||
Other long-term liabilities | 13,190 | 12,952 | |||||
Total Liabilities | 68,093 | 65,368 | |||||
Commitments and contingent liabilities (Note 15) | |||||||
Redeemable noncontrolling interest | 130 | 131 | |||||
Shareowners' Equity: | |||||||
Common Stock | 17,747 | 17,574 | |||||
Treasury Stock | (35,645 | ) | (35,596 | ) | |||
Retained earnings | 57,027 | 55,242 | |||||
Unearned ESOP shares | (81 | ) | (85 | ) | |||
Accumulated other comprehensive loss | (7,684 | ) | (7,525 | ) | |||
Total Shareowners' Equity | 31,364 | 29,610 | |||||
Noncontrolling interest | 1,982 | 1,811 | |||||
Total Equity | 33,346 | 31,421 | |||||
Total Liabilities and Equity | $ | 101,569 | $ | 96,920 |
Six Months Ended June 30, | |||||||
(dollars in millions) | 2018 | 2017 | |||||
Operating Activities: | |||||||
Net income from operations | $ | 3,507 | $ | 3,000 | |||
Adjustments to reconcile net income from operations to net cash flows provided by operating activities: | |||||||
Depreciation and amortization | 1,173 | 1,039 | |||||
Deferred income tax provision | 45 | 502 | |||||
Stock compensation cost | 117 | 96 | |||||
Gain on sale of Taylor Company | (795 | ) | — | ||||
Change in: | |||||||
Accounts receivable | (1,661 | ) | (951 | ) | |||
Contract assets, current | (617 | ) | — | ||||
Inventories and contracts in progress | (962 | ) | (1,066 | ) | |||
Other current assets | 301 | 27 | |||||
Accounts payable and accrued liabilities | 2,010 | 1,436 | |||||
Contract liabilities, current | 440 | — | |||||
Global pension contributions | (59 | ) | (79 | ) | |||
Canadian government settlement | (221 | ) | (246 | ) | |||
Other operating activities, net | (723 | ) | (619 | ) | |||
Net cash flows provided by operating activities | 2,555 | 3,139 | |||||
Investing Activities: | |||||||
Capital expenditures | (709 | ) | (771 | ) | |||
Investments in businesses | (134 | ) | (168 | ) | |||
Dispositions of businesses | 1,094 | 19 | |||||
Proceeds from sale of investments in Watsco, Inc. | — | 596 | |||||
Increase in customer financing assets, net | (344 | ) | (240 | ) | |||
Increase in collaboration intangible assets | (181 | ) | (195 | ) | |||
Receipts (payments) from settlements of derivative contracts | 82 | (294 | ) | ||||
Other investing activities, net | (46 | ) | 63 | ||||
Net cash flows used in investing activities | (238 | ) | (990 | ) | |||
Financing Activities: | |||||||
Issuance of long-term debt | 2,429 | 4,013 | |||||
Repayment of long-term debt | (2,092 | ) | (1,611 | ) | |||
Increase in short-term borrowings, net | 642 | 32 | |||||
Proceeds from Common Stock issued under employee stock plans | 6 | 22 | |||||
Dividends paid on Common Stock | (1,070 | ) | (1,008 | ) | |||
Repurchase of Common Stock | (52 | ) | (1,370 | ) | |||
Other financing activities, net | (74 | ) | (130 | ) | |||
Net cash flows used in financing activities | (211 | ) | (52 | ) | |||
Effect of foreign exchange rate changes on cash and cash equivalents | (18 | ) | 95 | ||||
Net increase in cash, cash equivalents and restricted cash | 2,088 | 2,192 | |||||
Cash, cash equivalents and restricted cash, beginning of year | 9,018 | 7,189 | |||||
Cash, cash equivalents and restricted cash, end of period | 11,106 | 9,381 | |||||
Less: Restricted cash, included in Other assets | 38 | 36 | |||||
Cash and cash equivalents, end of period | $ | 11,068 | $ | 9,345 |
(dollars in millions) | Balance as of January 1, 2018 | Goodwill Resulting from Business Combinations | Foreign Currency Translation and Other | Balance as of June 30, 2018 | |||||||||||
Otis | $ | 1,737 | $ | 5 | $ | (34 | ) | $ | 1,708 | ||||||
UTC Climate, Controls & Security | 10,009 | 1 | (211 | ) | 9,799 | ||||||||||
Pratt & Whitney | 1,511 | 57 | (3 | ) | 1,565 | ||||||||||
UTC Aerospace Systems | 14,650 | — | (26 | ) | 14,624 | ||||||||||
Total Segments | 27,907 | 63 | (274 | ) | 27,696 | ||||||||||
Eliminations and other | 3 | — | — | 3 | |||||||||||
Total | $ | 27,910 | $ | 63 | $ | (274 | ) | $ | 27,699 |
June 30, 2018 | December 31, 2017 | ||||||||||||||
(dollars in millions) | Gross Amount | Accumulated Amortization | Gross Amount | Accumulated Amortization | |||||||||||
Amortized: | |||||||||||||||
Service portfolios | $ | 2,187 | $ | (1,588 | ) | $ | 2,178 | $ | (1,534 | ) | |||||
Patents and trademarks | 364 | (226 | ) | 399 | (233 | ) | |||||||||
Collaboration intangible assets | 4,294 | (510 | ) | 4,109 | (384 | ) | |||||||||
Customer relationships and other | 13,425 | (4,281 | ) | 13,352 | (4,100 | ) | |||||||||
20,270 | (6,605 | ) | 20,038 | (6,251 | ) | ||||||||||
Unamortized: | |||||||||||||||
Trademarks and other | 2,074 | — | 2,096 | — | |||||||||||
Total | $ | 22,344 | $ | (6,605 | ) | $ | 22,134 | $ | (6,251 | ) |
(dollars in millions) | Remaining 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | ||||||||||||||||||
Amortization expense | $ | 457 | $ | 873 | $ | 874 | $ | 899 | $ | 896 | $ | 918 |
(dollars in millions) | Quarter Ended June 30, 2018, under previous standard | Effect of the New Revenue Standard | Quarter Ended June 30, 2018 as reported | ||||||||
Net Sales: | |||||||||||
Product sales | $ | 11,406 | $ | 114 | $ | 11,520 | |||||
Service sales | 5,115 | 70 | 5,185 | ||||||||
16,521 | 184 | 16,705 | |||||||||
Costs and Expenses: | |||||||||||
Cost of products sold | 8,975 | 179 | 9,154 | ||||||||
Cost of services sold | 3,228 | 40 | 3,268 | ||||||||
Research and development | 607 | (18 | ) | 589 | |||||||
Selling, general and administrative | 1,759 | — | 1,759 | ||||||||
14,569 | 201 | 14,770 | |||||||||
Other income, net | 943 | (2 | ) | 941 | |||||||
Operating profit | 2,895 | (19 | ) | 2,876 | |||||||
Non-service pension (benefit) | (192 | ) | — | (192 | ) | ||||||
Interest expense, net | 234 | — | 234 | ||||||||
Income from operations before income taxes | 2,853 | (19 | ) | 2,834 | |||||||
Income tax expense | 700 | (5 | ) | 695 | |||||||
Net income from operations | 2,153 | (14 | ) | 2,139 | |||||||
Less: Noncontrolling interest in subsidiaries' earnings from operations | 87 | 4 | 91 | ||||||||
Net income attributable to common shareowners | $ | 2,066 | $ | (18 | ) | $ | 2,048 |
(dollars in millions) | Six Months Ended June 30, 2018, under previous standard | Effect of the New Revenue Standard | Six Months Ended June 30, 2018 as reported | ||||||||
Net Sales: | |||||||||||
Product sales | $ | 21,573 | $ | 205 | $ | 21,778 | |||||
Service sales | 9,968 | 201 | 10,169 | ||||||||
31,541 | 406 | 31,947 | |||||||||
Costs and Expenses: | |||||||||||
Cost of products sold | 16,861 | 309 | 17,170 | ||||||||
Cost of services sold | 6,396 | 136 | 6,532 | ||||||||
Research and development | 1,180 | (37 | ) | 1,143 | |||||||
Selling, general and administrative | 3,470 | — | 3,470 | ||||||||
27,907 | 408 | 28,315 | |||||||||
Other income, net | 1,175 | (3 | ) | 1,172 | |||||||
Operating profit | 4,809 | (5 | ) | 4,804 | |||||||
Non-service pension (benefit) | (383 | ) | — | (383 | ) | ||||||
Interest expense, net | 463 | — | 463 | ||||||||
Income from operations before income taxes | 4,729 | (5 | ) | 4,724 | |||||||
Income tax expense | 1,218 | (1 | ) | 1,217 | |||||||
Net income from operations | 3,511 | (4 | ) | 3,507 | |||||||
Less: Noncontrolling interest in subsidiaries' earnings from operations | 156 | 6 | 162 | ||||||||
Net income attributable to common shareowners | $ | 3,355 | $ | (10 | ) | $ | 3,345 |
(dollars in millions) | June 30, 2018 under previous standard | Effect of the New Revenue Standard | June 30, 2018 as reported | ||||||||
Assets | |||||||||||
Accounts receivable, net | $ | 13,432 | $ | (1,459 | ) | $ | 11,973 | ||||
Inventories | 11,093 | (2,114 | ) | 8,979 | |||||||
Contract assets, current | — | 3,273 | 3,273 | ||||||||
Other assets, current | 1,276 | (13 | ) | 1,263 | |||||||
Future income tax benefits | 1,600 | 26 | 1,626 | ||||||||
Intangible assets, net | 15,807 | (68 | ) | 15,739 | |||||||
Other assets | 6,098 | 973 | 7,071 | ||||||||
Liabilities and Equity | |||||||||||
Accrued liabilities | $ | 14,287 | $ | (5,557 | ) | $ | 8,730 | ||||
Contract liabilities, current | — | 5,652 | 5,652 | ||||||||
Other long term liabilities | 12,180 | 1,010 | 13,190 | ||||||||
Noncontrolling interest | 1,977 | 5 | 1,982 | ||||||||
Retained earnings | 57,517 | (490 | ) | 57,027 |
(dollars in millions) | June 30, 2018 | ||
Contract assets, current | $ | 3,273 | |
Contract assets, noncurrent (included within Other assets) | 1,015 | ||
Total contract assets | 4,288 | ||
Contract liabilities, current | (5,652 | ) | |
Contract liabilities, noncurrent (included within Other long-term liabilities) | (4,838 | ) | |
Total contract liabilities | (10,490 | ) | |
Net contract liabilities | $ | (6,202 | ) |
Quarter Ended June 30, | Six Months Ended June 30, | |||||||||||||
(dollars in millions, except per share amounts; shares in millions) | 2018 | 2017 | 2018 | 2017 | ||||||||||
Net income attributable to common shareowners | $ | 2,048 | $ | 1,439 | $ | 3,345 | $ | 2,825 | ||||||
Basic weighted average number of shares outstanding | 790.5 | 788.7 | 790.2 | 791.1 | ||||||||||
Stock awards and equity units | 9.1 | 9.5 | 9.8 | 9.3 | ||||||||||
Diluted weighted average number of shares outstanding | 799.6 | 798.2 | 800.0 | 800.4 | ||||||||||
Earnings Per Share of Common Stock: | ||||||||||||||
Basic | $ | 2.59 | $ | 1.83 | $ | 4.23 | $ | 3.57 | ||||||
Diluted | $ | 2.56 | $ | 1.80 | $ | 4.18 | $ | 3.53 |
(dollars in millions) | June 30, 2018 | December 31, 2017 | |||||
Raw materials | $ | 2,298 | $ | 2,038 | |||
Work-in-process | 2,306 | 3,366 | |||||
Finished goods | 4,375 | 3,845 | |||||
Contracts in progress | — | 10,205 | |||||
8,979 | 19,454 | ||||||
Less: | |||||||
Progress payments, secured by lien, on U.S. Government contracts | — | (236 | ) | ||||
Billings on contracts in progress | — | (9,337 | ) | ||||
$ | 8,979 | $ | 9,881 |
(dollars in millions) | June 30, 2018 | December 31, 2017 | |||||
Commercial paper | $ | 876 | $ | 300 | |||
Other borrowings | 109 | 92 | |||||
Total short-term borrowings | $ | 985 | $ | 392 |
(dollars in millions) | June 30, 2018 | December 31, 2017 | |||||
6.800% notes due 2018 | $ | — | $ | 99 | |||
EURIBOR plus 0.800% floating rate notes due 2018 (€750 million principal value) 2 | — | 890 | |||||
1.778% junior subordinated notes due 2018 | — | 1,100 | |||||
LIBOR plus 0.350% floating rate notes due 2019 3 | 350 | 350 | |||||
1.500% notes due 2019 1 | 650 | 650 | |||||
EURIBOR plus 0.15% floating rate notes due 2019 (€750 million principal value) 2 | 876 | 890 | |||||
8.875% notes due 2019 | 271 | 271 | |||||
4.875% notes due 2020 1 | 171 | 171 | |||||
4.500% notes due 2020 1 | 1,250 | 1,250 | |||||
1.900% notes due 2020 1 | 1,000 | 1,000 | |||||
EURIBOR plus 0.20% floating rate notes due 2020 (€750 million principal value) 2 | 876 | — | |||||
8.750% notes due 2021 | 250 | 250 | |||||
1.950% notes due 2021 1 | 750 | 750 | |||||
1.125% notes due 2021 (€950 million principal value) 1 | 1,110 | 1,127 | |||||
2.300% notes due 2022 1 | 500 | 500 | |||||
3.100% notes due 2022 1 | 2,300 | 2,300 | |||||
1.250% notes due 2023 (€750 million principal value) 1 | 876 | 890 | |||||
2.800% notes due 2024 1 | 800 | 800 | |||||
1.150% notes due 2024 (€750 million principal value) 1 | 876 | — | |||||
1.875% notes due 2026 (€500 million principal value) 1 | 584 | 593 | |||||
2.650% notes due 2026 1 | 1,150 | 1,150 | |||||
3.125% notes due 2027 1 | 1,100 | 1,100 | |||||
7.100% notes due 2027 | 141 | 141 | |||||
6.700% notes due 2028 | 400 | 400 | |||||
7.500% notes due 2029 1 | 550 | 550 | |||||
2.150% notes due 2030 (€500 million principal value) 1 | 584 | — | |||||
5.400% notes due 2035 1 | 600 | 600 | |||||
6.050% notes due 2036 1 | 600 | 600 | |||||
6.800% notes due 2036 1 | 134 | 134 | |||||
7.000% notes due 2038 | 159 | 159 | |||||
6.125% notes due 2038 1 | 1,000 | 1,000 | |||||
5.700% notes due 2040 1 | 1,000 | 1,000 | |||||
4.500% notes due 2042 1 | 3,500 | 3,500 | |||||
4.150% notes due 2045 1 | 850 | 850 | |||||
3.750% notes due 2046 1 | 1,100 | 1,100 | |||||
4.050% notes due 2047 1 | 600 | 600 | |||||
Project financing obligations | 206 | 158 | |||||
Other (including capitalized leases) | 197 | 195 | |||||
Total principal long-term debt | 27,361 | 27,118 | |||||
Other (fair market value adjustments and discounts) | (37 | ) | (25 | ) | |||
Total long-term debt | 27,324 | 27,093 | |||||
Less: current portion | 78 | 2,104 | |||||
Long-term debt, net of current portion | $ | 27,246 | $ | 24,989 |
1 | We may redeem these notes at our option pursuant to their terms. |
2 | The three-month EURIBOR rate as of June 30, 2018 was approximately -0.321%. The notes may be redeemed at our option in whole, but not in part, at any time in the event of certain developments affecting U.S. taxation. |
3 | The three-month LIBOR rate as of June 30, 2018 was approximately 2.336%. |
Quarter Ended June 30, | Six Months Ended June 30, | ||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||
Average interest expense rate | 3.5 | % | 3.6 | % | 3.5 | % | 3.6 | % |
Quarter Ended June 30, 2017 | |||||||||||
(dollars in millions) | Previously Reported | Effect of Change Higher/(Lower) | As Revised | ||||||||
Cost of product sold | $ | 7,907 | $ | 50 | $ | 7,957 | |||||
Cost of services sold | 3,193 | 14 | 3,207 | ||||||||
Research and development | 609 | 10 | 619 | ||||||||
Selling, general and administrative | 1,538 | 52 | 1,590 | ||||||||
Non-service pension (benefit) | — | (126 | ) | (126 | ) |
Six Months Ended June 30, 2017 | ||||||||
(dollars in millions) | Previously Reported | Effect of Change Higher/(Lower) | As Revised | |||||
Cost of product sold | 15,170 | 98 | 15,268 | |||||
Cost of services sold | 6,007 | 25 | 6,032 | |||||
Research and development | 1,186 | 19 | 1,205 | |||||
Selling, general and administrative | 3,020 | 107 | 3,127 | |||||
Non-service pension (benefit) | — | (249 | ) | (249 | ) |
Quarter Ended June 30, | Six Months Ended June 30, | ||||||||||||||
(dollars in millions) | 2018 | 2017 | 2018 | 2017 | |||||||||||
Defined benefit plans | $ | 22 | $ | 33 | $ | 59 | $ | 79 | |||||||
Defined contribution plans | 105 | 86 | 199 | 176 |
Pension Benefits Quarter Ended June 30, | Other Postretirement Benefits Quarter Ended June 30, | ||||||||||||||
(dollars in millions) | 2018 | 2017 | 2018 | 2017 | |||||||||||
Service cost | $ | 93 | $ | 93 | $ | — | $ | 1 | |||||||
Interest cost | 278 | 279 | 6 | 6 | |||||||||||
Expected return on plan assets | (562 | ) | (541 | ) | — | — | |||||||||
Amortization of prior service credit | (10 | ) | (9 | ) | (1 | ) | — | ||||||||
Recognized actuarial net loss (gain) | 101 | 143 | (2 | ) | (2 | ) | |||||||||
Net settlement and curtailment gain | (2 | ) | (2 | ) | — | — | |||||||||
Total net periodic benefit (income) cost | $ | (102 | ) | $ | (37 | ) | $ | 3 | $ | 5 |
Pension Benefits Six Months Ended June 30, | Other Postretirement Benefits Six Months Ended June 30, | ||||||||||||||
(dollars in millions) | 2018 | 2017 | 2018 | 2017 | |||||||||||
Service cost | $ | 186 | $ | 186 | $ | 1 | $ | 2 | |||||||
Interest cost | 557 | 557 | 12 | 13 | |||||||||||
Expected return on plan assets | (1,125 | ) | (1,081 | ) | — | — | |||||||||
Amortization of prior service credit | (20 | ) | (18 | ) | (2 | ) | — | ||||||||
Recognized actuarial net loss (gain) | 202 | 286 | (4 | ) | (5 | ) | |||||||||
Net settlement and curtailment gain | (3 | ) | (1 | ) | — | — | |||||||||
Total net periodic benefit (income) cost | $ | (203 | ) | $ | (71 | ) | $ | 7 | $ | 10 |
(dollars in millions) | |||
Otis | $ | 47 | |
UTC Climate, Controls & Security | 35 | ||
Pratt & Whitney | 3 | ||
UTC Aerospace Systems | 60 | ||
Eliminations and other | 4 | ||
Total | $ | 149 |
(dollars in millions) | |||
Cost of sales | $ | 86 | |
Selling, general and administrative | 65 | ||
Non-service pension (benefit) | (2 | ) | |
Total | $ | 149 |
(dollars in millions) | Severance | Facility Exit, Lease Termination and Other Costs | Total | ||||||||
Quarter Ended June 30, 2018 | |||||||||||
Restructuring accruals at March 31, 2018 | $ | 8 | $ | — | $ | 8 | |||||
Net pre-tax restructuring costs | 60 | 1 | 61 | ||||||||
Utilization and foreign exchange | (20 | ) | (1 | ) | (21 | ) | |||||
Balance at June 30, 2018 | $ | 48 | $ | — | $ | 48 | |||||
Six Months Ended June 30, 2018 | |||||||||||
Net pre-tax restructuring costs | $ | 71 | $ | 2 | $ | 73 | |||||
Utilization and foreign exchange | (23 | ) | (2 | ) | (25 | ) | |||||
Balance at June 30, 2018 | $ | 48 | $ | — | $ | 48 |
(dollars in millions) | Expected Costs | Costs Incurred Quarter Ended March 31, 2018 | Costs Incurred Quarter Ended June 30, 2018 | Remaining Costs at June 30, 2018 | |||||||||||
Otis | $ | 31 | $ | (9 | ) | $ | (18 | ) | $ | 4 | |||||
UTC Climate, Controls & Security | 77 | (1 | ) | (23 | ) | 53 | |||||||||
Pratt & Whitney | 3 | — | (3 | ) | — | ||||||||||
UTC Aerospace Systems | 20 | — | (15 | ) | 5 | ||||||||||
Eliminations and other | 4 | (2 | ) | (2 | ) | — | |||||||||
Total | $ | 135 | $ | (12 | ) | $ | (61 | ) | $ | 62 |
(dollars in millions) | Severance | Facility Exit, Lease Termination and Other Costs | Total | ||||||||
Quarter Ended June 30, 2018 | |||||||||||
Restructuring accruals at March 31, 2018 | $ | 88 | $ | (2 | ) | $ | 86 | ||||
Net pre-tax restructuring costs | 8 | 8 | 16 | ||||||||
Utilization and foreign exchange | (23 | ) | (9 | ) | (32 | ) | |||||
Balance at June 30, 2018 | $ | 73 | $ | (3 | ) | $ | 70 | ||||
Six Months Ended June 30, 2018 | |||||||||||
Restructuring accruals at December 31, 2017 | $ | 84 | $ | 1 | $ | 85 | |||||
Net pre-tax restructuring costs | 47 | 20 | 67 | ||||||||
Utilization and foreign exchange | (58 | ) | (24 | ) | (82 | ) | |||||
Balance at June 30, 2018 | $ | 73 | $ | (3 | ) | $ | 70 |
(dollars in millions) | Expected Costs | Costs Incurred in 2017 | Costs Incurred Quarter Ended March 31, 2018 | Costs Incurred Quarter Ended June 30, 2018 | Remaining Costs at June 30, 2018 | ||||||||||||||
Otis | $ | 73 | $ | (43 | ) | $ | (15 | ) | $ | (4 | ) | $ | 11 | ||||||
UTC Climate, Controls & Security | 81 | (76 | ) | (7 | ) | 5 | 3 | ||||||||||||
Pratt & Whitney | 7 | (7 | ) | — | — | — | |||||||||||||
UTC Aerospace Systems | 157 | (43 | ) | (29 | ) | (17 | ) | 68 | |||||||||||
Eliminations and other | 7 | (7 | ) | — | — | — | |||||||||||||
Total | $ | 325 | $ | (176 | ) | $ | (51 | ) | $ | (16 | ) | $ | 82 |
(dollars in millions) | Balance Sheet Location | June 30, 2018 | December 31, 2017 | |||||
Derivatives designated as hedging instruments: | ||||||||
Foreign exchange contracts | Asset Derivatives: | |||||||
Other assets, current | $ | 23 | $ | 77 | ||||
Other assets | 27 | 101 | ||||||
Total asset derivatives | $ | 50 | $ | 178 | ||||
Liability Derivatives: | ||||||||
Accrued liabilities | (43 | ) | (10 | ) | ||||
Other long-term liabilities | (75 | ) | (8 | ) | ||||
Total liability derivatives | $ | (118 | ) | $ | (18 | ) | ||
Derivatives not designated as hedging instruments: | ||||||||
Foreign exchange contracts | Asset Derivatives: | |||||||
Other assets, current | 39 | 70 | ||||||
Other assets | 22 | 5 | ||||||
Total asset derivatives | $ | 61 | $ | 75 | ||||
Liability Derivatives: | ||||||||
Accrued liabilities | (93 | ) | (57 | ) | ||||
Other long-term liabilities | (3 | ) | (3 | ) | ||||
Total liability derivatives | $ | (96 | ) | $ | (60 | ) |
Quarter Ended June 30, | Six Months Ended June 30, | ||||||||||||||
(dollars in millions) | 2018 | 2017 | 2018 | 2017 | |||||||||||
Gain (loss) recorded in Accumulated other comprehensive loss | $ | (245 | ) | $ | 66 | $ | (200 | ) | $ | 130 | |||||
(Gain) loss reclassified from Accumulated other comprehensive loss into Product sales | (1 | ) | 5 | (28 | ) | 10 |
Quarter Ended June 30, | Six Months Ended June 30, | ||||||||||||||
(dollars in millions) | 2018 | 2017 | 2018 | 2017 | |||||||||||
Foreign exchange contracts | $ | 19 | $ | 28 | $ | 70 | $ | 40 |
June 30, 2018 (dollars in millions) | Total | Level 1 | Level 2 | Level 3 | |||||||||||
Recurring fair value measurements: | |||||||||||||||
Available-for-sale securities | $ | 42 | $ | 42 | $ | — | $ | — | |||||||
Derivative assets | 111 | — | 111 | — | |||||||||||
Derivative liabilities | (214 | ) | — | (214 | ) | — |
December 31, 2017 (dollars in millions) | Total | Level 1 | Level 2 | Level 3 | |||||||||||
Recurring fair value measurements: | |||||||||||||||
Available-for-sale securities | $ | 64 | $ | 64 | $ | — | $ | — | |||||||
Derivative assets | 253 | — | 253 | — | |||||||||||
Derivative liabilities | (78 | ) | — | (78 | ) | — |
June 30, 2018 | December 31, 2017 | ||||||||||||||
(dollars in millions) | Carrying Amount | Fair Value | Carrying Amount | Fair Value | |||||||||||
Long-term receivables | $ | 132 | $ | 122 | $ | 127 | $ | 121 | |||||||
Customer financing notes receivable | 577 | 554 | 609 | 596 | |||||||||||
Short-term borrowings | (985 | ) | (985 | ) | (392 | ) | (392 | ) | |||||||
Long-term debt (excluding capitalized leases) | (27,301 | ) | (27,755 | ) | (27,067 | ) | (29,180 | ) | |||||||
Long-term liabilities | (307 | ) | (271 | ) | (362 | ) | (330 | ) |
June 30, 2018 | |||||||||||||||
(dollars in millions) | Total | Level 1 | Level 2 | Level 3 | |||||||||||
Long-term receivables | $ | 122 | $ | — | $ | 122 | $ | — | |||||||
Customer financing notes receivable | 554 | — | 554 | — | |||||||||||
Short-term borrowings | (985 | ) | — | (876 | ) | (109 | ) | ||||||||
Long-term debt (excluding capitalized leases) | (27,755 | ) | — | (27,496 | ) | (259 | ) | ||||||||
Long-term liabilities | (271 | ) | — | (271 | ) | — |
December 31, 2017 | |||||||||||||||
(dollars in millions) | Total | Level 1 | Level 2 | Level 3 | |||||||||||
Long-term receivables | $ | 121 | $ | — | $ | 121 | $ | — | |||||||
Customer financing notes receivable | 596 | — | 596 | — | |||||||||||
Short-term borrowings | (392 | ) | — | (300 | ) | (92 | ) | ||||||||
Long-term debt (excluding capitalized leases) | (29,180 | ) | — | (28,970 | ) | (210 | ) | ||||||||
Long-term liabilities | (330 | ) | — | (330 | ) | — |
(dollars in millions) | June 30, 2018 | December 31, 2017 | |||||
Long-term trade accounts receivable | $ | 71 | $ | 973 | |||
Notes and leases receivable | 435 | 424 | |||||
Total long-term receivables | $ | 506 | $ | 1,397 |
Quarter Ended June 30, | |||||||||||||||||||||||
2018 | 2017 | ||||||||||||||||||||||
(dollars in millions) | Share-owners' Equity | Non-controlling Interest | Total Equity | Share-owners' Equity | Non-controlling Interest | Total Equity | |||||||||||||||||
Equity, beginning of period | $ | 30,534 | $ | 1,958 | $ | 32,492 | $ | 27,594 | $ | 1,678 | $ | 29,272 | |||||||||||
Comprehensive (loss) income for the period: | |||||||||||||||||||||||
Net income | 2,048 | 91 | 2,139 | 1,439 | 93 | 1,532 | |||||||||||||||||
Total other comprehensive (loss) income | (747 | ) | (38 | ) | (785 | ) | 369 | 18 | 387 | ||||||||||||||
Total comprehensive income for the period | 1,301 | 53 | 1,354 | 1,808 | 111 | 1,919 | |||||||||||||||||
Common Stock issued under employee plans | 110 | — | 110 | 91 | — | 91 | |||||||||||||||||
Common Stock repurchased | (27 | ) | — | (27 | ) | (437 | ) | — | (437 | ) | |||||||||||||
Dividends on Common Stock | (535 | ) | — | (535 | ) | (503 | ) | — | (503 | ) | |||||||||||||
Dividends on ESOP Common Stock | (17 | ) | — | (17 | ) | (17 | ) | — | (17 | ) | |||||||||||||
Dividends attributable to noncontrolling interest | — | (73 | ) | (73 | ) | — | (64 | ) | (64 | ) | |||||||||||||
Capital contributions | — | 42 | 42 | — | — | — | |||||||||||||||||
Purchase of subsidiary shares from noncontrolling interest, net | — | — | — | (1 | ) | (4 | ) | (5 | ) | ||||||||||||||
Redeemable noncontrolling interest fair value adjustment | — | — | — | (94 | ) | — | (94 | ) | |||||||||||||||
Other | (2 | ) | 2 | — | 1 | (8 | ) | (7 | ) | ||||||||||||||
Equity, end of period | $ | 31,364 | $ | 1,982 | $ | 33,346 | $ | 28,442 | $ | 1,713 | $ | 30,155 |
Six Months Ended June 30, | |||||||||||||||||||||||
2018 | 2017 | ||||||||||||||||||||||
(Dollars in millions) | Share-owners' Equity | Non-controlling Interest | Total Equity | Share-owners' Equity | Non-controlling Interest | Total Equity | |||||||||||||||||
Equity, beginning of period | $ | 29,610 | $ | 1,811 | $ | 31,421 | $ | 27,579 | $ | 1,590 | $ | 29,169 | |||||||||||
Comprehensive (loss) income for the period: | |||||||||||||||||||||||
Net income | 3,345 | 162 | 3,507 | 2,825 | 175 | 3,000 | |||||||||||||||||
Total other comprehensive (loss) income | (159 | ) | (5 | ) | (164 | ) | 370 | 43 | 413 | ||||||||||||||
Total comprehensive income for the period | 3,186 | 157 | 3,343 | 3,195 | 218 | 3,413 | |||||||||||||||||
Common Stock issued under employee plans | 181 | — | 181 | 170 | — | 170 | |||||||||||||||||
Common Stock repurchased | (52 | ) | — | (52 | ) | (1,370 | ) | — | (1,370 | ) | |||||||||||||
Dividends on Common Stock | (1,070 | ) | — | (1,070 | ) | (1,008 | ) | — | (1,008 | ) | |||||||||||||
Dividends on ESOP Common Stock | (35 | ) | — | (35 | ) | (35 | ) | — | (35 | ) | |||||||||||||
Dividends attributable to noncontrolling interest | — | (139 | ) | (139 | ) | — | (112 | ) | (112 | ) | |||||||||||||
Capital contributions | — | 162 | 162 | — | 43 | 43 | |||||||||||||||||
Purchase of subsidiary shares from noncontrolling interest, net | (1 | ) | (1 | ) | (2 | ) | (1 | ) | (5 | ) | (6 | ) | |||||||||||
Disposition of noncontrolling interest | — | (8 | ) | (8 | ) | — | — | — | |||||||||||||||
Redeemable noncontrolling interest fair value adjustment | (2 | ) | — | (2 | ) | (95 | ) | — | (95 | ) | |||||||||||||
New Revenue Standard adoption impact | (480 | ) | — | (480 | ) | — | — | — | |||||||||||||||
Other | 27 | — | 27 | 7 | (21 | ) | (14 | ) | |||||||||||||||
Equity, end of period | $ | 31,364 | $ | 1,982 | $ | 33,346 | $ | 28,442 | $ | 1,713 | $ | 30,155 |
(dollars in millions) | Foreign Currency Translation | Defined Benefit Pension and Post- retirement Plans | Unrealized Gains (Losses) on Available-for-Sale Securities | Unrealized Hedging (Losses) Gains | Accumulated Other Comprehensive (Loss) Income | ||||||||||||||
Quarter Ended June 30, 2018 | |||||||||||||||||||
Balance at March 31, 2018 | $ | (2,444 | ) | $ | (4,579 | ) | $ | — | $ | 86 | $ | (6,937 | ) | ||||||
Other comprehensive income (loss) before reclassifications, net | (564 | ) | 18 | — | (245 | ) | (791 | ) | |||||||||||
Amounts reclassified, pre-tax | (3 | ) | 88 | — | (1 | ) | 84 | ||||||||||||
Tax (benefit) expense reclassified | (74 | ) | (26 | ) | — | 60 | (40 | ) | |||||||||||
Balance at June 30, 2018 | $ | (3,085 | ) | $ | (4,499 | ) | $ | — | $ | (100 | ) | $ | (7,684 | ) | |||||
Six Months Ended June 30, 2018 | |||||||||||||||||||
Balance at December 31, 2017 | $ | (2,950 | ) | $ | (4,652 | ) | $ | 5 | $ | 72 | $ | (7,525 | ) | ||||||
Other comprehensive income (loss) before reclassifications, net | (188 | ) | 26 | — | (200 | ) | (362 | ) | |||||||||||
Amounts reclassified, pre-tax | (3 | ) | 176 | — | (28 | ) | 145 | ||||||||||||
Tax (benefit) expense reclassified | 56 | (49 | ) | — | 56 | 63 | |||||||||||||
ASU 2016-01 adoption impact | — | — | (5 | ) | — | (5 | ) | ||||||||||||
Balance at June 30, 2018 | $ | (3,085 | ) | $ | (4,499 | ) | $ | — | $ | (100 | ) | $ | (7,684 | ) |
(dollars in millions) | Foreign Currency Translation | Defined Benefit Pension and Post- retirement Plans | Unrealized Gains (Losses) on Available-for-Sale Securities | Unrealized Hedging (Losses) Gains | Accumulated Other Comprehensive (Loss) Income | ||||||||||||||
Quarter Ended June 30, 2017 | |||||||||||||||||||
Balance at March 31, 2017 | $ | (3,359 | ) | $ | (4,962 | ) | $ | 96 | $ | (108 | ) | $ | (8,333 | ) | |||||
Other comprehensive income (loss) before reclassifications, net | 231 | (2 | ) | 20 | 50 | 299 | |||||||||||||
Amounts reclassified, pre-tax | — | 132 | (24 | ) | 5 | 113 | |||||||||||||
Tax (benefit) expense reclassified | — | (50 | ) | 8 | (1 | ) | (43 | ) | |||||||||||
Balance at June 30, 2017 | $ | (3,128 | ) | $ | (4,882 | ) | $ | 100 | $ | (54 | ) | $ | (7,964 | ) | |||||
Six Months Ended June 30, 2017 | |||||||||||||||||||
Balance at December 31, 2016 | $ | (3,480 | ) | $ | (5,045 | ) | $ | 353 | $ | (162 | ) | $ | (8,334 | ) | |||||
Other comprehensive income (loss) before reclassifications, net | 352 | (2 | ) | (1 | ) | 100 | 449 | ||||||||||||
Amounts reclassified, pre-tax | — | 263 | (407 | ) | 10 | (134 | ) | ||||||||||||
Tax (benefit) expense reclassified | — | (98 | ) | 155 | (2 | ) | 55 | ||||||||||||
Balance at June 30, 2017 | $ | (3,128 | ) | $ | (4,882 | ) | $ | 100 | $ | (54 | ) | $ | (7,964 | ) |
(dollars in millions) | June 30, 2018 | December 31, 2017 | |||||
Current assets | $ | 4,127 | $ | 3,976 | |||
Noncurrent assets | 1,360 | 1,534 | |||||
Total assets | $ | 5,487 | $ | 5,510 | |||
Current liabilities | $ | 4,739 | $ | 3,601 | |||
Noncurrent liabilities | 1,813 | 2,086 | |||||
Total liabilities | $ | 6,552 | $ | 5,687 |
(dollars in millions) | 2018 | 2017 | ||||||
Balance as of January 1 | $ | 1,146 | $ | 1,199 | ||||
Warranties and performance guarantees issued | 233 | 142 | ||||||
Settlements made | (200 | ) | (120 | ) | ||||
Other | (7 | ) | 13 | |||||
Balance as of June 30 | $ | 1,172 | $ | 1,234 |
Net Sales | Operating Profits | Operating Profit Margins | |||||||||||||||||||
(dollars in millions) | 2018 | 2017 | 2018 | 2017 | 2018 | 2017 | |||||||||||||||
Otis | $ | 3,344 | $ | 3,131 | $ | 488 | $ | 539 | 14.6 | % | 17.2 | % | |||||||||
UTC Climate, Controls & Security | 5,035 | 4,712 | 1,645 | 837 | 32.7 | % | 17.8 | % | |||||||||||||
Pratt & Whitney | 4,736 | 4,070 | 397 | 364 | 8.4 | % | 8.9 | % | |||||||||||||
UTC Aerospace Systems | 3,962 | 3,640 | 569 | 534 | 14.4 | % | 14.7 | % | |||||||||||||
Total segments | 17,077 | 15,553 | 3,099 | 2,274 | 18.1 | % | 14.6 | % | |||||||||||||
Eliminations and other | (372 | ) | (273 | ) | (97 | ) | (5 | ) | |||||||||||||
General corporate expenses | — | — | (126 | ) | (105 | ) | |||||||||||||||
Consolidated | $ | 16,705 | $ | 15,280 | $ | 2,876 | $ | 2,164 | 17.2 | % | 14.2 | % |
Net Sales | Operating Profits | Operating Profit Margins | |||||||||||||||||||
(dollars in millions) | 2018 | 2017 | 2018 | 2017 | 2018 | 2017 | |||||||||||||||
Otis | $ | 6,381 | $ | 5,935 | $ | 938 | $ | 986 | 14.7 | % | 16.6 | % | |||||||||
UTC Climate, Controls & Security | 9,411 | 8,604 | 2,237 | 1,768 | 23.8 | % | 20.5 | % | |||||||||||||
Pratt & Whitney | 9,065 | 7,828 | 810 | 720 | 8.9 | % | 9.2 | % | |||||||||||||
UTC Aerospace Systems | 7,779 | 7,251 | 1,157 | 1,065 | 14.9 | % | 14.7 | % | |||||||||||||
Total segments | 32,636 | 29,618 | 5,142 | 4,539 | 15.8 | % | 15.3 | % | |||||||||||||
Eliminations and other | (689 | ) | (523 | ) | (108 | ) | (23 | ) | |||||||||||||
General corporate expenses | — | — | (230 | ) | (208 | ) | |||||||||||||||
Consolidated | $ | 31,947 | $ | 29,095 | $ | 4,804 | $ | 4,308 | 15.0 | % | 14.8 | % |
(dollars in millions) | Otis | UTC Climate, Controls & Security | Pratt & Whitney | UTC Aerospace Systems | Total | ||||||||||||||
Primary Geographical Markets | |||||||||||||||||||
United States | $ | 859 | $ | 2,618 | $ | 3,652 | $ | 2,776 | $ | 9,905 | |||||||||
Europe | 1,054 | 1,455 | 126 | 585 | 3,220 | ||||||||||||||
Asia Pacific | 1,169 | 720 | 312 | 85 | 2,286 | ||||||||||||||
Other | 262 | 242 | 646 | 516 | 1,666 | ||||||||||||||
Total segment | $ | 3,344 | $ | 5,035 | $ | 4,736 | $ | 3,962 | 17,077 | ||||||||||
Eliminations and other | (372 | ) | |||||||||||||||||
Consolidated | $ | 16,705 |
(dollars in millions) | Otis | UTC Climate, Controls & Security | Pratt & Whitney | UTC Aerospace Systems | Total | ||||||||||||||
Primary Geographical Markets | |||||||||||||||||||
United States | $ | 1,704 | $ | 4,713 | $ | 6,773 | $ | 5,430 | $ | 18,620 | |||||||||
Europe | 2,059 | 2,839 | 299 | 1,192 | 6,389 | ||||||||||||||
Asia Pacific | 2,091 | 1,405 | 680 | 169 | 4,345 | ||||||||||||||
Other | 527 | 454 | 1,313 | 988 | 3,282 | ||||||||||||||
Total segment | $ | 6,381 | $ | 9,411 | $ | 9,065 | $ | 7,779 | 32,636 | ||||||||||
Eliminations and other | (689 | ) | |||||||||||||||||
Consolidated | $ | 31,947 |
(dollars in millions) | Otis | UTC Climate, Controls & Security | Pratt & Whitney | UTC Aerospace Systems | Total | ||||||||||||||
Product Type | |||||||||||||||||||
Commercial and industrial, non aerospace | $ | 3,344 | $ | 5,035 | $ | 5 | $ | 15 | $ | 8,399 | |||||||||
Commercial aerospace | — | — | 3,369 | 3,024 | 6,393 | ||||||||||||||
Military aerospace | — | — | 1,362 | 923 | 2,285 | ||||||||||||||
Total segment | $ | 3,344 | $ | 5,035 | $ | 4,736 | $ | 3,962 | 17,077 | ||||||||||
Eliminations and other | (372 | ) | |||||||||||||||||
Consolidated | $ | 16,705 | |||||||||||||||||
Sales Type | |||||||||||||||||||
Product | $ | 1,525 | $ | 4,213 | $ | 2,775 | $ | 3,340 | $ | 11,853 | |||||||||
Service | 1,819 | 822 | 1,961 | 622 | 5,224 | ||||||||||||||
Total segment | $ | 3,344 | $ | 5,035 | $ | 4,736 | $ | 3,962 | 17,077 | ||||||||||
Eliminations and other | (372 | ) | |||||||||||||||||
Consolidated | $ | 16,705 |
(dollars in millions) | Otis | UTC Climate, Controls & Security | Pratt & Whitney | UTC Aerospace Systems | Total | ||||||||||||||
Product Type | |||||||||||||||||||
Commercial and industrial, non aerospace | $ | 6,381 | $ | 9,411 | $ | 26 | $ | 30 | $ | 15,848 | |||||||||
Commercial aerospace | — | — | 6,568 | 5,935 | 12,503 | ||||||||||||||
Military aerospace | — | — | 2,471 | 1,814 | 4,285 | ||||||||||||||
Total segment | $ | 6,381 | $ | 9,411 | $ | 9,065 | $ | 7,779 | 32,636 | ||||||||||
Eliminations and other | (689 | ) | |||||||||||||||||
Consolidated | $ | 31,947 | |||||||||||||||||
Sales Type | |||||||||||||||||||
Product | $ | 2,744 | $ | 7,811 | $ | 5,312 | $ | 6,528 | $ | 22,395 | |||||||||
Service | 3,637 | 1,600 | 3,753 | 1,251 | 10,241 | ||||||||||||||
Total segment | $ | 6,381 | $ | 9,411 | $ | 9,065 | $ | 7,779 | 32,636 | ||||||||||
Eliminations and other | (689 | ) | |||||||||||||||||
Consolidated | $ | 31,947 |
Item 2. | Management's Discussion and Analysis of Financial Condition and Results of Operations |
Quarter Ended June 30, | Six Months Ended June 30, | ||||||||||||||
(dollars in millions) | 2018 | 2017 | 2018 | 2017 | |||||||||||
Net Sales | $ | 16,705 | $ | 15,280 | $ | 31,947 | $ | 29,095 |
Quarter Ended June 30, 2018 | Six Months Ended June 30, 2018 | ||||
Organic change | 6 | % | 6 | % | |
Foreign currency translation | 2 | % | 2 | % | |
Other | 1 | % | 2 | % | |
Total % change | 9 | % | 10 | % |
Quarter Ended June 30, | Six Months Ended June 30, | ||||||||||||||
(dollars in millions) | 2018 | 2017 | 2018 | 2017 | |||||||||||
Total cost of products and services sold | $ | 12,422 | $ | 11,164 | $ | 23,702 | $ | 21,300 | |||||||
Percentage of net sales | 74.4 | % | 73.1 | % | 74.2 | % | 73.2 | % |
Quarter Ended June 30, 2018 | Six Months Ended June 30, 2018 | ||||
Organic change | 7 | % | 6 | % | |
Foreign currency translation | 2 | % | 3 | % | |
Other | 2 | % | 2 | % | |
Total % change | 11 | % | 11 | % |
Quarter Ended June 30, | Six Months Ended June 30, | ||||||||||||||
(dollars in millions) | 2018 | 2017 | 2018 | 2017 | |||||||||||
Gross margin | $ | 4,283 | $ | 4,116 | $ | 8,245 | $ | 7,795 | |||||||
Percentage of net sales | 25.6 | % | 26.9 | % | 25.8 | % | 26.8 | % |
Quarter Ended June 30, | Six Months Ended June 30, | ||||||||||||||
(dollars in millions) | 2018 | 2017 | 2018 | 2017 | |||||||||||
Company-funded | $ | 589 | $ | 619 | $ | 1,143 | $ | 1,205 | |||||||
Percentage of net sales | 3.5 | % | 4.1 | % | 3.6 | % | 4.1 | % | |||||||
Customer-funded | $ | 365 | $ | 395 | $ | 688 | $ | 735 | |||||||
Percentage of net sales | 2.2 | % | 2.6 | % | 2.2 | % | 2.5 | % |
Quarter Ended June 30, | Six Months Ended June 30, | ||||||||||||||
(dollars in millions) | 2018 | 2017 | 2018 | 2017 | |||||||||||
Selling, general and administrative expenses | $ | 1,759 | $ | 1,590 | $ | 3,470 | $ | 3,127 | |||||||
Percentage of net sales | 10.5 | % | 10.4 | % | 10.9 | % | 10.7 | % |
Quarter Ended June 30, | Six Months Ended June 30, | ||||||||||||||
(dollars in millions) | 2018 | 2017 | 2018 | 2017 | |||||||||||
Other income, net | $ | 941 | $ | 257 | $ | 1,172 | $ | 845 |
Quarter Ended June 30, | Six Months Ended June 30, | ||||||||||||||
(dollars in millions) | 2018 | 2017 | 2018 | 2017 | |||||||||||
Interest expense | $ | 258 | $ | 251 | $ | 514 | $ | 487 | |||||||
Interest income | (24 | ) | (25 | ) | (51 | ) | (48 | ) | |||||||
Interest expense, net | $ | 234 | $ | 226 | $ | 463 | $ | 439 | |||||||
Average interest expense rate | 3.5 | % | 3.6 | % | 3.5 | % | 3.6 | % |
Quarter Ended June 30, | Six Months Ended June 30, | ||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||
Effective tax rate | 24.5 | % | 25.7 | % | 25.8 | % | 27.1 | % |
Quarter Ended June 30, | Six Months Ended June 30, | ||||||||||||||
(dollars in millions, except per share amounts) | 2018 | 2017 | 2018 | 2017 | |||||||||||
Net income attributable to common shareowners | $ | 2,048 | $ | 1,439 | $ | 3,345 | $ | 2,825 | |||||||
Diluted earnings per share from operations | $ | 2.56 | $ | 1.80 | $ | 4.18 | $ | 3.53 |
Six Months Ended June 30, | |||||||
(dollars in millions) | 2018 | 2017 | |||||
Restructuring costs | $ | 149 | $ | 112 |
Otis | UTC Climate, Controls & Security | ||||||||||||||||||||
(dollars in millions) | 2018 | 2017 | Change | 2018 | 2017 | Change | |||||||||||||||
Net Sales | $ | 3,344 | $ | 3,131 | 7 | % | $ | 5,035 | $ | 4,712 | 7 | % | |||||||||
Cost of Sales | 2,389 | 2,177 | 10 | % | 3,521 | 3,289 | 7 | % | |||||||||||||
955 | 954 | — | 1,514 | 1,423 | 6 | % | |||||||||||||||
Operating Expenses and Other | 467 | 415 | 13 | % | (131 | ) | 586 | (122 | )% | ||||||||||||
Operating Profits | $ | 488 | $ | 539 | (9 | )% | $ | 1,645 | $ | 837 | 97 | % |
Operating Profit Margins | 14.6 | % | 17.2 | % | 32.7 | % | 17.8 | % |
Otis | UTC Climate, Controls & Security | ||||||||||||||||||||
(dollars in millions) | 2018 | 2017 | Change | 2018 | 2017 | Change | |||||||||||||||
Net Sales | $ | 6,381 | $ | 5,935 | 8 | % | $ | 9,411 | $ | 8,604 | 9 | % | |||||||||
Cost of Sales | 4,523 | 4,118 | 10 | % | 6,625 | 6,051 | 9 | % | |||||||||||||
1,858 | 1,817 | 2 | % | 2,786 | 2,553 | 9 | % | ||||||||||||||
Operating Expenses and Other | 920 | 831 | 11 | % | 549 | 785 | (30 | )% | |||||||||||||
Operating Profits | $ | 938 | $ | 986 | (5 | )% | $ | 2,237 | $ | 1,768 | 27 | % |
Operating Profit Margins | 14.7 | % | 16.6 | % | 23.8 | % | 20.5 | % |
Factors Contributing to Total % Change | |||||||||||||
Organic / Operational | FX Translation | Acquisitions / Divestitures, net | Restructuring Costs | Other | |||||||||
Net Sales | 3 | % | 4 | % | — | — | — | ||||||
Cost of Sales | 4 | % | 4 | % | — | — | 2 | % | |||||
Operating Profits | (8 | )% | 4 | % | — | (2 | )% | (3 | )% |
• | unfavorable price and mix (6%), primarily driven by China |
• | unfavorable commodities impact (2%) |
• | higher selling, general and administrative expenses and research and development costs (2%) |
• | unfavorable transactional foreign exchange gains from mark-to-market adjustments and embedded foreign currency derivatives within certain new equipment contracts (1%) |
• | profit contribution from the higher sales volumes noted above (5%) |
Factors Contributing to Total % Change | |||||||||||||
Organic / Operational | FX Translation | Acquisitions / Divestitures, net | Restructuring Costs | Other | |||||||||
Net Sales | 2 | % | 5 | % | — | — | 1 | % | |||||
Cost of Sales | 3 | % | 5 | % | — | — | 2 | % | |||||
Operating Profits | (5 | )% | 5 | % | — | (3 | )% | (2 | )% |
• | unfavorable price and mix (9%), primarily driven by China |
• | unfavorable commodities impact (2%) |
• | higher selling, general and administrative expenses (2%) |
• | profit contribution from the higher sales volumes noted above (6%) |
• | favorable productivity (1%) |
• | favorable transactional foreign exchange gains from mark-to-market adjustments and embedded foreign currency derivatives within certain new equipment contracts (1%) |
Factors Contributing to Total % Change | ||||||||||||
Organic / Operational | FX Translation | Acquisitions / Divestitures, net | Restructuring Costs | Other | ||||||||
Net Sales | 4 | % | 3 | % | — | — | — | |||||
Cost of Sales | 4 | % | 3 | % | — | — | — | |||||
Operating Profits | 5 | % | 1 | % | — | — | 91 | % |
• | profit contribution from the higher sales volumes noted above, net of unfavorable mix (4%) |
• | the year-over-year impact of a prior year unfavorable contract adjustment related to a large commercial project (5%) |
• | higher logistics costs (2%) |
• | higher research and development costs (1%) |
Factors Contributing to Total % Change | |||||||||||||
Organic / Operational | FX Translation | Acquisitions / Divestitures, net | Restructuring Costs | Other | |||||||||
Net Sales | 5 | % | 4 | % | — | — | — | ||||||
Cost of Sales | 5 | % | 4 | % | — | — | — | ||||||
Operating Profits | 5 | % | 2 | % | — | 1 | % | 19 | % |
• | profit contribution from the higher sales volumes noted above, net of unfavorable mix (5%) |
• | the year-over-year impact of a prior year unfavorable contract adjustment related to a large commercial project (4%) |
• | increased logistics costs (1%) |
• | higher commodity cost, net of price (1%) |
• | higher research and development costs (1%) |
Pratt & Whitney | UTC Aerospace Systems | ||||||||||||||||||||
(dollars in millions) | 2018 | 2017 | Change | 2018 | 2017 | Change | |||||||||||||||
Net Sales | $ | 4,736 | $ | 4,070 | 16 | % | $ | 3,962 | $ | 3,640 | 9 | % | |||||||||
Cost of Sales | 3,893 | 3,267 | 19 | % | 2,922 | 2,690 | 9 | % | |||||||||||||
843 | 803 | 5 | % | 1,040 | 950 | 9 | % | ||||||||||||||
Operating Expenses and Other | 446 | 439 | 2 | % | 471 | 416 | 13 | % | |||||||||||||
Operating Profits | $ | 397 | $ | 364 | 9 | % | $ | 569 | $ | 534 | 7 | % |
Operating Profit Margins | 8.4 | % | 8.9 | % | 14.4 | % | 14.7 | % |
Pratt & Whitney | UTC Aerospace Systems | ||||||||||||||||||||
(dollars in millions) | 2018 | 2017 | Change | 2018 | 2017 | Change | |||||||||||||||
Net Sales | $ | 9,065 | $ | 7,828 | 16 | % | $ | 7,779 | $ | 7,251 | 7 | % | |||||||||
Cost of Sales | 7,414 | 6,253 | 19 | % | 5,705 | 5,357 | 6 | % | |||||||||||||
1,651 | 1,575 | 5 | % | 2,074 | 1,894 | 10 | % | ||||||||||||||
Operating Expenses and Other | 841 | 855 | (2 | )% | 917 | 829 | 11 | % | |||||||||||||
Operating Profits | $ | 810 | $ | 720 | 13 | % | $ | 1,157 | $ | 1,065 | 9 | % |
Operating Profit Margins | 8.9 | % | 9.2 | % | 14.9 | % | 14.7 | % |
Factors Contributing to Total % Change | |||||||||||||
Organic / Operational | FX Translation* | Acquisitions / Divestitures, net | Restructuring Costs | Other | |||||||||
Net Sales | 12 | % | — | — | — | 4 | % | ||||||
Cost of Sales | 12 | % | 1 | % | — | — | 6 | % | |||||
Operating Profits | 21 | % | (1 | )% | — | 1 | % | (12 | )% |
• | higher commercial aftermarket profit contribution (27%), driven by the sales increase noted above |
• | lower military profit contribution (3%), driven by adverse mix |
• | lower commercial OEM profit contribution (1%), primarily driven by adverse mix at Pratt & Whitney Canada and higher negative engine margin |
• | higher selling, general and administrative expenses and other ramp-related costs (2%) |
Factors Contributing to Total % Change | ||||||||||||
Organic / Operational | FX Translation* | Acquisitions / Divestitures, net | Restructuring Costs | Other | ||||||||
Net Sales | 11 | % | — | — | — | 5 | % | |||||
Cost of Sales | 12 | % | 1 | % | — | — | 6 | % | ||||
Operating Profits | 13 | % | 2 | % | — | — | (2 | )% |
• | higher commercial aftermarket profit contribution (21%), driven by the sales increase noted above |
• | higher military profit contribution (3%), driven by the sales increase noted above |
• | lower commercial OEM profit contribution (11%), primarily driven by higher negative engine margin and customer support costs |
Factors Contributing to Total % Change | |||||||||||||
Organic / Operational | FX Translation | Acquisitions / Divestitures, net | Restructuring Costs | Other | |||||||||
Net Sales | 8 | % | 1 | % | — | — | — | ||||||
Cost of Sales | 7 | % | 1 | % | — | 1 | % | — | |||||
Operating Profits | 17 | % | (2 | )% | — | (2 | )% | (6 | )% |
• | higher commercial aftermarket and military profit contribution driven by the sales growth noted above (combined, 16%) |
• | higher commercial OEM profit contribution driven by the sales growth noted above (10%) |
• | higher selling, general and administrative expenses (8%) |
Factors Contributing to Total % Change | |||||||||||||
Organic / Operational | FX Translation | Acquisitions / Divestitures, net | Restructuring Costs | Other | |||||||||
Net Sales | 7 | % | 1 | % | — | — | (1 | )% | |||||
Cost of Sales | 5 | % | 1 | % | — | — | — | ||||||
Operating Profits | 16 | % | (3 | )% | — | (1 | )% | (3 | )% |
• | higher commercial aftermarket and military profit contribution driven by the sales growth noted above (combined, 23%) |
• | higher selling, general and administrative expenses (7%) |
Net Sales | Operating Profits | ||||||||||||||
Quarter Ended June 30, | Quarter Ended June 30, | ||||||||||||||
(dollars in millions) | 2018 | 2017 | 2018 | 2017 | |||||||||||
Eliminations and other | $ | (372 | ) | $ | (273 | ) | $ | (97 | ) | $ | (5 | ) | |||
General corporate expenses | — | — | (126 | ) | (105 | ) |
Net Sales | Operating Profits | ||||||||||||||
Six Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
(dollars in millions) | 2018 | 2017 | 2018 | 2017 | |||||||||||
Eliminations and other | $ | (689 | ) | $ | (523 | ) | $ | (108 | ) | $ | (23 | ) | |||
General corporate expenses | — | — | (230 | ) | (208 | ) |
(dollars in millions) | June 30, 2018 | December 31, 2017 | June 30, 2017 | |||||||||
Cash and cash equivalents | $ | 11,068 | $ | 8,985 | $ | 9,345 | ||||||
Total debt | 28,309 | 27,485 | 26,626 | |||||||||
Net debt (total debt less cash and cash equivalents) | 17,241 | 18,500 | 17,281 | |||||||||
Total equity | 33,346 | 31,421 | 30,155 | |||||||||
Total capitalization (total debt plus total equity) | 61,655 | 58,906 | 56,781 | |||||||||
Net capitalization (total debt plus total equity less cash and cash equivalents) | 50,587 | 49,921 | 47,436 |
Total debt to total capitalization | 46 | % | 47 | % | 47 | % | |||
Net debt to net capitalization | 34 | % | 37 | % | 36 | % |
Six Months Ended June 30, | |||||||
(dollars in millions) | 2018 | 2017 | |||||
Net cash flows provided by operating activities | $ | 2,555 | $ | 3,139 |
Six Months Ended June 30, | |||||||
(dollars in millions) | 2018 | 2017 | |||||
Net cash flows used in investing activities | $ | (238 | ) | $ | (990 | ) |
Six Months Ended June 30, | |||||||
(dollars in millions) | 2018 | 2017 | |||||
Net cash flows used in financing activities | $ | (211 | ) | $ | (52 | ) |
Item 3. | Quantitative and Qualitative Disclosures About Market Risk |
Item 4. | Controls and Procedures |
• | the effect of economic conditions in the industries and markets in which we and Rockwell Collins operate in the U.S. and globally and any changes therein, including financial market conditions, fluctuations in commodity prices, interest rates and foreign currency exchange rates, levels of end market demand in construction and in both the commercial and defense segments of the aerospace industry, levels of air travel, financial condition of commercial airlines, the impact of weather conditions and natural disasters and the financial condition of our customers and suppliers; |
• | challenges in the development, production, delivery, support, performance and realization of the anticipated benefits of advanced technologies and new products and services; |
• | the scope, nature, impact or timing of the pending Rockwell Collins acquisition and other acquisition and divestiture or restructuring activity, including among other things integration of acquired businesses into UTC's existing businesses and realization of synergies and opportunities for growth and innovation; |
• | future timing and levels of indebtedness, including indebtedness expected to be incurred by UTC in connection with the pending Rockwell Collins acquisition, and capital spending and research and development spending, including in connection with the pending Rockwell Collins acquisition; |
• | future availability of credit and factors that may affect such availability, including credit market conditions and our capital structure; |
• | the timing and scope of future repurchases of our common stock, which may be suspended at any time due to various factors, including market conditions and the level of other investing activities and uses of cash, including in connection with the pending acquisition of Rockwell Collins; |
• | delays and disruption in delivery of materials and services from suppliers; |
• | company and customer-directed cost reduction efforts and restructuring costs and savings and other consequences thereof; |
• | new business and investment opportunities; |
• | our ability to realize the intended benefits of organizational changes; |
• | the anticipated benefits of diversification and balance of operations across product lines, regions and industries; |
• | the outcome of legal proceedings, investigations and other contingencies; |
• | pension plan assumptions and future contributions; |
• | the impact of the negotiation of collective bargaining agreements and labor disputes; |
• | the effect of changes in political conditions in the U.S. and other countries in which we and Rockwell Collins operate, including the effect of changes in U.S. trade policies or the U.K.'s pending withdrawal from the EU, on general market conditions, global trade policies and currency exchange rates in the near term and beyond; and |
• | the effect of changes in tax (including the U.S. tax reform enacted on December 22, 2017, which is commonly referred to as the Tax Cuts and Jobs Act of 2017), environmental, regulatory (including among other things import/export) and other laws and regulations in the U.S. and other countries in which we and Rockwell Collins operate; |
• | the ability of UTC and Rockwell Collins to receive the required regulatory approvals (and the risk that such approvals may result in the imposition of conditions that could adversely affect the combined company or the expected benefits of the merger) and to satisfy the other conditions to the closing of the pending acquisition on a timely basis or at all; |
• | the occurrence of events that may give rise to a right of one or both of UTC or Rockwell Collins to terminate the merger agreement; |
• | negative effects of the announcement or the completion of the merger on the market price of UTC’s and/or Rockwell Collins’ common stock and/or on their respective financial performance; |
• | risks related to Rockwell Collins and UTC being restricted in their operation of their businesses while the merger agreement is in effect; |
• | risks relating to the value of the UTC’s shares to be issued in connection with the pending Rockwell Collins acquisition, significant merger costs and/or unknown liabilities; |
• | risks associated with third-party contracts containing consent and/or other provisions that may be triggered by the Rockwell Collins merger agreement; |
• | risks associated with merger-related litigation; and |
• | the ability of UTC and Rockwell Collins, or the combined company, to retain and hire key personnel. |
Item 1A. | Risk Factors |
Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds |
2018 | Total Number of Shares Purchased (000's) | Average Price Paid per Share | Total Number of Shares Purchased as Part of a Publicly Announced Program (000's) | Approximate Dollar Value of Shares that May Yet Be Purchased Under the Program (dollars in millions) | ||||||||||
April 1 - April 30 | 93 | $ | 122.40 | 93 | $ | 2,258 | ||||||||
May 1 - May 31 | 61 | 124.70 | 61 | $ | 2,250 | |||||||||
June 1 - June 30 | 60 | 126.10 | 60 | $ | 2,242 | |||||||||
Total | 214 | $ | 124.10 | 214 |
Item 6. | Exhibits |
Exhibit Number | Exhibit Description | |
10.1 | ||
10.2 | ||
10.3 | ||
12 | ||
15 | ||
31.1 | ||
31.2 | ||
31.3 | ||
32 | ||
101.INS | XBRL Instance Document.* (File name: utx-20180630.xml) | |
101.SCH | XBRL Taxonomy Extension Schema Document.* (File name: utx-20180630.xsd) | |
101.CAL | XBRL Taxonomy Extension Calculation Linkbase Document.* (File name: utx-20180630_cal.xml) | |
101.DEF | XBRL Taxonomy Extension Definition Linkbase Document.* (File name: utx-20180630_def.xml) | |
101.LAB | XBRL Taxonomy Extension Label Linkbase Document.* (File name: utx-20180630_lab.xml) | |
101.PRE | XBRL Taxonomy Extension Presentation Linkbase Document.* (File name: utx-20180630_pre.xml) |
* | Submitted electronically herewith. |
UNITED TECHNOLOGIES CORPORATION (Registrant) | |||
Dated: | July 27, 2018 | by: | /s/ AKHIL JOHRI |
Akhil Johri | |||
Executive Vice President & Chief Financial Officer | |||
(on behalf of the Registrant and as the Registrant's Principal Financial Officer) | |||
Dated: | July 27, 2018 | by: | /s/ ROBERT J. BAILEY |
Robert J. Bailey | |||
Corporate Vice President, Controller | |||
(on behalf of the Registrant and as the Registrant's Principal Accounting Officer) |
Age as of December 31 | Applicable Percentage |
Under 30 | 3% |
30-34 | 3.5% |
35-39 | 4% |
40-44 | 4.5% |
45-49 | 5% |
50+ | 5.5% |
Six Months Ended June 30, | ||||||||
(Dollars in millions) | 2018 | 2017 | ||||||
Fixed Charges: | ||||||||
Interest expense 1 | $ | 514 | $ | 487 | ||||
Interest capitalized | 15 | 16 | ||||||
One-third of rents 2 | 72 | 67 | ||||||
Total fixed charges | $ | 601 | $ | 570 | ||||
Earnings: | ||||||||
Income from continuing operations before income taxes | $ | 4,724 | $ | 4,118 | ||||
Fixed charges per above | 601 | 570 | ||||||
Less: capitalized interest | (15 | ) | (16 | ) | ||||
586 | 554 | |||||||
Amortization of interest capitalized | 5 | 5 | ||||||
Total earnings | $ | 5,315 | $ | 4,677 | ||||
Ratio of earnings to fixed charges | 8.84 | 8.21 |
1 | Pursuant to the guidance in the Income Taxes Topic of the Financial Accounting Standards Board Accounting Standards Codification, interest related to unrecognized tax benefits recorded was approximately $9 million and $7 million for the six months ended June 30, 2018 and 2017, respectively. The ratio of earnings to fixed charges would have been 8.98 and 8.31 for the six months ended June 30, 2018 and 2017, respectively, if such interest were excluded from the calculation. |
2 | Reasonable approximation of the interest factor. |
Very truly yours, | |
/s/ PricewaterhouseCoopers LLP | |
PricewaterhouseCoopers LLP | |
Hartford, Connecticut |
1. | I have reviewed this quarterly report on Form 10-Q of United Technologies Corporation; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a. | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b. | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c. | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d. | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
a. | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
b. | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
Date: | July 27, 2018 | /s/ GREGORY J. HAYES | |
Gregory J. Hayes | |||
Chairman, President and Chief Executive Officer |
1. | I have reviewed this quarterly report on Form 10-Q of United Technologies Corporation; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a. | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b. | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c. | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d. | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
a. | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
b. | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
Date: | July 27, 2018 | /s/ AKHIL JOHRI | |
Akhil Johri | |||
Executive Vice President & Chief Financial Officer |
1. | I have reviewed this quarterly report on Form 10-Q of United Technologies Corporation; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a. | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b. | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c. | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d. | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
a. | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
b. | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
Date: | July 27, 2018 | /s/ ROBERT J. BAILEY | |
Robert J. Bailey | |||
Corporate Vice President, Controller |
Date: | July 27, 2018 | /s/ GREGORY J. HAYES |
Gregory J. Hayes | ||
Chairman, President and Chief Executive Officer | ||
Date: | July 27, 2018 | /s/ AKHIL JOHRI |
Akhil Johri | ||
Executive Vice President & Chief Financial Officer | ||
Date: | July 27, 2018 | /s/ ROBERT J. BAILEY |
Robert J. Bailey | ||
Corporate Vice President, Controller |
Document and Entity Information |
6 Months Ended |
---|---|
Jun. 30, 2018
USD ($)
shares
| |
Document and Entity Information [Abstract] | |
Document Type | 10-Q |
Document Period End Date | Jun. 30, 2018 |
Amendment Flag | false |
Document Fiscal Year Focus | 2018 |
Document Fiscal Period Focus | Q2 |
Current Fiscal Year End Date | --12-31 |
Entity Registrant Name | UNITED TECHNOLOGIES CORP /DE/ |
Entity Central Index Key | 0000101829 |
Entity Well-known Seasoned Issuer | Yes |
Entity Voluntary Filers | No |
Entity Current Reporting Status | Yes |
Entity Filer Category | Large Accelerated Filer |
Entity Public Float | $ | $ 99,985,852,722 |
Entity Common Stock, Shares Outstanding | shares | 800,093,285 |
Introduction to Notes to Condensed Consolidated Financial Statements (Unaudited) Introduction |
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Jun. 30, 2018 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Introduction of Notes to Condensed Consolidated Financial Statements | The Condensed Consolidated Financial Statements at June 30, 2018 and for the quarter and six months ended June 30, 2018 and 2017 are unaudited, but in the opinion of management include all adjustments (consisting only of normal recurring adjustments) necessary for a fair statement of the results for the interim periods. The results reported in these Condensed Consolidated Financial Statements should not necessarily be taken as indicative of results that may be expected for the entire year. The financial information included herein should be read in conjunction with the financial statements and notes in our Annual Report to Shareowners (2017 Annual Report) incorporated by reference in our Annual Report on Form 10-K for calendar year 2017 (2017 Form 10-K). |
Acquisitions, Dispositions, Goodwill and Other Intangible Assets |
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Business Combination, Recognized Identifiable Assets Acquired, Goodwill, and Liabilities Assumed, Net [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Acquisitions, Dispositions, Goodwill and Other Intangible Assets [Text Block] | Acquisitions, Dispositions, Goodwill and Other Intangible Assets Business Acquisitions and Dispositions. During the six months ended June 30, 2018, our investment in business acquisitions was $134 million, and primarily consisted of an acquisition at Pratt & Whitney. On June 21, 2018, UTC Climate, Controls & Security completed its sale of Taylor Company for proceeds of $1.0 billion resulting in a pre-tax gain of $795 million ($588 million after tax). On September 4, 2017, we announced that we had entered into a merger agreement with Rockwell Collins, Inc. (Rockwell Collins), under which we agreed to acquire Rockwell Collins. Under the terms of the merger agreement, each Rockwell Collins shareowner will receive $93.33 per share in cash and a fraction of a share of UTC common stock equal to the quotient obtained by dividing $46.67 by the average of the volume-weighted average prices per share of UTC common stock on the NYSE on each of the 20 consecutive trading days ending with the trading day immediately prior to the closing date, (the “UTC Stock Price”), subject to adjustment based on a two-way collar mechanism as described below (the “Stock Consideration”). The cash and UTC stock payable in exchange for each such share of Rockwell Collins common stock are collectively the “Merger Consideration.” The fraction of a share of UTC common stock into which each such share of Rockwell Collins common stock will be converted is the “Exchange Ratio.” The Exchange Ratio will be determined based upon the UTC Stock Price. If the UTC Stock Price is greater than $107.01 but less than $124.37, the Exchange Ratio will be equal to the quotient of (i) $46.67 divided by (ii) the UTC Stock Price, which, in each case, will result in the Stock Consideration having a value equal to $46.67. If the UTC Stock Price is less than or equal to $107.01 or greater than or equal to $124.37, then a two-way collar mechanism will apply, pursuant to which, (x) if the UTC Stock Price is greater than or equal to $124.37, the Exchange Ratio will be fixed at 0.37525 and the value of the Stock Consideration will be greater than $46.67, and (y) if the UTC Stock Price is less than or equal to $107.01, the Exchange Ratio will be fixed at 0.43613 and the value of the Stock Consideration will be less than $46.67. On January 11, 2018, the merger was approved by Rockwell Collins' shareowners. We currently expect that the merger will be completed in the third quarter of 2018, subject to customary closing conditions, including the receipt of required regulatory approvals. We anticipate that approximately $15 billion will be required to pay the aggregate cash portion of the Merger Consideration. We expect to fund the cash portion of the Merger Consideration through debt issuances and cash on hand. Additionally, we have entered into a $6.5 billion 364-day unsecured bridge loan credit agreement that would be funded only to the extent certain anticipated debt issuances are not completed prior to the completion of the merger. We expect to assume approximately $7 billion of Rockwell Collins' outstanding debt upon completion of the merger. Goodwill. Changes in our goodwill balances for the six months ended June 30, 2018 were as follows:
The $274 million net reduction in goodwill within Foreign Currency Translation and Other includes a $150 million reduction of goodwill attributable to UTC Climate, Controls & Security's sale of Taylor Company. Intangible Assets. Identifiable intangible assets are comprised of the following:
Customer relationship intangible assets include payments made to our customers to secure certain contractual rights. Such payments are capitalized when distinct rights are obtained and sufficient incremental cash flows to support the recoverability of the assets have been established. Otherwise, the applicable portion of the payments are expensed. We amortize these intangible assets based on the underlying pattern of economic benefit, which may result in an amortization method other than straight-line. In the aerospace industry, amortization based on the pattern of economic benefit generally results in lower amortization expense during the development period with amortization expense increasing as programs enter full production and aftermarket cycles. If a pattern of economic benefit cannot be reliably determined, a straight-line amortization method is used. We classify amortization of such payments as a reduction of sales. The collaboration intangible assets are amortized based upon the pattern of economic benefits as represented by the underlying cash flows. Amortization of intangible assets for the quarter and six months ended June 30, 2018 was $232 million and $455 million, respectively, compared with $210 million and $415 million for the same periods of 2017. The following is the expected amortization of intangible assets for the years 2018 through 2023, which reflects the pattern of expected economic benefit on certain aerospace intangible assets.
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Revenue Recognition Revenue Recognition (Notes) |
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Revenue Recognition [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue Recognition [Text Block] | Revenue Recognition ASU 2014-09 and its related amendments (collectively, the New Revenue Standard) are effective for reporting periods beginning after December 15, 2017, and interim periods therein. We adopted the New Revenue Standard effective January 1, 2018 and elected the modified retrospective approach. The results for periods before 2018 were not adjusted for the new standard and the cumulative effect of the change in accounting was recognized through retained earnings at the date of adoption. Revenue Recognition Accounting Policy Summary. We account for revenue in accordance with Accounting Standards Codification (ASC) Topic 606: Revenue from Contracts with Customers. Under Topic 606, a performance obligation is a promise in a contract with a customer to transfer a distinct good or service to the customer. Some of our contracts with customers contain a single performance obligation, while others contain multiple performance obligations most commonly when a contract spans multiple phases of the product life-cycle such as development, production, maintenance and support. A contract's transaction price is allocated to each distinct performance obligation and recognized as revenue when, or as, the performance obligation is satisfied. When there are multiple performance obligations within a contract, we allocate the transaction price to each performance obligation based on its standalone selling price. We consider the contractual consideration payable by the customer and assess variable consideration that may affect the total transaction price, including contractual discounts, contract incentive payments, estimates of award fees, and other sources of variable consideration, when determining the transaction price of each contract. We include variable consideration in the estimated transaction price when there is a basis to reasonably estimate the amount. These estimates are based on historical experience, anticipated performance and our best judgment at the time. We also consider whether our contracts provide customers with significant financing. Generally, our contracts do not contain significant financing. Point in time revenue recognition. Timing of the satisfaction of performance obligations varies across our businesses due to our diverse product and service mix, customer base, and contractual terms. Performance obligations are satisfied as of a point in time for heating, ventilating, air-conditioning and refrigeration systems, certain alarm and fire detection and suppression systems, and certain aerospace components, engines, and spare parts. Revenue is recognized when control of the product transfers to the customer, generally upon product shipment. Over-time revenue recognition. Performance obligations are satisfied over-time if the customer receives the benefits as we perform work, if the customer controls the asset as it is being produced, or if the product being produced for the customer has no alternative use and we have a contractual right to payment. Revenue is recognized for our construction-type and certain production-type contracts on an over-time basis. We recognize revenue on an over-time basis on certain long-term aerospace aftermarket contracts and aftermarket service work; development, fixed price, and other cost reimbursement contracts in our aerospace businesses; and elevator and escalator sales, installation, service, modernization and other construction contracts in our commercial businesses. For construction and installation contracts within our commercial businesses and aerospace performance obligations satisfied over time, revenue is recognized using costs incurred to date relative to total estimated costs at completion to measure progress. Incurred costs represent work performed, which correspond with and best depict transfer of control to the customer. Contract costs include labor, materials, and subcontractors' costs, or other direct costs, and where applicable on government and commercial contracts, indirect costs. For certain of our long-term aftermarket contracts, revenue is recognized over the contract period. In the commercial businesses, revenue is primarily recognized on a straight-line basis over the contract period. In the aerospace businesses, we generally account for such contracts as a series of daily obligations to stand ready to provide product maintenance and aftermarket services. Revenue is primarily recognized in proportion to cost as sufficient historical evidence indicates that the cost of performing services under the contract is incurred on an other than straight-line basis. Aerospace contract modifications are routine and contracts are often modified to account for changes in contract specifications or requirements. Contract modifications that are for goods or services that are not distinct are accounted for as part of the existing contract. We incur costs for engineering and development of aerospace products directly related to existing or anticipated contracts with customers. Such costs generate or enhance our ability to satisfy our performance obligations under these contracts. We capitalize these costs as contract fulfillment costs to the extent the costs are recoverable from the associated contract margin and subsequently amortize the costs as the original equipment (OEM) products are delivered to the customer. In instances where intellectual property does not transfer to the customer, we defer the customer funding of OEM product engineering and development and recognize revenue when the OEM products are delivered to the customer. Costs to obtain contracts are not material. Loss provisions on OEM contracts are recognized to the extent that estimated contract costs exceed the estimated consideration from the products contemplated under the contractual arrangement. For new commitments, we generally record loss provisions at the earlier of contract announcement or contract signing except for certain contracts under which losses are recorded upon receipt of the purchase order that obligates us to perform. For existing commitments, anticipated losses on contractual arrangements are recognized in the period in which losses become evident. Products contemplated under contractual arrangements include firm quantities of product sold under contract and, in the large commercial engine and wheels and brakes businesses, future highly probable sales of replacement parts required by regulation that are expected to be sold subsequently for incorporation into the original equipment. In the large commercial engine and wheels and brakes businesses, when the combined original equipment and aftermarket arrangement for each individual sales campaign are profitable, we record original equipment product losses, as applicable, at the time of delivery. We review our cost estimates on significant contracts on a quarterly basis and for others, no less frequently than annually or when circumstances change and warrant a modification to a previous estimate. We record changes in contract estimates using the cumulative catch-up method. The New Revenue Standard changed the revenue recognition practices for a number of revenue streams across our businesses, although the most significant impacts are concentrated in our aerospace units. Several businesses, which previously accounted for revenue on a point in time basis are now required to use an over-time model when their contracts meet one or more of the mandatory criteria established in the New Revenue Standard. Revenue is now recognized based on percentage-of-completion for repair contracts within Otis and UTC Climate, Controls & Security; certain U.S. Government and commercial aerospace equipment contracts; and aerospace aftermarket service work. For these businesses, unrecognized sales related to the satisfied portion of the performance obligations of contracts in process as of the date of adoption of approximately $220 million were recorded through retained earnings. The ongoing effect of recording revenue on a percentage-of-completion basis within these businesses is not expected to be materially different than the previous revenue recognition method. In addition to the foregoing, our aerospace businesses, in certain cases, also changed the timing of manufacturing cost recognition and certain engineering and development costs. In most circumstances, our commercial aerospace businesses identify the performance obligation as the individual OEM unit; revenue and cost to manufacture each unit are recognized upon OEM unit delivery. Under the prior accounting, the unit of accounting was the contract and early-contract OEM unit costs in excess of the average unit costs expected over the contract were capitalized and amortized over lower-cost units later in the contract. With the adoption of the New Revenue Standard, deferred unit costs in excess of the contract average of $438 million as of January 1, 2018 were eliminated through retained earnings, and as such, will not be amortized into future earnings. Under the New Revenue Standard, costs incurred for engineering and development of aerospace products under contracts with customers must be capitalized as contract fulfillment costs, to the extent recoverable from the associated contract margin, and subsequently amortized as the OEM products are delivered to the customer. Under prior accounting, we generally expensed costs of engineering and development of aerospace products. The new standard also requires that customer funding of OEM product engineering and development be deferred in instances where economic benefit does not transfer to the customer and recognized as revenue when the OEM products are delivered. Engineering and development costs which do not qualify for capitalization as contract fulfillment costs are expensed as incurred. Prior to the New Revenue Standard, any customer funding received for such development efforts was recognized when earned, with the corresponding costs recognized as cost of sales. With the adoption of the New Revenue Standard, we capitalized engineering and development costs of approximately $700 million as contract fulfillment cost assets through retained earnings as of January 1, 2018. We also established previously recognized customer funding of approximately $850 million as a contract liability through retained earnings as of the adoption date. We expect the New Revenue Standard will have an immaterial impact on our 2018 net income. Adoption of the New Revenue Standard has resulted in Statement of Operations classification changes between Net Sales, Cost of sales, Research & development, and Other income. The New Revenue Standard also resulted in the establishment of Contract asset and Contract liability balance sheet accounts, and in the reclassification of balances to these new accounts from Accounts receivable, Inventories and contracts in progress, net, and Accrued liabilities. In addition to the following disclosures, Note 16 provides incremental disclosures required by the New Revenue Standard, including disaggregation of revenue into categories that depict how the nature, amount, timing and uncertainty of revenue and cash flows are affected by economic factors. The following schedules quantify the impact of the New Revenue Standard on the statement of operations for the quarter and six months ended June 30, 2018. The effect of the new standard represents the increase (decrease) in the line item based on the adoption of the New Revenue Standard.
The New Revenue Standard resulted in an increase to Product and Service sales and Cost of products and services sold primarily due to the change to a percentage-of-completion revenue model for certain U.S Government and commercial aerospace equipment contracts, and aerospace aftermarket service work at Pratt & Whitney and UTC Aerospace Systems. The New Revenue Standard also resulted in an increase in Cost of products sold related to the timing of manufacturing cost recognition on early-contract OEM units sold, with costs in excess of the contract average unit costs recorded through Cost of products sold. The lower amounts of research and development expense recognized under the New Revenue Standard reflect the capitalization of costs of engineering and development of aerospace products as contract fulfillment costs under contracts with customers. The following schedule quantifies the impact of the New Revenue Standard on our balance sheet as of June 30, 2018.
The decrease in Retained earnings of $490 million in the table above reflects $480 million of adjustments to the balance sheet as of January 1, 2018, resulting from the adoption of the New Revenue Standard and $10 million lower reported net income under the New Revenue Standard during 2018. The declines in Accounts receivable, net, Inventories, Other assets, current, and Intangible assets, net, reflect reclassifications to contract assets, and specifically for Inventories, earlier recognition of costs of products sold for contracts requiring an over-time method of revenue recognition. The increase in Other assets reflects the establishment of non-current contract assets and contract fulfillment cost assets. The decline in accrued liabilities is primarily due to the reclassification of payments from customers in advance of work performed as contract liabilities. The Other long term liabilities increase primarily reflects the establishment of non-current contract liabilities for certain customer funding of OEM product engineering and development, which will be recognized as revenue when the OEM products are delivered to the customer. Contract Assets and Liabilities. Contract assets reflect revenue recognized and performance obligations satisfied in advance of customer billing. Contract liabilities relate to payments received in advance of the satisfaction of performance under the contract. We receive payments from customers based on the terms established in our contracts. Total contract assets and contract liabilities as of June 30, 2018 are as follows:
Under the New Revenue Standard, during the six months ended June 30, 2018, net contract liabilities increased to $6,202 million. This reflects the establishment of $6,365 million of net contract liabilities upon the adoption, and $14,401 million of advance payments from customers and reclassifications of contract assets to receivables upon billing during the period. These increases were partially offset by the liquidation of beginning of period contract liabilities of $1,728 million as a result of revenue recognition, and by $12,701 million of revenue recognition within the period. The remaining change is primarily attributable to the impact of foreign currency exchange rate changes on the balance of contract assets and liabilities. Remaining performance obligations ("RPO") are the aggregate amount of total contract transaction price that is unsatisfied or partially unsatisfied. As of June 30, 2018, our total RPO is $103.4 billion. Of this total, we expect approximately 45% will be recognized as sales over the following 24 months. |
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Earnings Per Share [Text Block] | Earnings Per Share
The computation of diluted earnings per share excludes the effect of the potential exercise of stock awards, including stock appreciation rights and stock options, when the average market price of the common stock is lower than the exercise price of the related stock awards during the period because the effect would be anti-dilutive. For both the quarter and six months ended June 30, 2018, the number of stock awards excluded from the computation was approximately 5.1 million. For the quarter and six months ended June 30, 2017, the number of stock awards excluded from the computation was approximately 5.8 million and 6.4 million, respectively. |
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Inventory Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Inventories and Contracts in Progress [Text Block] | Inventories and Contracts in Progress
Inventories as of December 31, 2017 include capitalized contract development costs of $127 million related to certain aerospace programs at UTC Aerospace Systems. Upon adoption of the New Revenue Standard, these costs are recorded as contract fulfillment costs included in Other assets. Prior to the adoption of the New Revenue Standard, within our commercial aerospace business, inventory costs attributable to new engine offerings were recognized based on the average cost per unit expected over the life of each contract using the units-of-delivery method of percentage of completion accounting. Under this method, costs of initial engine deliveries in excess of the projected contract per unit average cost were capitalized and these capitalized amounts were subsequently expensed as additional engines are delivered for engines with costs below the projected contract per unit average cost over the life of the contract. As of December 31, 2017, inventory included $438 million of such capitalized amounts. Upon adoption of the New Revenue Standard, these amounts are no longer included in inventory. In addition, amounts previously reported as Contracts in progress have been reclassified as contract assets in accordance with the New Revenue Standard. |
Borrowings and Lines of Credit |
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Borrowings and Lines of Credit [Text Block] | Borrowings and Lines of Credit
At June 30, 2018, we had revolving credit agreements with various banks permitting aggregate borrowings of up to $4.35 billion, pursuant to a $2.20 billion revolving credit agreement and a $2.15 billion multicurrency revolving credit agreement, both of which expire in August 2021. As of June 30, 2018, there were no borrowings under either of these agreements. The undrawn portions of these revolving credit agreements are also available to serve as backup facilities for the issuance of commercial paper. As of June 30, 2018, our maximum commercial paper borrowing limit was $4.35 billion. Commercial paper borrowings at June 30, 2018 include approximately €750 million ($876 million) of euro-denominated commercial paper. We use our commercial paper borrowings for general corporate purposes, including the funding of potential acquisitions, pension contributions, debt refinancing, dividend payments and repurchases of our common stock. The need for commercial paper borrowings arises when the use of domestic cash for general corporate purposes exceeds the sum of domestic cash generation and foreign cash repatriated to the U.S. On May 18, 2018, we issued €750 million aggregate principal amount of 1.150% senior notes due 2024, €500 million aggregate principal amount of 2.150% senior notes maturing 2030 and €750 million aggregate principal amount of senior floating rate notes maturing 2020. The net proceeds received from these debt issuances were used for general corporate purposes. On May 4, 2018, we repaid at maturity approximately $1.1 billion aggregate principal amount of 1.778% junior subordinated notes. On February 1, 2018, we repaid at maturity the $99 million 6.80% notes due in 2018 and on February 22, 2018, we repaid at maturity the €750 million EURIBOR plus 0.80% floating rate notes due in 2018. In connection with the merger agreement with Rockwell Collins announced on September 4, 2017, we have entered into a $6.5 billion 364-day unsecured bridge loan credit agreement that would be funded only to the extent certain anticipated debt issuances are not completed prior to the completion of the merger. See Note 1 for additional discussion. Long-term debt consisted of the following:
The average maturity of our long-term debt at June 30, 2018 is approximately 11 years. The average interest expense rate on our total borrowings for the quarter and six months ended June 30, 2018 and 2017 were as follows:
We have an existing universal shelf registration statement filed with the Securities and Exchange Commission (SEC) for an indeterminate amount of equity and debt securities for future issuances, subject to our internal limitations on the amount of equity and debt to be issued under this shelf registration statement. |
Income Taxes |
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Jun. 30, 2018 | |
Income Tax Disclosure [Abstract] | |
Income Tax Disclosure [Text Block] | Income Taxes On December 22, 2017 Public Law 115-97 “An Act to Provide for Reconciliation Pursuant to Titles II and V of the Concurrent Resolution on the Budget for Fiscal Year 2018” was enacted. This law is commonly referred to as the Tax Cuts and Jobs Act of 2017 (TCJA). In accordance with Staff Accounting Bulletin 118 (SAB 118) issued on December 22, 2017, the U.S. income tax amounts recorded attributable to the TCJA’s deemed repatriation provision, the revaluation of U.S. deferred taxes and the tax consequences relating to states with current conformity to the Internal Revenue Code are provisional amounts. Due to the enactment date and tax complexities of the TCJA, the Company has not completed its accounting related to these items. Prior to enactment of the TCJA, with few exceptions, U.S. income taxes had not been provided on undistributed earnings of UTC's international subsidiaries as the Company had intended to reinvest such earnings permanently outside the U.S. or to repatriate such earnings only when it was tax effective to do so. The Company continues to evaluate the impact of the TCJA on its existing accounting position related to the undistributed earnings. Due to the inherent complexities in determining any incremental U.S. Federal and State taxes and the non-U.S. taxes that may be due if all of these earnings were remitted to the U.S. and as provided for by SAB 118 this evaluation has not yet been completed and no provisional amount has been recorded in regard to the undistributed amounts. After completing its evaluation, the Company will accrue any additional taxes due on previously undistributed earnings to be distributed in the future. The Company will continue to accumulate and refine the relevant data and computational elements needed to finalize its accounting for the effects of the TCJA by December 22, 2018. We conduct business globally and, as a result, UTC or one or more of our subsidiaries files income tax returns in the U.S. federal jurisdiction and various state and foreign jurisdictions. In the normal course of business we are subject to examination by taxing authorities throughout the world, including such major jurisdictions as Australia, Belgium, Brazil, Canada, China, France, Germany, Hong Kong, India, Italy, Japan, Mexico, Netherlands, Poland, Singapore, South Korea, Spain, Switzerland, the United Kingdom, and the United States. With few exceptions, we are no longer subject to U.S. federal, state and local, or non-U.S. income tax examinations for years before 2006. In the ordinary course of business, there is inherent uncertainty in quantifying our income tax positions. We assess our income tax positions and record tax benefits for all years subject to examination based upon management’s evaluation of the facts, circumstances, and information available at the reporting date. It is reasonably possible that a net reduction within the range of $50 million to $625 million of unrecognized tax benefits may occur within the next 12 months as a result of additional worldwide uncertain tax positions, the closure of tax statutes, or the revaluation of current uncertain tax positions arising from the issuance of legislation, regulatory or other guidance or developments in examinations, in appeals, or in the courts. The range of potential change includes provisional amounts related to the TCJA based on currently available information. See Note 15, Contingent Liabilities, for discussion regarding uncertain tax positions, included in the above range, related to pending litigation with respect to certain deductions claimed in Germany. The Examination Division of the Internal Revenue Service is currently auditing UTC tax years 2014, 2015 and 2016, and the audit is expected to continue beyond 2018. |
Employee Benefit Plans |
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Retirement Benefits [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Pension and Other Postretirement Benefits Disclosure [Text Block] | Employee Benefit Plans Pension and Postretirement Plans. We sponsor both funded and unfunded domestic and foreign defined pension and other postretirement benefit plans, and defined contribution plans. In March 2017, the FASB issued ASU 2017-07, Compensation-Retirement Benefits (Topic 715), Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost. This ASU requires an employer to report the service cost component of net periodic pension benefit cost in the same line item or items as other compensation costs arising from services rendered by the pertinent employees during the period, with other cost components presented separately from the service cost component and outside of income from operations. This ASU also allows only the service cost component of net periodic pension benefit cost to be eligible for capitalization when applicable. This ASU was effective for years beginning after December 15, 2017. The Company adopted this standard on January 1, 2018 applying the presentation requirements retrospectively. We elected to apply the practical expedient, which allows us to reclassify amounts disclosed previously in the employee benefit plans note as the basis for applying retrospective presentation for comparative periods as it is impracticable to determine the disaggregation of the cost components for amounts capitalized and amortized in those periods. Provisions related to presentation of the service cost component eligibility for capitalization were applied prospectively. The effect of the retrospective presentation change related to the net periodic benefit cost of our defined benefit pension and postretirement plans on our condensed consolidated statement of operations was as follows:
Contributions to our plans were as follows:
There were no contributions to our domestic defined benefit pension plans in the quarter and six months ended June 30, 2018 and 2017. The following table illustrates the components of net periodic benefit cost for our defined pension and other postretirement benefit plans:
As approved in 2016, effective January 1, 2017, a voluntary lump-sum option is available for the frozen final average earnings benefits of certain U.S. salaried employees upon termination of employment after 2016. This option provides participants with the choice of electing to receive a lump-sum payment in lieu of receiving a future monthly pension benefit. This plan change reduced the projected benefit obligation by $170 million as of December 31, 2016. |
Restructuring and Other Costs |
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Restructuring and Related Activities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Restructuring and Other Costs [Text Block] | Restructuring Costs During the six months ended June 30, 2018, we recorded net pre-tax restructuring costs totaling $149 million for new and ongoing restructuring actions. We recorded charges in the segments as follows:
Restructuring charges incurred during the six months ended June 30, 2018 primarily relate to actions initiated during 2018 and 2017, and were recorded as follows:
2018 Actions. During the six months ended June 30, 2018, we recorded net pre-tax restructuring costs of $73 million, comprised of $38 million in cost of sales, $37 million in selling, general and administrative expenses, and $2 million in non-service pension benefit. The 2018 actions relate to ongoing cost reduction efforts, including workforce reductions and the consolidation of field and manufacturing operations. We are targeting to complete the majority of the remaining workforce and facility related cost reduction actions during 2018 and 2019. No specific plans for other significant actions have been finalized at this time. The following table summarizes the accrual balance and utilization for the 2018 restructuring actions for the quarter and six months ended June 30, 2018:
The following table summarizes expected, incurred and remaining costs for the 2018 restructuring actions by segment:
2017 Actions. During the six months ended June 30, 2018, we recorded net pre-tax restructuring costs totaling $67 million for restructuring actions initiated in 2017, including $42 million in cost of sales and $25 million in selling, general and administrative expenses. The 2017 actions relate to ongoing cost reduction efforts, including workforce reductions, consolidation of field operations, and costs to exit legacy programs. The following table summarizes the accrual balances and utilization for the 2017 restructuring actions for the quarter and six months ended June 30, 2018:
The following table summarizes expected, incurred and remaining costs for the 2017 restructuring actions by segment:
2016 and Prior Actions. During the six months ended June 30, 2018, we recorded net pre-tax restructuring costs totaling $9 million for restructuring actions initiated in 2016 and prior. As of June 30, 2018, we have approximately $91 million of accrual balances remaining related to 2016 and prior actions. |
Financial Instruments |
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Derivative Instruments and Hedging Activities Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative Financial Instruments [Text Block] | Financial Instruments We enter into derivative instruments primarily for risk management purposes, including derivatives designated as hedging instruments under the Derivatives and Hedging Topic of the FASB ASC and those utilized as economic hedges. We operate internationally and, in the normal course of business, are exposed to fluctuations in interest rates, foreign exchange rates and commodity prices. These fluctuations can increase the costs of financing, investing and operating the business. We have used derivative instruments, including swaps, forward contracts and options, to manage certain foreign currency, interest rate and commodity price exposures. The four quarter rolling average of the notional amount of foreign exchange contracts hedging foreign currency transactions was $20.5 billion and $19.1 billion at June 30, 2018 and December 31, 2017, respectively. The following table summarizes the fair value and presentation in the Condensed Consolidated Balance Sheets for derivative instruments as of June 30, 2018 and December 31, 2017:
The effect of cash flow hedging relationships on accumulated other comprehensive income for the quarter and six months ended June 30, 2018 and 2017 are presented in the table below. The amounts of gain or (loss) are attributable to foreign exchange contract activity and are recorded as a component of Product sales when reclassified from accumulated other comprehensive income.
The table above reflects the effect of cash flow hedging relationships on the Condensed Consolidated Statements of Operations for the quarter and six months ended June 30, 2018 and 2017. The Company utilizes the critical terms match method in assessing derivatives for hedge effectiveness. Accordingly, the hedged items and derivatives designated as hedging instruments are highly effective. We have approximately €4.95 billion of euro-denominated long-term debt and €750 million of euro-denominated commercial paper borrowings outstanding, which qualify as a net investment hedge against our investments in European businesses. As of June 30, 2018, the net investment hedge is deemed to be effective. Assuming current market conditions continue, a $33 million pre-tax loss is expected to be reclassified from Accumulated other comprehensive loss into Product sales to reflect the fixed prices obtained from foreign exchange hedging within the next 12 months. At June 30, 2018, all derivative contracts accounted for as cash flow hedges will mature by July 2022. The effect of derivatives not designated as hedging instruments that is included below within Other income, net, on the Condensed Consolidated Statement of Operations was as follows:
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Fair Value Measurements |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Disclosures [Text Block] | Fair Value Measurements In accordance with the provisions of ASC 820, the following tables provide the valuation hierarchy classification of assets and liabilities that are carried at fair value and measured on a recurring and nonrecurring basis in our Condensed Consolidated Balance Sheet as of June 30, 2018 and December 31, 2017:
Valuation Techniques. Our available-for-sale securities include equity investments that are traded in active markets, either domestically or internationally, and are measured at fair value using closing stock prices from active markets. Our derivative assets and liabilities include foreign exchange contracts that are measured at fair value using internal models based on observable market inputs such as forward rates, interest rates, our own credit risk and our counterparties' credit risks. As of June 30, 2018, there were no significant transfers in or out of Level 1 and Level 2. As of June 30, 2018, there has not been any significant impact to the fair value of our derivative liabilities due to our own credit risk. Similarly, there has not been any significant adverse impact to our derivative assets based on our evaluation of our counterparties' credit risks. The following table provides carrying amounts and fair values of financial instruments that are not carried at fair value in our Condensed Consolidated Balance Sheet at June 30, 2018 and December 31, 2017:
The following table provides the valuation hierarchy classification of assets and liabilities that are not carried at fair value in our Condensed Consolidated Balance Sheet at June 30, 2018 and December 31, 2017:
We had commercial aerospace financing and other contractual commitments totaling approximately $15.2 billion and $15.3 billion as of June 30, 2018 and December 31, 2017, respectively, related to commercial aircraft and certain contractual rights to provide product on new aircraft platforms. Associated risks on these commitments from changes in interest rates are mitigated because interest rates are variable during the commitment term and are set at the date of funding based on current market conditions, the fair value of the underlying collateral and the credit worthiness of the customers. As a result, the fair value of these financings is expected to equal the amounts funded. |
Long-Term Financing Receivables |
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Receivables [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||
Long-Term Financing Receivables [Text Block] | Long-Term Financing Receivables Our long-term financing receivables primarily represent balances related to our aerospace businesses, such as long-term trade accounts receivable, notes receivable, and leases receivable. We also have other long-term receivables related to our commercial businesses; however, both the individual and aggregate amounts of those other receivables are not significant. Prior to the adoption of the New Revenue Standard, long-term trade accounts receivable, including unbilled receivables related to long-term aftermarket contracts, were principally amounts arising from the sale of goods and the delivery of services with a contract maturity date or realization period of greater than one year and were recognized as "Other assets" in our Condensed Consolidated Balance Sheet. With the adoption of the New Revenue Standard, these unbilled receivables are classified as non-current contract assets and are recognized as "Other assets" in our Condensed Consolidated Balance Sheet. Notes and leases receivable represent notes and lease receivables other than receivables related to operating leases, and are recognized as "Customer financing assets" in our Condensed Consolidated Balance Sheet. The following table summarizes the balance by class of aerospace business related long-term receivables as of June 30, 2018 and December 31, 2017.
Customer credit ratings range from customers with an extremely strong capacity to meet financial obligations to customers whose uncollateralized receivables are in default. There can be no assurance that actual results will not differ from estimates or that consideration of these factors in the future will not result in an increase or decrease to the allowance for credit losses on long-term receivables. The decrease in Long-term trade accounts receivable from December 31, 2017 is primarily driven by the reclassification of unbilled receivables related to long-term aftermarket contracts to contract assets in accordance with the New Revenue Standard as described above. Based upon the customer credit ratings, approximately $140 million and $170 million of our total long-term receivables were considered to bear high credit risk as of June 30, 2018 and December 31, 2017, respectively. For long-term trade accounts receivable, we evaluate credit risk and collectability individually to determine if an allowance is necessary. Our long-term receivables reflected in the table above, which include reserves of $17 million as of both June 30, 2018 and December 31, 2017, are individually evaluated for impairment. At June 30, 2018 and December 31, 2017, we did not have any significant balances that are considered to be delinquent, on non-accrual status, past due 90 days or more, or are considered to be unrecoverable. |
Shareowners' Equity and Noncontrolling Interest |
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Stockholders' Equity Note [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Shareowners' Equity and Noncontrolling Interest [Text Block] | Shareowners' Equity and Noncontrolling Interest A summary of the changes in shareowners' equity and noncontrolling interest comprising total equity for the quarter and six months ended June 30, 2018 and 2017 is provided below:
A summary of the changes in each component of Accumulated other comprehensive (loss) income, net of tax for the quarter and six months ended June 30, 2018 and 2017 is provided below:
In January 2016, the FASB issued ASU 2016-01, Financial Instruments - Overall: Recognition and Measurement of Financial Assets and Financial Liabilities. This ASU modifies how entities measure equity investments and present changes in the fair value of financial liabilities. Upon adoption, investments that do not result in consolidation and are not accounted for under the equity method generally must be carried at fair value, with changes in fair value recognized in net income. We had approximately $5 million of unrealized gains on these securities recorded in Accumulated other comprehensive loss in our Consolidated Balance Sheet as of December 31, 2017. We adopted this standard effective January 1, 2018, with these amounts recorded directly to retained earnings as of that date. Amounts reclassified that relate to our defined benefit pension and postretirement plans include the amortization of prior service costs and actuarial net losses recognized during each period presented. These costs are recorded as components of net periodic pension cost for each period presented (see Note 7 for additional details). Amounts reclassified that relate to unrealized gains (losses) on available-for-sale securities, pre-tax includes approximately $380 million of previously unrealized gains reclassified to other income as a result of sales of significant investments in available-for-sale securities in the six months ended June 30, 2017, including UTC Climate, Controls & Security's sale of investments in Watsco, Inc. All noncontrolling interests with redemption features, such as put options, that are not solely within our control (redeemable noncontrolling interests) are reported in the mezzanine section of the Condensed Consolidated Balance Sheet, between liabilities and equity, at the greater of redemption value or initial carrying value. |
Variable Interest Entities |
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Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Variable Interest Entity Disclosure [Text Block] | Variable Interest Entities Pratt & Whitney holds a net 61% interest in the IAE International Aero Engines AG (IAE) collaboration with MTU Aero Engines AG (MTU) and Japanese Aero Engines Corporation (JAEC) and a 49.5% ownership interest in IAE. IAE's business purpose is to coordinate the design, development, manufacturing and product support of the V2500 program through involvement with the collaborators. Additionally, Pratt & Whitney, JAEC and MTU are participants in International Aero Engines, LLC (IAE LLC), whose business purpose is to coordinate the design, development, manufacturing and product support for the PW1100G-JM engine for the Airbus A320neo aircraft and the PW1400G-JM engine for the Irkut MC21 aircraft. Pratt & Whitney holds a 59% net interest and a 59% ownership interest in IAE LLC. IAE and IAE LLC retain limited equity with the primary economics of the programs passed to the participants. As such, we have determined that IAE and IAE LLC are variable interest entities with Pratt & Whitney the primary beneficiary. IAE and IAE LLC have, therefore, been consolidated. The carrying amounts and classification of assets and liabilities for variable interest entities in our Condensed Consolidated Balance Sheet are as follows:
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Guarantees |
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Guarantees [Text Block] | Guarantees We extend a variety of financial, market value and product performance guarantees to third parties. There have been no material changes to guarantees outstanding since December 31, 2017. The changes in the carrying amount of service and product warranties and product performance guarantees for the six months ended June 30, 2018 and 2017 are as follows:
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Contingent Liabilities |
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Jun. 30, 2018 | |
Commitments and Contingencies Disclosure [Abstract] | |
Contingent Liabilities [Text Block] | Contingent Liabilities Summarized below are the matters previously described in Note 18 of the Notes to the Consolidated Financial Statements in our 2017 Annual Report, incorporated by reference in our 2017 Form 10-K, updated as applicable. Except as otherwise noted, while we are unable to predict the final outcome, based on information currently available, we do not believe that resolution of any of the following matters will have a material adverse effect upon our competitive position, results of operations, cash flows or financial condition. Environmental. Our operations are subject to environmental regulation by federal, state and local authorities in the United States and authorities with jurisdiction over our foreign operations. As described in Note 1 to the Consolidated Financial Statements in our 2017 Annual Report, we have accrued for the costs of environmental remediation activities, including but not limited to investigatory, remediation, operating and maintenance costs and performance guarantees, and periodically reassess these amounts. We believe that the likelihood of incurring losses materially in excess of amounts accrued is remote. Additional information pertaining to environmental matters is included in Note 1 to the Consolidated Financial Statements in our 2017 Annual Report. Government. In the ordinary course of business, the Company and its subsidiaries and our properties are subject to regulatory and governmental examinations, information gathering requests, inquiries, investigations and threatened legal actions and proceedings. For example, we are now, and believe that, in light of the current U.S. Government contracting environment, we will continue to be the subject of one or more U.S. Government investigations. Such U.S. Government investigations often take years to complete and could result in administrative, civil or criminal liabilities, including repayments, fines, treble and other damages, forfeitures, restitution or penalties, or could lead to suspension or debarment of U.S. Government contracting or of export privileges. For instance, if we or one of our business units were charged with wrongdoing as a result of any of these investigations or other government investigations (including violations of certain anti-bribery, environmental or export laws) the U.S. Government could suspend us from bidding on or receiving awards of new U.S. Government contracts pending the completion of legal proceedings. If convicted or found liable, the U.S. Government could fine and debar us from new U.S. Government contracting for a period generally not to exceed three years. The U.S. Government also reserves the right to debar a contractor from receiving new government contracts for fraudulent, criminal or other seriously improper conduct. The U.S. Government could also void any contracts found to be tainted by fraud. Our contracts with the U.S. Government are also subject to audits. Like many defense contractors, we have received audit reports which recommend that certain contract prices should be reduced to comply with various government regulations, including because cost or pricing data we submitted in negotiation of the contract prices or cost accounting practices may not have conformed to government regulations, or that certain payments be delayed or withheld. Some of these audit reports involved substantial amounts. We have made voluntary refunds in those cases we believe appropriate, have settled some allegations and continue to litigate or challenge certain matters. In addition, we accrue for liabilities associated with those matters that are probable and can be reasonably estimated. The most likely settlement amount to be incurred is accrued based upon a range of estimates. Where no amount within a range of estimates is more likely, then we accrued the minimum amount. Legal Proceedings. Cost Accounting Standards Claim As previously disclosed, in December 2013, a Divisional Administrative Contracting Officer of the United States Defense Contract Management Agency asserted a claim against Pratt & Whitney to recover overpayments of approximately $177 million plus interest (approximately $76.5 million through June 30, 2018). The claim is based on Pratt & Whitney's alleged noncompliance with cost accounting standards from January 1, 2005 to December 31, 2012, due to its method of determining the cost of collaborator parts used in the calculation of material overhead costs for government contracts. On March 18, 2014, Pratt & Whitney filed an appeal to the Armed Services Board of Contract Appeals. Pratt & Whitney’s appeal is still pending and we continue to believe the government’s claim is without merit. German Tax Litigation As previously disclosed, UTC has been involved in administrative review proceedings with the German Tax Office, which concern approximately €215 million (approximately $252 million) of tax benefits that we have claimed related to a 1998 reorganization of the corporate structure of Otis operations in Germany. Upon audit, these tax benefits were disallowed by the German Tax Office. UTC estimates interest associated with the aforementioned tax benefits is an additional approximately €118 million (approximately $138 million). On August 3, 2012, we filed suit in the local German Tax Court (Berlin-Brandenburg). In March 2016, the local German Tax Court dismissed our suit, and we appealed this decision to the German Federal Tax Court (FTC). The FTC held a hearing on our appeal on July 24, 2018, and we expect it to issue a decision during the third quarter of 2018. In 2015, UTC made tax and interest payments to German tax authorities of €275 million (approximately $300 million) in order to avoid additional interest accruals pending final resolution of this matter. Asbestos Matters As previously disclosed, like many other industrial companies, we and our subsidiaries have been named as defendants in lawsuits alleging personal injury as a result of exposure to asbestos integrated into certain of our products or business premises. While we have never manufactured asbestos and no longer incorporate it in any currently-manufactured products, certain of our historical products, like those of many other manufacturers, have contained components incorporating asbestos. A substantial majority of these asbestos-related claims have been dismissed without payment or were covered in full or in part by insurance or other forms of indemnity. Additional cases were litigated and settled without any insurance reimbursement. The amounts involved in asbestos related claims were not material individually or in the aggregate in any year. Our estimated total liability to resolve all pending and unasserted potential future asbestos claims through 2059 is approximately $333 million and is principally recorded in Other long-term liabilities on our Condensed Consolidated Balance Sheet as of June 30, 2018. This amount is on a pre-tax basis, not discounted, and excludes the Company’s legal fees to defend the asbestos claims (which will continue to be expensed by the Company as they are incurred). In addition, the Company has an insurance recovery receivable for probable asbestos related recoveries of approximately $146 million, which is included primarily in Other assets on our Condensed Consolidated Balance Sheet as of June 30, 2018. The amounts recorded by UTC for asbestos-related liabilities and insurance recoveries are based on currently available information and assumptions that we believe are reasonable. Our actual liabilities or insurance recoveries could be higher or lower than those recorded if actual results vary significantly from the assumptions. Key variables in these assumptions include the number and type of new claims to be filed each year, the outcomes or resolution of such claims, the average cost of resolution of each new claim, the amount of insurance available, allocation methodologies, the contractual terms with each insurer with whom we have reached settlements, the resolution of coverage issues with other excess insurance carriers with whom we have not yet achieved settlements, and the solvency risk with respect to our insurance carriers. Other factors that may affect our future liability include uncertainties surrounding the litigation process from jurisdiction to jurisdiction and from case to case, legal rulings that may be made by state and federal courts, and the passage of state or federal legislation. At least annually, the Company evaluates all of these factors and, with input from an outside actuarial expert, makes any necessary adjustments to both our estimated asbestos liabilities and insurance recoveries. Other. As described in Note 14 of this Form 10-Q and Note 17 to the Consolidated Financial Statements in our 2017 Annual Report, we extend performance and operating cost guarantees beyond our normal warranty and service policies for extended periods on some of our products. We have accrued our estimate of the liability that may result under these guarantees and for service costs that are probable and can be reasonably estimated. We also have other commitments and contingent liabilities related to legal proceedings, self-insurance programs and matters arising out of the normal course of business. We accrue contingencies based upon a range of possible outcomes. If no amount within this range is a better estimate than any other, then we accrue the minimum amount. In the ordinary course of business, the Company and its subsidiaries are also routinely defendants in, parties to or otherwise subject to many pending and threatened legal actions, claims, disputes and proceedings. These matters are often based on alleged violations of contract, product liability, warranty, regulatory, environmental, health and safety, employment, intellectual property, tax and other laws. In some instances, claims for substantial monetary damages are asserted against the Company and its subsidiaries and could result in fines, penalties, compensatory or treble damages or non-monetary relief. We do not believe that these matters will have a material adverse effect upon our competitive position, results of operations, cash flows or financial condition. |
Segment Financial Data |
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Reporting Disclosure [Text Block] | Note 16: Segment Financial Data Our operations are classified into four principal segments: Otis, UTC Climate, Controls & Security, Pratt & Whitney, and UTC Aerospace Systems. The segments are generally based on the management structure of the businesses and the grouping of similar operating companies, where each management organization has general operating autonomy over diversified products and services. As discussed in Note 7, 2017 amounts have been recast based on the adoption of ASU 2017-07. Total sales by segment include inter-segment sales, which are generally made at prices approximating those that the selling entity is able to obtain on external sales. Results for the quarters ended June 30, 2018 and 2017 are as follows:
Results for the six months ended June 30, 2018 and 2017 are as follows:
Geographic sales are attributed to the geographic regions based on their location of origin. Segment information for the quarter ended June 30, 2018 is as follows:
Segment information for the six months ended June 30, 2018 is as follows:
Segment sales disaggregated by product type and product versus service for the quarter ended June 30, 2018 are as follows:
Segment sales disaggregated by product type and product versus service for the six months ended June 30, 2018 are as follows:
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Accounting Pronouncements |
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Jun. 30, 2018 | |
New Accounting Pronouncements and Changes in Accounting Principles [Abstract] | |
New Accounting Pronouncements, Policy [Text Block] | Accounting Pronouncements In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842). The new standard establishes a right-of-use (ROU) model that requires a lessee to record a ROU asset and a lease liability on the balance sheet for all leases with terms longer than 12 months. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition in the Condensed Consolidated Statement of Operations. In addition, this standard requires a lessor to classify leases as either sales-type, finance or operating. A lease will be treated as a sale if it transfers all of the risks and rewards, as well as control of the underlying asset, to the lessee. If risks and rewards are conveyed without the transfer of control, the lease is treated as financing. If the lessor doesn’t convey risks and rewards or control, the lease is treated as operating. ASU 2016-02 is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. A modified retrospective transition approach is required for lessees for capital and operating leases and lessors for sales-type, direct financing, and operating leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements, with certain practical expedients available. We expect that upon adoption we will recognize ROU assets and lease liabilities and that the amounts could be material. We do not expect the ASU to have a material impact on our cash flows or results of operations. In February 2018, the FASB issued ASU 2018-02, Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income (Topic 220). The new standard allows companies to reclassify to retained earnings the stranded tax effects in accumulated other comprehensive income (AOCI) from the newly-enacted US Tax Cuts and Jobs Act. The new standard is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years, with early adoption permitted. We are still evaluating the impact of our pending adoption of the new standard on our consolidated financial statements. However, we expect that upon adoption we will recognize a reclassification from AOCI to retained earnings that could be material. We do not expect this ASU to have a material impact on our cash flows and results of operations. |
Acquisitions, Dispositions, Goodwill and Other Intangible Assets (Tables) |
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Business Combination, Recognized Identifiable Assets Acquired, Goodwill, and Liabilities Assumed, Net [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Goodwill [Table Text Block] | Changes in our goodwill balances for the six months ended June 30, 2018 were as follows:
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Intangible Assets Disclosure [Table Text Block] | Identifiable intangible assets are comprised of the following:
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Schedule of Finite-Lived Intangible Assets, Future Amortization Expense [Table Text Block] | The following is the expected amortization of intangible assets for the years 2018 through 2023, which reflects the pattern of expected economic benefit on certain aerospace intangible assets.
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Revenue Recognition Contract Asset & Liability (Tables) |
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Contract with Customer, Asset and Liability [Table Text Block] | Contract Assets and Liabilities. Contract assets reflect revenue recognized and performance obligations satisfied in advance of customer billing. Contract liabilities relate to payments received in advance of the satisfaction of performance under the contract. We receive payments from customers based on the terms established in our contracts. Total contract assets and contract liabilities as of June 30, 2018 are as follows:
Under the New Revenue Standard, during the six months ended June 30, 2018, net contract liabilities increased to $6,202 million. This reflects the establishment of $6,365 million of net contract liabilities upon the adoption, and $14,401 million of advance payments from customers and reclassifications of contract assets to receivables upon billing during the period. These increases were partially offset by the liquidation of beginning of period contract liabilities of $1,728 million as a result of revenue recognition, and by $12,701 million of revenue recognition within the period. The remaining change is primarily attributable to the impact of foreign currency exchange rate changes on the balance of contract assets and liabilities. |
Revenue Recognition Remaining Performance Obligations (Tables) |
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Remaining Performance Obligations [Abstract] | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Table Text Block] | Remaining performance obligations ("RPO") are the aggregate amount of total contract transaction price that is unsatisfied or partially unsatisfied. As of June 30, 2018, our total RPO is $103.4 billion. Of this total, we expect approximately 45% will be recognized as sales over the following 24 months. |
Revenue Recognition Financial Statement Supplementals - Rev Rec (Tables) |
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Financial Statement Supplementals - Rev Rec [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue Recognition, Policy [Policy Text Block] | Note 2: Revenue Recognition ASU 2014-09 and its related amendments (collectively, the New Revenue Standard) are effective for reporting periods beginning after December 15, 2017, and interim periods therein. We adopted the New Revenue Standard effective January 1, 2018 and elected the modified retrospective approach. The results for periods before 2018 were not adjusted for the new standard and the cumulative effect of the change in accounting was recognized through retained earnings at the date of adoption. Revenue Recognition Accounting Policy Summary. We account for revenue in accordance with Accounting Standards Codification (ASC) Topic 606: Revenue from Contracts with Customers. Under Topic 606, a performance obligation is a promise in a contract with a customer to transfer a distinct good or service to the customer. Some of our contracts with customers contain a single performance obligation, while others contain multiple performance obligations most commonly when a contract spans multiple phases of the product life-cycle such as development, production, maintenance and support. A contract's transaction price is allocated to each distinct performance obligation and recognized as revenue when, or as, the performance obligation is satisfied. When there are multiple performance obligations within a contract, we allocate the transaction price to each performance obligation based on its standalone selling price. We consider the contractual consideration payable by the customer and assess variable consideration that may affect the total transaction price, including contractual discounts, contract incentive payments, estimates of award fees, and other sources of variable consideration, when determining the transaction price of each contract. We include variable consideration in the estimated transaction price when there is a basis to reasonably estimate the amount. These estimates are based on historical experience, anticipated performance and our best judgment at the time. We also consider whether our contracts provide customers with significant financing. Generally, our contracts do not contain significant financing. Point in time revenue recognition. Timing of the satisfaction of performance obligations varies across our businesses due to our diverse product and service mix, customer base, and contractual terms. Performance obligations are satisfied as of a point in time for heating, ventilating, air-conditioning and refrigeration systems, certain alarm and fire detection and suppression systems, and certain aerospace components, engines, and spare parts. Revenue is recognized when control of the product transfers to the customer, generally upon product shipment. Over-time revenue recognition. Performance obligations are satisfied over-time if the customer receives the benefits as we perform work, if the customer controls the asset as it is being produced, or if the product being produced for the customer has no alternative use and we have a contractual right to payment. Revenue is recognized for our construction-type and certain production-type contracts on an over-time basis. We recognize revenue on an over-time basis on certain long-term aerospace aftermarket contracts and aftermarket service work; development, fixed price, and other cost reimbursement contracts in our aerospace businesses; and elevator and escalator sales, installation, service, modernization and other construction contracts in our commercial businesses. For construction and installation contracts within our commercial businesses and aerospace performance obligations satisfied over time, revenue is recognized using costs incurred to date relative to total estimated costs at completion to measure progress. Incurred costs represent work performed, which correspond with and best depict transfer of control to the customer. Contract costs include labor, materials, and subcontractors' costs, or other direct costs, and where applicable on government and commercial contracts, indirect costs. For certain of our long-term aftermarket contracts, revenue is recognized over the contract period. In the commercial businesses, revenue is primarily recognized on a straight-line basis over the contract period. In the aerospace businesses, we generally account for such contracts as a series of daily obligations to stand ready to provide product maintenance and aftermarket services. Revenue is primarily recognized in proportion to cost as sufficient historical evidence indicates that the cost of performing services under the contract is incurred on an other than straight-line basis. Aerospace contract modifications are routine and contracts are often modified to account for changes in contract specifications or requirements. Contract modifications that are for goods or services that are not distinct are accounted for as part of the existing contract. We incur costs for engineering and development of aerospace products directly related to existing or anticipated contracts with customers. Such costs generate or enhance our ability to satisfy our performance obligations under these contracts. We capitalize these costs as contract fulfillment costs to the extent the costs are recoverable from the associated contract margin and subsequently amortize the costs as the original equipment (OEM) products are delivered to the customer. In instances where intellectual property does not transfer to the customer, we defer the customer funding of OEM product engineering and development and recognize revenue when the OEM products are delivered to the customer. Costs to obtain contracts are not material. Loss provisions on OEM contracts are recognized to the extent that estimated contract costs exceed the estimated consideration from the products contemplated under the contractual arrangement. For new commitments, we generally record loss provisions at the earlier of contract announcement or contract signing except for certain contracts under which losses are recorded upon receipt of the purchase order that obligates us to perform. For existing commitments, anticipated losses on contractual arrangements are recognized in the period in which losses become evident. Products contemplated under contractual arrangements include firm quantities of product sold under contract and, in the large commercial engine and wheels and brakes businesses, future highly probable sales of replacement parts required by regulation that are expected to be sold subsequently for incorporation into the original equipment. In the large commercial engine and wheels and brakes businesses, when the combined original equipment and aftermarket arrangement for each individual sales campaign are profitable, we record original equipment product losses, as applicable, at the time of delivery. We review our cost estimates on significant contracts on a quarterly basis and for others, no less frequently than annually or when circumstances change and warrant a modification to a previous estimate. We record changes in contract estimates using the cumulative catch-up method. |
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Additional Financial Information Disclosure [Text Block] | The following schedules quantify the impact of the New Revenue Standard on the statement of operations for the quarter and six months ended June 30, 2018. The effect of the new standard represents the increase (decrease) in the line item based on the adoption of the New Revenue Standard.
The New Revenue Standard resulted in an increase to Product and Service sales and Cost of products and services sold primarily due to the change to a percentage-of-completion revenue model for certain U.S Government and commercial aerospace equipment contracts, and aerospace aftermarket service work at Pratt & Whitney and UTC Aerospace Systems. The New Revenue Standard also resulted in an increase in Cost of products sold related to the timing of manufacturing cost recognition on early-contract OEM units sold, with costs in excess of the contract average unit costs recorded through Cost of products sold. The lower amounts of research and development expense recognized under the New Revenue Standard reflect the capitalization of costs of engineering and development of aerospace products as contract fulfillment costs under contracts with customers. The following schedule quantifies the impact of the New Revenue Standard on our balance sheet as of June 30, 2018.
The decrease in Retained earnings of $490 million in the table above reflects $480 million of adjustments to the balance sheet as of January 1, 2018, resulting from the adoption of the New Revenue Standard and $10 million lower reported net income under the New Revenue Standard during 2018. The declines in Accounts receivable, net, Inventories, Other assets, current, and Intangible assets, net, reflect reclassifications to contract assets, and specifically for Inventories, earlier recognition of costs of products sold for contracts requiring an over-time method of revenue recognition. The increase in Other assets reflects the establishment of non-current contract assets and contract fulfillment cost assets. The decline in accrued liabilities is primarily due to the reclassification of payments from customers in advance of work performed as contract liabilities. The Other long term liabilities increase primarily reflects the establishment of non-current contract liabilities for certain customer funding of OEM product engineering and development, which will be recognized as revenue when the OEM products are delivered to the customer. |
Earnings Per Share (Tables) |
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Earnings Per Share [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Earnings Per Share, Basic and Diluted [Table Text Block] |
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Inventories and Contracts in Progress (Tables) |
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Inventory Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Inventory, Current [Table Text Block] |
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Borrowings and Lines of Credit (Tables) |
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Schedule of Short-Term Debt [Table Text Block] |
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Schedule of Long-term Debt [Table Text Block] | Long-term debt consisted of the following:
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Schedule of Weighted average interest rates [Table Text Block] | The average interest expense rate on our total borrowings for the quarter and six months ended June 30, 2018 and 2017 were as follows:
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Employee Benefit Plans (Tables) |
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Retirement Benefits [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Defined Benefit Plans Disclosures [Table Text Block] |
Contributions to our plans were as follows:
There were no contributions to our domestic defined benefit pension plans in the quarter and six months ended June 30, 2018 and 2017. The following table illustrates the components of net periodic benefit cost for our defined pension and other postretirement benefit plans:
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Restructuring and Other Costs (Tables) |
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Jun. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Restructuring Cost and Reserve [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Restructuring and Related Costs [Table Text Block] | We recorded charges in the segments as follows:
Restructuring charges incurred during the six months ended June 30, 2018 primarily relate to actions initiated during 2018 and 2017, and were recorded as follows:
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Current Year Actions [Member] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Restructuring Cost and Reserve [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Restructuring and Related Costs [Table Text Block] | The following table summarizes expected, incurred and remaining costs for the 2018 restructuring actions by segment:
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Schedule of Restructuring Reserve by Type of Cost [Table Text Block] | The following table summarizes the accrual balance and utilization for the 2018 restructuring actions for the quarter and six months ended June 30, 2018:
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Prior Year Actions [Member] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Restructuring Cost and Reserve [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Restructuring and Related Costs [Table Text Block] | The following table summarizes expected, incurred and remaining costs for the 2017 restructuring actions by segment:
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Schedule of Restructuring Reserve by Type of Cost [Table Text Block] | he following table summarizes the accrual balances and utilization for the 2017 restructuring actions for the quarter and six months ended June 30, 2018:
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Financial Instruments (Tables) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2018 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Derivative Instruments in Statement of Financial Position, Fair Value [Table Text Block] | The following table summarizes the fair value and presentation in the Condensed Consolidated Balance Sheets for derivative instruments as of June 30, 2018 and December 31, 2017:
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Reclassification out of Accumulated Other Comprehensive Income [Member] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative Instruments, Gain (Loss) [Table Text Block] | The effect of cash flow hedging relationships on accumulated other comprehensive income for the quarter and six months ended June 30, 2018 and 2017 are presented in the table below. The amounts of gain or (loss) are attributable to foreign exchange contract activity and are recorded as a component of Product sales when reclassified from accumulated other comprehensive income.
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Other Income [Member] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative Instruments, Gain (Loss) [Table Text Block] | The effect of derivatives not designated as hedging instruments that is included below within Other income, net, on the Condensed Consolidated Statement of Operations was as follows:
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Fair Value Measurements (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Measurements, Recurring and Nonrecurring [Table Text Block] | In accordance with the provisions of ASC 820, the following tables provide the valuation hierarchy classification of assets and liabilities that are carried at fair value and measured on a recurring and nonrecurring basis in our Condensed Consolidated Balance Sheet as of June 30, 2018 and December 31, 2017:
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Fair Value, by Balance Sheet Grouping [Table Text Block] | The following table provides carrying amounts and fair values of financial instruments that are not carried at fair value in our Condensed Consolidated Balance Sheet at June 30, 2018 and December 31, 2017:
The following table provides the valuation hierarchy classification of assets and liabilities that are not carried at fair value in our Condensed Consolidated Balance Sheet at June 30, 2018 and December 31, 2017:
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Long-Term Financing Receivables (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||
Receivables [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||
Financing Receivable Credit Quality Indicators [Table Text Block] | The following table summarizes the balance by class of aerospace business related long-term receivables as of June 30, 2018 and December 31, 2017.
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Shareowners' Equity and Noncontrolling Interest (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Stockholders' Equity Note [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Stockholders Equity [Table Text Block] | A summary of the changes in shareowners' equity and noncontrolling interest comprising total equity for the quarter and six months ended June 30, 2018 and 2017 is provided below:
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Schedule of Accumulated Other Comprehensive Income (Loss) [Table Text Block] | A summary of the changes in each component of Accumulated other comprehensive (loss) income, net of tax for the quarter and six months ended June 30, 2018 and 2017 is provided below:
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Variable Interest Entities (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Variable Interest Entity, Primary Beneficiary | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Variable Interest Entity [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Variable Interest Entities [Table Text Block] | The carrying amounts and classification of assets and liabilities for variable interest entities in our Condensed Consolidated Balance Sheet are as follows:
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Guarantees (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Service and Product Warranties and Product Performance Guarantees [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Product Warranty Disclosure [Table Text Block] | The changes in the carrying amount of service and product warranties and product performance guarantees for the six months ended June 30, 2018 and 2017 are as follows:
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Segment Financial Data (Tables) |
3 Months Ended | 6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2018 |
Jun. 30, 2018 |
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Segment Reporting [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Segment Reporting Information, by Segment [Table Text Block] | Results for the quarters ended June 30, 2018 and 2017 are as follows:
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Results for the six months ended June 30, 2018 and 2017 are as follows:
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Schedule of Segment Reporting Information, by Geographic Markets [Table Text Block] | quarter ended June 30, 2018 is as follows:
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six months ended June 30, 2018 is as follows:
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Segment Reporting Disclosure, Product & Sales Type [Text Block] | quarter ended June 30, 2018 are as follows:
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six months ended June 30, 2018 are as follows:
|
Acquisitions, Dispositions, Goodwill and Other Intangible Assets (Intangible Assets) (Details) - USD ($) $ in Millions |
Jun. 30, 2018 |
Dec. 31, 2017 |
---|---|---|
Finite-Lived Intangible Assets [Line Items] | ||
Gross Amount | $ 20,270 | $ 20,038 |
Accumulated Amortization | 6,605 | 6,251 |
Unamortized: Trademarks and Other | 2,074 | 2,096 |
Total Intangible Assets Gross Excluding Goodwill | 22,344 | 22,134 |
Service portfolios [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Amount | 2,187 | 2,178 |
Accumulated Amortization | 1,588 | 1,534 |
Patents and trademarks [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Amount | 364 | 399 |
Accumulated Amortization | 226 | 233 |
Collaboration intangible assets [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Amount | 4,294 | 4,109 |
Accumulated Amortization | 510 | 384 |
Customer relationships and other [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Amount | 13,425 | 13,352 |
Accumulated Amortization | $ 4,281 | $ 4,100 |
Acquisitions, Dispositions, Goodwill and Other Intangible Assets (Amortization Expense) (Details) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2018 |
Jun. 30, 2017 |
Jun. 30, 2018 |
Jun. 30, 2017 |
|
Business Combination, Recognized Identifiable Assets Acquired, Goodwill, and Liabilities Assumed, Net [Abstract] | ||||
Amortization of Intangible Assets | $ 232 | $ 210 | $ 455 | $ 415 |
Amortization Expense, Remaining 2018 | 457 | 457 | ||
Amortization Expense, 2019 | 873 | 873 | ||
Amortization Expense, 2020 | 874 | 874 | ||
Amortization Expense, 2021 | 899 | 899 | ||
Amortization Expense, 2022 | 896 | 896 | ||
Amortization Expense, 2023 | $ 918 | $ 918 |
Inventories and Contracts in Progress (Details) - USD ($) |
Jun. 30, 2018 |
Dec. 31, 2017 |
---|---|---|
Inventory Disclosure [Abstract] | ||
Raw materials | $ 2,298,000,000 | $ 2,038,000,000 |
Work-in-process | 2,306,000,000 | 3,366,000,000 |
Finished goods | 4,375,000,000 | 3,845,000,000 |
Contracts in progress | 0 | 10,205,000,000 |
Inventory before payments and billings | 8,979,000,000 | 19,454,000,000 |
Progress payments, secured by lien, on U.S. Government contracts | 0 | 236,000,000 |
Billings on contracts in progress | 0 | 9,337,000,000 |
Inventories and contracts in progress, net | 8,979,000,000 | 9,881,000,000 |
Inventory [Line Items] | ||
Inventory Costs in Excess of Average Cost Per Unit | 0 | 438,000,000 |
UTC Aerospace Systems [Member] | ||
Inventory [Line Items] | ||
Other Inventory, Capitalized Costs, Gross | $ 0 | $ 127,000,000 |
Borrowings and Lines of Credit (Short-Term Borrowings) (Details) - USD ($) $ in Millions |
Jun. 30, 2018 |
Dec. 31, 2017 |
---|---|---|
Short-term Debt [Line Items] | ||
Commercial paper | $ 876 | $ 300 |
Other borrowings | 109 | 92 |
Total short-term borrowings | $ 985 | $ 392 |
Borrowing and Lines of Credit (Narrative) (Details) € in Millions |
6 Months Ended | ||
---|---|---|---|
Jun. 30, 2018
USD ($)
|
Jun. 30, 2018
EUR (€)
|
Sep. 04, 2017
USD ($)
|
|
Line of Credit Facility [Line Items] | |||
Aggregate Line of Credit Facility Maximum Borrowing Capacity | $ 4,350,000,000.00 | ||
Maximum Commercial Paper Borrowing Authority | 4,350,000,000.00 | ||
Commercial paper, euro-denominated | 876,000,000 | € 750 | |
Unsecured bridge loan credit agreement | $ 6,500,000,000 | ||
Revolving Credit Agreement [Member] | |||
Line of Credit Facility [Line Items] | |||
Line of Credit Facility, Maximum Borrowing Capacity | $ 2,200,000,000.00 | ||
Line of Credit Facility, Expiration Date | Aug. 05, 2021 | ||
Multicurrency Revolving Credit Agreement [Member] | |||
Line of Credit Facility [Line Items] | |||
Line of Credit Facility, Maximum Borrowing Capacity | $ 2,150,000,000 | ||
Line of Credit Facility, Expiration Date | Aug. 05, 2021 |
Borrowings and Lines of Credit Borrowings and lines of Credit (Current Year Actions) (Details) € in Millions, $ in Millions |
3 Months Ended | 6 Months Ended | |||
---|---|---|---|---|---|
Jun. 30, 2018 |
Jun. 30, 2017 |
Jun. 30, 2018
USD ($)
|
Jun. 30, 2018
EUR (€)
|
Jun. 30, 2017 |
|
Debt Instrument [Line Items] | |||||
Average Years of Maturity of Long Term Debt | 11 years | 11 years | |||
Average interest expense rate | 3.50% | 3.60% | 3.50% | 3.50% | 3.60% |
Notes 1.150% Due 2024 [Member] | |||||
Debt Instrument [Line Items] | |||||
Debt Instrument, Interest Rate, Stated Percentage | 1.15% | 1.15% | 1.15% | ||
Debt Instrument, Maturity Date, Description | 2024 | 2024 | |||
Proceeds from Issuance of Debt | € 750 | ||||
Notes 2.150% Due 2030 [Member] | |||||
Debt Instrument [Line Items] | |||||
Debt Instrument, Interest Rate, Stated Percentage | 2.15% | 2.15% | 2.15% | ||
Debt Instrument, Maturity Date, Description | 2030 | 2030 | |||
Proceeds from Issuance of Debt | € 500 | ||||
EURIBOR plus 0.20% floating rate notes due 2020 [Member] | |||||
Debt Instrument [Line Items] | |||||
Debt Instrument, Maturity Date, Description | 2020 | 2020 | |||
Proceeds from Issuance of Debt | € 750 | ||||
Junior subordinated notes 1.778% due 2018 [Member] | |||||
Debt Instrument [Line Items] | |||||
Debt Instrument, Interest Rate, Stated Percentage | 1.778% | 1.778% | 1.778% | ||
Debt Instrument, Maturity Date, Description | 2018 | 2018 | |||
Repayments of Debt | $ | $ 1,100 | ||||
Notes 6.800% Due 2018 [Member] | |||||
Debt Instrument [Line Items] | |||||
Debt Instrument, Interest Rate, Stated Percentage | 6.80% | 6.80% | 6.80% | ||
Debt Instrument, Maturity Date, Description | 2018 | 2018 | |||
Repayments of Debt | $ | $ 99 | ||||
EURIBOR plus 0.800% floating rate notes due 2018 [Member] | |||||
Debt Instrument [Line Items] | |||||
Debt Instrument, Maturity Date, Description | 2018 | 2018 | |||
Repayments of Debt | € 750 |
Income Taxes (Unrecognized Tax Benefit Changes) (Details) $ in Millions |
Jun. 30, 2018
USD ($)
|
---|---|
Minimum [Member] | |
Significant Change In Unrecognized Tax Benefits Is Reasonably Possible [Line Items] | |
Decrease in Unrecognized Tax Benefits is Reasonably Possible, Estimated Range of Change | $ 50 |
Maximum [Member] | |
Significant Change In Unrecognized Tax Benefits Is Reasonably Possible [Line Items] | |
Decrease in Unrecognized Tax Benefits is Reasonably Possible, Estimated Range of Change | $ 625 |
Employee Benefit Plans (Details) - USD ($) |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2018 |
Jun. 30, 2017 |
Jun. 30, 2018 |
Jun. 30, 2017 |
|
Defined Benefit Plan Disclosure [Line Items] | ||||
Research and development | $ 589,000,000 | $ 619,000,000 | $ 1,143,000,000 | $ 1,205,000,000 |
Pension Contributions | 59,000,000 | 79,000,000 | ||
Contributions - Defined benefit plans | 22,000,000 | 33,000,000 | 59,000,000 | 79,000,000 |
Contributions - Defined contribution plans | 105,000,000 | 86,000,000 | 199,000,000 | 176,000,000 |
Selling, general and administrative | 1,759,000,000 | 1,590,000,000 | 3,470,000,000 | 3,127,000,000 |
Other Operating Income | 941,000,000 | 257,000,000 | 1,172,000,000 | 845,000,000 |
Non-service pension cost (benefit) | (192,000,000) | (126,000,000) | (383,000,000) | (249,000,000) |
Previously Reported [Member] | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Research and development | 609,000,000 | 1,186,000,000 | ||
Selling, general and administrative | 1,538,000,000 | 3,020,000,000 | ||
Non-service pension cost (benefit) | 0 | 0 | ||
Accounting Standards Update 2017-07 [Member] | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Research and development | 10,000,000 | 19,000,000 | ||
Selling, general and administrative | 52,000,000 | 107,000,000 | ||
Non-service pension cost (benefit) | (126,000,000) | (249,000,000) | ||
Domestic Plan [Member] | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Pension Contributions | 0 | 0 | 0 | 0 |
Pension Plan [Member] | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Service cost | 93,000,000 | 93,000,000 | 186,000,000 | 186,000,000 |
Interest cost | 278,000,000 | 279,000,000 | 557,000,000 | 557,000,000 |
Expected return on plan assets | 562,000,000 | 541,000,000 | 1,125,000,000 | 1,081,000,000 |
Amortization of prior service credit | (10,000,000) | (9,000,000) | (20,000,000) | (18,000,000) |
Recognized actuarial net loss (gain) | (101,000,000) | (143,000,000) | (202,000,000) | (286,000,000) |
Net settlement and curtailment (gain) loss | 2,000,000 | 2,000,000 | 3,000,000 | 1,000,000 |
Total net periodic benefit (income) cost | (102,000,000) | (37,000,000) | (203,000,000) | (71,000,000) |
Defined Benefit Plan, Accumulated Benefit Obligation, Increase (Decrease) for Plan Amendment | (170,000,000) | |||
Other Postretirement Benefits Plan [Member] | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Service cost | 0 | 1,000,000 | 1,000,000 | 2,000,000 |
Interest cost | 6,000,000 | 6,000,000 | 12,000,000 | 13,000,000 |
Expected return on plan assets | 0 | 0 | 0 | 0 |
Amortization of prior service credit | (1,000,000) | 0 | (2,000,000) | 0 |
Recognized actuarial net loss (gain) | 2,000,000 | 2,000,000 | 4,000,000 | 5,000,000 |
Net settlement and curtailment (gain) loss | 0 | 0 | 0 | 0 |
Total net periodic benefit (income) cost | 3,000,000 | 5,000,000 | 7,000,000 | 10,000,000 |
Product [Member] | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Cost of Goods and Services Sold | 9,154,000,000 | 7,957,000,000 | 17,170,000,000 | 15,268,000,000 |
Product [Member] | Previously Reported [Member] | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Cost of Goods and Services Sold | 7,907,000,000 | 15,170,000,000 | ||
Product [Member] | Accounting Standards Update 2017-07 [Member] | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Cost of Goods and Services Sold | 50,000,000 | 98,000,000 | ||
Service [Member] | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Cost of Goods and Services Sold | $ 3,268,000,000 | 3,207,000,000 | $ 6,532,000,000 | 6,032,000,000 |
Service [Member] | Previously Reported [Member] | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Cost of Goods and Services Sold | 3,193,000,000 | 6,007,000,000 | ||
Service [Member] | Accounting Standards Update 2017-07 [Member] | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Cost of Goods and Services Sold | $ 14,000,000 | $ 25,000,000 |
Restructuring and Other Costs (Details) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | 12 Months Ended | |
---|---|---|---|---|
Jun. 30, 2018 |
Mar. 31, 2018 |
Jun. 30, 2018 |
Dec. 31, 2017 |
|
Restructuring Cost and Reserve [Line Items] | ||||
Restructuring Charges | $ (149) | |||
Cost of Sales [Member] | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Restructuring Charges | (86) | |||
Selling, General and Administrative Expenses [Member] | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Restructuring Charges | (65) | |||
Non-service pension cost (benefit) [Member] | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Restructuring Charges | (2) | |||
Current Year Actions [Member] | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Restructuring Charges | (73) | |||
Restructuring Reserve | $ 48 | $ 8 | 48 | |
Net pre-tax restructuring costs (reversals) | 61 | 12 | 73 | |
Utilization and foreign exchange | 21 | 25 | ||
Expected Costs | 135 | 135 | ||
Remaining Costs | 62 | 62 | ||
Current Year Actions [Member] | Cost of Sales [Member] | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Restructuring Charges | (38) | |||
Current Year Actions [Member] | Selling, General and Administrative Expenses [Member] | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Restructuring Charges | (37) | |||
Current Year Actions [Member] | Non-service pension cost (benefit) [Member] | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Restructuring Charges | (2) | |||
Current Year Actions [Member] | Severance [Member] | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Restructuring Reserve | 48 | 8 | 48 | |
Net pre-tax restructuring costs (reversals) | 60 | 71 | ||
Utilization and foreign exchange | 20 | 23 | ||
Current Year Actions [Member] | Facility Exit, Lease Termination and Other Costs | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Restructuring Reserve | 0 | 0 | 0 | |
Net pre-tax restructuring costs (reversals) | 1 | 2 | ||
Utilization and foreign exchange | 1 | 2 | ||
Prior Year Actions [Member] | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Restructuring Charges | (67) | |||
Restructuring Reserve | 70 | 86 | 70 | $ 85 |
Net pre-tax restructuring costs (reversals) | 16 | 51 | 67 | 176 |
Utilization and foreign exchange | 32 | 82 | ||
Expected Costs | 325 | 325 | ||
Remaining Costs | 82 | 82 | ||
Prior Year Actions [Member] | Cost of Sales [Member] | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Restructuring Charges | (42) | |||
Prior Year Actions [Member] | Selling, General and Administrative Expenses [Member] | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Restructuring Charges | (25) | |||
Prior Year Actions [Member] | Severance [Member] | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Restructuring Reserve | 73 | 88 | 73 | 84 |
Net pre-tax restructuring costs (reversals) | 8 | 47 | ||
Utilization and foreign exchange | 23 | 58 | ||
Prior Year Actions [Member] | Facility Exit, Lease Termination and Other Costs | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Restructuring Reserve | (3) | (2) | (3) | 1 |
Net pre-tax restructuring costs (reversals) | 8 | 20 | ||
Utilization and foreign exchange | 9 | 24 | ||
Two Years Prior Actions [Member] | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Restructuring Charges | (9) | |||
Restructuring Reserve | 91 | 91 | ||
Otis [Member] | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Restructuring Charges | (47) | |||
Otis [Member] | Current Year Actions [Member] | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Net pre-tax restructuring costs (reversals) | 18 | 9 | ||
Expected Costs | 31 | 31 | ||
Remaining Costs | 4 | 4 | ||
Otis [Member] | Prior Year Actions [Member] | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Net pre-tax restructuring costs (reversals) | 4 | 15 | 43 | |
Expected Costs | 73 | 73 | ||
Remaining Costs | 11 | 11 | ||
UTC Climate, Controls & Security [Member] | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Restructuring Charges | (35) | |||
UTC Climate, Controls & Security [Member] | Current Year Actions [Member] | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Net pre-tax restructuring costs (reversals) | 23 | 1 | ||
Expected Costs | 77 | 77 | ||
Remaining Costs | 53 | 53 | ||
UTC Climate, Controls & Security [Member] | Prior Year Actions [Member] | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Net pre-tax restructuring costs (reversals) | (5) | 7 | 76 | |
Expected Costs | 81 | 81 | ||
Remaining Costs | 3 | 3 | ||
Pratt & Whitney [Member] | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Restructuring Charges | (3) | |||
Pratt & Whitney [Member] | Current Year Actions [Member] | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Net pre-tax restructuring costs (reversals) | 3 | 0 | ||
Expected Costs | 3 | 3 | ||
Remaining Costs | 0 | 0 | ||
Pratt & Whitney [Member] | Prior Year Actions [Member] | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Net pre-tax restructuring costs (reversals) | 0 | 0 | 7 | |
Expected Costs | 7 | 7 | ||
Remaining Costs | 0 | 0 | ||
UTC Aerospace Systems [Member] | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Restructuring Charges | (60) | |||
UTC Aerospace Systems [Member] | Current Year Actions [Member] | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Net pre-tax restructuring costs (reversals) | 15 | 0 | ||
Expected Costs | 20 | 20 | ||
Remaining Costs | 5 | 5 | ||
UTC Aerospace Systems [Member] | Prior Year Actions [Member] | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Net pre-tax restructuring costs (reversals) | 17 | 29 | 43 | |
Expected Costs | 157 | 157 | ||
Remaining Costs | 68 | 68 | ||
Eliminations and other [Member] | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Restructuring Charges | (4) | |||
Eliminations and other [Member] | Current Year Actions [Member] | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Net pre-tax restructuring costs (reversals) | (2) | (2) | ||
Expected Costs | 4 | 4 | ||
Remaining Costs | 0 | 0 | ||
Eliminations and other [Member] | Prior Year Actions [Member] | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Net pre-tax restructuring costs (reversals) | 0 | $ 0 | $ 7 | |
Expected Costs | 7 | 7 | ||
Remaining Costs | $ 0 | $ 0 |
Financial Instruments (Details) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | |||
---|---|---|---|---|---|
Jun. 30, 2018 |
Jun. 30, 2017 |
Jun. 30, 2018 |
Jun. 30, 2017 |
Dec. 31, 2017 |
|
Derivatives, Fair Value [Line Items] | |||||
Derivatives designated as hedging instruments, Asset Derivatives | $ 50 | $ 50 | $ 178 | ||
Derivatives not designated as hedging instruments, Asset Derivatives | 61 | 61 | 75 | ||
Derivatives designated as hedging instruments, Liability Derivatives | 118 | 118 | 18 | ||
Derivatives not designated as hedging instruments, Liability Derivatives | 96 | 96 | 60 | ||
Four Quarter Rolling Average of Notional Amount of Foreign Exchange Contracts Hedging Foreign Currency Transactions | 20,500 | $ 20,500 | 19,100 | ||
Description of Net Investment Hedge Activity | We have approximately €4.95 billion of euro-denominated long-term debt and €750 million of euro-denominated commercial paper borrowings outstanding, which qualify as a net investment hedge against our investments in European businesses. As of June 30, 2018, the net investment hedge is deemed to be effective. | ||||
Gain (loss) recorded in Accumulated other comprehensive loss | (245) | $ 66 | $ (200) | $ 130 | |
(Gain) loss reclassified from Accumulated other comprehensive loss into Product Sales (effective portion) | (1) | 5 | $ (28) | 10 | |
Maximum Length of Time, Foreign Currency Cash Flow Hedge | 4 years 22 days | ||||
Gain recognized in Other income, net | 19 | $ 28 | $ 70 | $ 40 | |
Foreign Currency Cash Flow Hedge Gain (Loss) to be Reclassified During Next 12 Months | (33) | (33) | |||
Other Current Assets [Member] | |||||
Derivatives, Fair Value [Line Items] | |||||
Derivatives designated as hedging instruments, Asset Derivatives | 23 | 23 | 77 | ||
Derivatives not designated as hedging instruments, Asset Derivatives | 39 | 39 | 70 | ||
Other Noncurrent Assets [Member] | |||||
Derivatives, Fair Value [Line Items] | |||||
Derivatives designated as hedging instruments, Asset Derivatives | 27 | 27 | 101 | ||
Derivatives not designated as hedging instruments, Asset Derivatives | 22 | 22 | 5 | ||
Accrued Liabilities [Member] | |||||
Derivatives, Fair Value [Line Items] | |||||
Derivatives designated as hedging instruments, Liability Derivatives | 43 | 43 | 10 | ||
Derivatives not designated as hedging instruments, Liability Derivatives | 93 | 93 | 57 | ||
Other Long-term Liabilities [Member] | |||||
Derivatives, Fair Value [Line Items] | |||||
Derivatives designated as hedging instruments, Liability Derivatives | 75 | 75 | 8 | ||
Derivatives not designated as hedging instruments, Liability Derivatives | $ 3 | $ 3 | $ 3 |
Fair Value Measurements (Fair Value Hierarchy Classification) (Details) - USD ($) $ in Millions |
Jun. 30, 2018 |
Dec. 31, 2017 |
---|---|---|
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Short-term borrowings | $ 985 | $ 392 |
Portion at Other than Fair Value Measurement [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Long-term receivables | 132 | 127 |
Customer financing notes receivable | 577 | 609 |
Short-term borrowings | 985 | 392 |
Long-term debt (excluding capitalized leases) | 27,301 | 27,067 |
Long-term liabilities | 307 | 362 |
Estimate of Fair Value, Fair Value Disclosure [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Long-term receivables | 122 | 121 |
Customer financing notes receivable | 554 | 596 |
Short-term borrowings | 985 | 392 |
Long-term debt (excluding capitalized leases) | 27,755 | 29,180 |
Long-term liabilities | 271 | 330 |
Fair Value Level 1 [Member] | Estimate of Fair Value, Fair Value Disclosure [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Long-term receivables | 0 | 0 |
Customer financing notes receivable | 0 | 0 |
Short-term borrowings | 0 | 0 |
Long-term debt (excluding capitalized leases) | 0 | 0 |
Long-term liabilities | 0 | |
Fair Value Level 2 [Member] | Estimate of Fair Value, Fair Value Disclosure [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Long-term receivables | 122 | 121 |
Customer financing notes receivable | 554 | 596 |
Short-term borrowings | 876 | 300 |
Long-term debt (excluding capitalized leases) | 27,496 | 28,970 |
Long-term liabilities | 271 | 330 |
Fair Value Level 3 [Member] | Estimate of Fair Value, Fair Value Disclosure [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Long-term receivables | 0 | 0 |
Customer financing notes receivable | 0 | 0 |
Short-term borrowings | 109 | 92 |
Long-term debt (excluding capitalized leases) | 259 | 210 |
Long-term liabilities | 0 | 0 |
Fair Value, Measurements, Recurring [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Available-for-sale securities | 42 | 64 |
Derivative Assets | 111 | 253 |
Fair Value, Measurements, Recurring [Member] | Fair Value Level 1 [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Available-for-sale securities | 42 | 64 |
Derivative Assets | 0 | 0 |
Derivative Liabilities | 0 | 0 |
Fair Value, Measurements, Recurring [Member] | Fair Value Level 2 [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Available-for-sale securities | 0 | 0 |
Derivative Assets | 111 | 253 |
Derivative Liabilities | 214 | 78 |
Fair Value, Measurements, Recurring [Member] | Fair Value Level 3 [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Available-for-sale securities | 0 | 0 |
Derivative Assets | 0 | 0 |
Derivative Liabilities | $ 0 | $ 0 |
Fair Value Measurements (Commercial Aerospace Financing Commitments) (Details) - USD ($) $ in Billions |
Jun. 30, 2018 |
Dec. 31, 2017 |
---|---|---|
Commercial Aerospace [Member] | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Financing and other contractual commitments | $ 15.2 | $ 15.3 |
Long-Term Financing Receivables (Reserve and Additional Information) (Details) - USD ($) $ in Millions |
Jun. 30, 2018 |
Dec. 31, 2017 |
---|---|---|
Receivables [Abstract] | ||
Long Term Receivables High Credit Risk | $ 140 | $ 170 |
Financing Receivable, Allowance for Credit Losses, Individually Evaluated for Impairment | $ 17 | $ 17 |
Long-Term Financing Receivables(Class and Credit Risk Information) (Details) - USD ($) $ in Millions |
Jun. 30, 2018 |
Dec. 31, 2017 |
---|---|---|
Financing Receivable, Recorded Investment [Line Items] | ||
Total long-term receivables | $ 506 | $ 1,397 |
Long-term trade accounts receivable [Member] | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Total long-term receivables | 71 | 973 |
Notes and leases receivable [Member] | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Total long-term receivables | $ 435 | $ 424 |
Shareowners' Equity and Noncontrolling Interest (Summary of Changes in Shareowners' Equity and Noncontrolling Interest) (Details) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2018 |
Jun. 30, 2017 |
Jun. 30, 2018 |
Jun. 30, 2017 |
|
Shareowners' Equity, beginning of period | $ 30,534 | $ 27,594 | $ 29,610 | $ 27,579 |
Noncontrolling interest, beginning of period | 1,958 | 1,678 | 1,811 | 1,590 |
Total Equity, beginning of period | 32,492 | 29,272 | 31,421 | 29,169 |
Net income, Shareowners' Equity | 2,048 | 1,439 | 3,345 | 2,825 |
Net Income, Noncontrolling Interest | 91 | 93 | 162 | 175 |
Net income, Total Equity | 2,139 | 1,532 | 3,507 | 3,000 |
Total other comprehensive income (loss), Shareowners' Equity | (747) | 369 | (159) | 370 |
Total other comprehensive income (loss), Noncontrolling Interest | (38) | 18 | (5) | 43 |
Total other comprehensive income (loss) | (785) | 387 | (164) | 413 |
Total comprehensive income for the period, Shareowners' Equity | 1,301 | 1,808 | 3,186 | 3,195 |
Total comprehensive income for the period, Noncontrolling Interest | 53 | 111 | 157 | 218 |
Total comprehensive income for the period, Total Equity | 1,354 | 1,919 | 3,343 | 3,413 |
Common Stock issued under employee plans | 110 | 91 | 181 | 170 |
Common Stock repurchased | 27 | 437 | 52 | 1,370 |
Dividends on Common Stock | 535 | 503 | 1,070 | 1,008 |
Dividends on ESOP Common Stock | 17 | 17 | 35 | 35 |
Dividends attributable to noncontrolling interest | 73 | 64 | 139 | 112 |
Noncontrolling Interest, Increase from Capital Contributions | 42 | 0 | 162 | 43 |
Purchase of subsidiary shares from noncontrolling interest, net | 0 | 5 | 2 | 6 |
Non-controlling interest, decrease from disposition of non-controlling interest | 8 | 0 | ||
Redeemable noncontrolling interest fair value adjustment | 0 | 94 | 2 | 95 |
Other | 0 | 7 | (27) | 14 |
Shareowners' Equity, end of period | 31,364 | 28,442 | 31,364 | 28,442 |
Noncontrolling interest, end of period | 1,982 | 1,713 | 1,982 | 1,713 |
Total Equity, end of period | 33,346 | 30,155 | 33,346 | 30,155 |
Shareowners' Equity | ||||
Purchase of subsidiary shares from noncontrolling interest, net | 0 | 1 | 1 | 1 |
Redeemable noncontrolling interest fair value adjustment | 0 | 94 | 2 | 95 |
Other | 2 | (1) | (27) | (7) |
Noncontrolling Interest | ||||
Purchase of subsidiary shares from noncontrolling interest, net | 0 | 4 | 1 | 5 |
Redeemable noncontrolling interest fair value adjustment | 0 | 0 | 0 | 0 |
Other | $ (2) | $ 8 | 0 | 21 |
Accounting Standards Update 2014-09 [Member] | ||||
Other | $ 480 | $ 0 |
Shareowners' Equity and Noncontrolling Interest (Summary of Changes in AOCI) (Details) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | ||||||
---|---|---|---|---|---|---|---|---|
Jun. 30, 2018 |
Jun. 30, 2017 |
Jun. 30, 2018 |
Jun. 30, 2017 |
Mar. 31, 2018 |
Dec. 31, 2017 |
Mar. 31, 2017 |
Dec. 31, 2016 |
|
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||||||
Accumulated Other Comprehensive Income (Loss), Net of Tax | $ (7,684) | $ (7,964) | $ (7,684) | $ (7,964) | $ (6,937) | $ (7,525) | $ (8,333) | $ (8,334) |
Other comprehensive (loss) income before reclassifications, net - Foreign Currency Translation | (602) | 249 | (193) | 395 | ||||
Amounts reclassified, pretax - Foreign Currency Translation | 3 | 0 | 3 | 0 | ||||
Tax (benefit) expense reclassified - Foreign Currency Translation | (74) | 0 | 56 | 0 | ||||
Other comprehensive (loss) income before reclassifications, net - Pension | 18 | (2) | 26 | (2) | ||||
Amounts reclassified, pretax - Pension | 88 | 132 | 176 | 263 | ||||
Tax (benefit) expense reclassified - Pension | (26) | (50) | (49) | (98) | ||||
Other comprehensive (loss) income before reclassifications, net - AFS Securities | 0 | 20 | 0 | (1) | ||||
Amounts reclassified, pretax - AFS Securities | 0 | 24 | 0 | 407 | ||||
Tax (benefit) expense reclassified - AFS Securities | 0 | 8 | 0 | 155 | ||||
Other Comprehensive Income (Loss), ASU 2016-01 adoption impact on Securities Arising During Period | 0 | 0 | (5) | 0 | ||||
Other comprehensive (loss) income before reclassifications, net - Unrealized Hedging (Losses) Gains | (245) | 50 | (200) | 100 | ||||
Amounts reclassified, pretax - Unrealized Hedging (Losses) Gains | 1 | (5) | 28 | (10) | ||||
Tax (benefit) expense reclassified - Unrealized Hedging (Losses) Gains | 60 | (1) | 56 | (2) | ||||
Other comprehensive (loss) income before reclassifications, net | (791) | 299 | (362) | 449 | ||||
Amounts reclassified, pretax | (84) | (113) | (145) | 134 | ||||
Tax (benefit) expense reclassified | (40) | (43) | 63 | 55 | ||||
Other Comprehensive Income (Loss), ASU 2016-01 adoption impact on foreign currency translation Arising During Period | 0 | |||||||
Other Comprehensive Income (Loss), ASU 2016-01 adoption impact on Defined Benefit Plan Arising During Period | 0 | |||||||
Other Comprehensive Income (Loss), ASU 2016-01 adoption impact on Derivatives Arising During Period | 0 | |||||||
Reclassification from OCI, current period, ASU 2016-01 adoption impact | (5) | |||||||
Foreign Currency Translation | ||||||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||||||
Accumulated Other Comprehensive Income (Loss), Net of Tax | (3,085) | (3,128) | (3,085) | (3,128) | (2,444) | (2,950) | (3,359) | (3,480) |
Other comprehensive (loss) income before reclassifications, net - Foreign Currency Translation | (564) | 231 | (188) | 352 | ||||
Defined Benefit Pension and Post-retirement Plans | ||||||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||||||
Accumulated Other Comprehensive Income (Loss), Net of Tax | (4,499) | (4,882) | (4,499) | (4,882) | (4,579) | (4,652) | (4,962) | (5,045) |
Unrealized Gains (Losses) on Available-for-Sale Securities | ||||||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||||||
Accumulated Other Comprehensive Income (Loss), Net of Tax | 0 | 100 | 0 | 100 | 0 | 5 | 96 | 353 |
Sales of significant investments in AFS securities [Member] | ||||||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||||||
Amounts reclassified, pretax - Unrealized Hedging (Losses) Gains | 380 | |||||||
Unrealized hedging (losses) gains | ||||||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||||||
Accumulated Other Comprehensive Income (Loss), Net of Tax | $ (100) | $ (54) | $ (100) | $ (54) | $ 86 | $ 72 | $ (108) | $ (162) |
Variable Interest Entities (Details) - USD ($) $ in Millions |
6 Months Ended | |
---|---|---|
Jun. 30, 2018 |
Dec. 31, 2017 |
|
Variable Interest Entity [Line Items] | ||
Total assets | $ 5,487 | $ 5,510 |
Total liabilities | 6,552 | 5,687 |
Current Assets | ||
Variable Interest Entity [Line Items] | ||
Total assets | 4,127 | 3,976 |
Current Liabilities | ||
Variable Interest Entity [Line Items] | ||
Total liabilities | 4,739 | 3,601 |
Noncurrent Assets | ||
Variable Interest Entity [Line Items] | ||
Total assets | 1,360 | 1,534 |
Noncurrent Liabilities | ||
Variable Interest Entity [Line Items] | ||
Total liabilities | $ 1,813 | $ 2,086 |
IAE International Aero Engines AG | ||
Variable Interest Entity [Line Items] | ||
Variable Interest Entity, Methodology for Determining Whether Entity is Primary Beneficiary | Pratt & Whitney holds a net 61% interest in the IAE International Aero Engines AG (IAE) collaboration with MTU Aero Engines AG (MTU) and Japanese Aero Engines Corporation (JAEC) and a 49.5% ownership interest in IAE. IAE's business purpose is to coordinate the design, development, manufacturing and product support of the V2500 program through involvement with the collaborators. | |
Variable Interest Entity, Qualitative or Quantitative Information, Ownership Percentage | 49.50% | |
International Aero Engines LLC | ||
Variable Interest Entity [Line Items] | ||
Variable Interest Entity, Methodology for Determining Whether Entity is Primary Beneficiary | Additionally, Pratt & Whitney, JAEC and MTU are participants in International Aero Engines, LLC (IAE LLC), whose business purpose is to coordinate the design, development, manufacturing and product support for the PW1100G-JM engine for the Airbus A320neo aircraft and the PW1400G-JM engine for the Irkut MC21 aircraft. Pratt & Whitney holds a 59% net interest and a 59% ownership interest in IAE LLC. IAE and IAE LLC retain limited equity with the primary economics of the programs passed to the participants. | |
Variable Interest Entity, Qualitative or Quantitative Information, Ownership Percentage | 59.00% |
Guarantees (Details) - USD ($) $ in Millions |
6 Months Ended | |
---|---|---|
Jun. 30, 2018 |
Jun. 30, 2017 |
|
Product Warranty Liability [Line Items] | ||
Balance as of January 1 | $ 1,146 | $ 1,199 |
Warranties and performance guarantees issued | 233 | 142 |
Settlements made | 200 | 120 |
Other | (7) | 13 |
Balance as of June 30 | $ 1,172 | $ 1,234 |
Contingent Liabilities (Details) $ in Millions |
6 Months Ended |
---|---|
Jun. 30, 2018
USD ($)
| |
U.S. Defense Contract Management Agency Claim Against Pratt & Whitney [Member] | |
Loss Contingencies [Line Items] | |
Loss Contingency Lawsuit Filing Date | December 24, 2013 |
Loss Contingency Allegations | As previously disclosed, in December 2013, a Divisional Administrative Contracting Officer of the United States Defense Contract Management Agency asserted a claim against Pratt & Whitney to recover overpayments of approximately $177 million plus interest (approximately $76.5 million through June 30, 2018). The claim is based on Pratt & Whitney's alleged noncompliance with cost accounting standards from January 1, 2005 to December 31, 2012, due to its method of determining the cost of collaborator parts used in the calculation of material overhead costs for government contracts. |
Loss Contingency Damages Sought | $177 million |
Loss Contingency Actions Taken By Defendant | On March 18, 2014, Pratt & Whitney filed an appeal to the Armed Services Board of Contract Appeals. Pratt & Whitney’s appeal is still pending and we continue to believe the government’s claim is without merit. |
Estimate of interest on tax benefit | 76.5 |
German Tax Office Against Otis [Member] | |
Loss Contingencies [Line Items] | |
Loss Contingency Lawsuit Filing Date | August 3, 2012 |
Loss Contingency Allegations | As previously disclosed, UTC has been involved in administrative review proceedings with the German Tax Office, which concern approximately €215 million (approximately $252 million) of tax benefits that we have claimed related to a 1998 reorganization of the corporate structure of Otis operations in Germany. Upon audit, these tax benefits were disallowed by the German Tax Office. UTC estimates interest associated with the aforementioned tax benefits is an additional approximately €118 million (approximately $138 million). On August 3, 2012, we filed suit in the local German Tax Court (Berlin-Brandenburg). In March 2016, the local German Tax Court dismissed our suit, and we appealed this decision to the German Federal Tax Court (FTC). The FTC held a hearing on our appeal on July 24, 2018, and we expect it to issue a decision during the third quarter of 2018. |
Loss Contingency Damages Sought | €215 million (approximately $252 million) |
Loss Contingency Actions Taken By Defendant | In 2015, UTC made tax and interest payments to German tax authorities of €275 million (approximately $300 million) in order to avoid additional interest accruals pending final resolution of this matter. |
Estimate of interest on tax benefit | €118 million (approximately $138 million) |
Loss Contingency, Interest Paid | €275 million (approximately $300 million) |
Asbestos Matter [Member] | |
Loss Contingencies [Line Items] | |
Loss Contingency Allegations | As previously disclosed, like many other industrial companies, we and our subsidiaries have been named as defendants in lawsuits alleging personal injury as a result of exposure to asbestos integrated into certain of our products or business premises. While we have never manufactured asbestos and no longer incorporate it in any currently-manufactured products, certain of our historical products, like those of many other manufacturers, have contained components incorporating asbestos. A substantial majority of these asbestos-related claims have been dismissed without payment or were covered in full or in part by insurance or other forms of indemnity. Additional cases were litigated and settled without any insurance reimbursement. The amounts involved in asbestos related claims were not material individually or in the aggregate in any year. |
Loss Contingency, Management's Assessment and Process | Our estimated total liability to resolve all pending and unasserted potential future asbestos claims through 2059 is approximately $333 million and is principally recorded in Other long-term liabilities on our Condensed Consolidated Balance Sheet as of June 30, 2018. This amount is on a pre-tax basis, not discounted, and excludes the Company’s legal fees to defend the asbestos claims (which will continue to be expensed by the Company as they are incurred). In addition, the Company has an insurance recovery receivable for probable asbestos related recoveries of approximately $146 million, which is included primarily in Other assets on our Condensed Consolidated Balance Sheet as of June 30, 2018. The amounts recorded by UTC for asbestos-related liabilities and insurance recoveries are based on currently available information and assumptions that we believe are reasonable. Our actual liabilities or insurance recoveries could be higher or lower than those recorded if actual results vary significantly from the assumptions. Key variables in these assumptions include the number and type of new claims to be filed each year, the outcomes or resolution of such claims, the average cost of resolution of each new claim, the amount of insurance available, allocation methodologies, the contractual terms with each insurer with whom we have reached settlements, the resolution of coverage issues with other excess insurance carriers with whom we have not yet achieved settlements, and the solvency risk with respect to our insurance carriers. Other factors that may affect our future liability include uncertainties surrounding the litigation process from jurisdiction to jurisdiction and from case to case, legal rulings that may be made by state and federal courts, and the passage of state or federal legislation. At least annually, the Company evaluates all of these factors and, with input from an outside actuarial expert, makes any necessary adjustments to both our estimated asbestos liabilities and insurance recoveries. |
Loss Contingency, Estimate of Possible Loss | $ 333 |
Loss Contingency, Receivable | $ 146 |
Segment Financial Data (Details) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2018 |
Jun. 30, 2017 |
Jun. 30, 2018 |
Jun. 30, 2017 |
|
Segment Reporting Information [Line Items] | ||||
Revenues | $ 16,705 | $ 15,280 | $ 31,947 | $ 29,095 |
Operating profit | $ 2,876 | $ 2,164 | $ 4,804 | $ 4,308 |
Operating profit margin | 17.20% | 14.20% | 15.00% | 14.80% |
Total Segments [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Revenues | $ 17,077 | $ 15,553 | $ 32,636 | $ 29,618 |
Operating profit | $ 3,099 | $ 2,274 | $ 5,142 | $ 4,539 |
Operating profit margin | 18.10% | 14.60% | 15.80% | 15.30% |
Otis [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Revenues | $ 3,344 | $ 3,131 | $ 6,381 | $ 5,935 |
Operating profit | $ 488 | $ 539 | $ 938 | $ 986 |
Operating profit margin | 14.60% | 17.20% | 14.70% | 16.60% |
UTC Climate, Controls & Security [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Revenues | $ 5,035 | $ 4,712 | $ 9,411 | $ 8,604 |
Operating profit | $ 1,645 | $ 837 | $ 2,237 | $ 1,768 |
Operating profit margin | 32.70% | 17.80% | 23.80% | 20.50% |
Pratt & Whitney [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Revenues | $ 4,736 | $ 4,070 | $ 9,065 | $ 7,828 |
Operating profit | $ 397 | $ 364 | $ 810 | $ 720 |
Operating profit margin | 8.40% | 8.90% | 8.90% | 9.20% |
Eliminations and other [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Revenues | $ (372) | $ (273) | $ (689) | $ (523) |
Operating profit | (97) | (5) | (108) | (23) |
General corporate expenses [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Revenues | 0 | 0 | 0 | 0 |
Operating profit | (126) | (105) | (230) | (208) |
UTC Aerospace Systems [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Revenues | 3,962 | 3,640 | 7,779 | 7,251 |
Operating profit | $ 569 | $ 534 | $ 1,157 | $ 1,065 |
Operating profit margin | 14.40% | 14.70% | 14.90% | 14.70% |
United States [Member] | Total Segments [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Revenues | $ 9,905 | $ 18,620 | ||
United States [Member] | Otis [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Revenues | 859 | 1,704 | ||
United States [Member] | UTC Climate, Controls & Security [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Revenues | 2,618 | 4,713 | ||
United States [Member] | Pratt & Whitney [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Revenues | 3,652 | 6,773 | ||
United States [Member] | UTC Aerospace Systems [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Revenues | 2,776 | 5,430 | ||
Europe [Member] | Total Segments [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Revenues | 3,220 | 6,389 | ||
Europe [Member] | Otis [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Revenues | 1,054 | 2,059 | ||
Europe [Member] | UTC Climate, Controls & Security [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Revenues | 1,455 | 2,839 | ||
Europe [Member] | Pratt & Whitney [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Revenues | 126 | 299 | ||
Europe [Member] | UTC Aerospace Systems [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Revenues | 585 | 1,192 | ||
Asia Pacific [Member] | Total Segments [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Revenues | 2,286 | 4,345 | ||
Asia Pacific [Member] | Otis [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Revenues | 1,169 | 2,091 | ||
Asia Pacific [Member] | UTC Climate, Controls & Security [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Revenues | 720 | 1,405 | ||
Asia Pacific [Member] | Pratt & Whitney [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Revenues | 312 | 680 | ||
Asia Pacific [Member] | UTC Aerospace Systems [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Revenues | 85 | 169 | ||
Other [Member] | Total Segments [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Revenues | 1,666 | 3,282 | ||
Other [Member] | Otis [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Revenues | 262 | 527 | ||
Other [Member] | UTC Climate, Controls & Security [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Revenues | 242 | 454 | ||
Other [Member] | Pratt & Whitney [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Revenues | 646 | 1,313 | ||
Other [Member] | UTC Aerospace Systems [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Revenues | 516 | 988 | ||
Commercial and industrial, non aerospace [Member] | Total Segments [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Revenues | 8,399 | 15,848 | ||
Commercial and industrial, non aerospace [Member] | Otis [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Revenues | 3,344 | 6,381 | ||
Commercial and industrial, non aerospace [Member] | UTC Climate, Controls & Security [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Revenues | 5,035 | 9,411 | ||
Commercial and industrial, non aerospace [Member] | Pratt & Whitney [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Revenues | 5 | 26 | ||
Commercial and industrial, non aerospace [Member] | UTC Aerospace Systems [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Revenues | 15 | 30 | ||
Commercial Aerospace [Member] | Total Segments [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Revenues | 6,393 | 12,503 | ||
Commercial Aerospace [Member] | Otis [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Revenues | 0 | 0 | ||
Commercial Aerospace [Member] | UTC Climate, Controls & Security [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Revenues | 0 | 0 | ||
Commercial Aerospace [Member] | Pratt & Whitney [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Revenues | 3,369 | 6,568 | ||
Commercial Aerospace [Member] | UTC Aerospace Systems [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Revenues | 3,024 | 5,935 | ||
Military aerospace [Member] | Total Segments [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Revenues | 2,285 | 4,285 | ||
Military aerospace [Member] | Otis [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Revenues | 0 | 0 | ||
Military aerospace [Member] | UTC Climate, Controls & Security [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Revenues | 0 | 0 | ||
Military aerospace [Member] | Pratt & Whitney [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Revenues | 1,362 | 2,471 | ||
Military aerospace [Member] | UTC Aerospace Systems [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Revenues | 923 | 1,814 | ||
Service [Member] | Total Segments [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Revenues | 5,224 | 10,241 | ||
Service [Member] | Otis [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Revenues | 1,819 | 3,637 | ||
Service [Member] | UTC Climate, Controls & Security [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Revenues | 822 | 1,600 | ||
Service [Member] | Pratt & Whitney [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Revenues | 1,961 | 3,753 | ||
Service [Member] | UTC Aerospace Systems [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Revenues | 622 | 1,251 | ||
Product [Member] | Total Segments [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Revenues | 11,853 | 22,395 | ||
Product [Member] | Otis [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Revenues | 1,525 | 2,744 | ||
Product [Member] | UTC Climate, Controls & Security [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Revenues | 4,213 | 7,811 | ||
Product [Member] | Pratt & Whitney [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Revenues | 2,775 | 5,312 | ||
Product [Member] | UTC Aerospace Systems [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Revenues | $ 3,340 | $ 6,528 |
Accounting Pronouncements (Details) |
6 Months Ended |
---|---|
Jun. 30, 2018 | |
ASU 2016-02 [Member] | |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |
New Accounting Pronouncement or Change in Accounting Principle, Description | In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842). The new standard establishes a right-of-use (ROU) model that requires a lessee to record a ROU asset and a lease liability on the balance sheet for all leases with terms longer than 12 months. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition in the Condensed Consolidated Statement of Operations. In addition, this standard requires a lessor to classify leases as either sales-type, finance or operating. A lease will be treated as a sale if it transfers all of the risks and rewards, as well as control of the underlying asset, to the lessee. If risks and rewards are conveyed without the transfer of control, the lease is treated as financing. If the lessor doesn’t convey risks and rewards or control, the lease is treated as operating. ASU 2016-02 is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. A modified retrospective transition approach is required for lessees for capital and operating leases and lessors for sales-type, direct financing, and operating leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements, with certain practical expedients available. We expect that upon adoption we will recognize ROU assets and lease liabilities and that the amounts could be material. We do not expect the ASU to have a material impact on our cash flows or results of operations. |
ASU 2018-02 [Member] | |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |
New Accounting Pronouncement or Change in Accounting Principle, Description | In February 2018, the FASB issued ASU 2018-02, Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income (Topic 220). The new standard allows companies to reclassify to retained earnings the stranded tax effects in accumulated other comprehensive income (AOCI) from the newly-enacted US Tax Cuts and Jobs Act. The new standard is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years, with early adoption permitted. We are still evaluating the impact of our pending adoption of the new standard on our consolidated financial statements. However, we expect that upon adoption we will recognize a reclassification from AOCI to retained earnings that could be material. We do not expect this ASU to have a material impact on our cash flows and results of operations. |
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