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Acquisitions, Dispositions, Goodwill and Other Intangible Assets Business Acquisitions, Dispositions, Goodwill and Intangible Assets (Tables)

6 Months Ended

Jun. 30, 2020

Business Acquisition, Pro Forma Information, Nonrecurring Adjustment [Line Items]

Schedule of Goodwill [Table Text Block]

Changes in our goodwill balances for the six months ended June 30, 2020 were as follows:


(dollars in millions)	Balance as of January 1, 2020		Acquisitions and Divestitures		Impairment Losses		Foreign Currency Translation and Other		Balance as of June 30, 2020
Collins Aerospace Systems⁽¹⁾	$	35,025	$	(886)	$	(3,183)	$	(120)	$	30,836
Pratt & Whitney	1,563		—		—		—		1,563
Raytheon Intelligence & Space	—		8,422		—		2		8,424
Raytheon Missiles & Defense	—		11,067		—		—		11,067
Total Segments	36,588		18,603		(3,183)		(118)		51,890
Eliminations and other	21		1,380		—		(22)		1,379
Total	$	36,609	$	19,983	$	(3,183)	$	(140)	$	53,269

(1) Change in Acquisitions and Divestitures relates to reclassification of Goodwill associated with the Collins Aerospace businesses that are expected to be disposed of in the third quarter of 2020 as criteria for held for sale accounting treatment was met upon completion of the Raytheon Merger on April 3, 2020.

Schedule of Indefinite-Lived Intangible Assets [Table Text Block]

Identifiable intangible assets are comprised of the following:


	June 30, 2020						December 31, 2019
(dollars in millions)	Gross Amount		Accumulated Amortization		Gross Amount		Accumulated Amortization
Amortized:

Patents and trademarks	$	47	$	(34)	$	47	$	(34)
Collaboration assets	4,948		(997)		4,862		(920)
Exclusivity assets	2,425		(274)		2,386		(275)
Developed technology and other	1,685		(288)		890		(217)
Customer relationships	29,938		(4,134)		17,750		(3,392)
	$	39,043	$	(5,727)	$	25,935	$	(4,838)
Unamortized:
Trademarks and other	8,687		—		3,376		—
Total	$	47,730	$	(5,727)	$	29,311	$	(4,838)

Schedule of Finite-Lived Intangible Assets, Future Amortization Expense [Table Text Block]

The following is the expected amortization of intangible assets for the years 2020 through 2025.


(dollars in millions)	Remaining 2020		2021		2022		2023		2024		2025
Amortization expense	$	1,230	$	2,523	$	1,989	$	2,101	$	2,166	$	2,030

Raytheon Company [Member]

Business Acquisition, Pro Forma Information, Nonrecurring Adjustment [Line Items]

Business Acquisition, Pro Forma Information, Nonrecurring Adjustments [Table Text Block]

Supplemental Pro-Forma Data. Raytheon Company’s results of operations have been included in RTC’s financial statements for the period subsequent to the completion of the Raytheon Merger on April 3, 2020. The following unaudited supplemental pro-forma data presents consolidated information as if the Raytheon Merger had been completed on January 1, 2019. The pro-forma results were calculated by combining the results of Raytheon Technologies with the stand-alone results of Raytheon Company for the pre-acquisition periods, which were adjusted to account for certain costs that would have been incurred during this pre-acquisition period. The results below reflect Raytheon Technologies on a continuing basis, in order to more accurately represent the structure of Raytheon Technologies after completion of the Separation Transactions and the Raytheon Merger.


	Quarter Ended June 30,						Six Months Ended June 30,
(dollars in millions, except per share amounts)	2020		2019		2020		2019
Net sales	$	14,470	$	18,416	$	32,921	$	36,038
Income (loss) from continuing operations attributable to common shareowners	(3,732)		2,006		(3,014)		3,308


Basic (loss) earnings per share of common stock from continuing operations	$	(2.49)	$	1.33	$	(2.08)	$	2.20


Diluted (loss) earnings per share of common stock from continuing operations	(2.49)		1.32		(2.07)		2.19

The unaudited supplemental pro-forma data above includes the following significant adjustments made to account for certain costs which would have been incurred if the acquisition had been completed on January 1, 2019, as adjusted for the

applicable tax impact. As the merger was completed on April 3, 2020, the pro-forma adjustments in the table below only include the required adjustments through April 3, 2020.


	Quarter Ended June 30,						Six Months Ended June 30,
(dollars in millions)	2020		2019		2020		2019
Amortization of acquired Raytheon Company intangible assets, net ⁽¹⁾	$	—	$	(262)	$	(270)	$	(525)
Amortization of fixed asset fair value adjustment ⁽²⁾	—		(9)		(9)		(18)
Utilization of contractual customer obligation ⁽³⁾	—		15		8		29
Deferred revenue fair value adjustment ⁽⁴⁾	—		(8)		(4)		(17)
Adjustment to non-service pension (benefit) cost⁽⁵⁾	—		208		239		416
RTC/Raytheon fees for advisory, legal, accounting services⁽⁶⁾	61		45		96		(96)
Adjustment to interest expense related to debt distributions and Raytheon Merger, net⁽⁷⁾	—		9		9		18
Elimination of deferred commission amortization ⁽⁸⁾	—		7		5		10
	$	61	$	5	$	74	$	(183)

(1) Reflects the additional amortization of the acquired Raytheon Company’s intangible assets recognized at fair value in purchase accounting and eliminates the historical Raytheon Company intangible asset amortization expense.

(2) Reflects the amortization of the fixed asset fair value adjustment as of the acquisition date.

(3) Reflects the additional amortization of liabilities recognized for certain acquired loss making contracts as of the acquisition date.

(4) Reflects the difference between prepayments related to extended arrangements and the preliminary fair value of the assumed performance obligations as they are satisfied.

(5) Represents the elimination of unamortized prior service costs and actuarial losses, as a result of fair value purchase accounting.

(6) Reflects the elimination of transaction-related fees incurred by RTC and Raytheon Company in connection with the Raytheon Merger and assumes all of the fees were incurred during the first quarter of 2019.

(7) Reflects the amortization of the fair market value adjustment related to Raytheon Company.

(8) Reflects the elimination of amortization recognized on deferred commissions that are eliminated in purchase accounting.

Schedule of Noncash or Part Noncash Acquisitions

Total consideration is calculated as follows:


(dollars, in millions, except per share amounts and exchange ratio)	Amount
Fair value of RTC common stock issued for Raytheon Company outstanding common stock and vested equity awards	$	33,067
Fair value attributable to pre-merger service for replacement equity awards	99
Total estimated merger consideration	$	33,166

The fair value of RTC common stock issued for Raytheon Company outstanding common stock and vested equity awards is calculated as follows:


(dollars and shares, in millions, except per share amounts and exchange ratio)	Amount
Number of Raytheon Company common shares outstanding as of April 3, 2020	277.3
Number of Raytheon Company stock awards vested as a result of the Raytheon Merger ⁽¹⁾	0.4
Total outstanding shares of Raytheon Company common stock and equity awards entitled to merger consideration	277.7
Exchange ratio ⁽²⁾	2.3348
Shares of RTC common stock issued for Raytheon Company outstanding common stock and vested equity awards	648.4
Price per share of RTC common stock ⁽³⁾	$	51.00
Fair value of RTC common stock issued for Raytheon Company outstanding common stock and vested equity awards	$	33,067

(1) Represents Raytheon Company stock awards that vested as a result of the Raytheon Merger, which is considered a “change in control” for purposes of the Raytheon 2010 Stock Plan. Certain Raytheon Company restricted stock awards and Raytheon Company restricted stock unit (RSU) awards, issued under the Raytheon 2010 Stock Plan vested on an accelerated basis as a result of the Raytheon Merger. Such vested awards were converted into the right to receive RTC common stock determined as the product of (1) the number of vested awards, and (2) the exchange ratio.

(2) The exchange ratio is equal to 2.3348 shares of UTC common stock for each share of Raytheon Company common stock in accordance with the Raytheon Merger Agreement.

(3) The price per share of RTC common stock is based on the RTC opening stock price as of April 3, 2020.

Schedule of Recognized Identified Assets Acquired and Liabilities Assumed


(dollars, in millions)
Cash and cash equivalents	$	3,208
Accounts receivable	1,997
Inventory	705
Contract assets	6,023
Other assets, current	897
Future income tax benefits	14
Fixed assets	4,732
Intangible assets:	19,130
Customer relationships	12,900
Tradenames/trademarks	5,430
Developed technology	800
Other assets	2,139
Total identifiable assets acquired	38,845

Accounts payable	1,455
Accrued liabilities	3,235
Contract liabilities	2,991
Long-term debt, including current portion	4,700
Future pension and postretirement benefit obligation	10,651
Other long-term liabilities	3,482
Total liabilities acquired	26,514
Total identifiable net assets	12,331
Goodwill	20,869
Redeemable noncontrolling interest	(34)
Total consideration transferred	$	33,166

Finite-Lived and Indefinite-Lived Intangible Assets Acquired as Part of Business Combination

The intangible assets included above consist of the following:


(dollars, in millions)	Estimated Fair Value		Estimated Life
Acquired customer relationships	$	12,900	25 years
Acquired tradenames	5,430		Indefinite
Acquired developed technology	800		5 to 7 years
Total identifiable intangible assets	$	19,130