Discontinued Operations and Disposal Groups (Tables)

9 Months Ended

Sep. 30, 2020

Discontinued Operations and Disposal Groups [Abstract]

Schedule of income (loss) from discontinued operations

Carrier and Otis are presented as discontinued operations and, as such, have been excluded from both continuing operations and segment results for all periods presented. Income (loss) from discontinued operations is as follows:

	Quarter Ended September 30,				Nine Months Ended September 30,
(dollars, in millions)	2020		2019		2020		2019
Otis	$	—	$	277	$	187	$	799
Carrier	—		418		196		1,334
Separation related transactions (1)	113		(505)		(782)		(592)
Income (loss) from discontinued operations	$	113	$	190	$	(399)	$	1,541

(1)    Reflects debt extinguishment costs related to the Company’s paydown of debt to not exceed the maximum applicable net indebtedness under the Raytheon Merger Agreement, and unallocable transaction costs incurred by the Company primarily related to professional services costs pertaining to the Separation Transactions and the establishment of Otis and Carrier as stand-alone public companies, facility relocation costs, costs to separate information systems, costs of retention bonuses and tax charges and benefits related to separation activities.

The following summarized financial information related to discontinued operations has been reclassified from Income from continuing operations and included in Income (loss) from discontinued operations:

	Quarter Ended September 30,				Nine Months Ended September 30,
(dollars, in millions)	2020		2019		2020		2019
Otis
Product sales	$	—	$	1,449	$	1,123	$	4,240
Service sales	—		1,858		1,843		5,511
Cost of products sold	—		1,185		913		3,471
Cost of services sold	—		1,146		1,157		3,430
Research and development	—		39		38		118
Selling, general and administrative expense	—		468		450		1,381
Other income (expense), net	—		(11)		(65)		(36)
Non-operating (income) expense, net	—		(3)		3		5
Income from discontinued operations, before income taxes	—		461		340		1,310
Income tax expense	—		140		116		396
Income from discontinued operations	—		321		224		914
Less: Noncontrolling interest in subsidiaries earnings from discontinued operations	—		44		37		115
Income from discontinued operations attributable to common shareowners	$	—	$	277	$	187	$	799
Carrier
Product sales	$	—	$	3,991	$	3,143	$	11,684
Service sales	—		825		741		2,405
Cost of products sold	—		2,778		2,239		8,242
Cost of services sold	—		593		527		1,706
Research and development	—		101		98		301
Selling, general and administrative expense	—		731		669		2,151
Other income (expense), net	—		(12)		(30)		156
Non-operating (income) expense, net	—		(12)		17		(33)
Income from discontinued operations, before income taxes	—		613		304		1,878
Income tax expense	—		183		102		519
Income from discontinued operations	—		430		202		1,359
Less: Noncontrolling interest in subsidiaries earnings from discontinued operations	—		12		6		25
Income from discontinued operations attributable to common shareowners	$	—	$	418	$	196	$	1,334
Separation related transactions (1)
Selling, general and administrative expense	$	(13)	$	3	154		$	3
Non-operating expense, net	—		—		709		—
Income (loss) from discontinued operations, before income taxes	13		(3)		(863)		(3)
Income tax (benefit) expense	(100)		502		(81)		589
Income (loss) from discontinued operations, net of tax	113		(505)		(782)		(592)
Total Income (loss) from discontinued operations attributable to common shareowners	$	113	$	190	$	(399)	$	1,541

(1)    Reflects debt extinguishment costs related to the Company’s paydown of debt to not exceed the maximum applicable net indebtedness under the Raytheon Merger Agreement, and unallocable transaction costs incurred by the Company primarily related to professional services costs pertaining to the Separation Transactions and the establishment of Otis and Carrier as stand-alone public companies, facility relocation costs, costs to separate information systems, costs of retention bonuses and tax charges and benefits related to separation activities.

Schedule of cash flows from discontinued operations

Selected financial information related to cash flows from discontinued operations is as follows:

	Nine Months Ended September 30,
(dollars, in millions)	2020		2019
Net cash (used in) provided by operating activities	$	(693)	$	1,605
Net cash used in investing activities	(241)		(241)
Net cash used in financing activities	(1,449)		(1,410)

Major components of assets and liabilities related to discontinued operations

The major components of assets and liabilities related to discontinued operations at December 31, 2019 are provided below:

(dollars, in millions)	Otis		Carrier		Total
Assets
Cash and cash equivalents	$	1,446	$	995	$	2,441
Accounts receivable, net	2,899		2,728		5,627
Contract assets	530		679		1,209
Inventory, net	571		1,332		1,903
Other assets, current	213		221		434
Future income tax benefits	355		370		725
Fixed assets, net	747		1,686		2,433
Operating lease right-of-use assets	529		818		1,347
Goodwill	1,647		9,807		11,454
Intangible assets, net	490		1,083		1,573
Other assets	220		2,457		2,677
Total assets related to discontinued operations	$	9,647	$	22,176	$	31,823
Liabilities and Redeemable Noncontrolling Interest
Short-term borrowings	$	33	$	38	$	71
Accounts payable	1,321		1,682		3,003
Accrued liabilities	1,651		2,889		4,540
Contract liabilities	2,288		611		2,899
Long-term debt currently due	1		237		238
Long-term debt	5		82		87
Future pension and postretirement benefit obligations	560		455		1,015
Operating lease liabilities	383		668		1,051
Other long-term liabilities(1)	514		1,025		1,539
Total liabilities related to discontinued operations	$	6,756	$	7,687	$	14,443

(1)    Amounts include a deferred tax jurisdictional netting adjustment of $145 million.