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 Operations for the quarters ended September 30, 2017 and 2016 | |
Item 1. | Financial Statements |
Quarter Ended September 30, | |||||||
(Dollars in millions, except per share amounts) | 2017 | 2016 | |||||
Net Sales: | |||||||
Product sales | $ | 10,378 | $ | 10,194 | |||
Service sales | 4,684 | 4,160 | |||||
15,062 | 14,354 | ||||||
Costs and Expenses: | |||||||
Cost of products sold | 7,750 | 7,522 | |||||
Cost of services sold | 3,293 | 2,820 | |||||
Research and development | 582 | 582 | |||||
Selling, general and administrative | 1,524 | 1,390 | |||||
13,149 | 12,314 | ||||||
Other income, net | 250 | 211 | |||||
Operating profit | 2,163 | 2,251 | |||||
Interest expense, net | 223 | 225 | |||||
Income from continuing operations before income taxes | 1,940 | 2,026 | |||||
Income tax expense | 506 | 492 | |||||
Net income from continuing operations | 1,434 | 1,534 | |||||
Less: Noncontrolling interest in subsidiaries' earnings from continuing operations | 104 | 91 | |||||
Income from continuing operations attributable to common shareowners | 1,330 | 1,443 | |||||
Discontinued operations (Note 2): | |||||||
Income from operations | — | 1 | |||||
Loss on disposal | — | (4 | ) | ||||
Income tax benefit | — | 40 | |||||
Income from discontinued operations attributable to common shareowners | — | 37 | |||||
Net income attributable to common shareowners | $ | 1,330 | $ | 1,480 | |||
Earnings Per Share of Common Stock - Basic: | |||||||
Income from continuing operations attributable to common shareowners | $ | 1.69 | $ | 1.76 | |||
Net income attributable to common shareowners | $ | 1.69 | $ | 1.80 | |||
Earnings Per Share of Common Stock - Diluted: | |||||||
Income from continuing operations attributable to common shareowners | $ | 1.67 | $ | 1.74 | |||
Net income attributable to common shareowners | $ | 1.67 | $ | 1.78 |
Nine Months Ended September 30, | |||||||
(Dollars in millions, except per share amounts) | 2017 | 2016 | |||||
Net Sales: | |||||||
Product sales | $ | 30,676 | $ | 30,247 | |||
Service sales | 13,481 | 12,338 | |||||
44,157 | 42,585 | ||||||
Costs and Expenses: | |||||||
Cost of products sold | 22,920 | 22,542 | |||||
Cost of services sold | 9,300 | 8,195 | |||||
Research and development | 1,768 | 1,711 | |||||
Selling, general and administrative | 4,544 | 4,204 | |||||
38,532 | 36,652 | ||||||
Other income, net | 1,095 | 600 | |||||
Operating profit | 6,720 | 6,533 | |||||
Interest expense, net | 662 | 673 | |||||
Income from continuing operations before income taxes | 6,058 | 5,860 | |||||
Income tax expense | 1,624 | 1,548 | |||||
Net income from continuing operations | 4,434 | 4,312 | |||||
Less: Noncontrolling interest in subsidiaries' earnings from continuing operations | 279 | 271 | |||||
Income from continuing operations attributable to common shareowners | 4,155 | 4,041 | |||||
Discontinued operations (Note 2): | |||||||
Income from operations | — | 2 | |||||
Gain on disposal | — | 11 | |||||
Income tax expense | — | (12 | ) | ||||
Income from discontinued operations attributable to common shareowners | — | 1 | |||||
Net income attributable to common shareowners | $ | 4,155 | $ | 4,042 | |||
Earnings Per Share of Common Stock - Basic: | |||||||
Income from continuing operations attributable to common shareowners | $ | 5.26 | $ | 4.90 | |||
Net income attributable to common shareowners | $ | 5.26 | $ | 4.91 | |||
Earnings Per Share of Common Stock - Diluted: | |||||||
Income from continuing operations attributable to common shareowners | $ | 5.20 | $ | 4.86 | |||
Net income attributable to common shareowners | $ | 5.20 | $ | 4.86 |
Quarter Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
(Dollars in millions) | 2017 | 2016 | 2017 | 2016 | |||||||||||
Net income from continuing operations | $ | 1,434 | $ | 1,534 | $ | 4,434 | $ | 4,312 | |||||||
Net income from discontinued operations | — | 37 | — | 1 | |||||||||||
Net income | 1,434 | 1,571 | 4,434 | 4,313 | |||||||||||
Other comprehensive income (loss), net of tax (expense) benefit: | |||||||||||||||
Foreign currency translation adjustments | |||||||||||||||
Foreign currency translation adjustments arising during period | 514 | (359 | ) | 909 | (596 | ) | |||||||||
Less: Reclassification adjustments for gain on sale of an investment in a foreign entity recognized in Other income, net | (3 | ) | (1 | ) | (3 | ) | — | ||||||||
511 | (360 | ) | 906 | (596 | ) | ||||||||||
Pension and postretirement benefit plans | |||||||||||||||
Pension and postretirement benefit plans adjustments during the period | (50 | ) | 7 | (54 | ) | (30 | ) | ||||||||
Amortization of actuarial loss and prior service cost | 132 | 127 | 395 | 381 | |||||||||||
82 | 134 | 341 | 351 | ||||||||||||
Tax expense | (53 | ) | (50 | ) | (149 | ) | (131 | ) | |||||||
29 | 84 | 192 | 220 | ||||||||||||
Unrealized gain (loss) on available-for-sale securities | |||||||||||||||
Unrealized holding gain (loss) arising during period | 19 | 49 | 17 | 139 | |||||||||||
Reclassification adjustments for gain included in Other income, net | (138 | ) | (20 | ) | (545 | ) | (72 | ) | |||||||
(119 | ) | 29 | (528 | ) | 67 | ||||||||||
Tax benefit (expense) | 43 | (11 | ) | 199 | (25 | ) | |||||||||
(76 | ) | 18 | (329 | ) | 42 | ||||||||||
Change in unrealized cash flow hedging | |||||||||||||||
Unrealized cash flow hedging gain (loss) arising during period | 310 | (7 | ) | 440 | 188 | ||||||||||
(Gain) loss reclassified into Product sales | (24 | ) | 32 | (14 | ) | 139 | |||||||||
286 | 25 | 426 | 327 | ||||||||||||
Tax expense | (73 | ) | (7 | ) | (105 | ) | (87 | ) | |||||||
213 | 18 | 321 | 240 | ||||||||||||
Other comprehensive income (loss), net of tax | 677 | (240 | ) | 1,090 | (94 | ) | |||||||||
Comprehensive income | 2,111 | 1,331 | 5,524 | 4,219 | |||||||||||
Less: Comprehensive income attributable to noncontrolling interest | (144 | ) | (96 | ) | (362 | ) | (287 | ) | |||||||
Comprehensive income attributable to common shareowners | $ | 1,967 | $ | 1,235 | $ | 5,162 | $ | 3,932 |
(Dollars in millions) | September 30, 2017 | December 31, 2016 | |||||
Assets | |||||||
Cash and cash equivalents | $ | 8,523 | $ | 7,157 | |||
Accounts receivable, net | 13,128 | 11,481 | |||||
Inventories and contracts in progress, net | 10,083 | 8,704 | |||||
Other assets, current | 1,229 | 1,208 | |||||
Total Current Assets | 32,963 | 28,550 | |||||
Customer financing assets | 2,184 | 1,398 | |||||
Future income tax benefits | 1,723 | 1,809 | |||||
Fixed assets | 20,975 | 19,469 | |||||
Less: Accumulated depreciation | (11,212 | ) | (10,311 | ) | |||
Fixed assets, net | 9,763 | 9,158 | |||||
Goodwill | 27,916 | 27,059 | |||||
Intangible assets, net | 15,955 | 15,684 | |||||
Other assets | 5,848 | 6,048 | |||||
Total Assets | $ | 96,352 | $ | 89,706 | |||
Liabilities and Equity | |||||||
Short-term borrowings | $ | 1,077 | $ | 601 | |||
Accounts payable | 8,999 | 7,483 | |||||
Accrued liabilities | 13,053 | 12,219 | |||||
Long-term debt currently due | 2,120 | 1,603 | |||||
Total Current Liabilities | 25,249 | 21,906 | |||||
Long-term debt | 24,063 | 21,697 | |||||
Future pension and postretirement benefit obligations | 3,227 | 5,612 | |||||
Other long-term liabilities | 11,693 | 11,026 | |||||
Total Liabilities | 64,232 | 60,241 | |||||
Commitments and contingent liabilities (Note 15) | |||||||
Redeemable noncontrolling interest | 429 | 296 | |||||
Shareowners' Equity: | |||||||
Common Stock | 17,486 | 17,285 | |||||
Treasury Stock | (35,575 | ) | (34,150 | ) | |||
Retained earnings | 55,385 | 52,873 | |||||
Unearned ESOP shares | (88 | ) | (95 | ) | |||
Accumulated other comprehensive loss | (7,327 | ) | (8,334 | ) | |||
Total Shareowners' Equity | 29,881 | 27,579 | |||||
Noncontrolling interest | 1,810 | 1,590 | |||||
Total Equity | 31,691 | 29,169 | |||||
Total Liabilities and Equity | $ | 96,352 | $ | 89,706 |
Nine Months Ended September 30, | |||||||
(Dollars in millions) | 2017 | 2016 | |||||
Operating Activities of Continuing Operations: | |||||||
Net income from continuing operations | $ | 4,434 | $ | 4,312 | |||
Adjustments to reconcile net income from continuing operations to net cash flows provided by operating activities of continuing operations: | |||||||
Depreciation and amortization | 1,582 | 1,456 | |||||
Deferred income tax provision | 724 | 273 | |||||
Stock compensation cost | 145 | 112 | |||||
Change in: | |||||||
Accounts receivable | (1,051 | ) | (636 | ) | |||
Inventories and contracts in progress | (1,249 | ) | (810 | ) | |||
Other current assets | 78 | (27 | ) | ||||
Accounts payable and accrued liabilities | 1,864 | 774 | |||||
Global pension contributions | (2,008 | ) | (125 | ) | |||
Canadian government settlement | (246 | ) | (237 | ) | |||
Other operating activities, net | (1,163 | ) | (525 | ) | |||
Net cash flows provided by operating activities of continuing operations | 3,110 | 4,567 | |||||
Investing Activities of Continuing Operations: | |||||||
Capital expenditures | (1,214 | ) | (1,043 | ) | |||
Investments in businesses | (196 | ) | (535 | ) | |||
Dispositions of businesses | 37 | 148 | |||||
Proceeds from sale of investments in Watsco, Inc. | 596 | — | |||||
Increase in customer financing assets, net | (525 | ) | (128 | ) | |||
Increase in collaboration intangible assets | (290 | ) | (301 | ) | |||
Payments from settlements of derivative contracts | (183 | ) | (29 | ) | |||
Other investing activities, net | 117 | (11 | ) | ||||
Net cash flows used in investing activities of continuing operations | (1,658 | ) | (1,899 | ) | |||
Financing Activities of Continuing Operations: | |||||||
Issuance of long-term debt | 4,044 | 2,482 | |||||
Repayment of long-term debt | (1,587 | ) | (201 | ) | |||
Increase (decrease) in short-term borrowings, net | 400 | (63 | ) | ||||
Proceeds from Common Stock issued under employee stock plans | 25 | 6 | |||||
Dividends paid on Common Stock | (1,541 | ) | (1,561 | ) | |||
Repurchase of Common Stock | (1,430 | ) | (528 | ) | |||
Other financing activities, net | (204 | ) | (338 | ) | |||
Net cash flows used in financing activities of continuing operations | (293 | ) | (203 | ) | |||
Discontinued Operations: | |||||||
Net cash used in operating activities | — | (2,486 | ) | ||||
Net cash provided by investing activities | — | 6 | |||||
Net cash flows used in discontinued operations | — | (2,480 | ) | ||||
Effect of foreign exchange rate changes on cash and cash equivalents | 208 | 28 | |||||
Net increase in cash, cash equivalents and restricted cash | 1,367 | 13 | |||||
Cash, cash equivalents and restricted cash, beginning of year | 7,189 | 7,120 | |||||
Cash, cash equivalents and restricted cash, end of period | 8,556 | 7,133 | |||||
Less: Restricted cash, included in Other assets | 33 | 26 | |||||
Cash and cash equivalents, end of period | $ | 8,523 | $ | 7,107 |
(Dollars in millions) | Balance as of January 1, 2017 | Goodwill Resulting from Business Combinations | Foreign Currency Translation and Other | Balance as of September 30, 2017 | |||||||||||
Otis | $ | 1,575 | $ | 3 | $ | 114 | $ | 1,692 | |||||||
UTC Climate, Controls & Security | 9,487 | 110 | 443 | 10,040 | |||||||||||
Pratt & Whitney | 1,511 | — | — | 1,511 | |||||||||||
UTC Aerospace Systems | 14,483 | — | 187 | 14,670 | |||||||||||
Total Segments | 27,056 | 113 | 744 | 27,913 | |||||||||||
Eliminations and other | 3 | — | — | 3 | |||||||||||
Total | $ | 27,059 | $ | 113 | $ | 744 | $ | 27,916 |
September 30, 2017 | December 31, 2016 | ||||||||||||||
(Dollars in millions) | Gross Amount | Accumulated Amortization | Gross Amount | Accumulated Amortization | |||||||||||
Amortized: | |||||||||||||||
Service portfolios | $ | 2,197 | $ | (1,531 | ) | $ | 1,995 | $ | (1,344 | ) | |||||
Patents and trademarks | 401 | (228 | ) | 378 | (201 | ) | |||||||||
Collaboration intangible assets | 4,023 | (342 | ) | 3,724 | (211 | ) | |||||||||
Customer relationships and other | 13,323 | (3,999 | ) | 12,798 | (3,480 | ) | |||||||||
19,944 | (6,100 | ) | 18,895 | (5,236 | ) | ||||||||||
Unamortized: | |||||||||||||||
Trademarks and other | 2,111 | — | 2,025 | — | |||||||||||
Total | $ | 22,055 | $ | (6,100 | ) | $ | 20,920 | $ | (5,236 | ) |
(Dollars in millions) | Remaining 2017 | 2018 | 2019 | 2020 | 2021 | 2022 | ||||||||||||||||||
Amortization expense | $ | 210 | $ | 879 | $ | 866 | $ | 888 | $ | 898 | $ | 893 |
Quarter Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
(Dollars in millions, except per share amounts; shares in millions) | 2017 | 2016 | 2017 | 2016 | |||||||||||
Net income attributable to common shareowners: | |||||||||||||||
Net income from continuing operations | $ | 1,330 | $ | 1,443 | $ | 4,155 | $ | 4,041 | |||||||
Income from discontinued operations | — | 37 | — | 1 | |||||||||||
Net income attributable to common shareowners | $ | 1,330 | $ | 1,480 | $ | 4,155 | $ | 4,042 | |||||||
Basic weighted average number of shares outstanding | 788.3 | 822.4 | 790.3 | 824.0 | |||||||||||
Stock awards and equity units | 8.8 | 8.8 | 9.1 | 7.8 | |||||||||||
Diluted weighted average number of shares outstanding | 797.1 | 831.2 | 799.4 | 831.8 | |||||||||||
Earnings Per Share of Common Stock - Basic: | |||||||||||||||
Net income from continuing operations | $ | 1.69 | $ | 1.76 | $ | 5.26 | $ | 4.90 | |||||||
Income from discontinued operations | — | 0.04 | — | — | |||||||||||
Net income attributable to common shareowners | 1.69 | 1.80 | 5.26 | 4.91 | |||||||||||
Earnings Per Share of Common Stock - Diluted: | |||||||||||||||
Net income from continuing operations | $ | 1.67 | $ | 1.74 | $ | 5.20 | $ | 4.86 | |||||||
Income from discontinued operations | — | 0.04 | — | — | |||||||||||
Net income attributable to common shareowners | 1.67 | 1.78 | 5.20 | 4.86 |
(Dollars in millions) | September 30, 2017 | December 31, 2016 | |||||
Raw materials | $ | 2,189 | $ | 2,040 | |||
Work-in-process | 3,453 | 2,787 | |||||
Finished goods | 3,715 | 3,305 | |||||
Contracts in progress | 10,417 | 9,395 | |||||
19,774 | 17,527 | ||||||
Less: | |||||||
Progress payments, secured by lien, on U.S. Government contracts | (224 | ) | (130 | ) | |||
Billings on contracts in progress | (9,467 | ) | (8,693 | ) | |||
$ | 10,083 | $ | 8,704 |
(Dollars in millions) | September 30, 2017 | December 31, 2016 | |||||
Commercial paper | $ | 943 | $ | 522 | |||
Other borrowings | 134 | 79 | |||||
Total short-term borrowings | $ | 1,077 | $ | 601 |
(Dollars in millions) | September 30, 2017 | December 31, 2016 | |||||
1.800% notes due 2017 1 | $ | — | $ | 1,500 | |||
6.800% notes due 2018 | 99 | 99 | |||||
EURIBOR plus 0.800% floating rate notes due 2018 (€750 million principal value) 2 | 890 | 783 | |||||
1.778% junior subordinated notes due 2018 | 1,100 | 1,100 | |||||
LIBOR plus 0.350% floating rate notes due 2019 3 | 350 | 350 | |||||
1.500% notes due 2019 1 | 650 | 650 | |||||
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 | — | |||||
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 | 1,128 | 992 | |||||
2.300% notes due 2022 1 | 500 | — | |||||
3.100% notes due 2022 1 | 2,300 | 2,300 | |||||
1.250% notes due 2023 (€750 million principal value) 1 | 890 | 783 | |||||
2.800% notes due 2024 1 | 800 | — | |||||
1.875% notes due 2026 (€500 million principal value) 1 | 594 | 522 | |||||
2.650% notes due 2026 1 | 1,150 | 1,150 | |||||
3.125% notes due 2027 1 | 1,100 | — | |||||
7.100% notes due 2027 | 141 | 141 | |||||
6.700% notes due 2028 | 400 | 400 | |||||
7.500% notes due 2029 1 | 550 | 550 | |||||
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 | — | |||||
Project financing obligations | 137 | 155 | |||||
Other (including capitalized leases) | 195 | 189 | |||||
Total principal long-term debt | 26,209 | 23,299 | |||||
Other (fair market value adjustments and discounts) | (26 | ) | 1 | ||||
Total long-term debt | 26,183 | 23,300 | |||||
Less: current portion | 2,120 | 1,603 | |||||
Long-term debt, net of current portion | $ | 24,063 | $ | 21,697 |
1 | We may redeem these notes at our option pursuant to their terms. |
2 | The three-month EURIBOR rate as of September 30, 2017 was approximately -0.329%. 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 September 30, 2017 was approximately 1.334%. |
Quarter Ended September 30, | Nine Months Ended September 30, | ||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||
Average interest expense rate | 3.6 | % | 4.0 | % | 3.6 | % | 4.1 | % |
Quarter Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
(Dollars in millions) | 2017 | 2016 | 2017 | 2016 | |||||||||||
Defined benefit plans | $ | 1,929 | $ | 18 | $ | 2,008 | $ | 125 | |||||||
Defined contribution plans | 86 | 79 | 262 | 235 |
Pension Benefits Quarter Ended September 30, | Other Postretirement Benefits Quarter Ended September 30, | ||||||||||||||
(Dollars in millions) | 2017 | 2016 | 2017 | 2016 | |||||||||||
Service cost | $ | 94 | $ | 96 | $ | — | $ | 1 | |||||||
Interest cost | 281 | 302 | 9 | 9 | |||||||||||
Expected return on plan assets | (555 | ) | (554 | ) | — | — | |||||||||
Amortization of prior service credit | (9 | ) | (7 | ) | (1 | ) | — | ||||||||
Recognized actuarial net loss (gain) | 144 | 135 | (2 | ) | (1 | ) | |||||||||
Net settlement and curtailment loss | 2 | 3 | — | — | |||||||||||
Total net periodic benefit (income) cost | $ | (43 | ) | $ | (25 | ) | $ | 6 | $ | 9 |
Pension Benefits Nine Months Ended September 30, | Other Postretirement Benefits Nine Months Ended September 30, | ||||||||||||||
(Dollars in millions) | 2017 | 2016 | 2017 | 2016 | |||||||||||
Service cost | $ | 280 | $ | 287 | $ | 2 | $ | 3 | |||||||
Interest cost | 838 | 908 | 22 | 25 | |||||||||||
Expected return on plan assets | (1,636 | ) | (1,669 | ) | — | — | |||||||||
Amortization of prior service credit | (27 | ) | (22 | ) | (1 | ) | — | ||||||||
Recognized actuarial net loss (gain) | 430 | 406 | (7 | ) | (3 | ) | |||||||||
Net settlement and curtailment loss | 1 | 18 | — | — | |||||||||||
Total net periodic benefit (income) cost | $ | (114 | ) | $ | (72 | ) | $ | 16 | $ | 25 |
(Dollars in millions) | |||
Otis | $ | 23 | |
UTC Climate, Controls & Security | 84 | ||
Pratt & Whitney | 4 | ||
UTC Aerospace Systems | 64 | ||
Eliminations and other | 2 | ||
Total | $ | 177 |
(Dollars in millions) | |||
Cost of sales | $ | 81 | |
Selling, general and administrative | 96 | ||
Total | $ | 177 |
(Dollars in millions) | Severance | Facility Exit, Lease Termination and Other Costs | Total | ||||||||
Quarter Ended September 30, 2017 | |||||||||||
Restructuring accruals at June 30, 2017 | $ | 43 | $ | — | $ | 43 | |||||
Net pre-tax restructuring costs | 49 | 2 | 51 | ||||||||
Utilization and foreign exchange | (20 | ) | (2 | ) | (22 | ) | |||||
Balance at September 30, 2017 | $ | 72 | $ | — | $ | 72 | |||||
Nine Months Ended September 30, 2017 | |||||||||||
Net pre-tax restructuring costs | $ | 106 | $ | 8 | $ | 114 | |||||
Utilization and foreign exchange | (34 | ) | (8 | ) | (42 | ) | |||||
Balance at September 30, 2017 | $ | 72 | $ | — | $ | 72 |
(Dollars in millions) | Expected Costs | Costs Incurred Quarter Ended March 31, 2017 | Costs Incurred Quarter Ended June 30, 2017 | Costs Incurred Quarter Ended September 30, 2017 | Remaining Costs at September 30, 2017 | ||||||||||||||
Otis | $ | 71 | $ | (2 | ) | $ | (12 | ) | $ | (5 | ) | $ | 52 | ||||||
UTC Climate, Controls & Security | 83 | (12 | ) | (11 | ) | (35 | ) | 25 | |||||||||||
Pratt & Whitney | 8 | — | (6 | ) | — | 2 | |||||||||||||
UTC Aerospace Systems | 54 | (9 | ) | (10 | ) | (10 | ) | 25 | |||||||||||
Eliminations and other | 2 | (1 | ) | — | (1 | ) | — | ||||||||||||
Total | $ | 218 | $ | (24 | ) | $ | (39 | ) | $ | (51 | ) | $ | 104 |
(Dollars in millions) | Severance | Facility Exit, Lease Termination and Other Costs | Total | ||||||||
Quarter Ended September 30, 2017 | |||||||||||
Restructuring accruals at June 30, 2017 | $ | 49 | $ | 48 | $ | 97 | |||||
Net pre-tax restructuring costs | 3 | 5 | 8 | ||||||||
Utilization and foreign exchange | (12 | ) | (1 | ) | (13 | ) | |||||
Balance at September 30, 2017 | $ | 40 | $ | 52 | $ | 92 | |||||
Nine Months Ended September 30, 2017 | |||||||||||
Restructuring accruals at December 31, 2016 | $ | 63 | $ | 46 | $ | 109 | |||||
Net pre-tax restructuring costs | 29 | 19 | 48 | ||||||||
Utilization and foreign exchange | (52 | ) | (13 | ) | (65 | ) | |||||
Balance at September 30, 2017 | $ | 40 | $ | 52 | $ | 92 |
(Dollars in millions) | Expected Costs | Costs Incurred in 2016 | Costs Incurred Quarter Ended March 31, 2017 | Costs Incurred Quarter Ended June 30, 2017 | Costs Incurred Quarter Ended September 30, 2017 | Remaining Costs at September 30, 2017 | |||||||||||||||||
Otis | $ | 55 | $ | (48 | ) | $ | (3 | ) | $ | 1 | $ | — | $ | 5 | |||||||||
UTC Climate, Controls & Security | 80 | (45 | ) | (6 | ) | (7 | ) | (3 | ) | 19 | |||||||||||||
Pratt & Whitney | 118 | (118 | ) | — | — | — | — | ||||||||||||||||
UTC Aerospace Systems | 87 | (31 | ) | (13 | ) | (12 | ) | (5 | ) | 26 | |||||||||||||
Total | $ | 340 | $ | (242 | ) | $ | (22 | ) | $ | (18 | ) | $ | (8 | ) | $ | 50 |
Asset Derivatives | Liability Derivatives | ||||||||||||||
(Dollars in millions) | September 30, 2017 | December 31, 2016 | September 30, 2017 | December 31, 2016 | |||||||||||
Derivatives designated as hedging instruments | $ | 295 | $ | 15 | $ | 15 | $ | 196 | |||||||
Derivatives not designated as hedging instruments | 95 | 155 | 75 | 158 |
Quarter Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
(Dollars in millions) | 2017 | 2016 | 2017 | 2016 | |||||||||||
Gain (loss) recorded in Accumulated other comprehensive loss | $ | 310 | $ | (7 | ) | $ | 440 | $ | 188 | ||||||
(Gain) loss reclassified from Accumulated other comprehensive loss into Product sales (effective portion) | (24 | ) | 32 | (14 | ) | 139 |
Quarter Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
(Dollars in millions) | 2017 | 2016 | 2017 | 2016 | |||||||||||
Gain recognized in Other income, net | $ | 10 | $ | 19 | $ | 50 | $ | 49 |
September 30, 2017 (Dollars in millions) | Total | Level 1 | Level 2 | Level 3 | |||||||||||
Recurring fair value measurements: | |||||||||||||||
Available-for-sale securities | $ | 120 | $ | 120 | $ | — | $ | — | |||||||
Derivative assets | 390 | — | 390 | — | |||||||||||
Derivative liabilities | (90 | ) | — | (90 | ) | — |
December 31, 2016 (Dollars in millions) | Total | Level 1 | Level 2 | Level 3 | |||||||||||
Recurring fair value measurements: | |||||||||||||||
Available-for-sale securities | $ | 987 | $ | 987 | $ | — | $ | — | |||||||
Derivative assets | 170 | — | 170 | — | |||||||||||
Derivative liabilities | (354 | ) | — | (354 | ) | — |
September 30, 2017 | December 31, 2016 | ||||||||||||||
(Dollars in millions) | Carrying Amount | Fair Value | Carrying Amount | Fair Value | |||||||||||
Long-term receivables | $ | 147 | $ | 139 | $ | 127 | $ | 121 | |||||||
Customer financing notes receivable | 430 | 414 | 437 | 420 | |||||||||||
Short-term borrowings | (1,077 | ) | (1,077 | ) | (601 | ) | (601 | ) | |||||||
Long-term debt (excluding capitalized leases) | (26,161 | ) | (28,052 | ) | (23,280 | ) | (25,110 | ) | |||||||
Long-term liabilities | (363 | ) | (331 | ) | (457 | ) | (427 | ) |
(Dollars in millions) | Total | Level 1 | Level 2 | Level 3 | |||||||||||
Long-term receivables | $ | 139 | $ | — | $ | 139 | $ | — | |||||||
Customer financing notes receivable | 414 | — | 414 | — | |||||||||||
Short-term borrowings | (1,077 | ) | — | (943 | ) | (134 | ) | ||||||||
Long-term debt (excluding capitalized leases) | (28,052 | ) | — | (27,827 | ) | (225 | ) | ||||||||
Long-term liabilities | (331 | ) | — | (331 | ) | — |
(Dollars in millions) | September 30, 2017 | December 31, 2016 | |||||
Long-term trade accounts receivable | $ | 1,101 | $ | 926 | |||
Notes and leases receivable | 435 | 430 | |||||
Total long-term receivables | $ | 1,536 | $ | 1,356 |
Quarter Ended September 30, | |||||||||||||||||||||||
2017 | 2016 | ||||||||||||||||||||||
(Dollars in millions) | Share-owners' Equity | Non-controlling Interest | Total Equity | Share-owners' Equity | Non-controlling Interest | Total Equity | |||||||||||||||||
Equity, beginning of period | $ | 28,442 | $ | 1,713 | $ | 30,155 | $ | 29,090 | $ | 1,558 | $ | 30,648 | |||||||||||
Comprehensive income for the period: | |||||||||||||||||||||||
Net income | 1,330 | 104 | 1,434 | 1,480 | 91 | 1,571 | |||||||||||||||||
Total other comprehensive income (loss) | 637 | 40 | 677 | (245 | ) | 5 | (240 | ) | |||||||||||||||
Total comprehensive income for the period | 1,967 | 144 | 2,111 | 1,235 | 96 | 1,331 | |||||||||||||||||
Common Stock issued under employee plans | 86 | 86 | 54 | 54 | |||||||||||||||||||
Common Stock repurchased | (60 | ) | (60 | ) | (649 | ) | (649 | ) | |||||||||||||||
Dividends on Common Stock | (533 | ) | (533 | ) | (526 | ) | (526 | ) | |||||||||||||||
Dividends on ESOP Common Stock | (19 | ) | (19 | ) | (19 | ) | (19 | ) | |||||||||||||||
Dividends attributable to noncontrolling interest | (51 | ) | (51 | ) | (129 | ) | (129 | ) | |||||||||||||||
Sale of subsidiary shares from noncontrolling interest, net | 5 | 9 | 14 | 2 | 22 | 24 | |||||||||||||||||
Acquisition of noncontrolling interest | — | 14 | 14 | 29 | 29 | ||||||||||||||||||
Redeemable noncontrolling interest fair value adjustment | (4 | ) | — | (4 | ) | — | — | — | |||||||||||||||
Other | (3 | ) | (19 | ) | (22 | ) | — | 1 | 1 | ||||||||||||||
Equity, end of period | $ | 29,881 | $ | 1,810 | $ | 31,691 | $ | 29,187 | $ | 1,577 | $ | 30,764 |
Nine Months Ended September 30, | |||||||||||||||||||||||
2017 | 2016 | ||||||||||||||||||||||
(Dollars in millions) | Share-owners' Equity | Non-controlling Interest | Total Equity | Share-owners' Equity | Non-controlling Interest | Total Equity | |||||||||||||||||
Equity, beginning of period | $ | 27,579 | $ | 1,590 | $ | 29,169 | $ | 27,358 | $ | 1,486 | $ | 28,844 | |||||||||||
Comprehensive income for the period: | |||||||||||||||||||||||
Net income | 4,155 | 279 | 4,434 | 4,042 | 271 | 4,313 | |||||||||||||||||
Total other comprehensive income (loss) | 1,007 | 83 | 1,090 | (110 | ) | 16 | (94 | ) | |||||||||||||||
Total comprehensive income for the period | 5,162 | 362 | 5,524 | 3,932 | 287 | 4,219 | |||||||||||||||||
Common Stock issued under employee plans | 256 | 256 | 200 | 200 | |||||||||||||||||||
Common Stock repurchased | (1,430 | ) | (1,430 | ) | (685 | ) | (685 | ) | |||||||||||||||
Dividends on Common Stock | (1,541 | ) | (1,541 | ) | (1,561 | ) | (1,561 | ) | |||||||||||||||
Dividends on ESOP Common Stock | (54 | ) | (54 | ) | (56 | ) | (56 | ) | |||||||||||||||
Dividends attributable to noncontrolling interest | (120 | ) | (120 | ) | (270 | ) | (270 | ) | |||||||||||||||
Sale of subsidiary shares from noncontrolling interest, net | 4 | 4 | 8 | (4 | ) | 21 | 17 | ||||||||||||||||
Acquisition of noncontrolling interest | 14 | 14 | 63 | 63 | |||||||||||||||||||
Redeemable noncontrolling interest fair value adjustment | (99 | ) | — | (99 | ) | — | — | ||||||||||||||||
Other | 4 | (40 | ) | (36 | ) | 3 | (10 | ) | (7 | ) | |||||||||||||
Equity, end of period | $ | 29,881 | $ | 1,810 | $ | 31,691 | $ | 29,187 | $ | 1,577 | $ | 30,764 |
(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 September 30, 2017 | |||||||||||||||||||
Balance at June 30, 2017 | $ | (3,128 | ) | $ | (4,882 | ) | $ | 100 | $ | (54 | ) | $ | (7,964 | ) | |||||
Other comprehensive income (loss) before reclassifications, net | 474 | (37 | ) | 12 | 232 | 681 | |||||||||||||
Amounts reclassified, pre-tax | (3 | ) | 132 | (138 | ) | (24 | ) | (33 | ) | ||||||||||
Tax (benefit) expense reclassified | — | (66 | ) | 50 | 5 | (11 | ) | ||||||||||||
Balance at September 30, 2017 | $ | (2,657 | ) | $ | (4,853 | ) | $ | 24 | $ | 159 | $ | (7,327 | ) | ||||||
Nine Months Ended September 30, 2017 | |||||||||||||||||||
Balance at December 31, 2016 | $ | (3,480 | ) | $ | (5,045 | ) | $ | 353 | $ | (162 | ) | $ | (8,334 | ) | |||||
Other comprehensive income (loss) before reclassifications, net | 826 | (39 | ) | 11 | 332 | 1,130 | |||||||||||||
Amounts reclassified, pre-tax | (3 | ) | 395 | (545 | ) | (14 | ) | (167 | ) | ||||||||||
Tax (benefit) expense reclassified | — | (164 | ) | 205 | 3 | 44 | |||||||||||||
Balance at September 30, 2017 | $ | (2,657 | ) | $ | (4,853 | ) | $ | 24 | $ | 159 | $ | (7,327 | ) |
(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 September 30, 2016 | |||||||||||||||||||
Balance at June 30, 2016 | $ | (2,685 | ) | $ | (4,999 | ) | $ | 317 | $ | (117 | ) | $ | (7,484 | ) | |||||
Other comprehensive income (loss) before reclassifications, net | (364 | ) | 4 | 30 | (5 | ) | (335 | ) | |||||||||||
Amounts reclassified, pre-tax | (1 | ) | 127 | (20 | ) | 32 | 138 | ||||||||||||
Tax (benefit) expense reclassified | — | (47 | ) | 8 | (9 | ) | (48 | ) | |||||||||||
Balance at September 30, 2016 | $ | (3,050 | ) | $ | (4,915 | ) | $ | 335 | $ | (99 | ) | $ | (7,729 | ) | |||||
Nine Months Ended September 30, 2016 | |||||||||||||||||||
Balance at December 31, 2015 | $ | (2,438 | ) | $ | (5,135 | ) | $ | 293 | $ | (339 | ) | $ | (7,619 | ) | |||||
Other comprehensive income (loss) before reclassifications, net | (612 | ) | (21 | ) | 87 | 138 | (408 | ) | |||||||||||
Amounts reclassified, pre-tax | — | 381 | (72 | ) | 139 | 448 | |||||||||||||
Tax (benefit) expense reclassified | — | (140 | ) | 27 | (37 | ) | (150 | ) | |||||||||||
Balance at September 30, 2016 | $ | (3,050 | ) | $ | (4,915 | ) | $ | 335 | $ | (99 | ) | $ | (7,729 | ) |
(Dollars in millions) | September 30, 2017 | December 31, 2016 | |||||
Current assets | $ | 4,317 | $ | 2,722 | |||
Noncurrent assets | 1,675 | 1,334 | |||||
Total assets | $ | 5,992 | $ | 4,056 | |||
Current liabilities | $ | 3,831 | $ | 2,422 | |||
Noncurrent liabilities | 2,013 | 1,636 | |||||
Total liabilities | $ | 5,844 | $ | 4,058 |
(Dollars in millions) | 2017 | 2016 | ||||||
Balance as of January 1 | $ | 1,199 | $ | 1,212 | ||||
Warranties and performance guarantees issued | 221 | 218 | ||||||
Settlements made | (194 | ) | (192 | ) | ||||
Other | 21 | — | ||||||
Balance as of September 30 | $ | 1,247 | $ | 1,238 |
Net Sales | Operating Profits | Operating Profit Margins | |||||||||||||||||||
(Dollars in millions) | 2017 | 2016 | 2017 | 2016 | 2017 | 2016 | |||||||||||||||
Otis | $ | 3,156 | $ | 3,018 | $ | 555 | $ | 584 | 17.6 | % | 19.4 | % | |||||||||
UTC Climate, Controls & Security | 4,688 | 4,415 | 828 | 801 | 17.7 | % | 18.1 | % | |||||||||||||
Pratt & Whitney | 3,871 | 3,501 | 229 | 340 | 5.9 | % | 9.7 | % | |||||||||||||
UTC Aerospace Systems | 3,637 | 3,646 | 616 | 600 | 16.9 | % | 16.5 | % | |||||||||||||
Total segments | 15,352 | 14,580 | 2,228 | 2,325 | 14.5 | % | 15.9 | % | |||||||||||||
Eliminations and other | (290 | ) | (226 | ) | 40 | 18 | |||||||||||||||
General corporate expenses | — | — | (105 | ) | (92 | ) | |||||||||||||||
Consolidated | $ | 15,062 | $ | 14,354 | $ | 2,163 | $ | 2,251 | 14.4 | % | 15.7 | % |
Net Sales | Operating Profits | Operating Profit Margins | |||||||||||||||||||
(Dollars in millions) | 2017 | 2016 | 2017 | 2016 | 2017 | 2016 | |||||||||||||||
Otis | $ | 9,091 | $ | 8,830 | $ | 1,551 | $ | 1,631 | 17.1 | % | 18.5 | % | |||||||||
UTC Climate, Controls & Security | 13,292 | 12,602 | 2,664 | 2,279 | 20.0 | % | 18.1 | % | |||||||||||||
Pratt & Whitney | 11,699 | 10,902 | 1,024 | 1,136 | 8.8 | % | 10.4 | % | |||||||||||||
UTC Aerospace Systems | 10,888 | 10,867 | 1,771 | 1,720 | 16.3 | % | 15.8 | % | |||||||||||||
Total segments | 44,970 | 43,201 | 7,010 | 6,766 | 15.6 | % | 15.7 | % | |||||||||||||
Eliminations and other | (813 | ) | (616 | ) | 25 | 47 | |||||||||||||||
General corporate expenses | — | — | (315 | ) | (280 | ) | |||||||||||||||
Consolidated | $ | 44,157 | $ | 42,585 | $ | 6,720 | $ | 6,533 | 15.2 | % | 15.3 | % |
• | ASU 2015-14, Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date - delays the effective date of ASU 2014-09 by one year. |
• | ASU 2016-08, Revenue from Contracts with Customers (Topic 606), Principal versus Agent Considerations (Reporting Revenue Gross versus Net) - clarifies how an entity should identify the unit of accounting (i.e. the specified good or service) for the principal versus agent evaluation and how it should apply the control principle to certain types of arrangements. |
• | ASU 2016-10, Revenue from Contracts with Customers (Topic 606), Identifying Performance Obligations and Licensing - clarifies the guidance surrounding licensing arrangements and the identification of performance obligations. |
• | ASU 2016-12, Revenue from Contracts with Customers (Topic 606), Narrow-Scope Improvements and Practical Expedients - addresses implementation issues raised by stakeholders concerning collectability, noncash consideration, presentation of sales tax, and transition. |
• | ASU 2016-20, Revenue from Contracts with Customers (Topic 606), Technical Corrections and Improvements - addresses loan guarantee fees, impairment testing of contract costs, provisions for losses on certain contracts, and various disclosures. |
Item 2. | Management's Discussion and Analysis of Financial Condition and Results of Operations |
Quarter Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
(Dollars in millions) | 2017 | 2016 | 2017 | 2016 | |||||||||||
Net Sales | $ | 15,062 | $ | 14,354 | $ | 44,157 | $ | 42,585 |
Quarter Ended September 30, 2017 | Nine Months Ended September 30, 2017 | ||||
Organic change | 6 | % | 4 | % | |
Foreign currency translation | 1 | % | — | ||
Other | (2 | )% | — | ||
Total % Change | 5 | % | 4 | % |
Quarter Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
(Dollars in millions) | 2017 | 2016 | 2017 | 2016 | |||||||||||
Cost of products sold | $ | 7,750 | $ | 7,522 | $ | 22,920 | $ | 22,542 | |||||||
Percentage of product sales | 74.7 | % | 73.8 | % | 74.7 | % | 74.5 | % | |||||||
Cost of services sold | $ | 3,293 | $ | 2,820 | $ | 9,300 | $ | 8,195 | |||||||
Percentage of service sales | 70.3 | % | 67.8 | % | 69.0 | % | 66.4 | % | |||||||
Total cost of products and services sold | $ | 11,043 | $ | 10,342 | $ | 32,220 | $ | 30,737 |
Quarter Ended September 30, 2017 | Nine Months Ended September 30, 2017 | ||||
Organic change | 7 | % | 5 | % | |
Foreign currency translation | 1 | % | — | ||
Other | (1 | )% | — | ||
Total % Change | 7 | % | 5 | % |
Quarter Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
(Dollars in millions) | 2017 | 2016 | 2017 | 2016 | |||||||||||
Gross margin | $ | 4,019 | $ | 4,012 | $ | 11,937 | $ | 11,848 | |||||||
Percentage of net sales | 26.7 | % | 28.0 | % | 27.0 | % | 27.8 | % |
Quarter Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
(Dollars in millions) | 2017 | 2016 | 2017 | 2016 | |||||||||||
Company-funded | $ | 582 | $ | 582 | $ | 1,768 | $ | 1,711 | |||||||
Percentage of net sales | 3.9 | % | 4.1 | % | 4.0 | % | 4.0 | % | |||||||
Customer-funded | $ | 350 | $ | 350 | $ | 1,068 | $ | 1,065 | |||||||
Percentage of net sales | 2.3 | % | 2.4 | % | 2.4 | % | 2.5 | % |
Quarter Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
(Dollars in millions) | 2017 | 2016 | 2017 | 2016 | |||||||||||
Selling, general and administrative expenses | $ | 1,524 | $ | 1,390 | $ | 4,544 | $ | 4,204 | |||||||
Percentage of net sales | 10.1 | % | 9.7 | % | 10.3 | % | 9.9 | % |
Quarter Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
(Dollars in millions) | 2017 | 2016 | 2017 | 2016 | |||||||||||
Other income, net | $ | 250 | $ | 211 | $ | 1,095 | $ | 600 |
Quarter Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
(Dollars in millions) | 2017 | 2016 | 2017 | 2016 | |||||||||||
Interest expense | $ | 258 | $ | 252 | $ | 745 | $ | 741 | |||||||
Interest income | (35 | ) | (27 | ) | (83 | ) | (68 | ) | |||||||
Interest expense, net | $ | 223 | $ | 225 | $ | 662 | $ | 673 | |||||||
Average interest expense rate | 3.6 | % | 4.0 | % | 3.6 | % | 4.1 | % |
Quarter Ended September 30, | Nine Months Ended September 30, | ||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||
Effective tax rate | 26.1 | % | 24.3 | % | 26.8 | % | 26.4 | % |
Quarter Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
(Dollars in millions, except per share amounts) | 2017 | 2016 | 2017 | 2016 | |||||||||||
Net income from continuing operations attributable to common shareowners | $ | 1,330 | $ | 1,443 | $ | 4,155 | $ | 4,041 | |||||||
Diluted earnings per share from continuing operations | $ | 1.67 | $ | 1.74 | $ | 5.20 | $ | 4.86 |
Quarter Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
(Dollars in millions, except per share amounts) | 2017 | 2016 | 2017 | 2016 | |||||||||||
Net income from discontinued operations attributable to common shareowners | $ | — | $ | 37 | $ | — | $ | 1 | |||||||
Diluted earnings per share from discontinued operations | $ | — | $ | 0.04 | $ | — | $ | — |
Nine Months Ended September 30, | |||||||
(Dollars in millions) | 2017 | 2016 | |||||
Restructuring costs | $ | 177 | $ | 201 |
Otis | UTC Climate, Controls & Security | ||||||||||||||||||||
(Dollars in millions) | 2017 | 2016 | Change | 2017 | 2016 | Change | |||||||||||||||
Net Sales | $ | 3,156 | $ | 3,018 | 5 | % | $ | 4,688 | $ | 4,415 | 6 | % | |||||||||
Cost of Sales | 2,173 | 2,025 | 7 | % | 3,286 | 3,067 | 7 | % | |||||||||||||
983 | 993 | (1 | )% | 1,402 | 1,348 | 4 | % | ||||||||||||||
Operating Expenses and Other | 428 | 409 | 5 | % | 574 | 547 | 5 | % | |||||||||||||
Operating Profits | $ | 555 | $ | 584 | (5 | )% | $ | 828 | $ | 801 | 3 | % |
Operating Profit Margins | 17.6 | % | 19.4 | % | 17.7 | % | 18.1 | % |
Otis | UTC Climate, Controls & Security | ||||||||||||||||||||
(Dollars in millions) | 2017 | 2016 | Change | 2017 | 2016 | Change | |||||||||||||||
Net Sales | $ | 9,091 | $ | 8,830 | 3 | % | $ | 13,292 | $ | 12,602 | 5 | % | |||||||||
Cost of Sales | 6,287 | 5,972 | 5 | % | 9,322 | 8,708 | 7 | % | |||||||||||||
2,804 | 2,858 | (2 | )% | 3,970 | 3,894 | 2 | % | ||||||||||||||
Operating Expenses and Other | 1,253 | 1,227 | 2 | % | 1,306 | 1,615 | (19 | )% | |||||||||||||
Operating Profits | $ | 1,551 | $ | 1,631 | (5 | )% | $ | 2,664 | $ | 2,279 | 17 | % |
Operating Profit Margins | 17.1 | % | 18.5 | % | 20.0 | % | 18.1 | % |
Factors Contributing to Total % Change | |||||||||||||
Organic / Operational | FX Translation | Acquisitions / Divestitures, net | Restructuring Costs | Other | |||||||||
Net Sales | 2 | % | 1 | % | 1 | % | — | 1 | % | ||||
Cost of Sales | 5 | % | 1 | % | — | — | 1 | % | |||||
Operating Profits | (4 | )% | 1 | % | — | — | (2 | )% |
• | unfavorable price and mix (10%), primarily in China |
• | higher selling, general and administrative expenses (2%), including higher labor and information technology costs |
• | profit contribution from the higher sales volumes noted above (5%) |
• | favorable productivity (4%) |
Factors Contributing to Total % Change | ||||||||||||||
Organic / Operational | FX Translation | Acquisitions / Divestitures, net | Restructuring Costs | Other | ||||||||||
Net Sales | 2 | % | (1 | )% | 1 | % | — | 1 | % | |||||
Cost of Sales | 5 | % | (1 | )% | — | — | 1 | % | ||||||
Operating Profits | (6 | )% | — | — | 1 | % | — |
• | unfavorable price and mix (11%), primarily in China |
• | higher selling, general and administrative expenses (2%), primarily labor and information technology costs |
• | profit contribution from the higher sales volumes noted above (4%) |
• | favorable productivity (4%) |
Factors Contributing to Total % Change | ||||||||||||||
Organic / Operational | FX Translation | Acquisitions / Divestitures, net | Restructuring Costs | Other | ||||||||||
Net Sales | 4 | % | 2 | % | — | — | — | |||||||
Cost of Sales | 5 | % | 2 | % | — | — | — | |||||||
Operating Profits | 3 | % | 1 | % | (1 | )% | (3 | )% | 3 | % |
Factors Contributing to Total % Change | ||||||||||||||
Organic / Operational | FX Translation | Acquisitions / Divestitures, net | Restructuring Costs | Other | ||||||||||
Net Sales | 4 | % | (1 | )% | 2 | % | — | — | ||||||
Cost of Sales | 5 | % | — | 2 | % | — | — | |||||||
Operating Profits | (2 | )% | — | — | (1 | )% | 20 | % |
Pratt & Whitney | UTC Aerospace Systems | ||||||||||||||||||||
(Dollars in millions) | 2017 | 2016 | Change | 2017 | 2016 | Change | |||||||||||||||
Net Sales | $ | 3,871 | $ | 3,501 | 11 | % | $ | 3,637 | $ | 3,646 | — | ||||||||||
Cost of Sales | 3,179 | 2,778 | 14 | % | 2,640 | 2,681 | (2 | )% | |||||||||||||
692 | 723 | (4 | )% | 997 | 965 | 3 | % | ||||||||||||||
Operating Expenses and Other | 463 | 383 | 21 | % | 381 | 365 | 4 | % | |||||||||||||
Operating Profits | $ | 229 | $ | 340 | (33 | )% | $ | 616 | $ | 600 | 3 | % |
Operating Profit Margins | 5.9 | % | 9.7 | % | 16.9 | % | 16.5 | % |
Pratt & Whitney | UTC Aerospace Systems | ||||||||||||||||||||
(Dollars in millions) | 2017 | 2016 | Change | 2017 | 2016 | Change | |||||||||||||||
Net Sales | $ | 11,699 | $ | 10,902 | 7 | % | $ | 10,888 | $ | 10,867 | — | ||||||||||
Cost of Sales | 9,381 | 8,668 | 8 | % | 7,945 | 7,976 | — | ||||||||||||||
2,318 | 2,234 | 4 | % | 2,943 | 2,891 | 2 | % | ||||||||||||||
Operating Expenses and Other | 1,294 | 1,098 | 18 | % | 1,172 | 1,171 | — | ||||||||||||||
Operating Profits | $ | 1,024 | $ | 1,136 | (10 | )% | $ | 1,771 | $ | 1,720 | 3 | % |
Operating Profit Margins | 8.8 | % | 10.4 | % | 16.3 | % | 15.8 | % |
Factors Contributing to Total % Change | ||||||||||||||
Organic / Operational | FX Translation* | Acquisitions / Divestitures, net | Restructuring Costs | Other | ||||||||||
Net Sales | 15 | % | 2 | % | — | — | (6 | )% | ||||||
Cost of Sales | 18 | % | — | — | — | (4 | )% | |||||||
Operating Profits | 3 | % | 10 | % | (1 | )% | (6 | )% | (39 | )% |
• | higher aftermarket profit contribution (37%) driven by increases in both commercial and military aftermarket sales |
• | lower pension expense (3%) |
• | lower OEM profit contribution (29%), reflecting higher negative engine margin and other ramp-related costs, partially offset by the profit contribution from higher military sales |
• | higher selling, general and administrative expenses and research and development costs (7%) |
Factors Contributing to Total % Change | |||||||||||||
Organic / Operational | FX Translation* | Acquisitions / Divestitures, net | Restructuring Costs | Other | |||||||||
Net Sales | 8 | % | 1 | % | — | — | (2 | )% | |||||
Cost of Sales | 10 | % | — | — | (1 | )% | (1 | )% | |||||
Operating Profits | (8 | )% | 9 | % | — | 4 | % | (15 | )% |
• | lower OEM profit contribution (18%) reflecting higher negative engine margin and other ramp-related costs and lower volume at Pratt & Whitney Canada partially offset by the profit contribution from higher military sales |
• | unfavorable year-over-year contract settlements (7%) |
• | higher selling, general and administrative expenses and research and development costs (6%) |
• | the absence of prior year sales of legacy hardware (4%) |
• | higher aftermarket profit contribution (24%) driven by increases in both commercial and military aftermarket sales |
• | lower pension expense (2%) |
Factors Contributing to Total % Change | ||||||||||||||
Organic / Operational | FX Translation | Acquisitions / Divestitures, net | Restructuring Costs | Other | ||||||||||
Net Sales | — | — | — | — | — | |||||||||
Cost of Sales | (1 | )% | — | (1 | )% | — | — | |||||||
Operating Profits | 10 | % | (1 | )% | — | (1 | )% | (5 | )% |
• | higher commercial aerospace profit contribution (8%) driven by the commercial aftermarket sales growth noted above, partially offset by lower commercial aerospace OEM volume and adverse mix |
• | the favorable impact of a customer settlement (3%) |
• | lower pension expense (2%) |
• | lower military OEM and military aftermarket profit contribution (3%), primarily driven by adverse mix |
Factors Contributing to Total % Change | ||||||||||||||
Organic / Operational | FX Translation | Acquisitions / Divestitures, net | Restructuring Costs | Other | ||||||||||
Net Sales | 1 | % | — | (1 | )% | — | — | |||||||
Cost of Sales | 1 | % | — | (1 | )% | — | — | |||||||
Operating Profits | 5 | % | 1 | % | — | (2 | )% | (1 | )% |
• | higher commercial aerospace profit contribution (6%) driven by the commercial aftermarket sales growth noted above partially offset by lower commercial aerospace OEM profit contribution |
• | lower pension costs (2%) |
• | the favorable impact of a customer settlement (1%) |
• | higher selling, general, and administrative expenses (2%) |
• | lower military OEM and military aftermarket profit contribution (1%) |
Net Sales | Operating Profits | ||||||||||||||
Quarter Ended September 30, | Quarter Ended September 30, | ||||||||||||||
(Dollars in millions) | 2017 | 2016 | 2017 | 2016 | |||||||||||
Eliminations and other | $ | (290 | ) | $ | (226 | ) | $ | 40 | $ | 18 | |||||
General corporate expenses | — | — | (105 | ) | (92 | ) |
Net Sales | Operating Profits | ||||||||||||||
Nine Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
(Dollars in millions) | 2017 | 2016 | 2017 | 2016 | |||||||||||
Eliminations and other | $ | (813 | ) | $ | (616 | ) | $ | 25 | $ | 47 | |||||
General corporate expenses | — | — | (315 | ) | (280 | ) |
(Dollars in millions) | September 30, 2017 | December 31, 2016 | September 30, 2016 | |||||||||
Cash and cash equivalents | $ | 8,523 | $ | 7,157 | $ | 7,107 | ||||||
Total debt | 27,260 | 23,901 | 22,665 | |||||||||
Net debt (total debt less cash and cash equivalents) | 18,737 | 16,744 | 15,558 | |||||||||
Total equity | 31,691 | 29,169 | 30,764 | |||||||||
Total capitalization (debt plus equity) | 58,951 | 53,070 | 53,429 | |||||||||
Net capitalization (debt plus equity less cash and cash equivalents) | 50,428 | 45,913 | 46,322 |
Debt to total capitalization | 46 | % | 45 | % | 42 | % | |||
Net debt to net capitalization | 37 | % | 36 | % | 34 | % |
Nine Months Ended September 30, | |||||||
(Dollars in millions) | 2017 | 2016 | |||||
Net cash flows provided by operating activities of continuing operations | $ | 3,110 | $ | 4,567 |
Nine Months Ended September 30, | |||||||
(Dollars in millions) | 2017 | 2016 | |||||
Net cash flows used in investing activities of continuing operations | $ | (1,658 | ) | $ | (1,899 | ) |
Nine Months Ended September 30, | |||||||
(Dollars in millions) | 2017 | 2016 | |||||
Net cash flows used in financing activities of continuing operations | $ | (293 | ) | $ | (203 | ) |
(Dollars in millions) | Nine Months Ended September 30, 2016 | ||
Net cash flows used in discontinued operations | $ | (2,480 | ) |
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 acquisition and divestiture activity, including among other things integration of acquired businesses, including the proposed acquisition of Rockwell Collins, into UTC's existing businesses and realization of synergies and opportunities for growth and innovation; |
• | future levels of indebtedness, including indebtedness expected to be incurred by UTC in connection with the proposed Rockwell Collins merger, and capital spending and research and development spending including in connection with the proposed Rockwell Collins merger; |
• | 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; |
• | 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, 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 approval by the Rockwell Collins shareowners and to satisfy the other conditions to the closing of the proposed merger 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, including on circumstances that might require Rockwell Collins to pay a termination fee of $695 million to UTC or $50 million of expense reimbursement; |
• | 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; |
• | the risks related to Rockwell Collins and UTC being restricted in its operation of the business while the merger agreement is in effect; |
• | risks relating to the value of the UTC’s shares to be issued in connection with the proposed Rockwell merger, 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 merger agreement; |
• | risks associated with potential merger-related litigation or appraisal proceedings; and |
• | the ability of UTC and Rockwell Collins, or the combined company, to retain and hire key personnel. |
Item 1A. | Risk Factors |
• | the diversion of management’s attention from ongoing business concerns and performance shortfalls at one or both of the companies as a result of the devotion of management’s attention to the acquisition; |
• | managing a larger combined aerospace systems business; |
• | maintaining employee morale and retaining key management and other employees; |
• | retaining existing business and operational relationships, including customers, suppliers and employees and other counterparties, as may be impacted by contracts containing consent and/or other provisions that may be triggered by the acquisition, and attracting new business and operational relationships; |
• | the possibility of faulty assumptions underlying expectations regarding the integration process; |
• | consolidating corporate and administrative infrastructures and eliminating duplicative operations; |
• | coordinating geographically separate organizations; |
• | unanticipated issues in integrating information technology, communications and other systems; and |
• | unforeseen expenses or delays associated with the acquisition. |
Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds |
2017 | 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) | ||||||||||
July 1 - July 31 | 277 | $ | 119.48 | 277 | $ | 2,343 | ||||||||
August 1 - August 31 | 168 | 118.63 | 168 | $ | 2,323 | |||||||||
September 1 - September 30 | 64 | 114.04 | 64 | $ | 2,316 | |||||||||
Total | 509 | $ | 118.51 | 509 |
Item 6. | Exhibits |
Exhibit Number | Exhibit Description | |
101.INS | XBRL Instance Document.* (File name: utx-20170930.xml) | |
101.SCH | XBRL Taxonomy Extension Schema Document.* (File name: utx-20170930.xsd) | |
101.CAL | XBRL Taxonomy Extension Calculation Linkbase Document.* (File name: utx-20170930_cal.xml) | |
101.DEF | XBRL Taxonomy Extension Definition Linkbase Document.* (File name: utx-20170930_def.xml) | |
101.LAB | XBRL Taxonomy Extension Label Linkbase Document.* (File name: utx-20170930_lab.xml) | |
101.PRE | XBRL Taxonomy Extension Presentation Linkbase Document.* (File name: utx-20170930_pre.xml) |
* | Submitted electronically herewith. |
UNITED TECHNOLOGIES CORPORATION (Registrant) | |||
Dated: | October 27, 2017 | 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: | October 27, 2017 | 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) |
Nine Months Ended September 30, | ||||||||
(Dollars in millions) | 2017 | 2016 | ||||||
Fixed Charges: | ||||||||
Interest expense 1 | $ | 745 | $ | 741 | ||||
Interest capitalized | 25 | 26 | ||||||
One-third of rents 2 | 104 | 96 | ||||||
Total fixed charges | $ | 874 | $ | 863 | ||||
Earnings: | ||||||||
Income from continuing operations before income taxes | $ | 6,058 | $ | 5,860 | ||||
Fixed charges per above | 874 | 863 | ||||||
Less: capitalized interest | (25 | ) | (26 | ) | ||||
849 | 837 | |||||||
Amortization of interest capitalized | 8 | 7 | ||||||
Total earnings | $ | 6,915 | $ | 6,704 | ||||
Ratio of earnings to fixed charges | 7.91 | 7.77 |
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 $21 million and $31 million for the nine months ended September 30, 2017 and 2016, respectively. The ratio of earnings to fixed charges would have been 8.11 and 8.06 for the nine months ended September 30, 2017 and 2016, 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: | October 27, 2017 | /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: | October 27, 2017 | /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: | October 27, 2017 | /s/ ROBERT J. BAILEY | |
Robert J. Bailey | |||
Corporate Vice President, Controller |
Date: | October 27, 2017 | /s/ GREGORY J. HAYES |
Gregory J. Hayes | ||
Chairman, President and Chief Executive Officer | ||
Date: | October 27, 2017 | /s/ AKHIL JOHRI |
Akhil Johri | ||
Executive Vice President & Chief Financial Officer | ||
Date: | October 27, 2017 | /s/ ROBERT J. BAILEY |
Robert J. Bailey | ||
Corporate Vice President, Controller |
Document and Entity Information - USD ($) |
9 Months Ended | |
---|---|---|
Sep. 30, 2017 |
Jun. 30, 2017 |
|
Document and Entity Information [Abstract] | ||
Document Type | 10-Q | |
Document Period End Date | Sep. 30, 2017 | |
Amendment Flag | false | |
Document Fiscal Year Focus | 2017 | |
Document Fiscal Period Focus | Q3 | |
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 | $ 97,490,067,627 | |
Entity Common Stock, Shares Outstanding | 798,569,921 |
Introduction to Notes to Condensed Consolidated Financial Statements (Unaudited) Introduction |
9 Months Ended |
---|---|
Sep. 30, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Introduction of Notes to Condensed Consolidated Financial Statements | The Condensed Consolidated Financial Statements at September 30, 2017 and for the quarters and nine months ended September 30, 2017 and 2016 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 (2016 Annual Report) incorporated by reference in our Annual Report on Form 10-K for calendar year 2016 (2016 Form 10-K). Certain reclassifications have been made to the prior year amounts to conform to the current year presentation. As previously disclosed in our 2016 Form 10-K, in 2016 we early adopted Accounting Standards Update (ASU) 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments and ASU 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash. Amounts previously reported for the quarter and nine months ended September 30, 2016 have been restated as required upon adoption of these ASUs. These restatements had an immaterial impact on the Condensed Consolidated Financial Statements as of September 30, 2016, and for the quarter and nine months then ended. |
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 nine months ended September 30, 2017, our investment in business acquisitions was $196 million, and consisted of a number of small acquisitions, primarily in our commercial businesses. 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. We currently expect that the merger will be completed in the third quarter of 2018, subject to approval by Rockwell Collins’ shareowners, as well as other 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 existing Rockwell Collins long-term debt upon completion of the merger. Goodwill. Changes in our goodwill balances for the nine months ended September 30, 2017 were as follows:
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 nine months ended September 30, 2017 was $211 million and $626 million, respectively, compared with $197 million and $578 million for the same periods of 2016. The following is the expected amortization of intangible assets for the years 2017 through 2022, which reflects the pattern of expected economic benefit on certain aerospace intangible assets.
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Discontinued Operations |
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Sep. 30, 2017 | |
Discontinued Operations and Disposal Groups [Abstract] | |
Disposal Groups, Including Discontinued Operations, Disclosure [Text Block] | Discontinued Operations On November 6, 2015, we completed the sale of Sikorsky to Lockheed Martin Corp. In the nine months ended September 30, 2016, we recognized approximately $11 million of additional gain on the disposal, primarily resulting from the settlement of working capital adjustments. In the quarter and nine months ended September 30, 2016, we recognized approximately $40 million of income tax benefit and $12 million of additional income tax expense, respectively, including the impacts related to filing Sikorsky's 2015 tax returns. Net cash outflows from discontinued operations of approximately $2.5 billion resulted from the payment of taxes related to the 2015 gain realized on the sale of Sikorsky. |
Earnings Per Share |
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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 the quarter and nine months ended September 30, 2017, the number of stock awards excluded from the computation was approximately 5.8 million and 6.4 million, respectively. For the quarter and nine months ended September 30, 2016, the number of stock awards excluded from the computation was approximately 12.2 million and 15.0 million, respectively. |
Inventories and Contracts in Progress |
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Inventory Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Inventories and Contracts in Progress [Text Block] | Inventories and Contracts in Progress
Inventories include capitalized contract development costs related to certain aerospace programs at UTC Aerospace Systems. As of September 30, 2017 and December 31, 2016, these capitalized costs were $130 million and $140 million, respectively, which will be liquidated as production units are delivered to customers. Within commercial aerospace, inventory costs attributable to new engine offerings are 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 are capitalized, and these capitalized amounts are subsequently expensed as additional engine deliveries occur for engines with costs below the projected contract per unit average cost over the life of the contract. As of September 30, 2017 and December 31, 2016, inventory included $357 million and $233 million, respectively, of such capitalized amounts. |
Borrowings and Lines of Credit |
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Borrowings and Lines of Credit [Text Block] | Borrowings and Lines of Credit
At September 30, 2017, 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 September 30, 2017, there were no borrowings under these revolving credit 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 September 30, 2017, our maximum commercial paper borrowing limit was $4.35 billion. Commercial paper borrowings at September 30, 2017 include approximately €500 million ($594 million) of euro-denominated commercial paper. We use our commercial paper borrowings for general corporate purposes, including the funding of potential acquisitions, discretionary 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. 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. On May 4, 2017, we issued $1.0 billion aggregate principal amount of 1.900% notes due 2020, $500 million aggregate principal amount of 2.300% notes due 2022, $800 million aggregate principal amount of 2.800% notes due 2024, $1.1 billion aggregate principal amount of 3.125% notes due 2027 and $600 million aggregate principal amount of 4.050% notes due 2047. The net proceeds received from these debt issuances were used to fund the repayment at maturity of our 1.800% notes due 2017, representing $1.5 billion in aggregate principal, and for other general corporate purposes. Long-term debt consisted of the following:
The average maturity of our long-term debt at September 30, 2017 is approximately twelve years. The average interest expense rate on our total borrowings for the quarters and nine months ended September 30, 2017 and 2016 was 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 issuance, 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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Income Tax Disclosure [Abstract] | |
Income Tax Disclosure [Text Block] | Income Taxes 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 2005. 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 $30 million to $435 million of unrecognized tax benefits may occur within the next 12 months as a result of additional worldwide uncertain tax positions, the revaluation of current uncertain tax positions arising from developments in examinations, in appeals, in the courts, or the closure of tax statutes. 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 and 2015, which is expected to continue beyond the next 12 months. As a result of federal, state and non-U.S. tax year closures related to audit resolutions and the expiration of applicable statutes of limitation during the quarter, including expiration of the U.S. federal income tax statute of limitations for UTC’s 2013 tax year, we recognized non-cash gains of approximately $55 million of income tax and $9 million of related interest, in the quarter ended September 30, 2017. |
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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. Contributions to our plans were as follows:
There was a $1.9 billion contribution to our domestic defined benefit pension plans in the quarter and nine months ended September 30, 2017. There were no contributions to our domestic defined benefit pension plans in the quarter and nine months ended September 30, 2016. The following table illustrates the components of net periodic benefit cost for our defined pension and other postretirement benefit plans:
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. |
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Restructuring and Related Activities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Restructuring and Other Costs [Text Block] | Restructuring Costs During the nine months ended September 30, 2017, we recorded net pre-tax restructuring costs totaling $177 million for new and ongoing restructuring actions. We recorded charges in the segments as follows:
Restructuring charges incurred during the nine months ended September 30, 2017 primarily relate to actions initiated during 2017 and 2016, and were recorded as follows:
2017 Actions. During the nine months ended September 30, 2017, we recorded net pre-tax restructuring costs of $114 million, comprised of $40 million in cost of sales and $74 million in selling, general and administrative expenses. The 2017 actions relate to ongoing cost reduction efforts, including workforce reductions and the consolidation of field operations. We are targeting to complete the majority of the remaining workforce and facility related cost reduction actions during 2017 and 2018. No specific plans for significant other actions have been finalized at this time. The following table summarizes the accrual balance and utilization for the 2017 restructuring actions for the quarter and nine months ended September 30, 2017:
The following table summarizes expected, incurred and remaining costs for the 2017 restructuring actions by segment:
2016 Actions. During the nine months ended September 30, 2017, we recorded net pre-tax restructuring costs totaling $48 million for restructuring actions initiated in 2016, including $20 million in cost of sales and $28 million in selling, general and administrative expenses. The 2016 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 2016 restructuring actions for the quarter and nine months ended September 30, 2017:
The following table summarizes expected, incurred and remaining costs for the 2016 restructuring actions by segment:
2015 and Prior Actions. During the nine months ended September 30, 2017, we recorded net pre-tax restructuring costs totaling $15 million for restructuring actions initiated in 2015 and prior. As of September 30, 2017, we have approximately $52 million of accrual balances remaining related to 2015 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 for risk management purposes only, 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 ordinary course of business, we 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 $18.6 billion and $18.3 billion at September 30, 2017 and December 31, 2016, respectively. The following table summarizes the fair value of derivative instruments as of September 30, 2017 and December 31, 2016, which consist solely of foreign exchange contracts:
As discussed in Note 5, we have issued approximately €2.95 billion of euro-denominated long-term debt and €500 million of outstanding euro-denominated commercial paper borrowings, which qualify as a net investment hedge against our investments in European businesses. As of September 30, 2017, the net investment hedge is deemed to be effective. The amount of gains and losses related to the Company's derivative financial instruments was as follows:
Assuming current market conditions continue, a $80 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 September 30, 2017, all derivative contracts accounted for as cash flow hedges will mature by November 2022. The effect on the Condensed Consolidated Statement of Operations of foreign exchange contracts not designated as hedging instruments was as follows:
We paid $183 million and $29 million for settlements of derivative contracts during the nine months ended September 30, 2017 and 2016, respectively. |
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 September 30, 2017 and December 31, 2016:
The reduction in value of available-for-sale securities as of September 30, 2017, as compared to December 31, 2016, is primarily the result of sales of these securities in the nine months ended September 30, 2017, including UTC Climate, Controls & Security's sale of investments in Watsco, Inc. during the quarter ended March 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 and commodity derivatives 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 September 30, 2017, there were no significant transfers in and out of Level 1 and Level 2. As of September 30, 2017, 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 September 30, 2017 and December 31, 2016:
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 as of September 30, 2017:
We had commercial aerospace financing and other contractual commitments totaling approximately $13.9 billion and $14.4 billion as of September 30, 2017 and December 31, 2016, respectively, related to commercial aircraft and certain contractual rights to provide product on new aircraft platforms. Risks associated with changes in interest rates on these commitments are mitigated by the fact that 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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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. Long-term trade accounts receivable, including unbilled receivables related to long-term aftermarket contracts, are principally amounts arising from the sale of goods and the delivery of services with a contractual maturity date or realization period of greater than one year, 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 September 30, 2017 and December 31, 2016.
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. Based upon the customer credit ratings, approximately 11% and 13% of our total long-term receivables were considered to bear high credit risk as of September 30, 2017 and December 31, 2016, 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 September 30, 2017 and December 31, 2016, are individually evaluated for impairment. At September 30, 2017 and December 31, 2016, we did not have any significant balances that are considered to be delinquent, on non-accrual status, past due 90 days or more, or 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 quarters and nine months ended September 30, 2017 and 2016 is provided below:
On November 11, 2015, we entered into accelerated share repurchase (ASR) agreements to repurchase an aggregate of $6 billion of our common stock utilizing the net after-tax proceeds from the sale of Sikorsky. Under the terms of the ASR agreements, we made aggregate payments and received an initial delivery of approximately 51.9 million shares of our common stock in November 2015, representing approximately 85% of the shares expected to be repurchased. The shares associated with the remaining portion of the aggregate purchase were settled upon delivery to us of approximately 2.1 million additional shares of common stock in the quarter ended March 31, 2016 and approximately 8.0 million additional shares of common stock in the quarter ended September 30, 2016. A summary of the changes in each component of Accumulated other comprehensive (loss) income, net of tax for the quarters and nine months ended September 30, 2017 and 2016 is provided below:
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 $500 million of previously unrealized gains reclassified to other income as a result of sales of significant investments in available-for-sale securities in the nine months ended September 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. The increase in the value of redeemable noncontrolling interest in our Condensed Consolidated Balance Sheet as of September 30, 2017 is primarily attributable to the adjustment of the redemption value related to the acquisition of a majority interest in an Italian heating products and services company by UTC Climate, Controls & Security in 2016. |
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 61% net 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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Service and Product Warranties and Product Performance Guarantees [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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, 2016. The changes in the carrying amount of service and product warranties and product performance guarantees for the nine months ended September 30, 2017 and 2016 are as follows:
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Contingent Liabilities |
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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 2016 Annual Report, incorporated by reference in our 2016 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 2016 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 2016 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 $70 million through September 30, 2017). 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 $256 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 $140 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 have appealed this decision to the German Federal Tax Court (FTC). 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. In the meantime, we continue vigorously to litigate 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 $349 million and is principally recorded in Other long-term liabilities on our Condensed Consolidated Balance Sheet as of September 30, 2017. 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 $121 million, which is included primarily in Other assets on our Condensed Consolidated Balance Sheet as of September 30, 2017. 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 2016 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 Financial Data [Text Block] | 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. Results for the quarters ended September 30, 2017 and 2016 are as follows:
Results for the nine months ended September 30, 2017 and 2016 are as follows:
See Note 8 to the Condensed Consolidated Financial Statements for a discussion of restructuring costs included in segment operating results. |
Accounting Pronouncements |
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New Accounting Pronouncements and Changes in Accounting Principles [Abstract] | |||||||||||||||||||||
New Accounting Pronouncements, Policy [Text Block] | Accounting Pronouncements Accounting Standards Update (ASU) 2014-09, Revenue from Contracts with Customers: In May 2014, the FASB issued Accounting Standards Update (ASU) 2014-09, Revenue from Contracts with Customers. In 2015 and 2016, the FASB issued various updates to this ASU as follows:
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, using either of the following transition methods; (i) a full retrospective adoption reflecting the application of the standard in each prior reporting period, or (ii) a modified retrospective approach with the cumulative effect of adopting recognized through retained earnings at the date of adoption. The New Revenue Standard is expected to change the revenue recognition practices for a number of revenue streams across our businesses, although the most significant impacts will be concentrated within our aerospace units. Several businesses, which currently account for revenue on a “point-in-time basis,” will be required to use an “over time” model as they meet one or more of the mandatory criteria established in the New Revenue Standard. Revenue will be recognized based on percentage-of-completion for certain U.S. Government aerospace contracts; and aerospace aftermarket service work performed on a time and materials basis. For these businesses, unrecognized sales and operating profits related to the satisfied portion of the performance obligations of contracts in process as of the date of adoption will be recorded through retained earnings. The ongoing effect of recording revenue on a percentage-of-completion basis within these businesses is not expected to be material. In addition to the forgoing, our aerospace businesses will also incur changes related to the timing of manufacturing cost recognition and certain engineering and development costs. In most circumstances, our commercial aerospace businesses will identify the performance obligation, or the unit of accounting, as the individual original equipment (OEM) unit; revenues and costs to manufacture each unit will be recognized upon OEM unit delivery. Under current practice, the unit of accounting is the contract, and early-contract OEM unit costs in excess of the average expected over the contract are capitalized and amortized over lower-cost units later in the contract. With the adoption of the New Revenue Standard, any deferred unit costs in excess of the contract average will be eliminated through retained earnings and will not be amortized into future earnings. As of September 30, 2017, capitalized deferred unit costs in excess of the contract average are $357 million, which is expected to increase prior to adoption of the New Revenue Standard. With regard to costs incurred for the engineering and development of aerospace products under contract with customers, we generally expense as incurred unless there is a contractually guaranteed right of recovery. Any customer funding received for such efforts is recognized when earned, with the corresponding costs recognized as cost of sales. The New Revenue Standard requires customer funding of OEM product engineering and development to be deferred and recognized as revenue as the OEM products are delivered to the customer. The New Revenue Standard also requires product engineering and development costs to 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. For contracts that are open as of the adoption date, previously recognized customer funding will be established as a contract liability. We continue to evaluate the implications of the standard change. We intend to adopt the New Revenue Standard effective January 1, 2018 using the modified retrospective approach. Other Accounting Pronouncements: 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. As discussed in Note 12, we have approximately $24 million of unrealized gains on these securities recorded in Accumulated other comprehensive loss in our Condensed Consolidated Balance Sheet as of September 30, 2017. To the extent currently unrealized gains or losses on these investments are not realized through sale or other actions prior to the date of adoption, these amounts would be recorded directly to retained earnings upon adoption. The provisions of this ASU are effective for years beginning after December 15, 2017. 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 January 2017, the FASB issued ASU 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business. This ASU provides a new framework that will assist in the evaluation of whether business combination transactions should be accounted as acquisition of a business or a group of assets, as well as specifying the minimum required inputs and processes necessary to be a business. The provisions of this ASU are effective for years beginning after December 15, 2017, with early adoption permitted. We plan to adopt the new standard effective January 1, 2018. 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. The provisions of this ASU are effective for years beginning after December 15, 2017. Provisions related to presentation of the service cost components versus other cost components must be applied retrospectively, while provisions related to service cost component eligibility for capitalization must be applied prospectively. This ASU primarily impacts the presentation of net periodic pension cost/benefit and therefore we do not expect this ASU to have a material impact on net income, however it will result in changes to reported operating profit. In August 2017, the FASB issued ASU 2017-12, Derivatives and Hedging (Topic 815), Targeted Improvements to Accounting for Hedging Activities. This ASU will make more financial and nonfinancial hedging strategies eligible for hedge accounting. It also amends the presentation and disclosure requirements and changes how companies assess effectiveness. It is intended to more closely align hedge accounting with companies’ risk management strategies, simplify the application of hedge accounting, and increase transparency as to the scope and results of hedging programs. The provisions of this ASU are effective for years beginning after December 15, 2018, with early adoption permitted for any interim period after issuance of the ASU. In the case of early adoption, the effect of the adoption should be reflected as of the beginning of the fiscal year of adoption. We do not expect this ASU to have a significant impact on our results of operations or financial position. |
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 nine months ended September 30, 2017 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 2017 through 2022, which reflects the pattern of expected economic benefit on certain aerospace intangible assets.
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Earnings Per Share (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Inventory Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Inventory, Current [Table Text Block] |
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Borrowings and Lines of Credit (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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 quarters and nine months ended September 30, 2017 and 2016 was as follows:
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Employee Benefit Plans (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Retirement Benefits [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Defined Benefit Plans Disclosures [Table Text Block] | Contributions to our plans were as follows:
There was a $1.9 billion contribution to our domestic defined benefit pension plans in the quarter and nine months ended September 30, 2017. There were no contributions to our domestic defined benefit pension plans in the quarter and nine months ended September 30, 2016. 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) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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 nine months ended September 30, 2017 primarily relate to actions initiated during 2017 and 2016, 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 2017 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 2017 restructuring actions for the quarter and nine months ended September 30, 2017:
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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 2016 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 balances and utilization for the 2016 restructuring actions for the quarter and nine months ended September 30, 2017:
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Financial Instruments (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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 of derivative instruments as of September 30, 2017 and December 31, 2016, which consist solely of foreign exchange contracts:
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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 amount of gains and losses related to the Company's derivative financial instruments was as follows:
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Other Income [Member] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative Instruments, Gain (Loss) [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative Instruments, Gain (Loss) [Table Text Block] | The effect on the Condensed Consolidated Statement of Operations of foreign exchange contracts not designated as hedging instruments was as follows:
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Fair Value Measurements (Tables) |
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Sep. 30, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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 September 30, 2017 and December 31, 2016:
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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 September 30, 2017 and December 31, 2016:
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 as of September 30, 2017:
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Long-Term Financing Receivables (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||
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 September 30, 2017 and December 31, 2016.
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Shareowners' Equity and Noncontrolling Interest (Tables) |
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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 quarters and nine months ended September 30, 2017 and 2016 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 quarters and nine months ended September 30, 2017 and 2016 is provided below:
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Variable Interest Entities (Tables) |
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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) |
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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 nine months ended September 30, 2017 and 2016 are as follows:
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Segment Financial Data (Tables) |
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Segment Reporting Information, by Segment [Table Text Block] | Results for the quarters ended September 30, 2017 and 2016 are as follows:
Results for the nine months ended September 30, 2017 and 2016 are as follows:
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Acquisitions, Dispositions, Goodwill and Other Intangible Assets (General Information) (Details) - USD ($) |
3 Months Ended | 9 Months Ended | |
---|---|---|---|
Sep. 30, 2017 |
Sep. 30, 2017 |
Sep. 04, 2017 |
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Business Acquisition [Line Items] | |||
Acquisition Cost Of Acquired Entities and Interest in Affiliates | $ 196,000,000 | ||
Unsecured bridge loan credit agreement | $ 6,500,000,000 | ||
Rockwell Collins [Member] | |||
Business Acquisition [Line Items] | |||
Business Acquisition, Date of Acquisition Agreement | Sep. 04, 2017 | ||
Business Acquisition, Name of Acquired Entity | Rockwell Collins, Inc. (Rockwell Collins) | ||
Business Acquisition Cash Paid Per Share | $ 93.33 | ||
Business Acquisition UTC stock payable | 46.67 | ||
Payments to Acquire Businesses, Gross | 15,000,000,000 | ||
Unsecured bridge loan credit agreement | 6,500,000,000 | 6,500,000,000 | |
Business Acquisition, Assumed Long-term Debt | $ 7,000,000,000 | $ 7,000,000,000 |
Acquisitions, Dispositions, Goodwill and Other Intangible Assets (Intangible Assets) (Details) - USD ($) $ in Millions |
Sep. 30, 2017 |
Dec. 31, 2016 |
---|---|---|
Finite-Lived Intangible Assets [Line Items] | ||
Gross Amount | $ 19,944 | $ 18,895 |
Accumulated Amortization | 6,100 | 5,236 |
Unamortized: Trademarks and Other | 2,111 | 2,025 |
Total Intangible Assets Gross Excluding Goodwill | 22,055 | 20,920 |
Service portfolios [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Amount | 2,197 | 1,995 |
Accumulated Amortization | 1,531 | 1,344 |
Patents and trademarks [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Amount | 401 | 378 |
Accumulated Amortization | 228 | 201 |
Collaboration intangible assets [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Amount | 4,023 | 3,724 |
Accumulated Amortization | 342 | 211 |
Customer relationships and other [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Amount | 13,323 | 12,798 |
Accumulated Amortization | $ 3,999 | $ 3,480 |
Acquisitions, Dispositions, Goodwill and Other Intangible Assets (Amortization Expense) (Details) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2017 |
Sep. 30, 2016 |
Sep. 30, 2017 |
Sep. 30, 2016 |
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Business Combination, Recognized Identifiable Assets Acquired, Goodwill, and Liabilities Assumed, Net [Abstract] | ||||
Amortization of Intangible Assets | $ 211 | $ 197 | $ 626 | $ 578 |
Amortization Expense, Remaining 2017 | 210 | 210 | ||
Amortization Expense, 2018 | 879 | 879 | ||
Amortization Expense, 2019 | 866 | 866 | ||
Amortization Expense, 2020 | 888 | 888 | ||
Amortization Expense, 2021 | 898 | 898 | ||
Amortization Expense, 2022 | $ 893 | $ 893 |
Discontinued Operations (Details) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2017 |
Sep. 30, 2016 |
Sep. 30, 2017 |
Sep. 30, 2016 |
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Disposal Group, Including Discontinued Operation, Income Statement Disclosures [Abstract] | ||||
Disposal Group, Including Discontinued Operation, Description and Timing of Disposal | On November 6, 2015, we completed the sale of Sikorsky to Lockheed Martin Corp. | |||
Discontinued Operation, Gain (Loss) on Disposal of Discontinued Operation, Net of Tax [Abstract] | ||||
Discontinued Operations: (Loss) gain on disposal | $ 0 | $ (4) | $ 0 | $ 11 |
Net Cash Provided by (Used in) Discontinued Operations [Abstract] | ||||
Net cash outflows from discontinued operations | 0 | (2,480) | ||
Income tax (benefit) expense | $ 0 | $ (40) | $ 0 | $ 12 |
Inventories and Contracts in Progress (Details) - USD ($) $ in Millions |
Sep. 30, 2017 |
Dec. 31, 2016 |
---|---|---|
Inventory Disclosure [Abstract] | ||
Raw materials | $ 2,189 | $ 2,040 |
Work-in-process | 3,453 | 2,787 |
Finished goods | 3,715 | 3,305 |
Contracts in progress | 10,417 | 9,395 |
Inventory before payments and billings | 19,774 | 17,527 |
Progress payments, secured by lien, on U.S. Government contracts | 224 | 130 |
Billings on contracts in progress | 9,467 | 8,693 |
Inventories and contracts in progress, net | 10,083 | 8,704 |
Inventory [Line Items] | ||
Inventory Costs in Excess of Average Cost Per Unit | 357 | 233 |
UTC Aerospace Systems [Member] | ||
Inventory [Line Items] | ||
Other Inventory, Capitalized Costs, Gross | $ 130 | $ 140 |
Borrowings and Lines of Credit (Short-Term Borrowings) (Details) - USD ($) $ in Millions |
Sep. 30, 2017 |
Dec. 31, 2016 |
---|---|---|
Short-term Debt [Line Items] | ||
Commercial paper | $ 943 | $ 522 |
Other borrowings | 134 | 79 |
Total short-term borrowings | $ 1,077 | $ 601 |
Borrowing and Lines of Credit (Narrative) (Details) € in Millions |
9 Months Ended | ||
---|---|---|---|
Sep. 30, 2017
USD ($)
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Sep. 30, 2017
EUR (€)
|
Sep. 04, 2017
USD ($)
|
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Line of Credit Facility [Line Items] | |||
Aggregate Line of Credit Facility Maximum Borrowing Capacity | $ 4,350,000,000 | ||
Maximum Commercial Paper Borrowing Authority | 4,350,000,000 | ||
Commercial paper, euro-denominated | 594,000,000 | € 500 | |
Unsecured bridge loan credit agreement | $ 6,500,000,000 | ||
Revolving Credit Agreement [Member] | |||
Line of Credit Facility [Line Items] | |||
Long-term Line of Credit | 0 | ||
Line of Credit Facility, Maximum Borrowing Capacity | $ 2,200,000,000 | ||
Line of Credit Facility, Expiration Date | Aug. 05, 2021 | ||
Multicurrency Revolving Credit Agreement [Member] | |||
Line of Credit Facility [Line Items] | |||
Long-term Line of Credit | $ 0 | ||
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) |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2017 |
Sep. 30, 2016 |
Sep. 30, 2017 |
Sep. 30, 2016 |
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Debt Instrument [Line Items] | ||||
Average Years of Maturity of Long Term Debt | twelve years | |||
Average interest expense rate | 3.60% | 4.00% | 3.60% | 4.10% |
Income Taxes (Unrecognized Tax Benefit Changes) (Details) $ in Millions |
Sep. 30, 2017
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 | $ 30 |
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 | 435 |
Non-cash tax gain [Member] | |
Significant Change In Unrecognized Tax Benefits Is Reasonably Possible [Line Items] | |
Decrease in Unrecognized Tax Benefits is Reasonably Possible, Estimated Range of Change | 55 |
Non-cash interest gain [Member] | |
Significant Change In Unrecognized Tax Benefits Is Reasonably Possible [Line Items] | |
Decrease in Unrecognized Tax Benefits is Reasonably Possible, Estimated Range of Change | $ 9 |
Employee Benefit Plans (Details) - USD ($) |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2017 |
Sep. 30, 2016 |
Sep. 30, 2017 |
Sep. 30, 2016 |
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Defined Benefit Plan Disclosure [Line Items] | ||||
Pension Contributions | $ 2,008,000,000 | $ 125,000,000 | ||
Contributions - Defined benefit plans | $ 1,929,000,000 | $ 18,000,000 | 2,008,000,000 | 125,000,000 |
Contributions - Defined contribution plans | 86,000,000 | 79,000,000 | 262,000,000 | 235,000,000 |
Domestic Plan [Member] | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Pension Contributions | 1,900,000,000 | 0 | 1,900,000,000 | 0 |
Pension Plan [Member] | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Service cost | 94,000,000 | 96,000,000 | 280,000,000 | 287,000,000 |
Interest cost | 281,000,000 | 302,000,000 | 838,000,000 | 908,000,000 |
Expected return on plan assets | 555,000,000 | 554,000,000 | 1,636,000,000 | 1,669,000,000 |
Amortization of prior service credit | (9,000,000) | (7,000,000) | (27,000,000) | (22,000,000) |
Recognized actuarial net loss (gain) | (144,000,000) | (135,000,000) | (430,000,000) | (406,000,000) |
Net settlement and curtailment (gain) loss | (2,000,000) | (3,000,000) | (1,000,000) | (18,000,000) |
Total net periodic benefit (income) cost | (43,000,000) | (25,000,000) | (114,000,000) | (72,000,000) |
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 | 2,000,000 | 3,000,000 |
Interest cost | 9,000,000 | 9,000,000 | 22,000,000 | 25,000,000 |
Expected return on plan assets | 0 | 0 | 0 | 0 |
Amortization of prior service credit | (1,000,000) | 0 | (1,000,000) | 0 |
Recognized actuarial net loss (gain) | 2,000,000 | 1,000,000 | 7,000,000 | 3,000,000 |
Net settlement and curtailment (gain) loss | 0 | 0 | 0 | 0 |
Total net periodic benefit (income) cost | $ 6,000,000 | $ 9,000,000 | $ 16,000,000 | $ 25,000,000 |
Restructuring and Other Costs (Details) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | 12 Months Ended | ||
---|---|---|---|---|---|
Sep. 30, 2017 |
Jun. 30, 2017 |
Mar. 31, 2017 |
Sep. 30, 2017 |
Dec. 31, 2016 |
|
Restructuring Cost and Reserve [Line Items] | |||||
Restructuring Charges | $ 177 | ||||
Cost of Sales [Member] | |||||
Restructuring Cost and Reserve [Line Items] | |||||
Restructuring Charges | 81 | ||||
Selling, General and Administrative Expenses [Member] | |||||
Restructuring Cost and Reserve [Line Items] | |||||
Restructuring Charges | 96 | ||||
Current Year Actions [Member] | |||||
Restructuring Cost and Reserve [Line Items] | |||||
Restructuring Charges | 114 | ||||
Restructuring Reserve | $ 72 | $ 43 | 72 | ||
Net pre-tax restructuring costs (reversals) | 51 | 39 | $ 24 | 114 | |
Utilization and foreign exchange | 22 | 42 | |||
Expected Costs | 218 | 218 | |||
Remaining Costs | 104 | 104 | |||
Current Year Actions [Member] | Cost of Sales [Member] | |||||
Restructuring Cost and Reserve [Line Items] | |||||
Restructuring Charges | 40 | ||||
Current Year Actions [Member] | Selling, General and Administrative Expenses [Member] | |||||
Restructuring Cost and Reserve [Line Items] | |||||
Restructuring Charges | 74 | ||||
Current Year Actions [Member] | Severance [Member] | |||||
Restructuring Cost and Reserve [Line Items] | |||||
Restructuring Reserve | 72 | 43 | 72 | ||
Net pre-tax restructuring costs (reversals) | 49 | 106 | |||
Utilization and foreign exchange | 20 | 34 | |||
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) | 2 | 8 | |||
Utilization and foreign exchange | 2 | 8 | |||
Prior Year Actions [Member] | |||||
Restructuring Cost and Reserve [Line Items] | |||||
Restructuring Charges | 48 | ||||
Restructuring Reserve | 92 | 97 | 92 | $ 109 | |
Net pre-tax restructuring costs (reversals) | 8 | 18 | 22 | 48 | 242 |
Utilization and foreign exchange | 13 | 65 | |||
Expected Costs | 340 | 340 | |||
Remaining Costs | 50 | 50 | |||
Prior Year Actions [Member] | Cost of Sales [Member] | |||||
Restructuring Cost and Reserve [Line Items] | |||||
Restructuring Charges | 20 | ||||
Prior Year Actions [Member] | Selling, General and Administrative Expenses [Member] | |||||
Restructuring Cost and Reserve [Line Items] | |||||
Restructuring Charges | 28 | ||||
Prior Year Actions [Member] | Severance [Member] | |||||
Restructuring Cost and Reserve [Line Items] | |||||
Restructuring Reserve | 40 | 49 | 40 | 63 | |
Net pre-tax restructuring costs (reversals) | 3 | 29 | |||
Utilization and foreign exchange | 12 | 52 | |||
Prior Year Actions [Member] | Facility Exit, Lease Termination and Other Costs | |||||
Restructuring Cost and Reserve [Line Items] | |||||
Restructuring Reserve | 52 | 48 | 52 | 46 | |
Net pre-tax restructuring costs (reversals) | 5 | 19 | |||
Utilization and foreign exchange | 1 | 13 | |||
Two Years Prior Actions [Member] | |||||
Restructuring Cost and Reserve [Line Items] | |||||
Restructuring Charges | 15 | ||||
Restructuring Reserve | 52 | 52 | |||
Otis [Member] | |||||
Restructuring Cost and Reserve [Line Items] | |||||
Restructuring Charges | 23 | ||||
Otis [Member] | Current Year Actions [Member] | |||||
Restructuring Cost and Reserve [Line Items] | |||||
Net pre-tax restructuring costs (reversals) | 5 | 12 | 2 | ||
Expected Costs | 71 | 71 | |||
Remaining Costs | 52 | 52 | |||
Otis [Member] | Prior Year Actions [Member] | |||||
Restructuring Cost and Reserve [Line Items] | |||||
Net pre-tax restructuring costs (reversals) | 0 | (1) | 3 | 48 | |
Expected Costs | 55 | 55 | |||
Remaining Costs | 5 | 5 | |||
UTC Climate, Controls & Security [Member] | |||||
Restructuring Cost and Reserve [Line Items] | |||||
Restructuring Charges | 84 | ||||
UTC Climate, Controls & Security [Member] | Current Year Actions [Member] | |||||
Restructuring Cost and Reserve [Line Items] | |||||
Net pre-tax restructuring costs (reversals) | 35 | 11 | 12 | ||
Expected Costs | 83 | 83 | |||
Remaining Costs | 25 | 25 | |||
UTC Climate, Controls & Security [Member] | Prior Year Actions [Member] | |||||
Restructuring Cost and Reserve [Line Items] | |||||
Net pre-tax restructuring costs (reversals) | 3 | 7 | 6 | 45 | |
Expected Costs | 80 | 80 | |||
Remaining Costs | 19 | 19 | |||
Pratt & Whitney [Member] | |||||
Restructuring Cost and Reserve [Line Items] | |||||
Restructuring Charges | 4 | ||||
Pratt & Whitney [Member] | Current Year Actions [Member] | |||||
Restructuring Cost and Reserve [Line Items] | |||||
Net pre-tax restructuring costs (reversals) | 0 | 6 | 0 | ||
Expected Costs | 8 | 8 | |||
Remaining Costs | 2 | 2 | |||
Pratt & Whitney [Member] | Prior Year Actions [Member] | |||||
Restructuring Cost and Reserve [Line Items] | |||||
Net pre-tax restructuring costs (reversals) | 0 | 0 | 0 | 118 | |
Expected Costs | 118 | 118 | |||
Remaining Costs | 0 | 0 | |||
UTC Aerospace Systems [Member] | |||||
Restructuring Cost and Reserve [Line Items] | |||||
Restructuring Charges | 64 | ||||
UTC Aerospace Systems [Member] | Current Year Actions [Member] | |||||
Restructuring Cost and Reserve [Line Items] | |||||
Net pre-tax restructuring costs (reversals) | 10 | 10 | 9 | ||
Expected Costs | 54 | 54 | |||
Remaining Costs | 25 | 25 | |||
UTC Aerospace Systems [Member] | Prior Year Actions [Member] | |||||
Restructuring Cost and Reserve [Line Items] | |||||
Net pre-tax restructuring costs (reversals) | 5 | $ 12 | 13 | $ 31 | |
Expected Costs | 87 | 87 | |||
Remaining Costs | 26 | 26 | |||
Eliminations and other [Member] | |||||
Restructuring Cost and Reserve [Line Items] | |||||
Restructuring Charges | 2 | ||||
Eliminations and other [Member] | Current Year Actions [Member] | |||||
Restructuring Cost and Reserve [Line Items] | |||||
Net pre-tax restructuring costs (reversals) | (1) | $ (1) | |||
Expected Costs | 2 | 2 | |||
Remaining Costs | $ 0 | $ 0 |
Financial Instruments (Details) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | |||
---|---|---|---|---|---|
Sep. 30, 2017 |
Sep. 30, 2016 |
Sep. 30, 2017 |
Sep. 30, 2016 |
Dec. 31, 2016 |
|
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||
Four Quarter Rolling Average of Notional Amount of Foreign Exchange Contracts Hedging Foreign Currency Transactions | $ 18,600 | $ 18,600 | $ 18,300 | ||
Description of Net Investment Hedge Activity | we have issued approximately €2.95 billion of euro-denominated long-term debt and €500 million of outstanding euro-denominated commercial paper borrowings, which qualify as a net investment hedge against our investments in European businesses. As of September 30, 2017, the net investment hedge is deemed to be effective. | ||||
Derivatives designated as hedging instruments, Asset Derivatives | 295 | $ 295 | 15 | ||
Derivatives not designated as hedging instruments, Asset Derivatives | 95 | 95 | 155 | ||
Derivatives designated as hedging instruments, Liability Derivatives | 15 | 15 | 196 | ||
Derivatives not designated as hedging instruments, Liability Derivatives | 75 | 75 | $ 158 | ||
Gain recorded in Accumulated other comprehensive loss | 310 | $ (7) | 440 | $ 188 | |
Loss reclassified from Accumulated other comprehensive loss into Product Sales (effective portion) | (24) | 32 | (14) | 139 | |
Foreign Currency Cash Flow Hedge Loss to be Reclassified During Next 12 Months | 80 | $ 80 | |||
Maximum Length of Time, Foreign Currency Cash Flow Hedge | 5 years 1 month 24 days | ||||
Gain recognized in Other income, net | $ 10 | $ 19 | $ 50 | 49 | |
Payments for settlements of derivative contracts | $ 183 | $ 29 |
Fair Value Measurements (Fair Value Hierarchy Classification) (Details) - USD ($) $ in Millions |
Sep. 30, 2017 |
Dec. 31, 2016 |
---|---|---|
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Short-term borrowings | $ 1,077 | $ 601 |
Portion at Other than Fair Value Measurement [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Long-term receivables | 147 | 127 |
Customer financing notes receivable | 430 | 437 |
Short-term borrowings | 1,077 | 601 |
Long-term debt (excluding capitalized leases) | 26,161 | 23,280 |
Long-term liabilities | 363 | 457 |
Estimate of Fair Value, Fair Value Disclosure [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Long-term receivables | 139 | 121 |
Customer financing notes receivable | 414 | 420 |
Short-term borrowings | 1,077 | 601 |
Long-term debt (excluding capitalized leases) | 28,052 | 25,110 |
Long-term liabilities | 331 | 427 |
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 | |
Customer financing notes receivable | 0 | |
Short-term borrowings | 0 | |
Long-term debt (excluding capitalized leases) | 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 | 139 | |
Customer financing notes receivable | 414 | |
Short-term borrowings | 943 | |
Long-term debt (excluding capitalized leases) | 27,827 | |
Long-term liabilities | 331 | |
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 | |
Customer financing notes receivable | 0 | |
Short-term borrowings | 134 | |
Long-term debt (excluding capitalized leases) | 225 | |
Long-term liabilities | 0 | |
Fair Value, Measurements, Recurring [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Available-for-sale securities | 120 | 987 |
Derivative Assets | 390 | 170 |
Derivative Liabilities | 90 | 354 |
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 | 120 | 987 |
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 | 390 | 170 |
Derivative Liabilities | 90 | 354 |
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 |
Sep. 30, 2017 |
Dec. 31, 2016 |
---|---|---|
Commercial Aerospace [Member] | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Financing and other contractual commitments | $ 13.9 | $ 14.4 |
Long-Term Financing Receivables (Reserve and Additional Information) (Details) - USD ($) $ in Millions |
Sep. 30, 2017 |
Dec. 31, 2016 |
---|---|---|
Receivables [Abstract] | ||
Long Term Receivables High Credit Risk Percentage | 11.00% | 13.00% |
Financing Receivable Reserve For Credit Losses And Exposure | $ 17 | $ 17 |
Long-Term Financing Receivables(Class and Credit Risk Information) (Details) - USD ($) $ in Millions |
Sep. 30, 2017 |
Dec. 31, 2016 |
---|---|---|
Financing Receivable, Recorded Investment [Line Items] | ||
Total long-term receivables | $ 1,536 | $ 1,356 |
Long-term trade accounts receivable [Member] | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Total long-term receivables | 1,101 | 926 |
Notes and leases receivable [Member] | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Total long-term receivables | $ 435 | $ 430 |
Shareowners' Equity and Noncontrolling Interest (Summary of Changes in Shareowners' Equity and Noncontrolling Interest) (Details) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2017 |
Sep. 30, 2016 |
Sep. 30, 2017 |
Sep. 30, 2016 |
|
Shareowners' Equity, beginning of period | $ 28,442 | $ 29,090 | $ 27,579 | $ 27,358 |
Noncontrolling interest, beginning of period | 1,713 | 1,558 | 1,590 | 1,486 |
Total Equity, beginning of period | 30,155 | 30,648 | 29,169 | 28,844 |
Net income, Shareowners' Equity | 1,330 | 1,480 | 4,155 | 4,042 |
Net Income, Noncontrolling Interest | 104 | 91 | 279 | 271 |
Net income, Total Equity | 1,434 | 1,571 | 4,434 | 4,313 |
Total other comprehensive income (loss), Shareowners' Equity | 637 | (245) | 1,007 | (110) |
Total other comprehensive income (loss), Noncontrolling Interest | 40 | 5 | 83 | 16 |
Total other comprehensive income (loss) | 677 | (240) | 1,090 | (94) |
Total comprehensive income for the period, Shareowners' Equity | 1,967 | 1,235 | 5,162 | 3,932 |
Total comprehensive income for the period, Noncontrolling Interest | 144 | 96 | 362 | 287 |
Total comprehensive income for the period, Total Equity | 2,111 | 1,331 | 5,524 | 4,219 |
Common Stock issued under employee plans | 86 | 54 | 256 | 200 |
Common Stock repurchased | 60 | 649 | 1,430 | 685 |
Dividends on Common Stock | 533 | 526 | 1,541 | 1,561 |
Dividends on ESOP Common Stock | 19 | 19 | 54 | 56 |
Dividends attributable to noncontrolling interest | 51 | 129 | 120 | 270 |
Sale of subsidiary shares from noncontrolling interest, net | (14) | (24) | (8) | (17) |
Acquisition of noncontrolling interest | 14 | 29 | 14 | 63 |
Redeemable noncontrolling interest fair value adjustment | 4 | 0 | 99 | 0 |
Other | 22 | (1) | 36 | 7 |
Shareowners' Equity, end of period | 29,881 | 29,187 | 29,881 | 29,187 |
Noncontrolling interest, end of period | 1,810 | 1,577 | 1,810 | 1,577 |
Total Equity, end of period | 31,691 | 30,764 | 31,691 | 30,764 |
Shareowners' Equity | ||||
Sale of subsidiary shares from noncontrolling interest, net | (5) | (2) | (4) | 4 |
Redeemable noncontrolling interest fair value adjustment | 4 | 0 | 99 | |
Other | 3 | 0 | (4) | (3) |
Noncontrolling Interest | ||||
Sale of subsidiary shares from noncontrolling interest, net | (9) | (22) | (4) | (21) |
Redeemable noncontrolling interest fair value adjustment | 0 | 0 | 0 | 0 |
Other | $ 19 | $ (1) | $ 40 | $ 10 |
Shareowners' Equity and Noncontrolling Interest (Accelerated Stock Repurchase) (Details) - USD ($) shares in Millions, $ in Billions |
3 Months Ended | ||
---|---|---|---|
Sep. 30, 2016 |
Mar. 31, 2016 |
Dec. 31, 2015 |
|
November 11, 2015 ASR [Member] | |||
Accelerated Share Repurchases [Line Items] | |||
ASR Aggregate Purchase Price | $ 6 | ||
Stock Repurchased During Period, Shares | 51.9 | ||
January 19, 2016 settlement of ASR [Member] | |||
Accelerated Share Repurchases [Line Items] | |||
Stock Repurchased During Period, Shares | 2.1 | ||
September 14 and 15, 2016 final settlement of ASR [Member] | |||
Accelerated Share Repurchases [Line Items] | |||
Stock Repurchased During Period, Shares | 8.0 |
Shareowners' Equity and Noncontrolling Interest (Summary of Changes in AOCI) (Details) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | ||||||
---|---|---|---|---|---|---|---|---|
Sep. 30, 2017 |
Sep. 30, 2016 |
Sep. 30, 2017 |
Sep. 30, 2016 |
Jun. 30, 2017 |
Dec. 31, 2016 |
Jun. 30, 2016 |
Dec. 31, 2015 |
|
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||||||
Accumulated Other Comprehensive Income (Loss), Net of Tax | $ (7,327) | $ (7,729) | $ (7,327) | $ (7,729) | $ (7,964) | $ (8,334) | $ (7,484) | $ (7,619) |
Other comprehensive (loss) income before reclassifications, net - Foreign Currency Translation | 514 | (359) | 909 | (596) | ||||
Amounts reclassified, pretax - Foreign Currency Translation | 3 | 1 | 3 | 0 | ||||
Tax (benefit) expense reclassified - Foreign Currency Translation | 0 | 0 | 0 | 0 | ||||
Other comprehensive (loss) income before reclassifications, net - Pension | 37 | (4) | 39 | 21 | ||||
Amounts reclassified, pretax - Pension | 132 | 127 | 395 | 381 | ||||
Tax (benefit) expense reclassified - Pension | 66 | 47 | 164 | 140 | ||||
Other comprehensive (loss) income before reclassifications, net - AFS Securities | 12 | 30 | 11 | 87 | ||||
Amounts reclassified, pretax - AFS Securities | 138 | 20 | 545 | 72 | ||||
Tax (benefit) expense reclassified - AFS Securities | 50 | 8 | 205 | 27 | ||||
Other comprehensive (loss) income before reclassifications, net - Unrealized Hedging (Losses) Gains | 232 | (5) | 332 | 138 | ||||
Amounts reclassified, pretax - Unrealized Hedging (Losses) Gains | 24 | (32) | 14 | (139) | ||||
Tax (benefit) expense reclassified - Unrealized Hedging (Losses) Gains | 5 | (9) | 3 | (37) | ||||
Other comprehensive (loss) income before reclassifications, net | 681 | (335) | 1,130 | (408) | ||||
Amounts reclassified, pretax | 33 | (138) | 167 | (448) | ||||
Tax (benefit) expense reclassified | (11) | (48) | 44 | (150) | ||||
Foreign Currency Translation | ||||||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||||||
Accumulated Other Comprehensive Income (Loss), Net of Tax | (2,657) | (3,050) | (2,657) | (3,050) | (3,128) | (3,480) | (2,685) | (2,438) |
Other comprehensive (loss) income before reclassifications, net - Foreign Currency Translation | 474 | (364) | 826 | (612) | ||||
Defined Benefit Pension and Post-retirement Plans | ||||||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||||||
Accumulated Other Comprehensive Income (Loss), Net of Tax | (4,853) | (4,915) | (4,853) | (4,915) | (4,882) | (5,045) | (4,999) | (5,135) |
Unrealized Gains (Losses) on Available-for-Sale Securities | ||||||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||||||
Accumulated Other Comprehensive Income (Loss), Net of Tax | 24 | 335 | 24 | 335 | 100 | 353 | 317 | 293 |
Unrealized Hedging (Losses) Gains | ||||||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||||||
Accumulated Other Comprehensive Income (Loss), Net of Tax | $ 159 | $ (99) | 159 | $ (99) | $ (54) | $ (162) | $ (117) | $ (339) |
Sales of significant investments in AFS securities [Member] | ||||||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||||||
Amounts reclassified, pretax - Unrealized Hedging (Losses) Gains | $ 500 |
Variable Interest Entities (Details) - USD ($) $ in Millions |
9 Months Ended | |
---|---|---|
Sep. 30, 2017 |
Dec. 31, 2016 |
|
Variable Interest Entity [Line Items] | ||
Total assets | $ 5,992 | $ 4,056 |
Total liabilities | 5,844 | 4,058 |
Current Assets | ||
Variable Interest Entity [Line Items] | ||
Total assets | 4,317 | 2,722 |
Current Liabilities | ||
Variable Interest Entity [Line Items] | ||
Total liabilities | 3,831 | 2,422 |
Noncurrent Assets | ||
Variable Interest Entity [Line Items] | ||
Total assets | 1,675 | 1,334 |
Noncurrent Liabilities | ||
Variable Interest Entity [Line Items] | ||
Total liabilities | $ 2,013 | $ 1,636 |
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 61% net 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 |
9 Months Ended | |
---|---|---|
Sep. 30, 2017 |
Sep. 30, 2016 |
|
Product Warranty Liability [Line Items] | ||
Balance as of January 1 | $ 1,199 | $ 1,212 |
Warranties and performance guarantees issued | 221 | 218 |
Settlements made | 194 | 192 |
Other | 21 | 0 |
Balance as of September 30 | $ 1,247 | $ 1,238 |
Contingent Liabilities (Details) $ in Millions |
9 Months Ended |
---|---|
Sep. 30, 2017
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 $70 million through September 30, 2017). 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 | 70 |
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 $256 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 $140 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 have appealed this decision to the German Federal Tax Court (FTC). |
Loss Contingency Damages Sought | €215 million (approximately $256 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. In the meantime, we continue vigorously to litigate this matter. |
Estimate of interest on tax benefit | €118 million (approximately $140 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 $349 million and is principally recorded in Other long-term liabilities on our Condensed Consolidated Balance Sheet as of September 30, 2017. 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 $121 million, which is included primarily in Other assets on our Condensed Consolidated Balance Sheet as of September 30, 2017. 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 | $ 349 |
Loss Contingency, Receivable | $ 121 |
Segment Financial Data (Details) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2017 |
Sep. 30, 2016 |
Sep. 30, 2017 |
Sep. 30, 2016 |
|
Segment Reporting Information [Line Items] | ||||
Net Sales | $ 15,062 | $ 14,354 | $ 44,157 | $ 42,585 |
Operating profit | $ 2,163 | $ 2,251 | $ 6,720 | $ 6,533 |
Operating profit margin | 14.40% | 15.70% | 15.20% | 15.30% |
Otis [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Net Sales | $ 3,156 | $ 3,018 | $ 9,091 | $ 8,830 |
Operating profit | $ 555 | $ 584 | $ 1,551 | $ 1,631 |
Operating profit margin | 17.60% | 19.40% | 17.10% | 18.50% |
UTC Climate, Controls & Security [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Net Sales | $ 4,688 | $ 4,415 | $ 13,292 | $ 12,602 |
Operating profit | $ 828 | $ 801 | $ 2,664 | $ 2,279 |
Operating profit margin | 17.70% | 18.10% | 20.00% | 18.10% |
Pratt & Whitney [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Net Sales | $ 3,871 | $ 3,501 | $ 11,699 | $ 10,902 |
Operating profit | $ 229 | $ 340 | $ 1,024 | $ 1,136 |
Operating profit margin | 5.90% | 9.70% | 8.80% | 10.40% |
UTC Aerospace Systems [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Net Sales | $ 3,637 | $ 3,646 | $ 10,888 | $ 10,867 |
Operating profit | $ 616 | $ 600 | $ 1,771 | $ 1,720 |
Operating profit margin | 16.90% | 16.50% | 16.30% | 15.80% |
Total Segments [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Net Sales | $ 15,352 | $ 14,580 | $ 44,970 | $ 43,201 |
Operating profit | $ 2,228 | $ 2,325 | $ 7,010 | $ 6,766 |
Operating profit margin | 14.50% | 15.90% | 15.60% | 15.70% |
Eliminations and other [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Net Sales | $ (290) | $ (226) | $ (813) | $ (616) |
Operating profit | 40 | 18 | 25 | 47 |
General corporate expenses [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Net Sales | 0 | 0 | 0 | 0 |
Operating profit | $ (105) | $ (92) | $ (315) | $ (280) |
Accounting Pronouncements (Details) |
9 Months Ended |
---|---|
Sep. 30, 2017 | |
ASU 2014-09 [Member] | |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |
New Accounting Pronouncement or Change in Accounting Principle, Description | 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, using either of the following transition methods; (i) a full retrospective adoption reflecting the application of the standard in each prior reporting period, or (ii) a modified retrospective approach with the cumulative effect of adopting recognized through retained earnings at the date of adoption. The New Revenue Standard is expected to change the revenue recognition practices for a number of revenue streams across our businesses, although the most significant impacts will be concentrated within our aerospace units. Several businesses, which currently account for revenue on a “point-in-time basis,” will be required to use an “over time” model as they meet one or more of the mandatory criteria established in the New Revenue Standard. Revenue will be recognized based on percentage-of-completion for certain U.S. Government aerospace contracts; and aerospace aftermarket service work performed on a time and materials basis. For these businesses, unrecognized sales and operating profits related to the satisfied portion of the performance obligations of contracts in process as of the date of adoption will be recorded through retained earnings. The ongoing effect of recording revenue on a percentage-of-completion basis within these businesses is not expected to be material. In addition to the forgoing, our aerospace businesses will also incur changes related to the timing of manufacturing cost recognition and certain engineering and development costs. In most circumstances, our commercial aerospace businesses will identify the performance obligation, or the unit of accounting, as the individual original equipment (OEM) unit; revenues and costs to manufacture each unit will be recognized upon OEM unit delivery. Under current practice, the unit of accounting is the contract, and early-contract OEM unit costs in excess of the average expected over the contract are capitalized and amortized over lower-cost units later in the contract. With the adoption of the New Revenue Standard, any deferred unit costs in excess of the contract average will be eliminated through retained earnings and will not be amortized into future earnings. As of September 30, 2017, capitalized deferred unit costs in excess of the contract average are $357 million, which is expected to increase prior to adoption of the New Revenue Standard. With regard to costs incurred for the engineering and development of aerospace products under contract with customers, we generally expense as incurred unless there is a contractually guaranteed right of recovery. Any customer funding received for such efforts is recognized when earned, with the corresponding costs recognized as cost of sales. The New Revenue Standard requires customer funding of OEM product engineering and development to be deferred and recognized as revenue as the OEM products are delivered to the customer. The New Revenue Standard also requires product engineering and development costs to 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. For contracts that are open as of the adoption date, previously recognized customer funding will be established as a contract liability. We continue to evaluate the implications of the standard change. We intend to adopt the New Revenue Standard effective January 1, 2018 using the modified retrospective approach. |
ASU 2015-14 [Member] | |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |
New Accounting Pronouncement or Change in Accounting Principle, Description | ASU 2015-14, Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date - delays the effective date of ASU 2014-09 by one year. |
ASU 2016-08 [Member] | |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |
New Accounting Pronouncement or Change in Accounting Principle, Description | ASU 2016-08, Revenue from Contracts with Customers (Topic 606), Principal versus Agent Considerations (Reporting Revenue Gross versus Net) - clarifies how an entity should identify the unit of accounting (i.e. the specified good or service) for the principal versus agent evaluation and how it should apply the control principle to certain types of arrangements. |
ASU 2016-10 [Member] | |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |
New Accounting Pronouncement or Change in Accounting Principle, Description | ASU 2016-10, Revenue from Contracts with Customers (Topic 606), Identifying Performance Obligations and Licensing - clarifies the guidance surrounding licensing arrangements and the identification of performance obligations. |
ASU 2016-12 [Member] | |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |
New Accounting Pronouncement or Change in Accounting Principle, Description | ASU 2016-12, Revenue from Contracts with Customers (Topic 606), Narrow-Scope Improvements and Practical Expedients - addresses implementation issues raised by stakeholders concerning collectability, noncash consideration, presentation of sales tax, and transition. |
ASU 2016-20 [Member] | |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |
New Accounting Pronouncement or Change in Accounting Principle, Description | ASU 2016-20, Revenue from Contracts with Customers (Topic 606), Technical Corrections and Improvements - addresses loan guarantee fees, impairment testing of contract costs, provisions for losses on certain contracts, and various disclosures. |
ASU 2016-01 [Member] | |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |
New Accounting Pronouncement or Change in Accounting Principle, Description | 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. As discussed in Note 12, we have approximately $24 million of unrealized gains on these securities recorded in Accumulated other comprehensive loss in our Condensed Consolidated Balance Sheet as of September 30, 2017. To the extent currently unrealized gains or losses on these investments are not realized through sale or other actions prior to the date of adoption, these amounts would be recorded directly to retained earnings upon adoption. The provisions of this ASU are effective for years beginning after December 15, 2017. |
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 2017-01 [Member] | |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |
New Accounting Pronouncement or Change in Accounting Principle, Description | In January 2017, the FASB issued ASU 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business. This ASU provides a new framework that will assist in the evaluation of whether business combination transactions should be accounted as acquisition of a business or a group of assets, as well as specifying the minimum required inputs and processes necessary to be a business. The provisions of this ASU are effective for years beginning after December 15, 2017, with early adoption permitted. We plan to adopt the new standard effective January 1, 2018. |
ASU 2017-07 [Member] | |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |
New Accounting Pronouncement or Change in Accounting Principle, Description | 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. The provisions of this ASU are effective for years beginning after December 15, 2017. Provisions related to presentation of the service cost components versus other cost components must be applied retrospectively, while provisions related to service cost component eligibility for capitalization must be applied prospectively. This ASU primarily impacts the presentation of net periodic pension cost/benefit and therefore we do not expect this ASU to have a material impact on net income, however it will result in changes to reported operating profit. |
ASU 2017-12 [Member] | |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |
New Accounting Pronouncement or Change in Accounting Principle, Description | In August 2017, the FASB issued ASU 2017-12, Derivatives and Hedging (Topic 815), Targeted Improvements to Accounting for Hedging Activities. This ASU will make more financial and nonfinancial hedging strategies eligible for hedge accounting. It also amends the presentation and disclosure requirements and changes how companies assess effectiveness. It is intended to more closely align hedge accounting with companies’ risk management strategies, simplify the application of hedge accounting, and increase transparency as to the scope and results of hedging programs. The provisions of this ASU are effective for years beginning after December 15, 2018, with early adoption permitted for any interim period after issuance of the ASU. In the case of early adoption, the effect of the adoption should be reflected as of the beginning of the fiscal year of adoption. We do not expect this ASU to have a significant impact on our results of operations or financial position. |
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