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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
____________________________________ 
FORM 8-K
____________________________________ 

CURRENT REPORT
Pursuant to Section 13 OR 15(d) of The
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): October 27, 2020
____________________________________ 
RAYTHEON TECHNOLOGIES CORPORATION
(Exact name of registrant as specified in its charter)
____________________________________ 
Delaware001-0081206-0570975
(State or other jurisdiction
of incorporation)		(Commission
File Number)		(I.R.S. Employer
Identification No.)

870 Winter Street,Waltham,Massachusetts02451
(Address of principal executive offices, including zip code)
(781)522-3000
(Registrant's telephone number, including area code)
____________________________________ 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
☐Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company   ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.   ¨


Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock (:schemaRef xlink:type="simple" 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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
____________________________________ 
FORM 8-K
____________________________________ 

CURRENT REPORT
Pursuant to Section 13 OR 15(d) of The
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): October 27, 2020
____________________________________ 
RAYTHEON TECHNOLOGIES CORPORATION
(Exact name of registrant as specified in its charter)
____________________________________ 
Delaware001-0081206-0570975
(State or other jurisdiction
of incorporation)		(Commission
File Number)		(I.R.S. Employer
Identification No.)

870 Winter Street,Waltham,Massachusetts02451
(Address of principal executive offices, including zip code)
(781)522-3000
(Registrant's telephone number, including area code)
____________________________________ 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
☐Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company   ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.   ¨


Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock ($1 par value)RTXNew York Stock Exchange
(CUSIP 75513E 101)
2.150% Notes due 2030RTX 30New York Stock Exchange
(CUSIP 75513E AB7)

Item 8.01. Other Events
On April 3, 2020, following the separation by United Technologies Corporation (UTC or the Company) of its Carrier and Otis businesses from its aerospace businesses (such separations, the Separation Transactions), UTC consummated its merger of equals transaction with Raytheon Company (Raytheon), with Raytheon surviving as a wholly owned subsidiary of UTC (the Raytheon Merger). Upon the closing of the Raytheon Merger, the Company’s name changed to “Raytheon Technologies Corporation.” Throughout this Form 8-K filing, we may refer to the Company as “Raytheon Technologies Corporation” or “RTC” whether we are discussing events prior to or subsequent to the Raytheon Merger and name change.
The Company is recasting certain financial information included in its 2019 Annual Report on Form 10-K. The financial statements of the Company contained herein are as of and for the years ended December 31, 2019, 2018 and 2017, recast to reflect the presentation of its Carrier and Otis businesses as discontinued operations and as such, they have been excluded from both continuing operations and segment results for all periods presented, but without giving effect to the Raytheon Merger. Therefore, the financial statements and other information contained herein relate to the Company without giving effect to the Raytheon Merger and, accordingly, do not include the results of Raytheon. Other filings subsequent to and including the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2020, reflect the results of the Company after giving effect to the Separation Transactions and the Raytheon Merger, thereby reflecting the combined businesses of UTC (excluding the Carrier and Otis businesses) and Raytheon.
The Company has revised the following portions of its 2019 Annual Report on Form 10-K to reflect the presentation of its Carrier and Otis businesses as discontinued operations and, where applicable, changes to reportable segments:
•Part I, Item 1. Business
•Part I, Item 2. Properties
•Part II, Item 6. Selected Financial Data
•Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
•Part II, Item 8. Financial Statements and Supplementary Data
•Part IV, Item 15. Exhibits, Financial Statement Schedules (sub-Items (a)1 and (a) 2 only)
•Exhibit 13. Excerpts from the Company’s 2019 Annual Report to Shareowners for the years ended December 31, 2019, 2018 and 2017
Except as specifically set forth herein as required to reflect the historical results of the Carrier and Otis businesses as discontinued operations and include the reclassification of certain long term assets and liabilities to current using the duration of the related contract or program as our operating cycle, no revisions have been made to the Company’s 2019 Annual Report on Form 10-K to update for other information, developments or events that have occurred since such filing on February 6, 2020. This Form 8-K should be read in conjunction with the Company’s 2019 Annual Report on Form 10-K and its subsequent filings with the SEC, including its Quarterly Reports on Form 10-Q for the periods ended March 31, 2020 and June 30, 2020 and its Current Reports on Form 8-K. These subsequent SEC filings contain important information regarding events, risks, developments and updates affecting the Company and its expectations that have occurred since the filing of the Company’s 2019 Annual Report on Form 10-K. The information contained herein is not an amendment to, or a restatement of, the Company’s 2019 Annual Report on Form 10-K.
The revised portions of the 2019 Form 10-K described above are attached as Exhibits 99.1 and 99.2 hereto and incorporated herein by reference. All other information in the 2019 Form 10-K remains unchanged. References to the exhibits attached hereto to the 2019 Form 10-K or parts thereof refer to the 2019 Form 10-K, except to the extent portions of such 2019 Form 10-K have been recast in Exhibits 99.1 or 99.2 to this Current Report on Form 8-K, in which case they refer to the applicable revised portion in Exhibits 99.1 or 99.2 to this Current Report on Form 8-K.


Item 9.01. Financial Statements and Exhibits.
(d) Exhibits.
Exhibit
Number
Exhibit Description
23.1
99.1
99.2
RTXNew York Stock Exchange
(CUSIP 75513E 101)
2.150% Notes due 2030RTX 30New York Stock Exchange
(CUSIP 75513E AB7)

Item 8.01. Other Events
On April 3, 2020, following the separation by United Technologies Corporation (UTC or the Company) of its Carrier and Otis businesses from its aerospace businesses (such separations, the Separation Transactions), UTC consummated its merger of equals transaction with Raytheon Company (Raytheon), with Raytheon surviving as a wholly owned subsidiary of UTC (the Raytheon Merger). Upon the closing of the Raytheon Merger, the Company’s name changed to “Raytheon Technologies Corporation.” Throughout this Form 8-K filing, we may refer to the Company as “Raytheon Technologies Corporation” or “RTC” whether we are discussing events prior to or subsequent to the Raytheon Merger and name change.
The Company is recasting certain financial information included in its 2019 Annual Report on Form 10-K. The financial statements of the Company contained herein are as of and for the years ended December 31, 2019, 2018 and 2017, recast to reflect the presentation of its Carrier and Otis businesses as discontinued operations and as such, they have been excluded from both continuing operations and segment results for all periods presented, but without giving effect to the Raytheon Merger. Therefore, the financial statements and other information contained herein relate to the Company without giving effect to the Raytheon Merger and, accordingly, do not include the results of Raytheon. Other filings subsequent to and including the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2020, reflect the results of the Company after giving effect to the Separation Transactions and the Raytheon Merger, thereby reflecting the combined businesses of UTC (excluding the Carrier and Otis businesses) and Raytheon.
The Company has revised the following portions of its 2019 Annual Report on Form 10-K to reflect the presentation of its Carrier and Otis businesses as discontinued operations and, where applicable, changes to reportable segments:
•Part I, Item 1. Business
•Part I, Item 2. Properties
•Part II, Item 6. Selected Financial Data
•Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
•Part II, Item 8. Financial Statements and Supplementary Data
•Part IV, Item 15. Exhibits, Financial Statement Schedules (sub-Items (a)1 and (a) 2 only)
•Exhibit 13. Excerpts from the Company’s 2019 Annual Report to Shareowners for the years ended December 31, 2019, 2018 and 2017
Except as specifically set forth herein as required to reflect the historical results of the Carrier and Otis businesses as discontinued operations and include the reclassification of certain long term assets and liabilities to current using the duration of the related contract or program as our operating cycle, no revisions have been made to the Company’s 2019 Annual Report on Form 10-K to update for other information, developments or events that have occurred since such filing on February 6, 2020. This Form 8-K should be read in conjunction with the Company’s 2019 Annual Report on Form 10-K and its subsequent filings with the SEC, including its Quarterly Reports on Form 10-Q for the periods ended March 31, 2020 and June 30, 2020 and its Current Reports on Form 8-K. These subsequent SEC filings contain important information regarding events, risks, developments and updates affecting the Company and its expectations that have occurred since the filing of the Company’s 2019 Annual Report on Form 10-K. The information contained herein is not an amendment to, or a restatement of, the Company’s 2019 Annual Report on Form 10-K.
The revised portions of the 2019 Form 10-K described above are attached as Exhibits 99.1 and 99.2 hereto and incorporated herein by reference. All other information in the 2019 Form 10-K remains unchanged. References to the exhibits attached hereto to the 2019 Form 10-K or parts thereof refer to the 2019 Form 10-K, except to the extent portions of such 2019 Form 10-K have been recast in Exhibits 99.1 or 99.2 to this Current Report on Form 8-K, in which case they refer to the applicable revised portion in Exhibits 99.1 or 99.2 to this Current Report on Form 8-K.


Item 9.01. Financial Statements and Exhibits.
(d) Exhibits.
Exhibit
Number
Exhibit Description
23.1
99.1
99.2
101.INSInline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.*
101.SCHInline XBRL Taxonomy Extension Schema Document.*
101.CALInline XBRL Taxonomy Extension Calculation Linkbase Document.*
101.DEFInline XBRL Taxonomy Extension Definition Linkbase Document.*
101.LABInline XBRL Taxonomy Extension Label Linkbase Document.*
101.PREInline XBRL Taxonomy Extension Presentation Linkbase Document.*
104Cover Page Interactive Data File - the cover page XBRL tags are embedded within the Inline XBRL document.

Notes to Exhibits List:
*    Submitted electronically herewith.
Attached as Exhibit 101 to this report are the following formatted in XBRL (Extensible Business Reporting Language): (i) Consolidated Statement of Operations for the three years ended December 31, 2019, (ii) Consolidated Statement of Comprehensive Income for the three years ended December 31, 2019, (iii) Consolidated Balance Sheet as of December 31, 2019 and 2018, (iv) Consolidated Statement of Cash Flows for the three years ended December 31, 2019, (v) Consolidated Statement of Changes in Equity for the three years ended December 31, 2019, (vi) Notes to Consolidated Financial Statements, and (vii) Financial Schedule of Valuation and Qualifying Accounts.



SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
RAYTHEON TECHNOLOGIES CORPORATION
(Registrant)
Date: October 27, 2020By:
/S/ ANTHONY F. O’BRIEN        
Anthony F. O’Brien
Executive Vice President and Chief Financial Officer


Document

Exhibit 23.1


CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We hereby consent to the incorporation by reference in the Registration Statement on Form S-3 (No. 333-234027) and in the Registration Statements on Form S-8 (Nos. 333-237576, 333-234086, 333-234085, 333-234084, 333-228649, 333-225839, 333-207193, 333-197704, 333-183123, 333-177517, 333-175781, 333-150643, 333-125293, 333-110020, 333-100724, 333-100723, 333-100718 and 033-51385) of Raytheon Technologies Corporation (formerly known as United Technologies Corporation) of our report dated February 6, 2020, except with respect to our opinion on the consolidated financial statements insofar as it relates to the effects of discontinued operations and the change in operating cycle discussed in Note 1, as to which the date is October 27, 2020, relating to the financial statements and the effectiveness of internal control over financial reporting, which is incorporated by reference in this Current Report on Form 8-K. We also consent to the incorporation by reference of our report dated February 6, 2020, except for the effects of discontinued operations and the change in operating cycle discussed in Note 1 to the financial statement schedule, as to which the date is October 27, 2020, relating to the financial statement schedule, which is incorporated by reference in this Current Report on Form 8-K.


/s/ PricewaterhouseCoopers LLP
Boston, Massachusetts
October 27, 2020





Document
Exhibit 99.1
PART I
EXPLANATORY NOTE
On April 3, 2020, following the separation by United Technologies Corporation (UTC or the Company) of its Carrier Global Corporation (Carrier) and Otis Worldwide Corporation (Otis) businesses from its aerospace businesses (such separations, the Separation Transactions), UTC consummated its merger of equals transaction with Raytheon Company (Raytheon), with Raytheon surviving as a wholly owned subsidiary of UTC (the Raytheon Merger). Upon the closing of the Raytheon Merger, the Company’s name changed to “Raytheon Technologies Corporation.” Throughout this Form 8-K filing, we may refer to the Company as “Raytheon Technologies Corporation” or “RTC” whether we are discussing events prior to or subsequent to the Raytheon Merger and name change.
The Company is recasting certain financial information included in its 2019 Annual Report on Form 10-K. The financial statements of the Company contained herein are as of and for the years ended December 31, 2019, 2018 and 2017, recast to reflect the presentation of its Carrier and Otis businesses as discontinued operations and as such, they have been excluded from both continuing operations and segment results for all periods presented, but without giving effect to the Raytheon Merger. Therefore, the financial statements and other information contained herein relate to the Company without giving effect to the Raytheon Merger and, accordingly, do not include the results of Raytheon. Other filings subsequent to and including the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2020, reflect the results of the Company after giving effect to the Separation Transactions and the Raytheon Merger, thereby reflecting the combined businesses of UTC (excluding the Carrier and Otis businesses) and Raytheon.
The Company has revised the following portions of its 2019 Annual Report on Form 10-K to reflect the presentation of its Carrier and Otis businesses as discontinued operations and, where applicable, changes to reportable segments:
•Part I, Item 1. Business
•Part I, Item 2. Properties
•Part II, Item 6. Selected Financial Data
•Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
•Part II, Item 8. Financial Statements and Supplementary Data
•Part IV, Item 15. Exhibits, Financial Statement Schedules (sub-Items (a)1 and (a) 2 only)
•Exhibit 13. Excerpts from UTC’s 2019 Annual Report to Shareowners for the year ended December 31, 2019
Except as specifically set forth herein as required to reflect the historical results of the Carrier and Otis businesses as discontinued operations and include the reclassification of certain long term assets and liabilities to current using the duration of the related contract or program as our operating cycle, no revisions have been made to the Company’s 2019 Annual Report on Form 10-K to update for other information, developments or events that have occurred since such filing on February 6, 2020. This Form 8-K should be read in conjunction with the Company’s 2019 Annual Report on Form 10-K and its subsequent filings with the SEC, including its Quarterly Reports on Form 10-Q for the periods ended March 31, 2020 and June 30, 2020 and its Current Reports on Form 8-K. These subsequent SEC filings contain important information regarding events, risks, developments and updates affecting the Company and its expectations that have occurred since the filing of the Company’s 2019 Annual Report on Form 10-K. The information contained herein is not an amendment to, or a restatement of, the Company’s 2019 Annual Report on Form 10-K. Unaffected items and unaffected portions of the Company’s 2019 Annual Report on Form 10-K have not been repeated in, and are not amended or modified by this Current Report and Exhibits 99.1 and 99.2.
Item 1.    Business
General
Raytheon Technologies Corporation was incorporated in Delaware in 1934. RTC provides high technology products and services to the aerospace industry worldwide. Growth is attributable primarily to the internal development of our existing businesses and to acquisitions. The following description of our business should be read in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” within Exhibit 99.2 hereto, incorporated herein by reference, including the information contained therein under the heading “Business Overview.”
Our operations for the periods presented herein are classified into two segments: Pratt & Whitney and Collins Aerospace Systems, with each segment comprised of groups of similar operating companies. References to each segment include the various operating companies established worldwide through which the operations for each segment are conducted.
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Pratt & Whitney and Collins Aerospace Systems primarily serve commercial and government customers in both the original equipment and aftermarket parts and services markets of the aerospace industry. For 2019, our commercial and military aerospace sales were approximately 72 percent and 28 percent, respectively, of our consolidated sales. International sales for 2019, including U.S. export sales, were 61 percent of our net sales.
On April 3, 2020, the Company completed the previously announced separation of its business into three independent, publicly traded companies – UTC, Carrier Global Corporation (Carrier) and Otis Worldwide Corporation (Otis) (such separations, the Separation Transactions). UTC distributed all of the outstanding shares of Carrier common stock and all of the outstanding shares of Otis common stock to UTC shareowners who held shares of UTC common stock as of the close of business on March 19, 2020, the record date for the distributions (the Distributions). UTC distributed 866,158,910 and 433,079,455 shares of common stock of Carrier and Otis, respectively in the Distributions, each of which was effective at 12:01 a.m., Eastern Time, on April 3, 2020. The historical results of Otis and Carrier are presented as discontinued operations and, as such, have been excluded from both continuing operations and segment results for all periods presented. Throughout this Form 8-K, unless otherwise indicated, amounts and activity are presented on a continuing operations basis.
On April 3, 2020, following the completion of the Separation Transactions and the Distributions, pursuant to an Agreement and Plan of Merger dated June 9, 2019, as amended, UTC and Raytheon completed the Raytheon Merger. Upon closing of the Raytheon Merger, Raytheon became a wholly-owned subsidiary of UTC, which changed its name to “Raytheon Technologies Corporation.” As previously discussed, the financial results of the Company presented herein do not give effect to the Raytheon Merger and exclude the results of Raytheon.
The Company’s Annual Report on Form 10-K and our quarterly reports on Form 10-Q, current reports on Form 8-K and all amendments to those reports are available free of charge through the Investors section of our Internet website (http://www.rtx.com) under the heading “SEC Filings” as soon as reasonably practicable after these reports are electronically filed with, or furnished to, the SEC. In addition, the SEC maintains an Internet site (http://www.sec.gov) containing reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC.
Description of Business by Segment
Each segment’s business, including its principal products and services and other material developments and information, is described below. Segment financial data for the years 2017 through 2019, including financial information about foreign and domestic operations and export sales, appears in “Note 21: Segment Financial Data” within the Notes to Consolidated Financial Statements within Exhibit 99.2 hereto. Segment sales as discussed below include intercompany sales, which are ultimately eliminated within the “Eliminations and other” category as reflected in the segment financial data in “Note 21: Segment Financial Data” within the Notes to Consolidated Financial Statements within Exhibit 99.2 hereto. Similarly, the total remaining performance obligation (RPO) discussed below includes intercompany RPO. See “Note 1: Summary of Accounting Principles” within the Notes to Consolidated Financial Statements within Exhibit 99.2 hereto for further discussion of the accounting for RPO under Accounting Standards Codification (ASC) Topic 606: Revenue from Contracts with Customers.
Pratt & Whitney
Pratt & Whitney is among the world’s leading suppliers of aircraft engines for the commercial, military, business jet and general aviation markets. Pratt & Whitney provides fleet management services and aftermarket maintenance, repair and overhaul services. Pratt & Whitney designs, develops, produces and maintains families of large engines for wide- and narrow-body and large regional aircraft in the commercial market and for fighter, bomber, tanker and transport aircraft in the military market. Pratt & Whitney Canada (P&WC) is among the world’s leading suppliers of engines powering general and business aviation, as well as regional airline, and utility airplanes, and helicopters. Pratt & Whitney and P&WC also produce, sell and service auxiliary power units for military and commercial aircraft.
The development of new engines and improvements to current production engines present important growth opportunities. In view of the risks and costs associated with developing new engines, Pratt & Whitney has entered into collaboration arrangements in which revenues, costs and risks are shared with third parties. At December 31, 2019, the interests of third-party participants in Pratt & Whitney-directed commercial jet engine programs ranged, in the aggregate per program, from approximately 13 percent to 49 percent. RTC holds a 61 percent program share interest in the IAE International Aero Engines AG (IAE) collaboration with MTU Aero Engines AG (MTU) and Japanese Aero Engines Corporation (JAEC). Pratt & Whitney also holds a 59 percent program share interest in the International Aero Engines, LLC (IAE LLC) collaboration with MTU and JAEC. Pratt & Whitney sells the PW1100G-JM engine for the Airbus A320neo family of aircraft and the PW1400G-JM engine for the Irkut MC-21 aircraft through IAE LLC. In addition, Pratt & Whitney has interests in other engine programs, including a 50 percent ownership interest in Engine Alliance, LLC (EA), a joint venture with GE Aviation, which sells and provides maintenance services for the GP7000 engine for the Airbus A380 aircraft, which Airbus has announced it no longer intends to manufacture after 2021. Pratt & Whitney has entered into risk and revenue sharing arrangements with third parties
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for 40 percent of the products and 25 percent of the services that Pratt & Whitney is responsible for providing to the EA. Pratt & Whitney accounts for its interest in the EA joint venture under the equity method of accounting. See “Note 1: Summary of Accounting Principles” within the Notes to Consolidated Financial Statements within Exhibit 99.2 hereto for a description of our accounting for collaborative arrangements.
Pratt & Whitney produces the PW1000G Geared Turbofan engine family, the first of which, the PW1100G-JM, entered into service in January 2016. The PW1000G Geared Turbofan engine has demonstrated a significant reduction in fuel burn and noise levels and lower environmental emissions when compared to legacy engines. The PW1100G-JM engine is offered on the Airbus A320neo family of aircraft. PW1000G Geared Turbofan engine models also power the Airbus A220 passenger aircraft and Embraer’s E-Jet E2 family of aircraft. Additionally, PW1000G Geared Turbofan engine models have been selected to power the new Mitsubishi SpaceJet, and the new Irkut MC-21 passenger aircraft, which are scheduled to enter service in 2020 and 2021, respectively. As previously disclosed, Gulfstream announced the selection of the PW800 engine to exclusively power Gulfstream’s new G500 and G600 business jets. The Gulfstream G500 entered service in 2018, and the Gulfstream G600 entered service in 2019. P&WC’s PW800 engine has also been selected to power the new Falcon 6X business jet by Dassault Aviation, which is scheduled to enter into service in 2022. Pratt & Whitney continues to enhance its programs through performance improvement measures and product base expansion. The success of these aircraft and engines is dependent upon many factors, including technological accomplishments, program execution, aircraft demand, and regulatory approval. As a result of these factors, as well as the level of success of aircraft program launches by aircraft manufacturers and other conditions, additional investment in these engine programs may be required.
Pratt & Whitney is under contract with the U.S. Government’s F-35 Joint Program Office to produce and sustain the F135 engine to power the single-engine F-35 Lightning II aircraft (commonly known as the Joint Strike Fighter) being produced by Lockheed Martin. The two F135 propulsion system configurations for the F-35A, F-35B and F-35C jets are used by the U.S. Air Force, U.S. Marine Corps and U.S. Navy, respectively. F135 engines are also used on F-35 aircraft purchased by Joint Strike Fighter partner countries and foreign military sales countries. Pratt & Whitney is also under contract to build engines for the U.S. Air Force’s B-21 long-range strike bomber and for the development of next-generation adaptive engines for the U.S. Air Force.
Pratt & Whitney’s products are sold principally to aircraft manufacturers, airlines and other aircraft operators, aircraft leasing companies and the U.S. and foreign governments. Pratt & Whitney’s products and services must adhere to strict regulatory and market-driven safety and performance standards. The frequently changing nature of these standards, along with the long duration of aircraft engine development, production and support programs, creates uncertainty regarding engine program profitability. Sales to Airbus (Pratt & Whitney’s largest customer by sales) were 31 percent and 36 percent of total Pratt & Whitney segment sales in 2019 and 2018, respectively, before taking into account discounts or financial incentives offered to customers. Sales to the U.S. Government were approximately 27 percent and 23 percent of total Pratt & Whitney segment sales in 2019 and 2018, respectively.
Sales generated by Pratt & Whitney’s international operations, including U.S. export sales, were 64 percent and 63 percent of total Pratt & Whitney net sales in 2019 and 2018, respectively. At December 31, 2019, Pratt & Whitney’s RPO was $85.2 billion, including $13.1 billion of U.S. Government contracts and subcontracts. At December 31, 2018, Pratt & Whitney’s RPO was $71.1 billion, including $10.0 billion of U.S. Government contracts and subcontracts. Of the total Pratt & Whitney RPO at December 31, 2019, approximately $14 billion is expected to be realized as sales in 2020. Pratt & Whitney’s RPO includes certain contracts for which actual costs may ultimately exceed total sales. See “Note 1: Summary of Accounting Principles” within the Notes to Consolidated Financial Statements within Exhibit 99.2 hereto for a description of our Revenue Recognition accounting policy which includes discussion of the accounting for long-term contracts and for further discussion on RPO under ASC Topic 606: Revenue from Contracts with Customers.
Collins Aerospace Systems
Collins Aerospace Systems is a leading global provider of technologically advanced aerospace products and aftermarket service solutions for aircraft manufacturers, airlines, regional, business and general aviation markets, as well as military and space operations. Collins Aerospace Systems’ product portfolio mainly includes electric power generation, power management and distribution systems, air data and aircraft sensing systems, engine control systems, intelligence, surveillance and reconnaissance systems, engine components, environmental control systems, fire and ice detection and protection systems, propeller systems, engine nacelle systems, including thrust reversers and mounting pylons, interior and exterior aircraft lighting, aircraft seating and cargo systems, actuation systems, landing systems, including landing gear and wheels and brakes, space products and subsystems, integrated avionics systems, precision targeting, electronic warfare and range and training systems, flight controls, communications systems, navigation systems, oxygen systems, simulation and training systems, food and beverage preparation, storage and galley systems, lavatory and wastewater management systems. Collins Aerospace Systems also designs, produces and supports cabin interior, communications and aviation systems and products and provides
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information management services through voice and data communication networks and solutions worldwide. Aftermarket services include spare parts, overhaul and repair, engineering and technical support, training and fleet management solutions, and information management services.
Collins Aerospace Systems sells aerospace products and services to aircraft manufacturers, airlines and other aircraft operators, the U.S. and foreign governments, maintenance, repair and overhaul providers, and independent distributors. Collins Aerospace Systems’ largest customers are Boeing and Airbus with a combined 27 percent and 31 percent of total Collins Aerospace Systems segment sales in 2019 and 2018, respectively. Sales to the U.S. Government were 18 percent and 19 percent of total Collins Aerospace Systems net sales in 2019 and 2018, respectively.
In 2019, Collins Aerospace Systems’ products supported the first flight of the Royal Canadian Air Force Airbus C295, Embraer E175-E2, and the Optionally Piloted Black Hawk helicopter. In addition, we supported entry into service for the Gulfstream G600 and the Embraer E195-E2. Certifications were completed for the Embraer Praetor 500 and 600 and the United States Air Force’s Modernized GPS User Equipment program.
Significant product development activity continues, including major systems for Boeing’s 777X, T-7A, and VC-25B, the Mitsubishi SpaceJet, the Irkut MC-21, the Dassault 6X Falcon, the Leonardo AW249, and the COMAC C919. Other significant development work includes Iridium Next, HF Next, Tactical Combat Training Systems Increment II, NASA deep space exploration systems, distributed pulse oxygen system, and the FAA CLEEN II demonstrator.
Sales generated by Collins Aerospace Systems’ international operations, including U.S. export sales, were 53 percent and 56 percent of total Collins Aerospace Systems segment sales in 2019 and 2018, respectively. At December 31, 2019, Collins Aerospace Systems’ RPO was $29.5 billion, including $6.8 billion of U.S. Government contracts and subcontracts. At December 31, 2018, Collins Aerospace Systems’ RPO was $26.6 billion, including $6.0 billion of U.S. Government contracts and subcontracts, and $10.7 billion of RPO related to the acquisition of Rockwell Collins. Of the total Collins Aerospace Systems RPO at December 31, 2019, approximately $12 billion is expected to be realized as sales in 2020. See “Note 1: Summary of Accounting Principles” within the Notes to Consolidated Financial Statements within Exhibit 99.2 hereto for a description of our Revenue Recognition accounting policy which includes discussion of the accounting for long-term contracts and for further discussion on RPO under ASC Topic 606: Revenue from Contracts with Customers.
Other Matters Relating to Our Business as a Whole
Competition and Other Factors Affecting Our Businesses
As worldwide businesses, our operations can be affected by a variety of economic, industry and other factors, including those described in this section, in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included within Exhibit 99.2 hereto, “Cautionary Note Concerning Factors That May Affect Future Results,” and in Item 1A, “Risk Factors” of the Company’s Form 10-Q for the quarter ended March 31, 2020. Each business unit is subject to significant competition from a large number of companies in the U.S. and other countries, and each competes on the basis of price, delivery schedule, product performance and service.
Our businesses are subject to substantial competition from various domestic and foreign manufacturers, customers and companies that obtain regulatory agency approval to manufacture spare parts, with foreign companies sometimes receiving government research and development assistance, marketing subsidies and other assistance for certain of their products beyond the assistance that may be available in the U.S. Customer selections of aircraft engines, components and systems can also have a significant impact on future sales of parts and services. In addition, the U.S. Government’s and other governments’ policies of purchasing parts from suppliers other than the original equipment manufacturer affect military spare parts sales. Significant elements of our businesses, such as spare parts sales for engines and aircraft in service, have short lead times. Therefore, RPO information may not be indicative of future demand. Additionally, our businesses’ competitors may offer substantial discounts and other financial incentives, performance and operating cost guarantees, and participation in financing arrangements in an effort to compete for the aftermarket associated with these products. For information regarding customer financing commitments, participation in guarantees of customer financing arrangements and performance and operating cost guarantees, primarily related to Pratt & Whitney, see “Note 5: Commercial Aerospace Industry Assets and Commitments” and “Note 18: Guarantees” within the Notes to Consolidated Financial Statements within Exhibit 99.2 hereto. Pratt & Whitney’s major competitors in the sale of engines are GE Aviation, Honeywell, Safran Helicopter Engines, and CFM International.
U.S. Government Contracts
Contracting with the U.S. Government entails certain unique risks. U.S. Government contracts are subject to termination by the government, either for convenience or for default in the event of our failure to perform under the applicable contract. In the case of a termination for convenience, we would normally be entitled to reimbursement for our allowable costs incurred and termination costs. If terminated by the government as a result of our default, we could be liable for additional costs the
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government incurs in acquiring undelivered goods or services from another source and any other damages it suffers. Most of our U.S. Government sales are made under fixed-price contracts, while approximately $2.6 billion or 6 percent of our total sales for 2019 were made under cost-reimbursement type contracts.
Our contracts with the U.S. Government are also subject to audits. For further discussion of risks related to government contracting, including on-going litigation associated with U.S. Government audits, see Item 1A, “Risk Factors” of the Company’s Form 10-Q for the quarter ended March 31, 2020, Item 3, “Legal Proceedings,” of the Company’s Form 10-K for the year ended December 31, 2019, and “Note 19: Contingent Liabilities” within the Notes to Consolidated Financial Statements within Exhibit 99.2 hereto.
Compliance with Environmental and Other Government Regulations
Our operations are subject to and affected by environmental regulation by federal, state and local authorities in the U.S. and regulatory authorities with jurisdiction over our foreign operations. We have incurred and will likely continue to incur liabilities under various government statutes for the cleanup of pollutants previously released into the environment. We do not anticipate that compliance with current provisions relating to the protection of the environment or that any payments we may be required to make for cleanup liabilities will have a material adverse effect upon our cash flows, competitive position, financial condition or results of operations. Environmental matters are further addressed in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” within Exhibit 99.2 hereto and “Note 1: Summary of Accounting Principles” and “Note 19: Contingent Liabilities” within the Notes to Consolidated Financial Statements within Exhibit 99.2 hereto.
Most of the U.S. laws governing environmental matters include criminal provisions. If we were convicted of a violation of the federal Clean Air Act or Clean Water Act, the facility or facilities involved in the violation could be deemed ineligible to be used in performing any U.S. Government contract we are awarded until the Environmental Protection Agency thereafter certifies that the condition giving rise to the violation has been corrected.
In addition, we could be affected by future laws or regulations imposed in response to concerns over climate change. Changes in climate-related concerns, or in the regulation of such concerns, including greenhouse gas emissions, could subject us to additional costs and restrictions, including compliance costs and increased energy and raw materials costs.
We conduct our businesses through subsidiaries and affiliates worldwide. Changes in legislation or government policies can affect our worldwide operations. For example, government safety and performance regulations, restrictions on aircraft engine noise and emissions and government procurement practices can impact our businesses.
U.S. laws, regulations, orders, and other measures concerning the export or re-export of products, software, services and technology to, and other trade-related activities involving, non-U.S. countries and parties affect the operations of RTC and its affiliates.
For further discussion of risks related to environmental matters and other government regulations, see Item 1A, “Risk Factors” of the Company’s Form 10-Q for the quarter ended March 31, 2020, Item 3, “Legal Proceedings,” of the Company’s Form 10-K for the year ended December 31, 2019 and “Note 19: Contingent Liabilities” within the Notes to Consolidated Financial Statements within Exhibit 99.2 hereto.
Intellectual Property and Raw Materials and Supplies
We maintain a portfolio of patents, trademarks, copyrights, trade secrets, licenses and franchises related to our businesses. While we believe we have taken reasonable measures to protect this portfolio, our efforts may not be sufficient. See Item 1A, “Risk Factors” of the Company’s Form 10-Q for the quarter ended March 31, 2020 for further discussion of intellectual property matters.
We believe we have adequate sources for our purchases of materials, components, services and supplies used in our manufacturing. We work continuously with our supply base to ensure an adequate source of supply and to reduce costs. We pursue cost reductions through a number of mechanisms, including consolidating our purchases, reducing the number of suppliers, strategic global sourcing and competitions among potential suppliers. In some instances, we depend upon a single source of supply or participate in commodity markets that may be subject to allocations of limited supplies by suppliers. Like other users in the U.S., we are largely dependent upon foreign sources for certain raw materials, such as cobalt, tantalum, chromium, rhenium and nickel. We have a number of ongoing programs to manage this dependence and the accompanying risk, including long-term agreements and the conservation of materials through scrap reclamation and new manufacturing processes. We believe that our supply management practices are based on an appropriate balancing of the foreseeable risks and the costs of alternative practices. Although at times high prices for some raw materials important to our businesses (for example, steel, copper, aluminum, titanium and nickel) have caused margin and cost pressures, we do not foresee near term unavailability of materials, components or supplies that would have a material adverse effect on our competitive position, results of operations, cash flows or financial condition. For further discussion of the possible effects of the cost and availability of raw materials on
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our business, including the risks associated with more restrictive trade policies in the U.S., and internationally, and other market risks such as the United Kingdom’s pending withdrawal from the European Union, see Item 1A, “Risk Factors” of the Company’s Form 10-Q for the quarter ended March 31, 2020 and the section titled “Business Overview” in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” within Exhibit 99.2 hereto.
Employees and Employee Relations
At December 31, 2019, our total number of employees was approximately 121,600, of which approximately 45 percent are based outside the U.S. During 2019, we negotiated six domestic collective bargaining agreements. In 2020, numerous collective bargaining agreements are subject to renegotiation, the largest of which covers certain workers at Collins Aerospace Systems’ Chula Vista/Riverside, California facilities. Although some previous contract renegotiations have had a significant impact on our financial condition or results of operations in prior years, we do not anticipate that the renegotiation of these contracts in 2020 will have a material adverse effect on our competitive position, cash flows, financial condition or results of operations. For discussion of the effects of our restructuring actions on employment, see Item 1A, “Risk Factors” of the Company’s Form 10-Q for the quarter ended March 31, 2020 and under “Management’s Discussion and Analysis of Financial Condition and Results of Operations” within Exhibit 99.2 hereto and “Note 14: Restructuring Costs” within the Notes to Consolidated Financial Statements within Exhibit 99.2 hereto.
For a discussion of other matters which may affect our competitive position, cash flows, financial condition or results of operations, including the risks of our international operations, see the further discussion under the headings “General” and “Description of Business by Segment” in this section, Item 1A, “Risk Factors” of the Company’s Form 10-Q for the quarter ended March 31, 2020, and under “Management’s Discussion and Analysis of Financial Condition and Results of Operations” within Exhibit 99.2 hereto.
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Cautionary Note Concerning Factors That May Affect Future Results
This Form 8-K contains statements which, to the extent they are not statements of historical or present fact, constitute “forward-looking statements” under the securities laws. From time to time, oral or written forward-looking statements may also be included in other information released to the public. These forward-looking statements are intended to provide management’s current expectations or plans for our future operating and financial performance, based on assumptions currently believed to be valid. Forward-looking statements can be identified by the use of words such as “believe,” “expect,” “expectations,” “plans,” “strategy,” “prospects,” “estimate,” “project,” “target,” “anticipate,” “will,” “should,” “see,” “guidance,” “outlook,” “confident,” “on track” and other words of similar meaning. Forward-looking statements may include, among other things, statements relating to future sales, earnings, cash flow, results of operations, uses of cash, share repurchases, tax rates, R&D spend, other measures of financial performance, potential future plans, strategies or transactions, credit ratings and net indebtedness, other anticipated benefits to RTC of UTC’s Rockwell Collins acquisition, the Raytheon Merger or the Separation Transactions, including estimated synergies and customer cost savings resulting from the Raytheon Merger and the anticipated benefits and costs of the Separation Transactions and other statements that are not solely historical facts. All forward-looking statements involve risks, uncertainties and other factors that may cause actual results to differ materially from those expressed or implied in the forward-looking statements. For those statements, we claim the protection of the safe harbor for forward-looking statements contained in the U.S. Private Securities Litigation Reform Act of 1995. Such risks, uncertainties and other factors include, without limitation:
•the effect of economic conditions in the industries and markets in which RTC operates 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 pandemic health issues (including the coronavirus disease 2019 (COVID-19) and its effects, among other things, on global supply, demand and distribution capabilities as the COVID-19 outbreak continues and results in an increasingly prolonged period of disruption to air travel and commercial activities generally, and significant restrictions and limitations on businesses, particularly within the aerospace and commercial airlines industries), aviation safety concerns, weather conditions and natural disasters, the financial condition of our customers and suppliers, and the risks associated with U.S. government sales (including changes or shifts in defense spending due to budgetary constraints, spending cuts resulting from sequestration or the allocation of funds to governmental responses to COVID-19, a government shutdown, or otherwise, and uncertain funding of programs);  
•challenges in the development, production, delivery, support, performance and realization of the anticipated benefits (including our expected returns under customer contracts) of advanced technologies and new products and services;
•the scope, nature, impact or timing of acquisition and divestiture activity, including among other things the integration of UTC’s and Raytheon’s businesses and the integration of RTC with other businesses acquired before and after the Raytheon Merger, and realization of synergies and opportunities for growth and innovation and incurrence of related costs and expenses, including the possibility that the anticipated benefits from the combination of UTC’s and Raytheon’s businesses or other acquired businesses cannot be realized in full or at all or may take longer to realize than expected, or the possibility that costs or difficulties related to the integration of UTC’s businesses with Raytheon’s or other acquired businesses will be greater than expected or may not result in the achievement of estimated synergies within the contemplated time frame or at all;
•RTC’s levels of indebtedness, capital spending and research and development spending;
•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 by RTC of its common stock, which have been suspended through the end of calendar year 2020 and may continue to be suspended, or discontinued or delayed, 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 (including the potential termination of U.S. government contracts and performance under undefinitized contract awards and the potential inability to recover termination costs);
•new business and investment opportunities;
•the 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 RTC and its businesses operate, including the effect of changes in U.S. trade policies or the U.K.’s withdrawal from the European Union, on general
7

market conditions, global trade policies and currency exchange rates in the near term and beyond;
•the effect of changes in tax (including U.S. tax reform enacted on December 22, 2017, which is commonly referred to as the TCJA), environmental, regulatory and other laws and regulations (including, among other things, export and import requirements such as the International Traffic in Arms Regulations and the Export Administration Regulations, anti-bribery and anti-corruption requirements, including the Foreign Corrupt Practices Act, industrial cooperation agreement obligations, and procurement and other regulations) in the U.S. and other countries in which RTC and its businesses operate;
•the ability of RTC to retain and hire key personnel and the ability of our personnel to continue to operate our facilities and businesses around the world in light of, among other factors, the COVID-19 outbreak;  
•the expected benefits to RTC of the Separation Transactions;
•the intended qualification of (1) the Raytheon Merger as a tax-free reorganization and (2) the Separation Transactions as tax-free to UTC and former UTC shareowners, in each case, for U.S. federal income tax purposes; and
•the risk that dis-synergy costs incurred in connection with the Separation Transactions will exceed legacy UTC’s or legacy Raytheon’s estimates.
In addition, this Form 8-K includes important information as to risks, uncertainties and other factors that may cause actual results to differ materially from those expressed or implied in the forward-looking statements. See “Note 19: Contingent Liabilities” within the Notes to Consolidated Financial Statements within Exhibit 99.2 hereto, the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” under the headings “Business Overview,” “Critical Accounting Estimates,” “Results of Operations,” and “Liquidity and Financial Condition,” within Exhibit 99.2 hereto, and the sections titled Item 1A, “Risk Factors” of the Company’s Form 10-Q for the quarter ended March 31, 2020, and Item 3, “Legal Proceedings,” of the Company’s Form 10-K for the year ended December 31, 2019. Additional important information as to these factors is included in the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” under the headings “Restructuring Costs,” “Environmental Matters” and “Governmental Matters,” in Exhibit 99.2 hereto, and in the “Business” section under the headings “General,” “Description of Business by Segment” and “Other Matters Relating to Our Business as a Whole” in Exhibit 99.1 hereto, and in our Form S-4 Registration Statements (Registration No. 333-220883) and (Registration No. 333-232696) under the heading “Risk Factors.” The forward-looking statements speak only as of the date of this report or, in the case of any document incorporated by reference, the date of that document. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by applicable law. Additional information as to factors that may cause actual results to differ materially from those expressed or implied in the forward-looking statements is disclosed from time to time in our other filings with the SEC.
Item 2.    Properties
We have properties in approximately 30 countries, with approximately 400 significant properties comprising approximately 55 million square feet of productive space. Approximately 40% of our significant properties are leased, and 60% are owned. Approximately 65% of our significant properties are located in the United States.
Our fixed assets as of December 31, 2019 include manufacturing facilities and non-manufacturing facilities such as warehouses, and a substantial quantity of machinery and equipment, most of which are general purpose machinery and equipment using special jigs, tools and fixtures and in many instances having automatic control features and special adaptations. The facilities, warehouses, machinery and equipment in use as of December 31, 2019 are in good operating condition, are well-maintained and substantially all are generally in regular use.
8

PART II
Item 6.    Selected Financial Data
The Five-Year Summary appearing within Exhibit 99.2 hereto, is incorporated herein by reference. See “Notes to Consolidated Financial Statements” appearing within Exhibit 99.2 hereto for a description of any accounting changes and acquisitions or dispositions of businesses materially affecting the comparability of the information reflected in the Five-Year Summary.
Item 7.    Management’s Discussion and Analysis of Financial Condition and Results of Operations
The information set forth in the section entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” appearing within Exhibit 99.2 hereto, is incorporated herein by reference.
Item 8.    Financial Statements and Supplementary Data
The 2019 and 2018 Consolidated Balance Sheet, and other consolidated financial statements for the years ended 2019, 2018 and 2017, together with the report thereon of PricewaterhouseCoopers LLP dated October 27, 2020 appearing within Exhibit 99.2 hereto, are incorporated herein by reference. The 2019 and 2018 unaudited Selected Quarterly Financial Data appearing within Exhibit 99.2 hereto, is incorporated herein by reference.
9

PART IV
Item 15.    Exhibits and Financial Statement Schedules
(a)Financial Statements, Financial Statement Schedules and Exhibits
1.Financial Statements (incorporated herein by reference within Exhibit 99.2 hereto):
 Page Number in
Exhibit 99.2
Report of Independent Registered Public Accounting Firm27 
Consolidated Statement of Operations for the three years ended December 31, 201930 
Consolidated Statement of Comprehensive Income for the three years ended December 31, 201931 
Consolidated Balance Sheet as of December 31, 2019 and 201832 
Consolidated Statement of Cash Flows for the three years ended December 31, 201933 
Consolidated Statement of Changes in Equity for the three years ended December 31, 201935 
Notes to Consolidated Financial Statements36 
Selected Quarterly Financial Data (Unaudited)87 
2.Financial Statement Schedule for the three years ended December 31, 2019:
 Page Number Below
SCHEDULE I—Report of Independent Registered Public Accounting Firm on Financial Statement Schedule
SCHEDULE II—Valuation and Qualifying Accounts

All other schedules are omitted because they are not applicable or the required information is shown in the financial statements or the notes thereto.
10

Report of Independent Registered Public Accounting Firm on
Financial Statement Schedule



To the Shareowners and Board of Directors of Raytheon Technologies Corporation

Our audits of the consolidated financial statements referred to in our report dated February 6, 2020, except with respect to our opinion on the consolidated financial statements insofar as it relates to the effects of discontinued operations and the change in operating cycle discussed in Note 1, as to which the date is October 27, 2020, appearing in the Exhibit 99.2 of this Current Report on Form 8-K of Raytheon Technologies Corporation (formerly known as United Technologies Corporation) (which report and consolidated financial statements are incorporated by reference in this Current Report on Form 8-K) also included an audit of the financial statement schedule listed in Item 15(a)(2) of Exhibit 99.1 of this Current Report on Form 8-K. In our opinion, this financial statement schedule presents fairly, in all material respects, the information set forth therein when read in conjunction with the related consolidated financial statements.

/s/ PricewaterhouseCoopers LLP
Boston, Massachusetts
February 6, 2020, except for the effects of discontinued operations and the change in operating cycle discussed in Note 1 to the financial statement schedule, as to which the date is October 27, 2020
I

SCHEDULE II
RAYTHEON TECHNOLOGIES CORPORATION AND SUBSIDIARIES
Valuation and Qualifying Accounts
Three years ended December 31, 2019
(Millions of Dollars)
 
Allowances for Doubtful Accounts:
Balance, December 31, 2016$203 
Provision charged to income30 
Doubtful accounts written off (net)(44)
Other adjustments1 
Balance, December 31, 2017190 
Provision charged to income35 
Doubtful accounts written off (net)(10)
Other adjustments36 
Balance, December 31, 2018251 
Provision charged to income44 
Doubtful accounts written off (net)(41)
Balance, December 31, 2019$254 
Future Income Tax Benefits—Valuation allowance:
Balance, December 31, 2016$545 
Additions charged to income tax expense45 
Additions charged to goodwill, due to acquisitions— 
Reductions credited to income tax expense(29)
Other adjustments21 
Balance, December 31, 2017582 
Additions charged to income tax expense61 
Additions charged to goodwill, due to acquisitions25 
Reductions credited to income tax expense(25)
Other adjustments(38)
Balance, December 31, 2018605 
Additions charged to income tax expense117 
Additions charged to goodwill, due to acquisitions2 
Reductions credited to income tax expense(15)
Other adjustments(93)
Balance, December 31, 2019$616 
Note 1: This schedule of Valuation and Qualifying Accounts has been included in conjunction with the recast for discontinued operations described in Note 1 to the consolidated financial statements. The "Future Income Tax Benefits—Valuation allowance" table within the schedule includes valuation allowances related to discontinued operations."
II
utx-20201027_d2
Exhibit 99.2

Five-Year Summary
(dollars in millions, except per share amounts; shares in millions)20192018201720162015
For The Year
Net sales$45,349 $34,701 $29,713 $28,528 $27,433 
Research and development2,452 1,878 1,876 1,857 1,806 
Restructuring costs245 158 92 166 322 
Net income from continuing operations (1)
3,731 1,406 1,468 2,133 992 
Net income from continuing operations attributable to common shareowners (1)
3,510 1,216 1,313 2,009 903 
Basic earnings per share—Net income from continuing operations attributable to common shareowners4.11 1.52 1.66 2.46 1.03 
Diluted earnings per share—Net income from continuing operations attributable to common shareowners4.06 1.50 1.64 2.43 1.02 
Cash dividends per common share2.94 2.84 2.72 2.62 2.56 
Average number of shares of Common Stock outstanding:
Basic (2)
855 800 790 818 873 
Diluted (2)
864 810 799 826 883 
Capital expenditures 1,868 1,467 1,556 1,265 1,392 
Acquisitions, including debt assumed & equity issued9 30,783 25 24 140 
Repurchases of Common Stock (3)
151 325 1,453 2,254 10,000 
Dividends paid on Common Stock (excluding ESOP)2,442 2,170 2,074 2,069 2,184 
At Year End
Working capital (4),(8)
$(2,397)$(2,284)$7,003 $4,788 $1,621 
Total assets (8)
107,792 103,471 65,994 60,252 58,255 
Long-term debt, including current portion (5),(8)
40,959 43,763 26,917 23,131 15,546 
Total debt (5),(8)
43,252 45,191 27,279 23,696 19,928 
Total debt to total capitalization (5)
49 %53 %46 %45 %41 %
Total equity (5), (6)
44,231 40,610 31,421 29,169 28,844 
Number of employees (7)
121,600 117,300 81,600 77,700 77,800 
(1)    2019 amounts include a charge associated with amortization of an inventory fair value adjustment associated with the Rockwell Acquisition of $181 million and favorable tax settlements of $278 million. 2018 amounts include unfavorable tax charges of approximately $744 million primarily related to non U.S. taxes that will become due when earnings of certain international subsidiaries are remitted and a $300 million pre-tax charge resulting from customer contract matters. 2017 amounts include unfavorable tax charges of approximately $690 million related to U.S. tax reform legislation enacted in December, 2017, commonly referred to as the Tax Cuts and Jobs Act of 2017 (TCJA) and a $196 million pre-tax charge resulting from customer contract matters, partially offset by pre-tax gains of approximately $120 million on sales of available for sale securities. 2016 amounts include a $423 million pre-tax pension settlement charge resulting from defined benefit plan de-risking actions. 2015 amounts include pre-tax charges of: $867 million as a result of a settlement with the Canadian government and $295 million from customer contract negotiations at Collins Aerospace Systems.
(2)    Increase in average number of Common Stock outstanding in 2019 is due to additional shares issued in connection with the Rockwell Collins acquisition.
(3)    The decrease in 2019 is due to restrictions arising from the merger transaction with Raytheon. The decrease in share repurchases in 2018 is due to the temporary suspension of activity in connection with the acquisition of Rockwell Collins announced on September 4, 2017, excluding activity relating to our employee savings plans. Share repurchases in 2015 include share repurchases under accelerated repurchase agreements of $2.6 billion in the first quarter of 2015 and $6.0 billion in the fourth quarter of 2015.
(4)    Working capital in 2018 includes the addition of contract assets and liabilities of $3.7 billion and $7.8 billion, respectively, in accordance with the New Revenue Standard as well as an increase in current borrowings of $1.1 billion. Working capital in 2015 includes approximately $2.4 billion of taxes payable related to the gain on the sale of Sikorsky, which were paid in 2016. 2015 working capital also reflects the reclassification of current deferred tax assets and liabilities to non-current assets and liabilities in connection with the adoption of Accounting Standards Update 2015-17.
(5)    The decrease in debt to total capitalization ratio primarily reflects debt repayments in 2019. The increase in the 2018 debt to total capitalization ratio primarily reflects additional borrowings in 2018 used to finance the acquisition of Rockwell Collins. The increase in the 2017 and 2016 debt to total capitalization ratio primarily reflects additional borrowings to fund share repurchases, the 2017 discretionary pension contributions, and for general corporate purposes.
(6)    The increase in total equity in 2018 is due to UTC common stock issued as Merger Consideration for Rockwell Collins.
(7)    The increase in employees in 2018 is due to the addition of approximately 30,000 of Rockwell Collins employees.
(8)     Excludes assets and liabilities related to discontinued operations, for all periods presented.

1


Management’s Discussion and Analysis of Financial Condition and Results of Operations
BUSINESS OVERVIEW
We are a global provider of high technology products and services to aerospace industries. Our operations for the periods presented herein are classified into two principal business segments: Pratt & Whitney and Collins Aerospace Systems.
On April 3, 2020, United Technologies Corporation (UTC) completed the previously announced separation of its business into three independent, publicly traded companies – UTC, Carrier Global Corporation (Carrier) and Otis Worldwide Corporation (Otis) (such separations, the Separation Transactions). UTC distributed all of the outstanding shares of Carrier common stock and all of the outstanding shares of Otis common stock to UTC shareowners who held shares of UTC common stock as of the close of business on March 19, 2020, the record date for the distributions (the Distributions). UTC distributed 866,158,910 and 433,079,455 shares of common stock of Carrier and Otis, respectively in the Distributions, each of which was effective at 12:01 a.m., Eastern Time, on April 3, 2020. The historical results of Otis and Carrier are presented as discontinued operations and, as such, have been excluded from both continuing operations and segment results for all periods presented. Unless otherwise indicated, amounts and activity throughout this Form 8-K are presented on a continuing operations basis, and includes the reclassification of certain long term assets and liabilities to current using the duration of the related contract or program as our operating cycle. Refer to “Note 3: Discontinued Operations” and “Note 1: Summary of Accounting Principles” within the Notes to Consolidated Financial Statements for further details.
Raytheon Merger. On April 3, 2020, following the completion of the Separation Transactions and the Distributions, pursuant to an Agreement and Plan of Merger dated June 9, 2019, as amended, UTC and Raytheon Company (Raytheon) completed their previously announced all-stock merger of equals transaction (the Raytheon Merger). Upon closing of the Raytheon Merger, Raytheon became a wholly-owned subsidiary of UTC, which changed its name to “Raytheon Technologies Corporation.” Throughout this Form 8-K filing, we may refer to the Company as “Raytheon Technologies Corporation” or “RTC” whether we are discussing events prior to or subsequent to the Raytheon Merger and name change.
On November 26, 2018, we completed the acquisition of Rockwell Collins (the Rockwell Acquisition), a leader in aviation and high-integrity solutions for commercial and military customers as well as leading-edge avionics, flight controls, aircraft interior and data connectivity solutions. The total aggregate consideration payable in the Rockwell Acquisition was $15.5 billion in cash ($14.9 billion net of cash acquired) and 62.2 million shares of Company common stock. In addition, $7.8 billion of Rockwell Collins debt was outstanding at the time of the Rockwell Acquisition. Refer to “Note 2: Business Acquisitions, Dispositions, Goodwill and Intangible Assets” within the Notes to Consolidated Financial Statements for additional discussion on the Rockwell Acquisition.
Pratt & Whitney and Collins Aerospace Systems serve commercial and government aerospace customers in both the original equipment and aftermarket parts and services markets. Our consolidated net sales were as follows:
201920182017
Military aerospace and space28 %26 %25 %
Commercial aerospace72 %74 %75 %
100 %100 %100 %
Our consolidated net sales were derived from original equipment manufacturing (OEM) and aftermarket parts and services as follows:
201920182017
OEM49 %46 %43 %
Aftermarket parts and services51 %54 %57 %
100 %100 %100 %
Our worldwide operations can be affected by industrial, economic and political factors on both a regional and global level. Our operations include original equipment manufacturing and extensive related aftermarket parts and services. Our business mix also reflects the combination of shorter cycles in our commercial aerospace spares businesses and longer cycles in our aerospace OEM and aftermarket maintenance businesses. Our customers are in both the public and private sectors, and our businesses reflect an extensive geographic diversification that has evolved with continued globalization. Refer to “Note 21: Segment Financial Data” within the Notes to Consolidated Financial Statements for additional discussion of sales attributed to geographic regions.
As part of our growth strategy, we invest in businesses in certain countries that carry high levels of currency, political and/or economic risk, such as China, India, Mexico, Poland, Russia, Turkey, Ukraine and countries in the Middle East and Central
2


Asia. As of December 31, 2019, the net assets in any one of these countries did not exceed 5% of consolidated shareowners’ equity.
In a referendum on June 23, 2016, voters in the United Kingdom (U.K.) voted in favor of the U.K.’s exiting the European Union (EU). The manner in which the U.K. decides to exit the EU could have negative macroeconomic consequences. Our 2019 full year sales in and from the U.K. were approximately $3 billion and approximately 6% of our overall sales, and we do not believe the U.K.’s withdrawal from the EU will significantly impact our businesses in the near term.
Organic sales growth was 7% in 2019, reflecting growth across all segments driven by:
•Higher sales across all channels at Pratt & Whitney;
•Higher commercial aftermarket and military sales, partially offset by lower commercial aerospace OEM sales at Collins Aerospace Systems
We continue to invest in new platforms and new markets to position the Company for long-term growth, while remaining focused on innovation, structural cost reduction, disciplined capital allocation and execution to meet or exceed customer and shareowner commitments.
As discussed below in “Results of Operations,” operating profit in both 2019 and 2018 includes the impact from activities that are not expected to recur often or that are not otherwise reflective of the underlying operations, such as the beneficial impact of net gains from sales of investments, the unfavorable impact of contract matters with customers, transaction, acquisition and integration costs, costs associated with the Company’s separation of its commercial businesses, and other significant non-recurring and non-operational items. Our earnings growth strategy contemplates earnings from organic sales growth, including growth from new product development and product improvements, structural cost reductions, operational improvements, and incremental earnings from our investments in acquisitions.
In total, our investments in businesses in 2019 and 2018 totaled $9 million and $30,783 million, (including debt assumed of $7,784 million and stock issued of $7,960 million) respectively. Our investments in businesses in 2018 primarily consisted of the acquisition of Rockwell Collins.
Both acquisition and restructuring costs associated with business combinations are expensed as incurred. Depending on the nature and level of acquisition activity, earnings could be adversely impacted due to acquisition and restructuring actions initiated in connection with the integration of businesses acquired. For additional discussion of acquisitions and restructuring, see “Liquidity and Financial Condition,” “Restructuring Costs” and “Note 2: Business Acquisitions, Dispositions, Goodwill and Intangible Assets” and “Note 14: Restructuring Costs” within the Notes to Consolidated Financial Statements.
RESULTS OF OPERATIONS
Net Sales
(dollars in millions)201920182017
Net sales$45,349 $34,701 $29,713 
Percentage change year-over-year31 %17 %4 %
The factors contributing to the total percentage change year-over-year in total net sales are as follows:
20192018
Organic volume7 %11 %
Acquisitions and divestitures, net24 %3 %
Other— %3 %
Total % Change31 %17 %
Both of our segments experienced organic sales growth during 2019. Pratt & Whitney sales grew 8% organically, reflecting higher military, commercial OEM, and commercial aftermarket sales. Collins Aerospace Systems grew 6% organically, driven by higher commercial aftermarket and military sales, partially offset by lower commercial aerospace OEM sales. The 24% increase in Acquisitions and divestitures, net primarily reflects the increase in sales attributed to the Rockwell Acquisition. Foreign currency translation and Other had no impact on the change in Net sales in 2019.
Both of our segments experienced organic sales growth during 2018. Pratt & Whitney sales grew 14% organically, reflecting higher commercial aftermarket, commercial OEM, and military sales. Collins Aerospace Systems grew 8% organically, driven by higher commercial aftermarket and military sales, and higher commercial OEM sales. The 3% increase in Acquisitions and divestitures, net primarily reflects the increase in sales attributed to the Rockwell Acquisition. The 3% increase in Other reflects the impact of the adoption of the New Revenue Standard at Pratt & Whitney. Foreign currency translation had no impact on the change in Net sales in 2018.
3


Cost of Products and Services Sold 
(dollars in millions)201920182017
Total cost of products and services sold$34,598 $27,465 $22,988 
Percentage change year-over-year26 %19 %6 %
The factors contributing to the total percentage change year-over-year in total cost of products and services sold are as follows:
20192018
Organic volume6 %15 %
Acquisitions and divestitures, net21 %3 %
Other(1)%1 %
Total % Change26 %19 %
The organic increase in total cost of products and services sold in 2019 was primarily driven by the organic sales increases noted above. The 21% increase in Acquisitions and divestitures, net primarily reflects the increase in cost of products and services sold attributed to the Rockwell Acquisition. The 1% decline in Other primarily reflects the absence of a prior year customer contract settlement at Pratt & Whitney (1%). Foreign currency translation had no impact on cost of products and services sold in 2019.
The organic increase in total cost of products and services sold in 2018 was primarily driven by the organic sales increases noted above. The 3% increase in Acquisitions and divestitures, net primarily reflects the increase in sales attributed to the Rockwell Acquisition. The 1% increase in Other primarily reflects the impact of the adoption of the New Revenue Standard (2%) and a customer contract settlement at Pratt & Whitney (1%), partially offset by the absence of a prior year customer contract matter at Pratt & Whitney. Foreign currency translation had no impact on cost of products and services sold in 2018.
Gross Margin
(dollars in millions)201920182017
Gross margin$10,751 $7,236 $6,725 
Percentage of net sales23.7 %20.9 %22.6 %
The 280 basis point increase in gross margin as a percentage of sales in 2019, includes a 230 basis point increase at Collins Aerospace Systems driven by higher commercial aftermarket volumes and cost reduction, partially offset by adverse commercial OEM mix. Pratt & Whitney’s gross margin increased 120 basis points primarily reflecting continued year-over-year cost reduction and favorable mix on large commercial engine shipments.
The 170 basis point decrease in gross margin as a percentage of sales in 2018, includes a 300 basis point decline in Pratt & Whitney's gross margin driven by the unfavorable year-over-year impact of customer contract matters and higher negative engine margin from higher engine deliveries. Collins Aerospace Systems’ gross margin declined 40 basis points as the benefits of higher commercial aftermarket volumes and cost reduction were more than offset by adverse commercial OEM and military OEM mix, and higher warranty expense.
Research and Development
(dollars in millions)201920182017
Company-funded$2,452 $1,878 $1,876 
Percentage of net sales5.4 %5.4 %6.3 %
Customer-funded$2,283 $1,517 $1,510 
Percentage of net sales5.0 %4.4 %5.1 %
Research and development spending is subject to the variable nature of program development schedules and, therefore, year-over-year variations in spending levels are expected. The majority of the company-funded spending is incurred by the aerospace businesses and relates largely to the next generation engine product family at Pratt & Whitney and systems being developed to support new aircraft and other program introductions at Collins Aerospace Systems. In 2019, company-funded research and development increased 31% over the prior year. This increase was primarily driven by the impact of the Rockwell Acquisition (24%). Excluding this impact, an increase in company-funded research and development at Collins Aerospace Systems (4%) was driven by higher spend across various commercial programs. Company-funded research and development expense at Pratt & Whitney also increased (2%) driven by higher spend across various commercial programs partially offset by a decline in military program spend.
4


Customer-funded research and development increased 51% over the prior year, primarily reflecting the impact of the Rockwell Acquisition (53%). Excluding this impact, customer-funded research and development declined year-over-year as a decrease at Pratt & Whitney (4%), primarily driven by lower research and development expenses on military development programs, was partially offset by an increase at Collins Aerospace Systems (2%), primarily driven by higher expenses on various military development programs.
In 2018, company-funded research and development was consistent with 2017, as an increase at Collins Aerospace Systems due to higher spend across various commercial programs was largely offset by the deferral of certain development costs as contract fulfillment costs in accordance with the New Revenue Standard. Company-funded research and development expense at Pratt & Whitney was consistent with the prior year.
Customer-funded research and development in 2018 was consistent with 2017, as a decrease at Collins Aerospace Systems, primarily driven by the deferral of certain development costs as contract fulfillment costs in accordance with the New Revenue Standard, was offset by an increase at Pratt & Whitney, primarily driven by higher research and development expenses on military development programs.
Selling, General and Administrative
(dollars in millions)201920182017
Selling, general and administrative$3,711 $2,864 $2,387 
Percentage of net sales8.2 %8.3 %8.0 %
Selling, general and administrative expenses increased 30% in 2019. This increase primarily reflects the impact of incremental selling, general and administrative expenses resulting from the Rockwell Acquisition (22%) and costs associated with the Raytheon Merger (3%). In addition, 2019 reflects higher expenses at Pratt & Whitney (8%) driven by increased headcount and employee compensation related expenses and costs to support higher volumes as well as higher restructuring costs; higher expenses at Collins Aerospace Systems (10%) primarily driven by increased headcount and employee compensation related expenses partially offset by synergy capture related to the Rockwell Acquisition, partially offset by lower expenses at Corporate (10%).
Selling, general and administrative expenses increased 20% in 2018. The increase reflects the impact of incremental selling, general and administrative expenses resulting from the acquisition of Rockwell Collins (5%). In addition, 2018 reflects higher expenses at Collins Aerospace Systems (6%) primarily driven by increased headcount and employee compensation related expenses and higher expenses at Pratt & Whitney (3%) driven by increased headcount and employee compensation related expenses and costs to support higher volumes. The remaining increase includes transaction costs related to the acquisition of Rockwell Collins .
We are continuously evaluating our cost structure and have implemented restructuring actions as a method of keeping our cost structure competitive. As appropriate, the amounts reflected above include the beneficial impact of restructuring actions on Selling, general and administrative expenses. See “Note 14: Restructuring Costs” within the Notes to Consolidated Financial Statements and Restructuring Costs, below, for further discussion.
Other Income, Net
(dollars in millions)201920182017
Other income, net$326 $383 $527 
Other income, net includes the operational impact of equity earnings in unconsolidated entities, royalty income, foreign exchange gains and losses as well as other ongoing and infrequently occurring items. In 2019, the year-over-year decrease in Other income, net (15%) primarily reflects the net unfavorable year-over-year impact of foreign exchange gains and losses.
In 2018, the year-over-year decrease in Other income, net (27%) primarily reflects lower year-over-year gains on the sale of securities (28%).
5


Interest Expense, Net
(dollars in millions)201920182017
Interest expense$1,711 $1,182 $978 
Interest income(120)(150)(56)
Interest expense, net$1,591 $1,032 $922 
Average interest expense rate - average outstanding borrowings during the year:
Short-term borrowings1.7 %1.3 %0.8 %
Total debt3.6 %3.5 %3.5 %
Average interest expense rate - outstanding borrowings as of December 31:
Short-term borrowings2.3 %1.9 %1.1 %
Total debt3.6 %3.5 %3.6 %
Interest expense, net increased 54% in 2019 as compared with 2018. The increase in interest expense primarily reflects interest on debt acquired from the Rockwell Collins acquisition and the impact of the August 16, 2018 issuance of notes representing $11 billion in aggregate principal. The average maturity of our long-term debt at December 31, 2019 is approximately 10 years. The decrease in interest income in 2019 as compared to 2018 primarily reflects the absence of interest earned on higher cash balances held in the prior year in advance of funding the Rockwell Acquisition.
Interest expense, net increased 12% in 2018 as compared with 2017. The increase in interest expense reflects the impact of the August 16, 2018 issuance of notes representing $11 billion in aggregate principal; the May 4, 2017 issuance of notes representing $4 billion in aggregate principal; and the May 18, 2018 issuance of Euro-denominated notes representing €2 billion in aggregate principal. These increases were partially offset by the favorable impact of the repayment at maturity of the following: 1.800% notes in June 2017 representing $1.5 billion in aggregate principal; the 6.8% notes in February 2018 representing $99 million of aggregate principal; the Euro-denominated floating rate notes in February 2018 representing €750 million in aggregate principal; and the 1.778% notes in May 2018 representing $1.1 billion of aggregate principal. The average maturity of our long-term debt at December 31, 2018 is approximately 11 years.
The $11 billion in aggregate principal amount of notes issued on August 16, 2018 was primarily used to fund the cash consideration in the acquisition of Rockwell Collins and related fees, expenses and other amounts. The increase in interest income in 2018 as compared with 2017 primarily reflects interest earned on higher cash balances, including interest earned on cash from the $11 billion of notes issued and held prior to funding the Rockwell Acquisition.
The year-over-year increase in the average interest expense rate for short-term borrowings was primarily driven by increased borrowings under our term credit agreement. In 2018, the year-over-year increase in the average interest expense rate for short-term borrowings was primarily driven by increases in LIBOR rates.
Income Taxes
201920182017
Effective income tax rate10.1 %43.8 %41.8 %
The 2019 effective tax rate includes $290 million of tax benefits associated with the conclusion of the audit by the Examination Division of the Internal Revenue Service for the RTC 2014, 2015 and 2016 tax years and the filing by a subsidiary of the Company to participate in an amnesty program offered by the Italian Tax Authority. Additionally, tax benefits included in 2019 are those associated with Foreign Derived Intangible Income (FDII) and U.S. Research & Development Credits, offset by a tax charge associated with Global Intangible Low-Taxed Income (GILTI).
On December 22, 2017 Public Law 115-97 “An Act to Provide for Reconciliation Pursuant to Titles II and V of the Concurrent Resolution on the Budget for Fiscal Year 2018” was enacted. This law is commonly referred to as the Tax Cuts and Jobs Act of 2017 (TCJA).
The 2018 effective tax rate reflects a net charge of $744 million of TCJA related adjustments. The amount primarily relates to accounting completed under Staff Accounting Bulletin 118 (SAB 118) for non-U.S. taxes that will become due when previously reinvested earnings of certain international subsidiaries are remitted. The 2018 effective tax rate also includes tax benefits associated with FDII and the U.S. Research & Development Credit, offset by a tax charge associated with GILTI.
The 2017 effective tax rate reflects a tax charge of $690 million attributable to the passage of the TCJA. This amount relates to U.S. income tax attributable to previously undistributed earnings of RTC’s international subsidiaries and equity investments, net of foreign tax credits, and the revaluation of U.S. deferred income taxes.
6


The effective income tax rate for 2017 also includes tax benefits associated with lower tax rates on international earnings and the expiration of statutes of limitations during 2017 resulted in a favorable adjustment of $55 million largely offset by the unfavorable impact related to a retroactive Quebec tax law change.
For additional discussion of income taxes and the effective income tax rate, see “Income Taxes” within Critical Accounting Estimates, below, and “Note 12: Income Taxes” within the Notes to Consolidated Financial Statements.
Net Income Attributable to Common Shareowners from Continuing Operations
(dollars in millions, except per share amounts)201920182017
Net income from continuing operations attributable to common shareowners $3,510 $1,216 $1,313 
Diluted earnings per share from continuing operations$4.06 $1.50 $1.64 
To help mitigate the volatility of foreign currency exchange rates on our operating results, we maintain foreign currency hedging programs, the majority of which are entered into by Pratt & Whitney Canada (P&WC). In 2019, foreign currency, including hedging at P&WC, had a favorable impact on our consolidated operational results of $0.02 per diluted share. In 2018, foreign currency, including hedging at P&WC, had an unfavorable impact on our consolidated operational results of $0.01 per diluted share. In 2017, foreign currency, including hedging at P&WC, had a favorable impact on our consolidated operational results of $0.11 per diluted share. For additional discussion of foreign currency exposure, see “Market Risk and Risk Management—Foreign Currency Exposures.”
Net income from continuing operations attributable to common shareowners for the year ended December 31, 2019 includes restructuring charges, net of tax benefit, of $186 million ($245 million pre-tax) as well as a net favorable impact from significant non-operational and/or nonrecurring items, including the impact of taxes, of $135 million. Non-operational and/or nonrecurring items primarily include amortization of an inventory fair value adjustment associated with the Rockwell Acquisition, transaction expenses associated with the Raytheon Merger, pension curtailment costs, and transaction and integration costs related to the Rockwell Acquisition, which were more than offset by tax settlements. The effect of restructuring charges and nonrecurring items on diluted earnings per share for the year ended December 31, 2019 was a charge of $.06 per share.
Net income from continuing operations attributable to common shareowners for the year ended December 31, 2018 includes restructuring charges, net of tax benefit, of $116 million ($158 million pre-tax) as well as unfavorable impact from significant non-operational and/or nonrecurring items, including the impact of taxes, of $1,232 million. Non-operational and/or nonrecurring items include a tax charge in connection with the passage of the TCJA as described in “Note 12: Income Taxes” within the Notes to Consolidated Financial Statements, the unfavorable impact of a customer contract matter at Pratt & Whitney, and amortization of an inventory fair value adjustment associated with the Rockwell Acquisition. The effect of restructuring charges and nonrecurring items on diluted earnings per share for the year ended December 31, 2018 was a charge of $1.66 per share.
Net income from continuing operations attributable to common shareowners for the year ended December 31, 2017 includes restructuring charges, net of tax benefit, of $65 million ($92 million pre-tax) as well as the net unfavorable impact of significant non-operational and/or nonrecurring items, net of tax, of $823 million. Non-operational and/or nonrecurring items include a tax charge in connection with the passage of the TCJA as described in “Note 12: Income Taxes” within the Notes to Consolidated Financial Statements, the unfavorable impact of customer contract matters at Pratt & Whitney. The effect of restructuring charges and nonrecurring items on diluted earnings per share for 2017 was a charge of $1.11 per share.
Net Income Attributable to Common Shareowners from Discontinued Operations
(dollars in millions, except per share amounts)201920182017
Net income from discontinued operations attributable to common shareowners $2,027 $4,053 $3,239 
Diluted earnings per share from discontinued operations$2.35 $5.00 $4.06 
Net income from discontinued operations attributable to common shareowners for the year ended December 31, 2019 includes costs associated with the Company’s separation of its commercial businesses. Net income from discontinued operations attributable to common shareowners for the year ended December 31, 2018 includes a pre-tax gain on Carrier’s sale of Taylor Company of $799 million ($591 million post tax). Net income from discontinued operations attributable to common shareowners for the year ended December 31, 2017 includes the unfavorable impact of a product recall program at Carrier, partially offset by gains resulting from Carrier’s sale of its investments in Watsco, Inc.
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RESTRUCTURING COSTS
(dollars in millions)201920182017
Restructuring costs$245 $158 $92 
Restructuring actions are an essential component of our operating margin improvement efforts and relate to existing and recently acquired operations. Charges generally arise from severance related to workforce reductions, facility exit and lease termination costs associated with the consolidation of field and manufacturing operations and costs to exit legacy programs. We continue to closely monitor the economic environment and may undertake further restructuring actions to keep our cost structure aligned with the demands of the prevailing market conditions.
2019 Actions. During 2019, we recorded net pre-tax restructuring charges of $162 million relating to ongoing cost reduction actions initiated in 2019. We are targeting to complete in 2020 and 2021 the majority of the remaining workforce and facility related cost reduction actions initiated in 2019. Approximately 90% of the total pre-tax charge will require cash payments, which we have funded and expect to continue to fund with cash generated from operations. During 2019, we had cash outflows of approximately $110 million related to the 2019 actions. We expect to incur additional restructuring and other charges of $93 million to complete these actions. We expect recurring pre-tax savings to increase over the two-year period subsequent to initiating the actions to approximately $240 million annually, of which, approximately $50 million was realized in 2019.
2018 Actions. During 2019 and 2018, we recorded net pre-tax restructuring charges of $23 million and $95 million, respectively, for actions initiated in 2018. We are targeting to complete in 2020 the majority of the remaining workforce and all facility related cost reduction actions initiated in 2018. Approximately 100% of the total pre-tax charge will require cash payments, which we have and expect to continue to fund with cash generated from operations. During 2019, we had cash outflows of approximately $80 million related to the 2018 actions. We expect to incur additional restructuring charges of $3 million to complete these actions. We expect recurring pre-tax savings to increase over the two-year period subsequent to initiating the actions to approximately $170 million annually.
In addition, during 2019, we recorded net pre-tax restructuring costs totaling $60 million for restructuring actions initiated in 2017 and prior. For additional discussion of restructuring, see “Note 14: Restructuring Costs” within the Notes to Consolidated Financial Statements.
SEGMENT REVIEW
 Net SalesOperating ProfitsOperating Profit Margin
(dollars in millions)201920182017201920182017201920182017
Pratt & Whitney$20,892 $19,397 $16,160 $1,668 $1,269 $1,300 8.0 %6.5 %8.0 %
Collins Aerospace Systems26,028 16,634 14,691 4,100 2,303 2,191 15.8 %13.8 %14.9 %
Total segment46,920 36,031 30,851 5,768 3,572 3,491 12.3 %9.9 %11.3 %
Eliminations and other(1,571)(1,330)(1,138)(339)(220)(63)
General corporate expenses— — — (515)(475)(439)
Consolidated$45,349 $34,701 $29,713 $4,914 $2,877 $2,989 10.8 %8.3 %10.1 %

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The financial performance of Pratt & Whitney and Collins Aerospace Systems is directly tied to the economic conditions of the commercial aerospace and defense aerospace industries. In particular, Pratt & Whitney experiences intense competition for new commercial airframe/engine combinations. Engine suppliers may offer substantial discounts and other financial incentives, performance and operating cost guarantees, and participate in financing arrangements in an effort to compete for the aftermarket associated with these engine sales. These OEM engine sales may result in losses on the engine sales, which economically are recovered through the sales and profits generated over the engine’s maintenance cycle. At times, the businesses also enter into development programs and firm fixed-price development contracts, which may require the company to bear cost overruns related to unforeseen technical and design challenges that arise during the development stage of the program. Customer selections of engines and components can also have a significant impact on later sales of parts and service. Predicted traffic levels, load factors, worldwide airline profits, general economic activity and global defense spending have been reliable indicators for new aircraft and aftermarket orders within the aerospace industry. Spare part sales and aftermarket service trends are affected by many factors, including usage, technological improvements, pricing, regulatory changes and the retirement of older aircraft. Our commercial aftermarket businesses continue to evolve as an increasing proportion of our aerospace businesses’ customers are covered under long-term aftermarket service agreements. These agreements are comprehensive long-term spare part and service agreements with our customers. We expect a continued shift to long-term aftermarket service agreements in lieu of transactional spare part sales as new aerospace products enter our customers’ fleets under long-term aftermarket service agreements and legacy fleets are retired. In 2019, as compared with 2018, total commercial aerospace aftermarket sales increased 2% at Pratt & Whitney and 63% at Collins Aerospace Systems, or 14% excluding the impact of the Rockwell Acquisition.
Our long-term aerospace contracts are subject to strict safety and performance regulations which can affect our ability to estimate costs precisely. Contract cost estimation for the development of complex projects, in particular, requires management to make significant judgments and assumptions regarding the complexity of the work to be performed, availability of materials, the performance by subcontractors, the timing of funding from customers and the length of time to complete the contract. As a result, we review and update our cost estimates on significant contracts on a quarterly basis, and no less frequently than annually for all others, and when circumstances change and warrant a modification to a previous estimate. Changes in estimates relate to the current period impact of revisions to total estimated contract sales and costs at completion. We record changes in contract estimates primarily using the cumulative catch-up method. Operating profits included net unfavorable changes in aerospace contract estimates of approximately $69 million, $50 million and $110 million in 2019, 2018 and 2017, respectively, primarily the result of unexpected increases in estimated costs related to Pratt & Whitney long-term aftermarket agreements. In accordance with our revenue recognition policy, losses, if any, on long-term contracts are provided for when anticipated. There were no material loss provisions recorded in continuing operations in 2019 or 2018.
Performance in the general aviation sector is closely tied to the overall health of the economy. We continue to see growth in a strong commercial airline industry. Airline traffic, as measured by revenue passenger miles (RPMs), grew approximately 4% in the first eleven months of 2019.
Our military sales are affected by U.S. Department of Defense spending levels. Total sales to the U.S. Government were $10.4 billion in 2019, $7.3 billion in 2018, and $5.7 billion in 2017, and were 23% of total RTC sales in 2019, and 21% in 2018 and 19% in 2017. The defense portion of our business is also affected by changes in market demand and the global political environment. Our participation in long-term production and development programs for the U.S. Government has contributed positively to our results in 2019 and is expected to continue to benefit results in 2020.
Collins Aerospace Systems provides standard and selectable content to Boeing for its 737 MAX aircraft including standard avionics, cockpit flight displays, and cabin interior products. In March 2019, aviation authorities suspended worldwide operations of the Boeing 737 MAX fleet. In January 2020, Boeing announced that it expects the fleet to remain grounded until mid-2020. In addition, Boeing announced the temporary suspension of 737 MAX production. The Company has made various investments in support of content for the 737 MAX which we currently expect to recover despite these delays in the production and operation of the fleet.
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Pratt & Whitney is among the world’s leading suppliers of aircraft engines for the commercial, military, business jet and general aviation markets. Pratt & Whitney provides fleet management services and aftermarket maintenance, repair and overhaul services. Pratt & Whitney produces and develops families of large engines for wide- and narrow-body and large regional aircraft in the commercial market and for fighter, bomber, tanker and transport aircraft in the military market. P&WC is among the world’s leading suppliers of engines powering general and business aviation, as well as regional airline, utility and military airplanes, and helicopters. Pratt & Whitney and P&WC also produce, sell and service auxiliary power units for commercial and military aircraft. Pratt & Whitney’s products are sold principally to aircraft manufacturers, airlines and other aircraft operators, aircraft leasing companies and the U.S. and foreign governments.
 Total Increase (Decrease) Year-Over-Year for:
(dollars in millions)2019201820172019 Compared with 20182018 Compared with 2017
Net Sales$20,892 $19,397 $16,160 $1,495 8 %$3,237 20 %
Cost of Sales17,291 16,301 13,093 990 6 %3,208 25 %
3,601 3,096 3,067 
Operating Expenses and Other1,933 1,827 1,767 
Operating Profits$1,668 $1,269 $1,300 $399 31 %$(31)(2)%

 Factors Contributing to Total % Increase (Decrease) Year-Over-Year in:
 20192018
  Net SalesCost of SalesOperating
Profits		Net SalesCost of SalesOperating
Profits
Organic / Operational (1)
8 %8 %18 %14 %17 %(8)%
Foreign currency (including P&WC net hedging) (1)
— — (1)%— 1 %— 
Acquisitions and divestitures, net— — (1)%— — — 
Restructuring costs— — (11)%— — 1 %
Other— (2)%26 %6 %7 %5 %
Total % change8 %6 %31 %20 %25 %(2)%
(1)    As discussed further in the “Business Overview” and “Results of Operations” sections, for Pratt & Whitney only, the transactional impact of foreign exchange hedging at P&WC has been netted against the translational foreign exchange impact for presentation purposes in the above table. For all other segments, these foreign exchange transactional impacts are included within the organic sales/operational operating profit caption in their respective tables. Due to its significance to Pratt & Whitney’s overall operating results, we believe it is useful to segregate the foreign exchange transactional impact in order to clearly identify the underlying financial performance.
2019 Compared with 2018
The organic sales growth of 8% primarily reflects higher military sales (4%), higher commercial OEM sales (3%), and higher commercial aftermarket sales (1%).
The operational profit increase of 18% was primarily driven by:
•higher military margin contribution (13%), driven by the sales increase noted above
•higher OEM margin contribution (11%) primarily driven by continued year-over-year cost reduction and favorable mix on large commercial engine shipments
These increases were partially offset by:
•higher research and development costs (4%)
•higher selling, general and administrative expenses (3%)
The 26% increase in “Other” primarily reflects the absence of a prior year customer contract settlement.
2018 Compared with 2017
The organic sales increase of 14% primarily reflects higher commercial aftermarket sales (6%), higher commercial OEM sales (5%) and increased military sales (3%). The 6% increase in Other primarily reflects the impact of the adoption of the New Revenue Standard (4%) and the absence of a prior year customer contract matter (2%).
The operational profit decrease of 8% was primarily driven by:
•lower commercial OEM profit contribution (27%) primarily driven by higher negative engine margin on higher deliveries
•higher selling, general and administrative expenses (5%)
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•the absence of the favorable impact from a prior year license agreement (4%)
•higher research and development costs (2%)
These decreases were partially offset by:
•higher commercial aftermarket profit contribution (23%), driven by the sales increase noted above
•higher military profit contribution (5%), driven by the sales increase noted above
The 5% increase in Other primarily reflects the favorable impact resulting from the adoption of the New Revenue Standard (13%) partially offset by the unfavorable year-over-year impact of contract settlements (8%).
Collins Aerospace Systems is a leading global provider of technologically advanced aerospace products and aftermarket service solutions for aircraft manufacturers, airlines, regional, business and general aviation markets, military and space operations. Collins Aerospace Systems’ product portfolio includes electric power generation, power management and distribution systems, air data and aircraft sensing systems, engine control systems, intelligence, surveillance and reconnaissance systems, engine components, environmental control systems, fire and ice detection and protection systems, propeller systems, engine nacelle systems, including thrust reversers and mounting pylons, interior and exterior aircraft lighting, aircraft seating and cargo systems, actuation systems, landing systems, including landing gear and wheels and brakes, space products and subsystems, integrated avionics systems, precision targeting, electronic warfare and range and training systems, flight controls, communications systems, navigation systems, oxygen systems, simulation and training systems, food and beverage preparation, storage and galley systems, lavatory and wastewater management systems. Collins Aerospace Systems also designs, produces and supports cabin interior, communications and aviation systems and products and provides information management services through voice and data communication networks and solutions worldwide. Aftermarket services include spare parts, overhaul and repair, engineering and technical support, training and fleet management solutions, and information management services. Collins Aerospace Systems sells aerospace products and services to aircraft manufacturers, airlines and other aircraft operators, the U.S. and foreign governments, maintenance, repair and overhaul providers, and independent distributors.
    Total Increase (Decrease) Year-Over-Year for:
(dollars in millions)2019201820172019 Compared with 20182018 Compared with 2017
Net Sales$26,028 $16,634 $14,691 $9,394 56 %$1,943 13 %
Cost of Sales18,702 12,336 10,838 6,366 52 %1,498 14 %
7,326 4,298 3,853 
Operating Expenses and Other3,226 1,995 1,662 
Operating Profits$4,100 $2,303 $2,191 $1,797 78 %$112 5 %

 Factors Contributing to Total % Increase (Decrease) Year-Over-Year in:
 20192018
  Net SalesCost of SalesOperating
Profits		Net SalesCost of SalesOperating
Profits
Organic / Operational6 %6 %7 %8 %7 %10 %
Foreign currency translation— (1)%1 %— 1 %(1)%
Acquisitions and divestitures, net50 %46 %68 %5 %6 %1 %
Restructuring costs— — 3 %— — (4)%
Other— 1 %(1)%— — (1)%
Total % change56 %52 %78 %13 %14 %5 %
2019 Compared with 2018
The organic sales increase of 6% primarily reflects higher commercial aerospace aftermarket sales (5%) and higher military sales (2%), partially offset by lower commercial aerospace OEM sales (1%).
The operational profit increase of 7% primarily reflects:
•higher commercial aerospace margin contribution (10%) driven by the commercial aftermarket sales growth noted above, partially offset by lower commercial aerospace OEM margin contribution
•higher military margin contribution (4%) driven by the sales growth noted above
This increase was partially offset by:
•higher selling, general and administrative expenses (4%)
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•higher research and development costs (3%)
2018 Compared with 2017
The organic sales growth of 8% primarily reflects higher commercial aftermarket and military sales (combined, 6%) and higher commercial aerospace OEM sales (2%).
The increase in operational profit of 10% primarily reflects:
•higher commercial aftermarket and military profit contribution (combined, 18%) primarily driven by the commercial aftermarket sales growth noted above
•higher commercial aerospace OEM profit contribution (3%)
These increases were partially offset by:
•higher selling, general, and administrative expenses (7%)
•higher warranty costs (4%)
Eliminations and other
 Net SalesOperating Profits
(dollars in millions)201920182017201920182017
Eliminations and other$(1,571)$(1,330)$(1,138)$(339)$(220)$(63)
General corporate expenses— — — (515)(475)(439)
Eliminations and other reflects the elimination of sales, other income and operating profit transacted between segments, as well as the operating results of certain smaller businesses. The year-over-year increase in sales eliminations in 2019 as compared with 2018 reflects an increase in the amount of inter-segment eliminations. The year-over-year decrease in operating profit for 2019 as compared with 2018, is primarily driven by costs associated with the Raytheon Merger, and the absence of the favorable impact of prior year insurance settlements, partially offset by lower year-over-year costs related to the Rockwell Acquisition.
LIQUIDITY AND FINANCIAL CONDITION
(dollars in millions)20192018
Cash and cash equivalents$4,937 $3,693 
Total debt43,252 45,191 
Net debt (total debt less cash and cash equivalents)38,315 41,498 
Total equity44,231 40,610 
Total capitalization (total debt plus total equity)87,483 85,801 
Net capitalization (total debt plus total equity less cash and cash equivalents)82,546 82,108 
Total debt to total capitalization49 %53 %
Net debt to net capitalization46 %51 %
We assess our liquidity in terms of our ability to generate cash to fund our operating, investing and financing activities. Our principal source of liquidity is operating cash flows from operations. For 2019 our cash flows from operations, net of capital expenditures was $4.0 billion. In addition to operating cash flows, other significant factors that affect our overall management of liquidity include: capital expenditures, customer financing requirements, investments in businesses, dividends, common stock repurchases, pension funding, access to the commercial paper markets, adequacy of available bank lines of credit, redemptions of debt and the ability to attract long-term capital at satisfactory terms.
At December 31, 2019, we had cash and cash equivalents of $4.9 billion, of which approximately 34% was held by RTC’s foreign subsidiaries. We manage our worldwide cash requirements by reviewing available funds among the many subsidiaries through which we conduct our business and the cost effectiveness with which those funds can be accessed. The Company no longer intends to reinvest certain undistributed earnings of its international subsidiaries that have been previously taxed in the U.S. As such, in 2018 it recorded the international taxes associated with the future remittance of these earnings. For the remainder of the Company’s undistributed international earnings, unless tax effective to repatriate, RTC will continue to permanently reinvest these earnings. We repatriated $1.6 billion and $6.2 billion of overseas cash for the year ended December 31, 2019 and 2018, respectively.
On occasion, we are required to maintain cash deposits with certain banks with respect to contractual obligations related to acquisitions or divestitures or other legal obligations. As of December 31, 2019, 2018 and 2017, the amount of such restricted cash was $24 million, $38 million and $10 million, respectively.
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On November 26, 2018, we completed the Rockwell Acquisition. The total aggregate consideration payable in the Rockwell Acquisition was $15.5 billion in cash ($14.9 billion net of cash acquired) and 62.2 million shares of Company common stock. In addition, $7.8 billion of Rockwell Collins debt was outstanding as of the acquisition date. Refer to “Note 2: Business Acquisitions, Dispositions, Goodwill and Intangible Assets” within the Notes to Consolidated Financial Statements for additional discussion on the Rockwell Acquisition.
Our domestic pension funds experienced a positive return on assets of 19.8% during 2019 and a negative return on assets of 5.1% during 2018. Approximately 90% of these domestic pension plans’ funds are invested in readily-liquid investments, including equity, fixed income, asset-backed receivables and structured products. The balance of these domestic pension plans’ funds (10%) is invested in less-liquid but market-valued investments, including real estate and private equity. As part of the Rockwell Collins acquisition on November 26, 2018, we assumed approximately $3.7 billion of projected pension benefit obligations and $3.4 billion of plan assets. As part of our long-term strategy to de-risk our defined benefit pension plans, we made discretionary contributions of approximately $1.9 billion to our domestic defined benefit pension plans in 2017.
The funded status of our defined benefit pension plans is dependent upon many factors, including returns on invested assets, the level of market interest rates and actuarial mortality assumptions. We can contribute cash or RTC shares to our plans at our discretion, subject to applicable regulations. As of December 31, 2019, the total investment by the global defined benefit pension plans in the Company’s securities was less than 1% of total plan assets. Our qualified domestic defined benefit pension plans are approximately 99% funded on a projected benefit obligation basis as of December 31, 2019, and we are not required to make additional contributions through the end of 2025. We expect to make total contributions of approximately $100 million to our global defined benefit pension plans in 2020. Contributions to our global defined benefit pension plans in 2020 are expected to meet or exceed the current funding requirements.
Historically, our strong debt ratings and financial position have enabled us to issue long-term debt at favorable market rates. Our ability to obtain debt financing or additional credit facilities at comparable risk-based interest rates is partly a function of our existing debt-to-total-capitalization level as well as our credit standing. Our debt-to-total-capitalization decreased 400 basis points from 53% at December 31, 2018 to 49% at December 31, 2019. The average maturity of our long-term debt at December 31, 2019 is approximately 10 years.
At December 31, 2019, we had revolving credit agreements with various banks permitting aggregate borrowings of up to $10.35 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; and a $2.0 billion revolving credit agreement and a $4.0 billion term credit agreement, both of which we entered into on March 15, 2019 and which will expire on March 15, 2021 or, if earlier, the date that is 180 days after the date on which each of the separations of Otis and Carrier have been consummated. As of December 31, 2019, we drew down $2.1 billion on the term credit agreement to pay current debt maturities. There were no borrowings on any of the other agreements. The undrawn portions of the revolving credit agreements are also available to serve as backup facilities for the issuance of commercial paper.
As of December 31, 2019, our maximum commercial paper borrowing limit was $6.35 billion. We had no commercial paper borrowings outstanding at December 31, 2019. We use our commercial paper borrowings for general corporate purposes, including the funding of potential acquisitions, pension contributions, debt refinancing, dividend payments and repurchases of our common stock. The need for commercial paper borrowings arises when the use of domestic cash for general corporate purposes exceeds the sum of domestic cash generation and foreign cash repatriated to the U.S.
We have an existing universal shelf registration statement filed with the SEC for an indeterminate amount of debt and equity securities for future issuance, subject to our internal limitations on the amount of debt to be issued under this shelf registration statement.
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We had no debt issuances in 2019 and the following issuances of debt in 2018 and 2017:
(dollars in millions)
Issuance DateDescription of NotesAggregate Principal Balance
August 16, 2018:
3.350% notes due 2021 (1)
$1,000 
3.650% notes due 2023 (1)
2,250 
3.950% notes due 2025 (1)
1,500 
4.125% notes due 2028 (1)
3,000 
4.450% notes due 2038 (1)
750 
4.625% notes due 2048 (2)
1,750 
LIBOR plus 0.65% floating rate notes due 2021 (1)
750 
May 18, 2018:
1.150% notes due 2024 (3)
€750 
2.150% notes due 2030 (3)
500 
EURIBOR plus 0.20% floating rate notes due 2020 (3)
750 
November 13, 2017:
EURIBOR plus 0.15% floating rate notes due 2019 (2)
€750 
May 4, 2017:
1.900% notes due 2020 (4)
$1,000 
2.300% notes due 2022 (4)
500 
2.800% notes due 2024 (4)
800 
3.125% notes due 2027 (4)
1,100 
4.050% notes due 2047 (4)
600 
(1)    The net proceeds received from these debt issuances were used to partially finance the cash consideration portion of the purchase price for Rockwell Collins and fees, expenses and other amounts related to the acquisition of Rockwell Collins.
(2)    The net proceeds from these debt issuances were used to fund the repayment of commercial paper and for other general corporate purposes.
(3)    The net proceeds received from these debt issuances were used for general corporate purposes.
(4)    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 other general corporate purposes.
We made the following repayments of debt in 2019, 2018 and 2017:
(dollars in millions)
Repayment DateDescription of NotesAggregate Principal Balance
November 15, 2019
8.875% notes
$271 
November 13, 2019
EURIBOR plus 0.15% floating rate notes
€750 
November 1, 2019:
LIBOR plus 0.350% floating rate notes
$350 
1.500% notes
$650 
July 15, 2019:
1.950% notes (1)
$300 
5.250% notes (1)
$300 
December 14, 2018
Variable-rate term loan due 2020 (1 month LIBOR plus 1.25%) (1)
$482 
May 4, 2018
1.778% junior subordinated notes
$1,100 
February 22, 2018
EURIBOR plus 0.80% floating rate notes
€750 
February 1, 2018
6.80% notes
$99 
June 1, 2017
1.800% notes
$1,500 
(1)    These notes and term loan were assumed in connection with the Rockwell Collins acquisition and subsequently repaid.
We believe our future operating cash flows will be sufficient to meet our future operating cash needs. Further, we continue to have access to the commercial paper markets and our existing credit facilities, and our ability to obtain debt or equity financing, as well as the availability under committed credit lines, provides additional potential sources of liquidity should they be required or appropriate.
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Cash Flow—Operating Activities
(dollars in millions)201920182017
Net cash flows provided by operating activities from continuing operations$5,821 $2,670 $2,282 
Net cash flows provided by operating activities from discontinued operations3,062 3,652 3,349 
2019 Compared with 2018
Cash generated from operating activities in 2019 was approximately $3.2 billion higher than 2018. This increase is largely driven by an increase in Net income after adjustments for depreciation and amortization, deferred income tax provision, stock compensation costs, and net periodic pension and other postretirement benefit of $2.3 billion and an increase in other long term assets and liabilities cash flows of $1.1 billion, partially offset by a decrease in working capital cash flows of $0.7 billion. Reduced factoring activity resulted in a decrease of approximately $1.5 billion in cash flows from operating activities during the year ended December 31, 2019, as compared to the prior year. This decrease in factoring activity was primarily driven from an increase in funded factoring levels at Pratt & Whitney partially offset by increased factoring at Collins Aerospace Systems. Factoring activity does not reflect the factoring of certain receivables performed at customer request for which we are compensated by the customer for the extended collection cycle.
The 2019 cash outflows from working capital were $497 million. Contract assets increased $679 million due to work performed in excess of billings at Pratt & Whitney and Collins Aerospace. Inventory increased $1.3 billion to support higher sales volume at Collins Aerospace Systems and Pratt & Whitney. Other current assets increased $984 million due to increases in prepaid expenses. These outflows were partially offset by increases in Contract liabilities and Accounts payable and accrued liabilities. Contract liabilities increased $1.2 billion driven by Collins Aerospace due to higher advanced billings. Accounts payable and accrued liabilities increased $1.1 billion. The Accounts payable increase is primarily driven by Pratt & Whitney due to an increase in collaborator payables. The increase in Accrued liabilities was driven by various accruals at Collins Aerospace Systems and Pratt & Whitney.
Total cash contributions to our global defined benefit pension plans were $55 million, $79 million and $2,044 million during 2019, 2018 and 2017, respectively.
2018 Compared with 2017
Cash generated from operating activities in 2018 was $388 million higher than 2017. The increase is largely driven by an increase in Net income after adjustments for depreciation and amortization, deferred income tax provision, stock compensation costs, and net periodic pension and other postretirement benefit of $747 million partially offset by a decrease in working capital inflows of $109 million. Factoring activity resulted in a decrease of $118 million in cash generated from operating activities during the year ended, December 31, 2018, as compared to the prior year. This decrease was primarily driven from lower factoring levels at Pratt & Whitney. Factoring activity does not reflect the factoring of certain aerospace receivables performed at customer request for which we are compensated by the customer for the extended collection cycle.
The 2018 cash outflows from working capital were $203 million. Accounts receivable increased approximately $1.1 billion due to an increase in sales volume. Contract assets increased $651 million due to costs in excess of billings primarily at Pratt & Whitney driven by military engines and at Collins Aerospace Systems. Inventory increased $417 million primarily driven by an increase in production for the Geared Turbofan at Pratt & Whitney and increases at Collins Aerospace Systems. Other current assets increased $645 million due to increases at Collins Aerospace Systems, partially offset by tax refunds received. The outflows were partially offset by increase in Accounts payable and accrued liabilities and Contract liabilities. Accounts payable and accrued liabilities increased approximately $2.7 billion driven by higher inventory purchasing activity at Pratt & Whitney and Collins Aerospace Systems. Contract liabilities increased by $325 million driven by advanced billings at Collins Aerospace Systems.
Operating Activities - Discontinued Operations
The $590 million decrease in cash flows provided by operating activities from discontinued operations in 2019 compared to 2018 primarily relates to a decrease in net income from discontinued operations, partially offset by an increase in working capital. The $303 million increase in cash flows provided by operating activities from discontinued operations in 2018 compared to 2017 primarily relates to an increase net income from discontinued operations, partially offset by a decrease in working capital.
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Cash Flow—Investing Activities
(dollars in millions)201920182017
Net cash flows used in investing activities from continuing operations$(2,676)$(17,259)$(3,127)
Net cash flows (used in) provided by investing activities from discontinued operations(416)286 108 
2019 Compared with 2018
Cash flows used in investing activities for 2019 and 2018 primarily reflect capital expenditures, cash investments in customer financing assets, investments/dispositions of businesses, payments related to our collaboration intangible assets and contractual rights to provide product on new aircraft platforms, and settlements of derivative contracts. The $14.6 billion decrease in cash flows used in investing activities in 2019 the compared to 2018 primarily relates to the absence of cash paid to acquire Rockwell Collins of $14.9 billion in November 2018.
Capital expenditures in 2019 of $1.9 billion primarily relate to several projects at Collins Aerospace Systems and investments in production and aftermarket capacity at Pratt & Whitney.
Dispositions of businesses in 2019 of $134 million primarily consisted of the businesses sold in connection with the Rockwell Collins acquisition.
Customer financing assets is primarily driven by additional Geared Turbofan engines to support customer fleets and was a use of cash of $787 million and $988 million in 2019 and 2018, respectively. The decrease in the source of cash related to customer financing assets of $128 million in 2019 compared to $604 million in 2018 is driven by lower repayments on customer financing. At December 31, 2019, we had commercial aerospace financing and other contractual commitments of approximately $15.0 billion related to commercial aircraft and certain contractual rights to provide product on new aircraft platforms, of which as much as $1.6 billion may be required to be disbursed during 2020. As discussed in “Note 1: Summary of Accounting Principles” within the Notes to Consolidated Financial Statements, we have entered into certain collaboration arrangements, which may include participation by our collaborators in these commitments. At December 31, 2019, our collaborators’ share of these commitments was approximately $5.3 billion of which as much as $508 million may be required to be disbursed to us during 2020. Refer to “Note 5: Commercial Aerospace Industry Assets and Commitments” within the Notes to Consolidated Financial Statements for additional discussion of our commercial aerospace industry assets and commitments.
In 2019, we increased our collaboration intangible assets by approximately $351 million, which primarily relates to payments made under our 2012 agreement to acquire Rolls-Royce’s collaboration interests in IAE.
As discussed in “Note 15: Financial Instruments” within the Notes to Consolidated Financial Statements, 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 normal course of business, are exposed to fluctuations in interest rates, foreign exchange rates and commodity prices. These fluctuations can increase the costs of financing, investing and operating the business. We have used derivative instruments, including swaps, forward contracts and options to manage certain foreign currency, interest rate and commodity price exposures. During the years ended December 31, 2019 and 2018, we had net cash receipts of approximately $342 million and $140 million, respectively, from the settlement of these derivative instruments.
2018 Compared with 2017
Cash flows used in investing activities for 2018 and 2017 primarily reflect capital investments/dispositions of businesses, expenditures, cash investments in customer financing assets, payments related to our collaboration intangible assets and contractual rights to provide product on new aircraft platforms and settlements of derivative contracts. The $14.1 billion increase in cash flows used in investing activities from the prior year primarily relates to the $14.9 billion of cash paid for the acquisition of Rockwell Collins (net of cash acquired), partially offset by a decrease in customer financing assets of $584 million and $140 million in receipts from settlements of derivative contracts compared to payments of $316 million in 2017.
Capital expenditures in 2018 of $1.5 billion primarily relate to investments in production capacity at Pratt & Whitney and investments in production capacity and several small projects at Collins Aerospace Systems.
Cash investments in businesses (net of cash acquired) in 2018 of $15.0 billion primarily relate to the acquisition of Rockwell Collins in November 2018. Dispositions of businesses in 2018 of $74 million primarily relate to the sale of businesses at Pratt & Whitney and Collins Aerospace Systems.
Customer financing activities, primarily driven by additional Geared Turbofan engines to support customer fleets, were a net use of cash of $384 million and $968 million in 2018 and 2017, respectively. At December 31, 2018, we had commercial aerospace financing and other contractual commitments of approximately $15.5 billion related to commercial aircraft and
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certain contractual rights to provide product on new aircraft platforms, of which as much as $1.7 billion have been be required to be disbursed during 2019. At December 31, 2018, our collaborators’ share of these commitments was approximately $5.3 billion of which as much as $468 million may have been required to be dispersed to us during 2019.
In 2018, we increased our collaboration intangible assets by approximately $400 million, which primarily relates to payments made under our 2012 agreement to acquire Rolls-Royce’s collaboration interests in IAE.
Investing Activities - Discontinued Operations
The $702 million decrease in cash flows used in investing activities from discontinued operations in 2019 compared to 2018 primarily relates to the absence of $1.0 billion in proceeds from the sale of Taylor Company in June 2018 by Carrier, partially offset by a decrease in business acquisition activity. The $178 million increase in cash flows provided by investing activities from discontinued operations in 2018 compared to 2017 primarily relates to the $1 billion in proceeds from the sale of Taylor Company in June 2018 by Carrier, partially offset by the absence of short-term investment inflows and an increase in business acquisition activity.
Cash Flow—Financing Activities
(dollars in millions)201920182017
Net cash flows (used in) provided by financing activities from continuing operations$(1,913)$12,209 $2,438 
Net cash flows used in financing activities from discontinued operations(2,651)(4,244)(3,431)
2019 Compared with 2018
Our financing activities primarily include the issuance and repayment of short-term and long-term debt, payment of dividends and stock repurchases. Financing activities was a cash outflow of $1.9 billion in 2019 compared to a cash inflow of $12.2 billion in 2018. This change is driven by the absence of $13.4 billion of long-term debt issuances in the prior year which was primarily utilized to fund the Rockwell Acquisition, an increase in dividends paid on common stock of $0.3 billion, an increase in debt repayments of $0.2 billion, partially offset by an increase in short term borrowings of $1.3 billion and a reduction in common stock repurchases of $0.2 billion.
Commercial paper borrowings and revolving credit facilities provide short-term liquidity to supplement operating cash flows and are used for general corporate purposes, including the funding of potential acquisitions and repurchases of our stock. We had no outstanding commercial paper at December 31, 2019.
At December 31, 2019, management had remaining authority to repurchase approximately $1.8 billion of our common stock under the October 14, 2015 share repurchase program. Under this program, shares may be purchased on the open market, in privately negotiated transactions, under accelerated share repurchase programs, and under plans complying with Rules 10b5-1 and 10b-18 under the Securities Exchange Act of 1934, as amended. We may also reacquire shares outside of the program from time to time in connection with the surrender of shares to cover taxes on vesting of restricted stock and as required under our employee savings plan. Our ability to repurchase shares is subject to applicable law, including restrictions arising from the merger transaction with Raytheon. We made cash payments of approximately $151 million to repurchase approximately 1.1 million shares of our common stock during the year ended December 31, 2019.
We paid aggregate dividends on common stock of approximately $2.4 billion and $2.2 billion in 2019 and 2018, respectively. On February 3, 2020, the Board of Directors declared a dividend of $0.735 per share payable March 10, 2020 to shareowners of record at the close of business on February 14, 2020.
2018 Compared with 2017
Net cash provided by financing activities increased $9.8 billion in 2018 compared to the prior year due to an increase in long-term debt issuances of $8.5 billion, including the $11 billion issued in 2018 for the financing of the Rockwell Collins acquisition, and a decrease in repurchases of common stock of $1.1 billion, partially offset by an increase in repayments of long-term debt of $1.0 billion.
We had approximately $1.3 billion of outstanding commercial paper at December 31, 2018.
We made cash payments of approximately $325 million to repurchase approximately 2.7 million shares of our common stock during the year ended December 31, 2018.
We paid aggregate dividends on common stock of approximately $2.2 billion and $2.1 billion in 2018 and 2017, respectively.
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Financing Activities - Discontinued Operations
The $1.6 billion decrease in cash flows used in financing activities from discontinued operations in 2019 compared to 2018 primarily relates to the change in net transfers to continuing operations. The $813 million increase in cash flows used in financing activities from discontinued operations in 2018 compared to 2017 primarily relates to the change in net transfers to continuing operations.
CRITICAL ACCOUNTING ESTIMATES
Preparation of our financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses. “Note 1: Summary of Accounting Principles” within the Notes to Consolidated Financial Statements describes the significant accounting policies used in preparation of the Consolidated Financial Statements. Management believes the most complex and sensitive judgments, because of their significance to the Consolidated Financial Statements, result primarily from the need to make estimates about the effects of matters that are inherently uncertain. The most significant areas involving management judgments and estimates are described below. Actual results in these areas could differ from management's estimates.
Long-Term Contract Accounting. As described in “Note 1: Summary of Accounting Principles” within the Notes to Consolidated Financial Statements, revenue is recognized on an over-time basis using an input method for certain U.S. Government and commercial aerospace equipment contracts and aerospace aftermarket service work. We measure progress toward completion for these contracts using costs incurred to date relative to total estimated costs at completion. This over-time basis using an input method requires estimates of future revenues and costs over the full term of product and/or service delivery. Incurred costs represent work performed, which correspond with and best depict transfer of control to the customer. Contract costs are incurred over a period of time, which can be several years, and the estimation of these costs requires management’s judgment.
The long-term nature of these contracts, the complexity of the products, and the strict safety and performance standards under which they are regulated can affect our ability to estimate costs precisely. As a result, we review our cost estimates on significant contracts on a quarterly basis and for others, at least annually or when circumstances change and warrant a modification to a previous estimate. We record changes in contract estimates using the cumulative catch-up method.
Costs incurred for engineering and development of aerospace products under contracts with customers are 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. The estimation of contract margin requires management’s judgment.
Income Taxes. Management believes that our earnings during the periods when temporary differences become deductible will be sufficient to realize the related future income tax benefits, which may be realized over an extended period of time. For those jurisdictions where the expiration date of tax carryforwards or the projected operating results indicate that realization is not likely, a valuation allowance is provided.
In assessing the need for a valuation allowance, we estimate future taxable income, considering the feasibility of ongoing tax planning strategies and the realizability of tax loss carryforwards. Valuation allowances related to deferred tax assets can be affected by changes to tax laws, changes to statutory tax rates and future taxable income levels. In the event we were to determine that we would not be able to realize all or a portion of our deferred tax assets in the future, we would reduce such amounts through an increase to tax expense in the period in which that determination is made or when tax law changes are enacted. Conversely, if we were to determine that we would be able to realize our deferred tax assets in the future in excess of the net carrying amounts, we would decrease the recorded valuation allowance through a decrease to tax expense in the period in which that determination is made.
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. For those tax positions where it is more likely than not that a tax benefit will be sustained, we have recorded the largest amount of tax benefit with a greater than 50% likelihood of being realized upon ultimate settlement with a taxing authority that has full knowledge of all relevant information. For those income tax positions where it is not more likely than not that a tax benefit will be sustained, no tax benefit has been recognized in the financial statements. In addition, we have entered into certain internal legal entity restructuring transactions necessary to effectuate the separation transactions. We have generally accrued tax on these transactions, in discontinued operations, based on our interpretation of the applicable tax laws and our determination of appropriate entity valuations. See “Note 1: Summary of Accounting Principles” and “Note 12: Income Taxes” within the Notes to Consolidated Financial Statements for further discussion.
See “Note 12: Income Taxes” within the Notes to Consolidated Financial Statements for additional tax provision items.
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Goodwill and Intangible Assets. Our investments in businesses net of cash acquired in 2019 totaled $9 million. The assets and liabilities of acquired businesses are recorded under the acquisition method of accounting at their estimated fair values at the dates of acquisition. Goodwill represents costs in excess of fair values assigned to the underlying identifiable net assets of acquired businesses. Intangible assets consist of patents, trademarks/tradenames, customer relationships and other intangible assets including a collaboration asset established in connection with our 2012 agreement to acquire Rolls-Royce’s ownership and collaboration interests in IAE AG, as discussed in “Note 2: Business Acquisitions, Dispositions, Goodwill and Intangible Assets” within the Notes to Consolidated Financial Statements. The fair value for acquired customer relationship intangibles is determined as of the acquisition date based on estimates and judgments regarding expectations for the future after-tax cash flows arising from the follow-on revenue from customer relationships that existed on the acquisition date over their estimated lives, including the probability of expected future contract renewals and revenue, less a contributory assets charge, all of which is discounted to present value. The fair value of the tradename intangible assets were determined utilizing the relief from royalty method which is a form of the income approach. Under this method, a royalty rate based on observed market royalties is applied to projected revenue supporting the tradename and discounted to present value using an appropriate discount rate. See “Note 2: Business Acquisitions, Dispositions, Goodwill and Intangible Assets” within the Notes to Consolidated Financial Statements for further details.
Also included within other intangible assets are payments made to secure certain contractual rights to provide products on new commercial aerospace platforms. Such payments are capitalized when there are distinct rights obtained and there are sufficient incremental cash flows to support the recoverability of the assets established. Otherwise, the applicable portion of the payments are expensed. Capitalized payments made on these contractual commitments are amortized as a reduction of sales. We amortize these intangible assets based on the pattern of economic benefit, which typically results 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 increasing amortization expense 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. The gross value of these contractual commitments at December 31, 2019 was approximately $12.3 billion, of which approximately $3.2 billion has been paid to date. We record these payments as intangible assets when such payments are no longer conditional. The recoverability of these intangibles is dependent upon the future success and profitability of the underlying aircraft platforms including the associated aftermarket revenue streams.
Goodwill and intangible assets deemed to have indefinite lives are not amortized, but are subject to annual, or more frequent if necessary, impairment testing using the guidance and criteria described in the Intangibles—Goodwill and Other Topic of the FASB ASC. A goodwill impairment loss is measured at the amount by which a reporting unit’s carrying value exceeds its fair value, without exceeding the recorded amount of goodwill. In developing our estimates for the fair value of our reporting units, significant judgment is required in the determination of the appropriateness of using a qualitative assessment or quantitative assessment. For these quantitative assessments that are performed, fair value is primarily based on income approaches using discounted cash flow models and relief from royalty models, which have significant assumptions including revenue growth rates, projected operating income, terminal growth rates, discount rates and royalty rates. Such assumptions are subject to variability from year to year and are directly impacted by global market conditions. We completed our annual impairment testing as of July 1, 2019 and determined that no significant adjustments to the carrying value of goodwill or indefinite lived intangible assets were necessary. Although these assets are not currently impaired, there can be no assurance that future impairments will not occur. See “Note 2: Business Acquisitions, Dispositions, Goodwill and Intangible Assets” within the Notes to Consolidated Financial Statements for further discussion.
Contingent Liabilities. Our operating units include businesses which sell products and services and conduct operations throughout the world. As described in “Note 19: Contingent Liabilities” within the Notes to Consolidated Financial Statements, contractual, regulatory and other matters, in the normal course of business may arise that subject us to claims or litigation. Of note, the design, development, production and support of new aerospace technologies is inherently complex and subject to risk. Since the PW1000G Geared Turbofan engine entered into service in 2016, technical issues have been identified and experienced with the engine, which is typical for new engines and new aerospace technologies. Pratt & Whitney has addressed these issues through various improvements and modifications. These issues have resulted in financial impacts, including increased warranty provisions, customer contract settlements, and reductions in contract performance estimates. Additional technical issues may also arise in the normal course, which may result in financial impacts that could be material to the Company’s financial position, results of operations and cash flows.
Additionally, we have significant contracts with the U.S. Government, subject to government oversight and audit, which may require significant adjustment of contract prices. We accrue for liabilities associated with these matters when it is probable that a liability has been incurred and the amount can be reasonably estimated. The most likely cost to be incurred is accrued based on an evaluation of then currently available facts with respect to each matter. When no amount within a range of
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estimates is more likely, the minimum is accrued. The inherent uncertainty related to the outcome of these matters can result in amounts materially different from any provisions made with respect to their resolution.
Employee Benefit Plans. We sponsor domestic and foreign defined benefit pension and other postretirement plans. Major assumptions used in the accounting for these employee benefit plans include the discount rate, expected return on plan assets, rate of increase in employee compensation levels, mortality rates, and health care cost increase projections. Assumptions are determined based on company data and appropriate market indicators, and are evaluated each year at December 31. A change in any of these assumptions would have an effect on net periodic pension and postretirement benefit costs reported in the Consolidated Financial Statements.
In the following table, we show the sensitivity of our pension and other postretirement benefit plan liabilities and net periodic cost to a 25 basis point change in the discount rates for benefit obligations, interest cost and service cost as of December 31, 2019:
(dollars in millions)Increase in
Discount Rate
of 25 bps		Decrease in
Discount Rate
of 25 bps
Pension plans
Projected benefit obligation$(1,071)$1,125 
Net periodic pension (benefit) cost(6)7 
Other postretirement benefit plans (1)
Accumulated postretirement benefit obligation(11)12 
(1)    The impact on net periodic postretirement (benefit) cost is less than $1 million.
These estimates assume no change in the shape or steepness of the company-specific yield curve used to plot the individual spot rates that will be applied to the future cash outflows for future benefit payments in order to calculate interest and service cost. A flattening of the yield curve, from a narrowing of the spread between interest and obligation discount rates, would increase our net periodic pension cost. Conversely, a steepening of the yield curve, from an increase in the spread between interest and obligation discount rates, would decrease our net periodic pension cost.
Pension expense is also sensitive to changes in the expected long-term rate of asset return. An increase or decrease of 25 basis points in the expected long-term rate of asset return would have decreased or increased 2019 pension expense by approximately $84 million.
The weighted-average discount rates used to measure pension liabilities and costs are set by reference to RTC-specific analyses using each plan’s specific cash flows and are then compared to high-quality bond indices for reasonableness. For our significant plans, we utilize a full yield curve approach in the estimation of the service cost and interest cost components by applying the specific spot rates along the yield curve used in determination of the benefit obligation to the relevant projected cash flows. Global market interest rates have decreased in 2019 as compared with 2018 and, as a result, the weighted-average discount rate used to measure pension liabilities decreased from 4.0% in 2018 to 3.1% in 2019. The weighted-average discount rates used to measure service cost and interest cost was 3.7% in 2019. Across our global pension plans, the amendment to our domestic pension plans to cease accrual of additional benefits and domestic pension plan merger, partially offset by reduction in expected return on assets for 2020, will result in a net periodic pension benefit in 2020 consistent with 2019 amounts.
See “Note 13: Employee Benefit Plans” within the Notes to Consolidated Financial Statements for further discussion.
OFF-BALANCE SHEET ARRANGEMENTS AND CONTRACTUAL OBLIGATIONS
We extend a variety of financial guarantees to third parties in support of unconsolidated affiliates and for potential financing requirements of commercial aerospace customers. We also have obligations arising from sales of certain businesses and assets, including indemnities for representations and warranties and environmental, health and safety, tax and employment matters. Circumstances that could cause the contingent obligations and liabilities arising from these arrangements to come to fruition include changes in an underlying transaction (e.g., hazardous waste discoveries, etc.), nonperformance under a contract, customer requests for financing, or deterioration in the financial condition of the guaranteed party.
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A summary of our consolidated contractual obligations and commitments as of December 31, 2019 is as follows:
   Payments Due by Period
(dollars in millions)Total20202021-20222023-2024Thereafter
Long-term debt—principal$41,274 $3,258 $7,995 $6,082 $23,939 
Long-term debt—future interest16,833 1,383 2,520 2,136 10,794 
Operating leases1,621 298 461 267 595 
Purchase obligations13,177 9,072 3,740 306 59 
Other long-term liabilities3,001 675 1,029 400 897 
Total contractual obligations$75,906 $14,686 $15,745 $9,191 $36,284 
Purchase obligations include amounts committed for the purchase of goods and services under legally enforceable contracts or purchase orders. Where it is not practically feasible to determine the legally enforceable portion of our obligation under certain of our long-term purchase agreements, we include additional expected purchase obligations beyond what is legally enforceable. Approximately 22% of the purchase obligations disclosed above represent purchase orders for products to be delivered under firm contracts with the U.S. Government for which we have full recourse under customary contract termination clauses.
Other long-term liabilities primarily include those amounts on our December 31, 2019 balance sheet representing obligations under product service and warranty policies, performance and operating cost guarantees, estimated environmental remediation costs and expected contributions under employee benefit programs. The timing of expected cash flows associated with these obligations is based upon management's estimates over the terms of these agreements and is largely based upon historical experience.
In connection with the acquisitions of Rockwell Collins in 2018 and Goodrich in 2012, we recorded assumed liabilities of approximately $1.02 billion and $2.2 billion, respectively related to customer contractual obligations on certain programs with terms less favorable than could be realized in market transactions as of the acquisition date. These liabilities are being liquidated in accordance with the underlying pattern of obligations, as reflected by the net cash outflows incurred on the contracts. Total consumption of the contractual obligations for the year ended December 31, 2019 was approximately $345 million. Total future consumption of the contractual obligations is expected to be as follows: $263 million in 2020, $189 million in 2021, $148 million in 2022, $118 million in 2023, $127 million in 2024 and $563 million thereafter. These amounts are not included in the table above.
The above table also does not reflect unrecognized tax benefits of $1,347 million, the timing of which is uncertain, except for approximately $24 million that may become payable during 2020. Refer to “Note 12: Income Taxes” within the Notes to Consolidated Financial Statements for additional discussion on unrecognized tax benefits. Total unrecognized tax benefits include discontinued operations.
COMMERCIAL COMMITMENTS
The following table summarizes our commercial commitments outstanding as of December 31, 2019:
 Amount of Commitment Expiration per Period
(dollars in millions)Committed20202021-20222023-2024Thereafter
Commercial aerospace financing commitments$3,937 $911 $2,093 $863 $70 
Other commercial aerospace commitments11,055 702 1,453 1,295 7,605 
Commercial aerospace financing arrangements333 11 10 — 312 
Performance guarantees48 4 — 39 5 
Total commercial commitments$15,373 $1,628 $3,556 $2,197 $7,992 
In connection with our 2012 agreement to acquire Rolls-Royce’s ownership and collaboration interests in IAE AG, additional payments are due to Rolls-Royce contingent upon each hour flown through June 2027 by the V2500-powered aircraft in service as of the acquisition date. These flight hour payments, included in “Other commercial aerospace commitments” in the table above, are being capitalized as collaboration intangible assets. The collaboration intangible assets are amortized based upon the pattern of economic benefit as represented by the underlying cash flows.
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We also have other contractual commitments, including commitments to secure certain contractual rights to provide product on new aircraft platforms, which are included in “Other commercial aerospace commitments” in the table above. Such payments are capitalized when distinct rights are obtained and there are sufficient incremental cash flows to support the recoverability of the assets established. Otherwise, the applicable portion of the payments are expensed. Capitalized payments made on these contractual commitments are included in intangible assets and are amortized over the term of underlying economic benefit.
Refer to “Note 1: Summary of Accounting Principles,” and “Note 5: Commercial Aerospace Industry Assets and Commitments” within the Notes to Consolidated Financial Statements for additional discussion on contractual and commercial commitments.
MARKET RISK AND RISK MANAGEMENT
We are exposed to fluctuations in foreign currency exchange rates, interest rates and commodity prices. To manage certain of those exposures, we use derivative instruments, including swaps, forward contracts and options. Derivative instruments utilized by us in our hedging activities are viewed as risk management tools, involve relatively little complexity and are not used for trading or speculative purposes. We diversify the counterparties used and monitor the concentration of risk to limit our counterparty exposure.
We have evaluated our exposure to changes in foreign currency exchange rates, interest rates and commodity prices in our market risk sensitive instruments, which are primarily cash, debt, and derivative instruments, using a value at risk analysis. Based on a 95% confidence level and a one-day holding period, at December 31, 2019, the potential loss in fair value on our market risk sensitive instruments was not material in relation to our financial position, results of operations or cash flows. Our calculated value at risk exposure represents an estimate of reasonably possible net losses based on volatilities and correlations and is not necessarily indicative of actual results. Refer to “Note 1: Summary of Accounting Principles,” “Note 10: Borrowings and Lines of Credit” and “Note 15: Financial Instruments” within the Notes to Consolidated Financial Statements for additional discussion of foreign currency exchange, interest rates and financial instruments.
Foreign Currency Exposures. We have a large volume of foreign currency exposures that result from our international sales, purchases, investments, borrowings and other international transactions. International segment sales, excluding U.S. export sales, averaged approximately $10 billion over the last three years. We actively manage foreign currency exposures that are associated with committed foreign currency purchases and sales, and other assets and liabilities created in the normal course of business at the operating unit level. More than insignificant exposures that cannot be naturally offset within an operating unit are hedged with foreign currency derivatives. We also have a significant amount of foreign currency net asset exposures. As discussed in “Note 10: Borrowings and Lines of Credit” within the Notes to Consolidated Financial Statements, at December 31, 2019 we have approximately €4.20 billion of euro-denominated long-term debt, which qualifies as a net investment hedge against our investments in European businesses. As of December 31, 2019, the net investment hedge is deemed to be effective. Currently, we do not hold any derivative contracts that hedge our foreign currency net asset exposures but may consider such strategies in the future.
Within aerospace, our sales are typically denominated in U.S. Dollars under accepted industry convention. However, for our non-U.S. based entities, such as P&WC, a substantial portion of their costs are incurred in local currencies. Consequently, there is a foreign currency exchange impact and risk to operational results as U.S. Dollars must be converted to local currencies such as the Canadian Dollar in order to meet local currency cost obligations. Additionally, we transact business in various foreign currencies which exposes our cash flows and earnings to changes in foreign currency exchange rates. In order to minimize the exposure that exists from changes in the exchange rate of the U.S. Dollar against these other currencies, we hedge a certain portion of sales to secure the rates at which U.S. Dollars will be converted. The majority of this hedging activity occurs at P&WC and Collins Aerospace Systems, and hedging activity also occurs to a lesser extent at the remainder of Pratt & Whitney. At P&WC and Collins Aerospace Systems, firm and forecasted sales for both original equipment and spare parts are hedged at varying amounts for up to 49 months on the U.S. Dollar sales exposure as represented by the excess of U.S. Dollar sales over U.S. Dollar denominated purchases. Hedging gains and losses resulting from movements in foreign currency exchange rates are partially offset by the foreign currency translation impacts that are generated on the translation of local currency operating results into U.S. Dollars for reporting purposes. While the objective of the hedging program is to minimize the foreign currency exchange impact on operating results, there are typically variances between the hedging gains or losses and the translational impact due to the length of hedging contracts, changes in the sales profile, volatility in the exchange rates and other such operational considerations.
Interest Rate Exposures. Our long-term debt portfolio consists mostly of fixed-rate instruments. From time to time, we may hedge to floating rates using interest rate swaps. The hedges are designated as fair value hedges and the gains and losses on the swaps are reported in interest expense, reflecting that portion of interest expense at a variable rate. We issue commercial paper,
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which exposes us to changes in interest rates. Currently, we do not hold any derivative contracts that hedge our interest exposures, but may consider such strategies in the future.
Commodity Price Exposures. We are exposed to volatility in the prices of raw materials used in some of our products and from time to time we may use forward contracts in limited circumstances to manage some of those exposures. In the future, if hedges are used, gains and losses may affect earnings. There were no significant outstanding commodity hedges as of December 31, 2019.
ENVIRONMENTAL MATTERS
Our operations are subject to environmental regulation by federal, state and local authorities in the United States and regulatory authorities with jurisdiction over our foreign operations. As a result, we have established, and continually update, policies relating to environmental standards of performance for our operations worldwide. We believe that expenditures necessary to comply with the present regulations governing environmental protection will not have a material effect upon our competitive position, results of operations, cash flows or financial condition.
We have identified 551 locations, mostly in the United States, at which we may have some liability for remediating contamination. We have resolved our liability at 257 of these locations. We do not believe that any individual location’s exposure will have a material effect on our results of operations. Sites in the investigation, remediation or operation and maintenance stage represent approximately 90% of our accrued environmental remediation reserve.
We have been identified as a potentially responsible party under the Comprehensive Environmental Response Compensation and Liability Act (CERCLA or Superfund) at 102 sites. The number of Superfund sites, in and of itself, does not represent a relevant measure of liability because the nature and extent of environmental concerns vary from site to site and our share of responsibility varies from sole responsibility to very little responsibility. In estimating our liability for remediation, we consider our likely proportionate share of the anticipated remediation expense and the ability of other potentially responsible parties to fulfill their obligations.
At December 31, 2019 and 2018, we had $725 million and $662 million reserved for environmental remediation, respectively. Cash outflows for environmental remediation were $44 million in 2019, $41 million in 2018 and $35 million in 2017. We estimate that ongoing environmental remediation expenditures in each of the next two years will not exceed approximately $75 million.
GOVERNMENT MATTERS
As described above in “Critical Accounting Estimates—Contingent Liabilities,” our contracts with the U.S. Government are subject to audits. Such audits may recommend that certain contract prices should be reduced to comply with various government regulations, or that certain payments be delayed or withheld. We are also the subject of one or more investigations and legal proceedings initiated by the U.S. Government with respect to government contract matters. See “Legal Proceedings,” of the Company’s Form 10-K for the year ended December 31, 2019, and “Note 12: Income Taxes” and “Note 19: Contingent Liabilities” within the Notes to Consolidated Financial Statements, below, for further discussion of these and other government matters.
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Cautionary Note Concerning Factors That May Affect Future Results
This Form 8-K contains statements which, to the extent they are not statements of historical or present fact, constitute “forward-looking statements” under the securities laws. From time to time, oral or written forward-looking statements may also be included in other information released to the public. These forward-looking statements are intended to provide management’s current expectations or plans for our future operating and financial performance, based on assumptions currently believed to be valid. Forward-looking statements can be identified by the use of words such as “believe,” “expect,” “expectations,” “plans,” “strategy,” “prospects,” “estimate,” “project,” “target,” “anticipate,” “will,” “should,” “see,” “guidance,” “outlook,” “confident,” “on track” and other words of similar meaning. Forward-looking statements may include, among other things, statements relating to future sales, earnings, cash flow, results of operations, uses of cash, share repurchases, tax rates, R&D spend, other measures of financial performance, potential future plans, strategies or transactions, credit ratings and net indebtedness, other anticipated benefits to RTC of UTC’s Rockwell Collins acquisition, the Raytheon Merger or the Separation Transactions, including estimated synergies and customer cost savings resulting from the Raytheon Merger and the anticipated benefits and costs of the Separation Transactions and other statements that are not solely historical facts. All forward-looking statements involve risks, uncertainties and other factors that may cause actual results to differ materially from those expressed or implied in the forward-looking statements. For those statements, we claim the protection of the safe harbor for forward-looking statements contained in the U.S. Private Securities Litigation Reform Act of 1995. Such risks, uncertainties and other factors include, without limitation:
•the effect of economic conditions in the industries and markets in which RTC operates 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 pandemic health issues (including the coronavirus disease 2019 (COVID-19) and its effects, among other things, on global supply, demand and distribution capabilities as the COVID-19 outbreak continues and results in an increasingly prolonged period of disruption to air travel and commercial activities generally, and significant restrictions and limitations on businesses, particularly within the aerospace and commercial airlines industries), aviation safety concerns, weather conditions and natural disasters, the financial condition of our customers and suppliers, and the risks associated with U.S. government sales (including changes or shifts in defense spending due to budgetary constraints, spending cuts resulting from sequestration or the allocation of funds to governmental responses to COVID-19, a government shutdown, or otherwise, and uncertain funding of programs);  
•challenges in the development, production, delivery, support, performance and realization of the anticipated benefits (including our expected returns under customer contracts) of advanced technologies and new products and services;
•the scope, nature, impact or timing of acquisition and divestiture activity, including among other things the integration of UTC’s and Raytheon’s businesses and the integration of RTC with other businesses acquired before and after the Raytheon Merger, and realization of synergies and opportunities for growth and innovation and incurrence of related costs and expenses, including the possibility that the anticipated benefits from the combination of UTC’s and Raytheon’s businesses or other acquired businesses cannot be realized in full or at all or may take longer to realize than expected, or the possibility that costs or difficulties related to the integration of UTC’s businesses with Raytheon’s or other acquired businesses will be greater than expected or may not result in the achievement of estimated synergies within the contemplated time frame or at all;
•RTC’s levels of indebtedness, capital spending and research and development spending;
•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 by RTC of its common stock, which have been suspended through the end of calendar year 2020 and may continue to be suspended, or discontinued or delayed, 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 (including the potential termination of U.S. government contracts and performance under undefinitized contract awards and the potential inability to recover termination costs);
•new business and investment opportunities;
•the 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 RTC and its businesses operate, including the effect of changes in U.S. trade policies or the U.K.’s withdrawal from the European Union, on general
24


market conditions, global trade policies and currency exchange rates in the near term and beyond;
•the effect of changes in tax (including U.S. tax reform enacted on December 22, 2017, which is commonly referred to as the TCJA), environmental, regulatory and other laws and regulations (including, among other things, export and import requirements such as the International Traffic in Arms Regulations and the Export Administration Regulations, anti-bribery and anti-corruption requirements, including the Foreign Corrupt Practices Act, industrial cooperation agreement obligations, and procurement and other regulations) in the U.S. and other countries in which RTC and its businesses operate;
•the ability of RTC to retain and hire key personnel and the ability of our personnel to continue to operate our facilities and businesses around the world in light of, among other factors, the COVID-19 outbreak;  
•the expected benefits to RTC of the Separation Transactions;
•the intended qualification of (1) the Raytheon Merger as a tax-free reorganization and (2) the Separation Transactions as tax-free to UTC and former UTC shareowners, in each case, for U.S. federal income tax purposes; and
•the risk that dis-synergy costs incurred in connection with the Separation Transactions will exceed legacy UTC’s or legacy Raytheon’s estimates.
In addition, this Form 8-K includes important information as to risks, uncertainties and other factors that may cause actual results to differ materially from those expressed or implied in the forward-looking statements. See “Note 19: Contingent Liabilities” within the Notes to Consolidated Financial Statements within Exhibit 99.2 hereto, the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” under the headings “Business Overview,” “Critical Accounting Estimates,” “Results of Operations,” and “Liquidity and Financial Condition,” within Exhibit 99.2 hereto, and the sections titled Item 1A, “Risk Factors” of the Company’s Form 10-Q for the quarter ended March 31, 2020, and Item 3, “Legal Proceedings,” of the Company’s Form 10-K for the year ended December 31, 2019. Additional important information as to these factors is included in the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” under the headings “Restructuring Costs,” “Environmental Matters” and “Governmental Matters,” in Exhibit 99.2 hereto, and in the “Business” section under the headings “General,” “Description of Business by Segment” and “Other Matters Relating to Our Business as a Whole” in Exhibit 99.1 hereto, and in our Form S-4 Registration Statements (Registration No. 333-220883) and (Registration No. 333-232696) under the heading “Risk Factors.” The forward-looking statements speak only as of the date of this report or, in the case of any document incorporated by reference, the date of that document. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by applicable law. Additional information as to factors that may cause actual results to differ materially from those expressed or implied in the forward-looking statements is disclosed from time to time in our other filings with the SEC.
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Management’s Report on Internal Control over Financial Reporting
The management of RTC is responsible for establishing and maintaining adequate internal control over financial reporting. Internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external reporting purposes in accordance with accounting principles generally accepted in the United States of America. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.
Management has assessed the effectiveness of RTC’s internal control over financial reporting as of December 31, 2019. In making its assessment, management has utilized the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission in its Internal Control—Integrated Framework, released in 2013. Management concluded that based on its assessment, RTC’s internal control over financial reporting was effective as of December 31, 2019. The effectiveness of RTC’s internal control over financial reporting, as of December 31, 2019, has been audited by PricewaterhouseCoopers LLP, an independent registered public accounting firm, as stated in their report which is included herein.


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Report of Independent Registered Public Accounting Firm

To the Shareowners and Board of Directors of Raytheon Technologies Corporation

Opinions on the Financial Statements and Internal Control over Financial Reporting

We have audited the accompanying consolidated balance sheets of Raytheon Technologies Corporation (formerly known as United Technologies Corporation) and its subsidiaries (the “Company”) as of December 31, 2019 and 2018, and the related consolidated statements of operations, of comprehensive income, of changes in equity and of cash flows for each of the three years in the period ended December 31, 2019, including the related notes (collectively referred to as the “consolidated financial statements”). We also have audited the Company's internal control over financial reporting as of December 31, 2019, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2019 and 2018, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2019 in conformity with accounting principles generally accepted in the United States of America. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2019, based on criteria established in Internal Control - Integrated Framework (2013) issued by the COSO.

Changes in Accounting Principles

As discussed in Note 20 to the consolidated financial statements, the Company changed the manner in which it accounts for leases in 2019 and, as discussed in Note 1 to the consolidated financial statements, the Company changed the manner in which it accounts for revenue from contracts with customers in 2018.

Basis for Opinions

The Company's management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Control over Financial Reporting. Our responsibility is to express opinions on the Company’s consolidated financial statements and on the Company's internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.

Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.

Definition and Limitations of Internal Control over Financial Reporting

A company’s internal control over financial reporting is a process designed 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. A company’s internal control over financial reporting includes those policies and procedures
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that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that (i) relate to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Revenue Recognition - Estimated Costs at Completion for Certain Long-Term Aerospace Aftermarket Service Contracts

As described in Notes 1 and 21 to the consolidated financial statements, the Company recognizes revenue on an over-time basis on certain long-term aerospace aftermarket service contracts. A substantial portion of the Company’s $8.0 billion Pratt & Whitney segment service sales is derived from long-term contracts providing fleet management services and aftermarket maintenance, repair and overhaul services. As disclosed by management, the Company generally measures progress toward completion for these contracts using costs incurred to date relative to total estimated costs at completion because management believes that measure best depicts the transfer of control to the customer, which occurs as the Company incurs costs on the contracts. Due to the long-term duration of these contracts and technical complexity of the engines on which the work is required to be performed for many of the performance obligations, management’s estimation of costs at completion is complex and requires significant judgment. Periodically during the year, or as needed when circumstances change and warrant a modification to a previous estimate, cost estimates requiring management judgment are updated to measure the revenue to recognize in line with progress made on contracts.

The principal considerations for our determination that performing procedures relating to revenue recognition - estimated costs at completion for certain long-term aerospace aftermarket service contracts is a critical audit matter are there was significant judgment by management to determine the estimated costs at completion. This in turn led to significant auditor judgment, subjectivity and effort in performing procedures and evaluating audit evidence relating to the estimates of the costs to complete.

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures included testing the effectiveness of controls relating to the revenue recognition process, specifically as it relates to controls over significant assumptions used in the development of estimated costs at contract completion. These procedures also included, among others, evaluating and testing management’s process for developing estimated costs at contract completion, which included evaluating on a test basis the reasonableness of assumptions considered by management specific to each contract. Evaluating the assumptions related to the estimated costs at completion involved evaluating whether the assumptions used were reasonable considering (i) management’s historical forecasting accuracy, (ii) current and past service cost and frequency experience, (iii) the consistent application of accounting policies, and (iv) the timely identification of circumstances which may warrant a modification to a previous estimate.

Goodwill and Intangible Assets Quantitative Impairment Assessments

As described in Notes 1 and 2 (not presented herein) to the consolidated financial statements appearing in Exhibit 13 to the Company’s 2019 annual report on Form 10-K, the Company’s consolidated goodwill and intangible asset balances were $48.1 billion and $26.0 billion, respectively as of December 31, 2019. Intangible assets included unamortized intangible assets of $3.9 billion as of December 31, 2019. Goodwill and unamortized intangible assets are subject to annual impairment testing, or more frequent if a triggering event occurs. In developing the estimates for the fair value of reporting units and unamortized intangible assets, significant judgment is required by management in the determination of the appropriateness of using a qualitative assessment or quantitative assessment. The quantitative impairment testing compares carrying values to fair values and, when appropriate, the carrying value of these assets is reduced to fair value. For these quantitative assessments that are performed for goodwill and unamortized intangible assets, fair value is primarily based on income approaches using discounted cash flow and
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relief from royalty models, respectively, which have significant assumptions, including revenue growth rates, projected operating income, terminal growth rates, discount rates and royalty rates. As described in Notes 1 and 3, subsequent to the initial issuance of the December 31, 2019 consolidated financial statements, the Company entered into separation and distribution agreements with is Carrier and Otis businesses, the historical results of which are presented as discontinued operations.

The principal considerations for our determination that performing procedures relating to the goodwill and unamortized intangible assets quantitative impairment assessments is a critical audit matter as there was significant judgment by management when developing the fair value measurements of these assets. This in turn led to a high degree of auditor judgment, subjectivity, and effort in performing procedures to evaluate management’s fair value measurements and significant assumptions for both goodwill and unamortized intangible assets, including revenue growth rates, projected operating income, terminal growth rates, and discount rates. In addition, the audit effort involved the use of professionals with specialized skill and knowledge to assist in performing these procedures and evaluating the audit evidence obtained.

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures included testing the effectiveness of controls relating to management’s goodwill and unamortized intangible assets quantitative impairment assessments, including controls over the valuation of the Company’s reporting units and unamortized intangible assets. These procedures also included, among others, testing management’s process for developing the fair value estimates; evaluating the appropriateness of the discounted cash flow and relief from royalty models; testing the completeness, accuracy, and relevance of underlying data in the models; and evaluating the significant assumptions used by management, including revenue growth rates, projected operating income, terminal value growth rates and discount rates. Evaluating management’s assumptions related to revenue growth rates, projected operating income, and terminal growth rates involved evaluating whether the assumptions used by management were reasonable considering (i) the current and past performance of the reporting units and unamortized intangible assets, (ii) the consistency with external market and industry data, and (iii) whether these assumptions were consistent with evidence obtained in other areas of the audit. Professionals with specialized skill and knowledge were used to assist in the evaluation of the Company’s discounted cash flow models and certain significant assumptions, including discount rates.


/s/ PricewaterhouseCoopers LLP
Boston, Massachusetts
February 6, 2020, except with respect to our opinion on the consolidated financial statements insofar as it relates to the effects of discontinued operations and the change in operating cycle discussed in Note 1, as to which the date is October 27, 2020

We have served as the Company’s auditor since 1947.

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Raytheon Technologies Corporation (formerly known as United Technologies Corporation)
Consolidated Statement of Operations
(dollars in millions, except per share amounts; shares in millions)201920182017
Net Sales:
Product sales$32,998 $24,141 $21,119 
Service sales12,351 10,560 8,594 
Total Net Sales45,349 34,701 29,713 
Costs and Expenses:
Cost of products sold26,910 21,083 16,385 
Cost of services sold7,688 6,382 6,603 
Research and development2,452 1,878 1,876 
Selling, general and administrative3,711 2,864 2,387 
Total Costs and Expenses40,761 32,207 27,251 
Other income, net326 383 527 
Operating profit4,914 2,877 2,989 
Non-service pension (benefit)(829)(659)(455)
Interest expense, net1,591 1,032 922 
Income from continuing operations before income taxes4,152 2,504 2,522 
Income tax expense421 1,098 1,054 
Net income from continuing operations3,731 1,406 1,468 
Less: Noncontrolling interest in subsidiaries’ earnings from continuing operations221 190 155 
Income from continuing operations attributable to common shareowners3,510 1,216 1,313 
Discontinued operations:
Income from discontinued operations4,091 5,776 5,241 
Income tax expense from discontinued operations1,874 1,528 1,789 
Net income from discontinued operations2,217 4,248 3,452 
Less: Noncontrolling interest in subsidiaries’ earnings from discontinued operations190 195 213 
Income from discontinued operations attributable to common shareowners2,027 4,053 3,239 
Net income attributable to common shareowners$5,537 $5,269 $4,552 
Earnings per share attributable to common shareowners - basic
Income from continuing operations attributable to common shareowners$4.11 $1.52 $1.66 
Income from discontinued operations2.37 5.06 4.10 
Net income attributable to common shareowners$6.48 $6.58 $5.76 
Earnings per share attributable to common shareowners - diluted
Income from continuing operations attributable to common shareowners$4.06 $1.50 $1.64 
Income from discontinued operations2.35 5.00 4.06 
Net income attributable to common shareowners$6.41 $6.50 $5.70 
Weighted average number of shares outstanding:
Basic shares854.8 800.4 790.0 
Diluted shares863.9 810.1 799.1 
See accompanying Notes to Consolidated Financial Statements
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Raytheon Technologies Corporation (formerly known as United Technologies Corporation)
Consolidated Statement of Comprehensive Income
(dollars in millions)201920182017
Net income from continuing and discontinued operations$5,948 $5,654 $4,920 
Other comprehensive (loss) income, net of tax
Foreign currency translation adjustments
Foreign currency translation adjustments arising during period266 (516)620 
Less: Reclassification adjustments for gain on sale of an investment in a foreign entity recognized in Other income, net2 (2)(10)
268 (518)610 
Tax expense(43)(4)— 
 225 (522)610 
Pension and postretirement benefit plans
Net actuarial (loss) gain arising during period(543)(1,819)241 
Prior service (cost) credit arising during period(6)(22)2 
Amortization of actuarial loss and prior service cost 228 344 529 
Other(93)105 (116)
(414)(1,392)656 
Tax benefit (expense)97 326 (263)
 (317)(1,066)393 
Unrealized (loss) gain on available-for-sale securities
Unrealized holding gain arising during period— — 5 
Reclassification adjustments for gain included in Other income, net— — (566)
ASU 2016-01 adoption impact (Note 11)— (5)— 
— (5)(561)
Tax benefit — — 213 
 — (5)(348)
Change in unrealized cash flow hedging
Unrealized cash flow hedging (loss) gain arising during period(33)(307)347 
Loss (gain) reclassified into Product sales51 (16)(39)
18 (323)308 
Tax (expense) benefit(11)78 (74)
 7 (245)234 
Other comprehensive (loss) income, net of tax(85)(1,838)889 
Comprehensive income5,863 3,816 5,809 
Less: comprehensive income attributable to noncontrolling interest(399)(355)(448)
Comprehensive income attributable to common shareowners$5,464 $3,461 $5,361 
See accompanying Notes to Consolidated Financial Statements
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Raytheon Technologies Corporation (formerly known as United Technologies Corporation)
Consolidated Balance Sheet
(dollars in millions, except per share amounts; shares in thousands)20192018
Assets
Cash and cash equivalents$4,937 $3,693 
Accounts receivable (net of allowance for doubtful accounts of $254 and $251)
8,743 9,602 
Contract assets, current4,462 3,666 
Inventory, net9,047 8,081 
Assets related to discontinued operations31,823 30,740 
Other assets, current2,565 1,896 
Total Current Assets61,577 57,678 
Customer financing assets3,463 3,010 
Future income tax benefits884 999 
Fixed assets, net10,322 9,906 
Operating lease right-of-use assets1,252 — 
Goodwill36,609 36,590 
Intangible assets, net24,473 24,642 
Other assets1,035 1,386 
Total Assets$139,615 $134,211 
Liabilities and Equity
Short-term borrowings$2,293 $1,428 
Accounts payable7,816 7,859 
Accrued liabilities9,770 9,395 
Contract liabilities9,014 7,818 
Liabilities related to discontinued operations14,443 12,628 
Long-term debt currently due3,258 2,722 
Total Current Liabilities46,594 41,850 
Long-term debt37,701 41,041 
Future pension and postretirement benefit obligations2,487 3,050 
Operating lease liabilities1,093 — 
Other long-term liabilities7,414 7,551 
Total Liabilities95,289 93,492 
Commitments and contingent liabilities (Notes 5 and 19)
Redeemable noncontrolling interest95 109 
Shareowners’ Equity:
Capital Stock:
Preferred Stock, $1 par value; 250,000 shares authorized; None issued or outstanding
— — 
Common Stock, $1 par value; 4,000,000 shares authorized; 1,450,845 and 1,446,961 shares issued
23,019 22,514 
Treasury Stock— 586,479 and 585,479 common shares at average cost
(32,626)(32,482)
Retained earnings61,594 57,823 
Unearned ESOP shares(64)(76)
Total Accumulated other comprehensive loss(10,149)(9,333)
Total Shareowners’ Equity41,774 38,446 
Noncontrolling interest2,457 2,164 
Total Equity44,231 40,610 
Total Liabilities and Equity$139,615 $134,211 
See accompanying Notes to Consolidated Financial Statements
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Raytheon Technologies Corporation (formerly known as United Technologies Corporation)
Consolidated Statement of Cash Flows
(dollars in millions)201920182017
Operating Activities:
Net income from continuing operations$3,731 $1,406 $1,468 
Adjustments to reconcile net income from continuing operations to net cash flows provided by operating activities:
Depreciation and amortization2,708 1,896 1,580 
Deferred income tax provision38 763 103 
Stock compensation cost268 169 129 
Net periodic pension and other postretirement benefit(566)(392)(185)
Change in:
Accounts receivable88 (1,147)(593)
Contract assets(679)(651)— 
Inventory(1,267)(417)(866)
Other current assets(984)(645)(31)
Accounts payable and accrued liabilities1,111 2,738 1,802 
Contract liabilities1,234 325 — 
Income taxes(293)(246)1,744 
Global pension contributions(55)(79)(2,044)
Canadian government settlement(38)(429)(285)
Other operating activities, net525 (621)(540)
Net cash flows provided by operating activities from continuing operations5,821 2,670 2,282 
Investing Activities:
Capital expenditures(1,868)(1,467)(1,556)
Increase in customer financing assets(787)(988)(1,189)
Decrease in customer financing assets128 604 221 
Investments in businesses (Note 2) (9)(15,039)(25)
Dispositions of businesses (Note 2)134 74 19 
Increase in collaboration intangible assets(351)(400)(380)
Receipts (payments) from settlements of derivative contracts342 140 (316)
Other investing activities, net(265)(183)99 
Net cash flows used in investing activities from continuing operations(2,676)(17,259)(3,127)
Financing Activities:
Issuance of long-term debt(19)13,337 4,852 
Repayment of long-term debt(2,693)(2,520)(1,501)
Increase (decrease) in short-term borrowings, net896 (370)(263)
Proceeds from Common Stock issued under employee stock plans27 36 31 
Dividends paid on Common Stock(2,442)(2,170)(2,074)
Repurchase of Common Stock(151)(325)(1,453)
Net transfer from discontinued operations2,387 3,979 2,836 
Other financing activities, net82 242 10 
Net cash flows (used in) provided by financing activities from continuing operations(1,913)12,209 2,438 
Discontinued Operations:
Net cash provided by operating activities3,062 3,652 3,349 
Net cash (used in) provided by investing activities(416)286 108 
Net cash used in financing activities(2,651)(4,244)(3,431)
Net cash flows (used in) provided by discontinued operations(5)(306)26 
Effect of foreign exchange rate changes on cash and cash equivalents from continuing operations1 (6)34 
Effect of foreign exchange rate changes on cash and cash equivalents from discontinued operations(20)(114)176 
Net increase (decrease) in cash, cash equivalents and restricted cash1,208 (2,806)1,829 
Cash, cash equivalents and restricted cash, beginning of year3,731 6,118 4,486 
Cash, cash equivalents and restricted cash within assets related to discontinued operations, beginning of year2,481 2,900 2,703 
Cash, cash equivalents and restricted cash, end of year7,420 6,212 9,018 
Less: Restricted cash, included in Other assets24 38 10 
Less: Cash, cash equivalents and restricted cash for discontinued operations$2,459 $2,481 $2,900 
Cash and cash equivalents, end of year$4,937 $3,693 $6,108 
Supplemental Disclosure of Cash Flow Information(1):
Interest paid, net of amounts capitalized$1,801 $1,027 $974 
Income taxes paid, net of refunds$1,768 $1,714 $1,326 
(1)     Amounts are inclusive of continuing operations and discontinued operations payments.
See accompanying Notes to Consolidated Financial Statements
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Raytheon Technologies Corporation (formerly known as United Technologies Corporation)
Consolidated Statement of Changes in Equity
(dollars in millions, except per share amounts; shares in thousands)201920182017
Equity at January 1$40,610 $31,421 $29,169 
Common Stock
Balance at January 122,514 17,574 17,285 
Common Stock issued under employee plans525 423 331 
Common Stock repurchased— — 1 
Common Stock issued for Rockwell Collins outstanding common stock & equity awards— 4,523 — 
(Purchase) sale of subsidiary shares from noncontrolling interest, net(20)(6)4 
Redeemable noncontrolling interest fair value adjustment— — (47)
Balance at December 3123,019 22,514 17,574 
Treasury Stock
Balance at January 1(32,482)(35,596)(34,150)
Common Stock issued under employee plans7 6 7 
Common Stock repurchased(151)(329)(1,453)
Common Stock issued for Rockwell Collins outstanding common stock & equity awards— 3,437 — 
Balance at December 31(32,626)(32,482)(35,596)
Retained Earnings
Balance at January 157,823 55,242 52,873 
Net Income5,537 5,269 4,552 
Dividends on Common Stock(2,442)(2,170)(2,074)
Dividends on ESOP Common Stock(70)(71)(72)
Redeemable noncontrolling interest fair value adjustment4 7 (42)
ASU 2018-02 adoption impact (Note 11)745 — — 
New Revenue Standard adoption impact— (480)— 
Other(3)26 5 
Balance at December 3161,594 57,823 55,242 
Unearned ESOP Shares
Balance at January 1(76)(85)(95)
Common Stock issued under employee plans12 9 10 
Balance at December 31(64)(76)(85)
Accumulated Other Comprehensive (Loss) Income
Balance at January 1(9,333)(7,525)(8,334)
Other comprehensive (loss) income, net of tax(816)(1,808)809 
Balance at December 31(10,149)(9,333)(7,525)
Noncontrolling Interest
Balance at January 12,164 1,811 1,590 
Net Income411 385 368 
Redeemable noncontrolling interest in subsidiaries’ earnings7 (4)(17)
Other comprehensive (loss) income, net of tax(12)(30)56 
Dividends attributable to noncontrolling interest(268)(315)(336)
Sale (purchase) of subsidiary shares from noncontrolling interest, net70 (23)— 
(Disposition) acquisition of noncontrolling interest, net(23)(8)14 
Capital contributions108 342 135 
Other— 6 1 
Balance at December 312,457 2,164 1,811 
Equity at December 31$44,231 $40,610 $31,421 
Supplemental share information
Shares of Common Stock issued under employee plans3,883 2,775 3,205 
Shares of Common Stock repurchased1,133 2,727 12,900 
Dividends per share of Common Stock$2.94 $2.84 $2.72 
See accompanying Notes to Consolidated Financial Statements
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Notes to Consolidated Financial Statements

NOTE 1: SUMMARY OF ACCOUNTING PRINCIPLES
The preparation of financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses. Actual results could differ from those estimates.
Separation Transactions and Distributions. On April 3, 2020, United Technologies Corporation (UTC) (since renamed Raytheon Technologies Corporation) completed the previously announced separation of its business into three independent, publicly traded companies – UTC, Carrier Global Corporation (Carrier) and Otis Worldwide Corporation (Otis) (such separations, the Separation Transactions). UTC distributed all of the outstanding shares of Carrier common stock and all of the outstanding shares of Otis common stock to UTC shareowners who held shares of UTC common stock as of the close of business on March 19, 2020, the record date for the distributions (the Distributions). UTC distributed 866,158,910 and 433,079,455 shares of common stock of Carrier and Otis, respectively in the Distributions, each of which was effective at 12:01 a.m., Eastern Time, on April 3, 2020. The historical results of Otis and Carrier are presented as discontinued operations and, as such, have been excluded from both continuing operations and segment results for all periods presented. Unless otherwise indicated, amounts and activity throughout this Form 8-K are presented on a continuing operations basis, and includes the reclassification of certain long term assets and liabilities to current using the duration of the related contract or program as our operating cycle. Refer to “Note 3: Discontinued Operations” and “Consolidation” below for further details.
Raytheon Merger. On April 3, 2020, following the completion of the Separation Transactions and the Distributions, pursuant to an Agreement and Plan of Merger dated June 9, 2019, as amended, UTC and Raytheon Company (Raytheon) completed the Raytheon Merger. Upon closing of the Raytheon Merger, Raytheon became a wholly-owned subsidiary of UTC, which changed its name to “Raytheon Technologies Corporation.” Throughout this Form 8-K filing, we may refer to the Company as “Raytheon Technologies Corporation” or “RTC” whether we are discussing events prior to or subsequent to the Raytheon Merger and name change.
Consolidation. The Consolidated Financial Statements include the accounts of Raytheon Technologies Corporation and its controlled subsidiaries. Intercompany transactions have been eliminated. As a result of the Separation Transactions, we are now a focused aerospace and defense company with a defined operating cycle. Accordingly, to determine our classification of certain current assets and liabilities, the duration of our contracts or programs is utilized to determine our operating cycle, which is generally longer than one year. Included within our current assets and liabilities are contract assets and liabilities related to our aftermarket and development arrangements, which can generally span up to fifteen years. Certain reclassifications have been made to the prior year amounts to conform to the current year presentation.
Cash and Cash Equivalents. Cash and cash equivalents includes cash on hand, demand deposits and short-term cash investments that are highly liquid in nature and have original maturities of three months or less.
On occasion, we are required to maintain cash deposits with certain banks with respect to contractual obligations related to acquisitions or divestitures or other legal obligations. As of December 31, 2019 and 2018, the amount of such restricted cash was approximately $24 million and $38 million, respectively.
Accounts Receivable. Accounts receivable are stated at their net estimated realized value. The allowance for doubtful accounts is based upon an assessment of customer creditworthiness, historical payment experience, and the age and status of outstanding receivables. Accounts receivable as of December 31, 2019 and December 31, 2018 includes unbilled receivables of $265 million and $439 million, respectively, which primarily includes unbilled receivables with commercial aerospace customers. See “Note 5: Commercial Aerospace Industry Assets and Commitments” for discussion of commercial aerospace industry assets and commitments.
Unbilled receivables represent revenues that are not currently billable to the customer under the terms of the contract. These items are expected to be billed and collected in the normal course of business. Unbilled receivables where we have an unconditional right to payment are included in Accounts receivable.
Contract Assets and Liabilities. Contract assets and liabilities represent the difference in the timing of revenue recognition from receipt of cash from our customers. Contract assets reflect revenue recognized and performance obligations satisfied in advance of customer billing. Performance obligations partially satisfied in advance of customer billings are included in contract assets.
Contract liabilities relate to payments received in advance of the satisfaction of performance under the contract. We receive payments from customers based on the terms established in our contracts. See “Note 7: Contract Assets and Liabilities” for further discussion of contract assets and liabilities.
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Inventory. Inventory is stated at the lower of cost or estimated realizable value and are primarily based on first-in, first-out (FIFO) or average cost methods.
Valuation reserves for excess, obsolete, and slow-moving inventory are estimated by comparing the inventory levels of individual parts to both future sales forecasts or production requirements and historical usage rates in order to identify inventory where the resale value or replacement value is less than inventoriable cost. Other factors that management considers in determining the adequacy of these reserves include whether individual inventory parts meet current specifications and cannot be substituted for a part currently being sold or used as a service part, overall market conditions, and other inventory management initiatives. Manufacturing costs are allocated to current production and firm contracts.
Equity Method Investments. Investments in which we have the ability to exercise significant influence, but do not control, are accounted for under the equity method of accounting and are included in Other assets on the Consolidated Balance Sheet. Under this method of accounting, our share of the net earnings or losses of the investee is included in Other income, net on the Consolidated Statement of Operations since the activities of the investee are closely aligned with the operations of the business segment holding the investment. We evaluate our equity method investments whenever events or changes in circumstance indicate that the carrying amounts of such investments may be impaired. If a decline in the value of an equity method investment is determined to be other than temporary, a loss is recorded in earnings in the current period. RTC sells products to and purchases products from unconsolidated entities accounted for under the equity method, which are considered related parties. This activity is not considered material to the Consolidated Statement of Operations nor Consolidated Balance Sheet of RTC.
Customer Financing Assets. Customer Financing Assets (CFA) primarily relate to the aerospace business in which we provide financing to airline customers. The most common types of financing include products under lease, notes receivable, long-term accounts receivable and lease receivable. We record revenue from lease assets by applying Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) Topic 842, Leases, and from interest on the notes, accounts and lease receivables. Interest from notes and financing leases, rental income from operating lease assets and gains or losses on sales of operating lease assets is aggregated under the caption of “Other income, net” in the Consolidated Statement of Operations. The current portion of these financing arrangements are aggregated under the caption of “Other assets, current” and the non-current portions of these financing arrangements are aggregated under the caption of “Customer financing assets” in the Consolidated Balance Sheet. The increases and decreases in CFA from funding, receipts and certain other activity, are reflected as Investing Activities in the Consolidated Statement of Cash Flows. The product under lease assets are valued at cost and reviewed for impairment when circumstances indicate that the related carrying amounts may not be recoverable. Notes, accounts and lease receivable are valued at cost and reviewed for impairment when it is probable that we will be unable to collect amounts due. As of December 31, 2019 the reserves related to customer financing assets are not material.
Business Combinations. We account for transactions that are classified as business combinations in accordance with FASB ASC Topic 805, “Business Combinations.” Once a business is acquired, the fair value of the identifiable assets acquired and liabilities assumed is determined with the excess cost recorded to goodwill. As required, a preliminary fair value is determined once a business is acquired, with the final determination of the fair value being completed within the one year measurement period from the date of acquisition.
Goodwill and Intangible Assets. Goodwill represents costs in excess of fair values assigned to the underlying net assets of acquired businesses. Goodwill and intangible assets deemed to have indefinite lives are not amortized. Goodwill and indefinite-lived intangible assets are subject to annual impairment testing or when a triggering event occurs using the guidance and criteria described in the Intangibles - Goodwill and Other Topic of the FASB ASC. This testing compares carrying values to fair values and, when appropriate, the carrying value of these assets is reduced to fair value.
Intangible assets consist of patents, trademarks/tradenames, customer relationships and other intangible assets including collaboration assets, as discussed further in “Note 2: Business Acquisitions, Dispositions, Goodwill and Intangible Assets.” Acquired intangible assets are recognized at fair value in purchase accounting and then amortized to cost of sales and selling, general & administrative expenses over the applicable useful lives. Also included within other intangible assets are commercial aerospace payments made to secure certain contractual rights to provide product on new aircraft platforms. We classify amortization of such payments as a reduction of sales. Such payments are capitalized when there are distinct rights obtained and there are sufficient incremental cash flows to support the recoverability of the assets established. Otherwise, the applicable portion of the payments are expensed. Consideration paid on these contractual commitments is capitalized when it is no longer conditional.
Useful lives of finite-lived intangible assets are estimated based upon the nature of the intangible asset and the industry in which the intangible asset is used. These intangible assets are amortized based on the pattern in which the economic benefits of the intangible assets are consumed. For both our commercial aerospace collaboration assets and exclusivity arrangements, the pattern of economic benefit generally results in lower amortization during the development period with increasing amortization
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as programs enter full rate production and aftermarket cycles. If a pattern of economic benefit cannot be reliably determined or if straight-line amortization approximates the pattern of economic benefit, a straight-line amortization method may be used. The range of estimated useful lives is as follows:
Collaboration assets
30 years
Customer relationships and related programs
1 to 32 years
Patents & trademarks
5 to 30 years
Exclusivity assets
5 to 25 years
Leases. We account for leases in accordance with ASC Topic 842: Leases. Under Topic 842, the right-of-use model requires a lessee to record a right-of-use asset and a lease liability on the Consolidated Balance Sheet for all leases with terms longer than 12 months. Leases are classified as either finance or operating, with classification affecting the pattern of expense recognition in the Consolidated Statement of Operations. In addition, Topic 842 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.
We enter into lease agreements for the use of real estate space, vehicles, information technology equipment, and certain other equipment under operating and finance leases. We determine if an arrangement contains a lease at inception. Operating leases are included in Operating lease right-of-use assets, Accrued liabilities, and Operating lease liabilities in our Consolidated Balance Sheet. Finance leases are not considered significant to our Consolidated Balance Sheet or Consolidated Statement of Operations.
Right-of-use assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. Lease right-of-use assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. As most of our leases do not provide an implicit rate, we use our incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments, and use the implicit rate when readily determinable. We determine our incremental borrowing rate through market sources including relevant industry rates. Our lease right-of-use assets also include any lease pre-payments and exclude lease incentives. Certain of our leases include variable payments, which may vary based upon changes in facts or circumstances after the start of the lease. We exclude variable payments from lease right-of-use assets and lease liabilities, to the extent not considered fixed, and instead, expense variable payments as incurred. Variable lease expense and lease expense for short duration contracts is not a material component of lease expense. Our leases generally have remaining lease terms of 1 to 20 years, some of which include options to extend leases. For the majority of our leases with options to extend, those options are up to 5 years with the ability to terminate the lease within 1 year. The exercise of lease renewal options is at our sole discretion and our lease right-of-use assets and liabilities reflect only the options we are reasonably certain that we will exercise. Lease expense is recognized on a straight-line basis over the lease term.
In limited instances we act as a lessor, primarily for commercial aerospace engines, the majority of which are classified as operating leases. These leases are not significant to our Consolidated Balance Sheet or Consolidated Statement of Operations.
Other Long-Lived Assets. We evaluate the potential impairment of other long-lived assets whenever events or changes in circumstances indicate that the related carrying amounts may not be recoverable. If the carrying value of other long-lived assets held and used exceeds the sum of the undiscounted expected future cash flows, the carrying value is written down to fair value.
Income Taxes. 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. For those tax positions where it is more-likely-than-not that a tax benefit will be sustained, we have recorded the largest amount of tax benefit with a greater than 50% likelihood of being realized upon ultimate settlement with a taxing authority that has full knowledge of all relevant information. For those income tax positions where it is not more-likely-than-not that a tax benefit will be sustained, no tax benefit has been recognized in the financial statements. Where applicable, associated interest expense has also been recognized. We recognize accrued interest related to unrecognized tax benefits in interest expense. Penalties, if incurred, would be recognized as a component of income tax expense.
On December 22, 2017 the TCJA was enacted. The TCJA contains a new law that subjects the Company to a tax on Global Intangible Low-Taxed Income (GILTI), beginning in 2018. GILTI is a tax on foreign income in excess of a deemed return on tangible assets of foreign corporations. The FASB has provided that companies subject to GILTI have the option to account for the GILTI tax as a period cost if and when incurred, or to recognize deferred taxes for temporary differences,
37


including outside basis differences, expected to reverse as GILTI. We have elected to account for GILTI as a period cost, as incurred.
Revenue Recognition. We account for revenue in accordance with ASC Topic 606: Revenue from Contracts with Customers. We adopted ASC 606 effective January 1, 2018 and elected the modified retrospective approach. The results for periods before 2018 were not adjusted for the new standard and the cumulative effect of the change in accounting was recognized through retained earnings at the date of adoption. Under Topic 606, a performance obligation is a promise in a contract with a customer to transfer a distinct good or service to the customer. Some of our contracts with customers contain a single performance obligation, while others contain multiple performance obligations most commonly when a contract spans multiple phases of the product life-cycle such as development, production, maintenance and support. A contract’s transaction price is allocated to each distinct performance obligation and recognized as revenue when, or as, the performance obligation is satisfied. When there are multiple performance obligations within a contract, we allocate the transaction price to each performance obligation based on its standalone selling price.
We consider the contractual consideration payable by the customer and assess variable consideration that may affect the total transaction price, including contractual discounts, contract incentive payments, estimates of award fees, unfunded contract value under U.S. Government contracts, and other sources of variable consideration, when determining the transaction price of each contract. We include variable consideration in the estimated transaction price when there is a basis to reasonably estimate the amount. These estimates are based on historical experience, anticipated performance and our best judgment at the time. We also consider whether our contracts provide customers with significant financing. Generally, our contracts do not contain significant financing.
Timing of the satisfaction of performance obligations varies across our businesses due to our diverse product and service mix, customer base, and contractual terms.
Point in time revenue recognition. Performance obligations are satisfied as of a point in time for certain aerospace components, engines, and spare parts. Revenue is recognized when control of the product transfers to the customer, generally upon product shipment.
Over-time revenue recognition. Performance obligations are satisfied over-time if the customer receives the benefits as we perform work, if the customer controls the asset as it is being produced, or if the product being produced for the customer has no alternative use and we have a contractual right to payment. We recognize revenue on an over-time basis on certain long-term aerospace aftermarket contracts and aftermarket service work; and development, fixed price, and other cost reimbursement contracts. Revenue is recognized using costs incurred to date relative to total estimated costs at completion to measure progress for performance obligations satisfied over time. Incurred costs represent work performed, which correspond with and best depict transfer of control to the customer. Contract costs include labor, materials, and subcontractors’ costs, or other direct costs, and where applicable on government and commercial contracts, indirect costs.
For certain of our long-term aftermarket contracts, revenue is recognized over the contract period. We generally account for such contracts as a series of daily obligations to stand ready to provide spare parts and product maintenance and aftermarket services. These arrangements include the sale of spare parts with integral services to our customers, and are generally classified as Service sales, with the corresponding costs classified in Cost of services sold, within the Consolidated Statement of Operations. Revenue is primarily recognized in proportion to cost as sufficient historical evidence indicates that the cost of performing services under the contract is incurred on an other than straight-line basis. Aerospace contract modifications are routine and contracts are often modified to account for changes in contract specifications or requirements. Contract modifications that are for goods or services that are not distinct are accounted for as part of the existing contract.
We incur costs for engineering and development of aerospace products directly related to existing or anticipated contracts with customers. Such costs generate or enhance our ability to satisfy our performance obligations under these contracts. We capitalize these costs as contract fulfillment costs to the extent the costs are recoverable from the associated contract margin and subsequently amortize the costs as the original equipment (OEM) products performance obligations are satisfied. In instances where intellectual property does not transfer to the customer, we defer the customer funding of OEM product engineering and development and recognize revenue when the OEM products performance obligations are satisfied. Capitalized contract fulfillment costs were $1,519 million and $914 million as of December 31, 2019 and 2018, respectively and are recognized in “Other assets” in our Consolidated Balance Sheet and are included in Other operating activities, net in our Consolidated Statement of Cash Flows. The increase in capitalized net contract fulfillment costs is driven by current year activity at Collins Aerospace Systems. Costs to obtain contracts are not material.
Loss provisions on OEM contracts are recognized to the extent that estimated contract costs exceed the estimated consideration from the products contemplated under the contractual arrangement. For new commitments, we generally record loss provisions at the earlier of contract announcement or contract signing except for certain contracts under which losses are
38


recorded upon receipt of the purchase order that obligates us to perform. For existing commitments, anticipated losses on contractual arrangements are recognized in the period in which losses become evident. Products contemplated under contractual arrangements include firm quantities of product sold under contract and, in the commercial engine and wheels and brakes businesses, future highly probable sales of replacement parts required by regulation that are expected to be sold subsequently for incorporation into the original equipment. In the commercial engine and wheels and brakes businesses, when the combined original equipment and aftermarket arrangement for each individual sales campaign are profitable, we record original equipment product losses, as applicable, at the time of delivery.
We review our cost estimates on significant contracts on a quarterly basis and for others, no less frequently than annually or when circumstances change and warrant a modification to a previous estimate. We record changes in contract estimates using the cumulative catch-up method. Operating profits included net unfavorable changes in contract estimates of approximately $69 million, $50 million, and $110 million in 2019, 2018 and 2017, respectively, primarily the result of unexpected increases in estimated costs related to Pratt & Whitney long-term aftermarket contracts.
Collaborations. Sales generated from engine programs, spare parts sales, and aftermarket business under collaboration arrangements are recorded consistent with our revenue recognition policies in our Consolidated Financial Statements. Amounts attributable to our collaborators for their share of sales are recorded as cost of sales in our Consolidated Financial Statements based upon the terms and nature of the arrangement. Costs associated with engine programs under collaborative arrangements are expensed as incurred. Under these arrangements, collaborators contribute their program share of engine parts, incur their own production costs and make certain payments to Pratt & Whitney for shared or joint program costs. The reimbursement from collaborators of their share of program costs is recorded as a reduction of the related expense item at that time.
Cash Payments to Customers. We may offer customers incentives to purchase our products, which may result in payments made to those customers. In addition, we make participation payments to certain aerospace customers to secure certain contractual rights. To the extent these rights are incremental and are supported by the incremental cash flows obtained, they are capitalized as intangible assets. Otherwise, such payments are recorded as a reduction in sales. We classify the subsequent amortization of the capitalized acquired intangible assets from our customers as a reduction in sales.
Remaining Performance Obligations (RPO). RPO represents the aggregate amount of total contract transaction price that is unsatisfied or partially unsatisfied. As of December 31, 2019 our total RPO was approximately $111.7 billion compared to $93.8 billion as of December 31, 2018. Of the total RPO as of December 31, 2019, we expect approximately 37% will be recognized as sales over the following 24 months.
Research and Development. Research and development costs not specifically covered by contracts and those related to the company sponsored share of research and development activity in connection with cost-sharing arrangements are charged to expense as incurred. Government research and development support, not associated with specific contracts, is recorded as a reduction to research and development expense in the period earned.
Research and development costs incurred under contracts with customers are included as a contract cost and reported as a component of cost of products sold when revenue from such contracts is recognized. Research and development costs in excess of contractual consideration are expensed as incurred.
Foreign Exchange. We conduct business in many different currencies and, accordingly, are subject to the inherent risks associated with foreign exchange rate movements. The financial position and results of operations of substantially all of our foreign subsidiaries are measured using the local currency as the functional currency. Foreign currency denominated assets and liabilities are translated into U.S. Dollars at the exchange rates existing at the respective balance sheet dates, and income and expense items are translated at the average exchange rates during the respective periods. The aggregate effects of translating the balance sheets of these subsidiaries are deferred as a separate component of shareowners' equity.
Derivatives and Hedging Activity. We have used derivative instruments, including swaps, forward contracts and options, to help manage certain foreign currency, interest rate and commodity price exposures. Derivative instruments are viewed as risk management tools by us and are not used for trading or speculative purposes. By their nature, all financial instruments involve market and credit risks. We enter into derivative and other financial instruments with major investment grade financial institutions and have policies to monitor the credit risk of those counterparties. We limit counterparty exposure and concentration of risk by diversifying counterparties. While there can be no assurance, we do not anticipate any material non-performance by any of these counterparties. We enter into transactions that are subject to enforceable master netting arrangements or similar agreements with various counterparties. However, we have not elected to offset multiple contracts with a single counterparty and, as a result, the fair value of the derivative instruments in a loss position is not offset against the fair value of derivative instruments in a gain position.
Derivatives used for hedging purposes may be designated and effective as a hedge of the identified risk exposure at the inception of the contract. All derivative instruments are recorded on the balance sheet at fair value. Derivatives used to hedge
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foreign currency denominated balance sheet items are reported directly in earnings along with offsetting transaction gains and losses on the items being hedged. Derivatives used to hedge forecasted cash flows associated with foreign currency commitments or forecasted commodity purchases may be accounted for as cash flow hedges, as deemed appropriate. Gains and losses on derivatives designated as cash flow hedges are recorded in other comprehensive income and reclassified to earnings as a component of product sales or expenses, as applicable, when the hedged transaction occurs. Gains and losses on derivatives designated as cash flow hedges are recorded in Other operating activities, net within the Consolidated Statement of Cash Flows. To the extent that a previously designated hedging transaction is no longer an effective hedge, any ineffectiveness measured in the hedging relationship is recorded currently in earnings in the period it occurs. As discussed in Note 15, at December 31, 2019 we have approximately €4.20 billion of euro-denominated long-term debt, which qualifies as a net investment hedge against our investments in European businesses.
To the extent the hedge accounting criteria are not met, the foreign currency forward contracts are utilized as economic hedges and changes in the fair value of these contracts are recorded currently in earnings in the period in which they occur. Additional information pertaining to foreign currency forward contracts and net investment hedging is included in Note 15.
Environmental. Environmental investigatory, remediation, operating and maintenance costs are accrued when it is probable that a liability has been incurred and the amount can be reasonably estimated. The most likely cost to be incurred is accrued based on an evaluation of currently available facts with respect to each individual site, including existing technology, current laws and regulations and prior remediation experience. Where no amount within a range of estimates is more likely, the minimum is accrued. For sites with multiple responsible parties, we consider our likely proportionate share of the anticipated remediation costs and the ability of the other parties to fulfill their obligations in establishing a provision for those costs. Liabilities with fixed or reliably determinable future cash payments are discounted. Accrued environmental liabilities are not reduced by potential insurance reimbursements. See Note 19 for additional details on the environmental remediation activities.
Pension and Postretirement Obligations. Guidance under the Compensation - Retirement Benefits Topic of the FASB ASC requires balance sheet recognition of the overfunded or underfunded status of pension and postretirement benefit plans. Under this guidance, actuarial gains and losses, prior service costs or credits, and any remaining transition assets or obligations that have not been recognized under previous accounting standards must be recognized in other comprehensive income, net of tax effects, until they are amortized as a component of net periodic benefit cost.
Product Performance Obligations. We extend performance and operating cost guarantees beyond our normal service and warranty policies for extended periods on some of our products, particularly commercial aircraft engines. Liability under such guarantees is based upon future product performance and durability. We accrue for such costs that are probable and can be reasonably estimated. In addition, we incur discretionary costs to service our products in connection with product performance issues. The costs associated with these product performance and operating cost guarantees require estimates over the full terms of the agreements, and require management to consider factors such as the extent of future maintenance requirements and the future cost of material and labor to perform the services. These cost estimates are largely based upon historical experience. See Note 18 for further discussion.
Collaborative Arrangements. In view of the risks and costs associated with developing new engines, Pratt & Whitney has entered into certain collaboration arrangements in which sales, costs and risks are shared. Sales generated from engine programs, spare parts, and aftermarket business under collaboration arrangements are recognized in our financial statements when earned. Amounts attributable to our collaborators for their share of sales are recorded as an expense in our financial statements based upon the terms and nature of the arrangement. Costs associated with engine programs under collaborative arrangements are expensed as incurred. Under these arrangements, collaborators contribute their program share of engine parts, incur their own production costs and make certain payments to Pratt & Whitney for shared or joint program costs. The reimbursement from the collaborators of their share of program costs is recorded as a reduction of the related expense item at that time. As of December 31, 2019, the collaborators’ interests in all commercial engine programs ranged from 13% to 49%, inclusive of a portion of Pratt & Whitney's interests held by other participants. Pratt & Whitney is the principal participant in all existing collaborative arrangements, with the exception of the Engine Alliance (EA), a joint venture with GE Aviation, which markets and manufactures the GP7000 engine for the Airbus A380 aircraft. There are no individually significant collaborative arrangements and none of the collaborators individually exceed a 31% share in an individual program. The following table illustrates the Consolidated Statement of Operations classification and amounts attributable to transactions arising from the collaborative arrangements between participants for each period presented.
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(dollars in millions)201920182017
Collaborator share of sales:
Cost of products sold$2,097 $1,688 $1,789 
Cost of services sold1,674 1,765 929 
Collaborator share of program costs (reimbursement of expenses incurred):
Cost of products sold(190)(209)(143)
Research and development(219)(225)(190)
Selling, general and administrative(101)(87)(74)
Accounting Pronouncements. In June 2016, the FASB issued Accounting Standards Update (ASU) 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. This ASU and its related amendments modifies the impairment model to utilize an expected loss methodology in place of the incurred loss methodology for financial instruments, including trade receivables, contract assets, long-term receivables and off-balance sheet credit exposures. The amendment requires entities to consider a broader range of information to estimate expected credit losses, including historical information, current conditions and a reasonable forecast period, which may result in earlier recognition of certain losses. The provisions of this ASU are effective for years beginning after December 15, 2019, with early adoption permitted. A modified retrospective approach is required with a cumulative-effect adjustment to retained earnings as of January 1, 2020. We are still quantifying the impact of this ASU and its related amendments on our Consolidated Financial Statements which is not expected to be material.
In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement. The new standard removes the disclosure requirements for the amount of and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy. This standard did not have a material impact on our financial statement disclosures. We early adopted this standard effective January 1, 2019.
In August 2018, the FASB issued ASU 2018-14, Compensation—Retirement Benefits—Defined Benefit Plans—General (Subtopic 715-20): Disclosure Framework—Changes to the Disclosure Requirements for Defined Benefit Plans. The new standard includes updates to the disclosure requirements for defined benefit plans including several additions, deletions and modifications to the disclosure requirements. The provisions of this ASU are effective for fiscal years ending after December 15, 2020, with early adoption permitted. We are currently evaluating the impact of this ASU.
In August 2018, the FASB issued ASU 2018-15, Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract. The new standard provides updated guidance surrounding implementation costs associated with cloud computing arrangements that are service contracts. The provisions of this ASU are effective for years beginning after December 15, 2019, with early adoption permitted. We adopted the new standard prospectively effective January 1, 2020. We do not expect this ASU to have a material impact on the Consolidated Financial Statements.
In October 2018, the FASB issued ASU 2018-17, Consolidation (Topic 810): Targeted Improvements to Related Party Guidance for Variable Interest Entities. The amendments in this update for determining whether a decision-making fee is a variable interest require reporting entities to consider indirect interests held through related parties under common control on a proportional basis rather than as the equivalent of a direct interest in its entirety (as currently required in generally accepted accounting principles (GAAP)). These amendments also will create alignment between determining whether a decision making fee is a variable interest and determining whether a reporting entity within a related party group is the primary beneficiary of a VIE. This will significantly reduce the risk that decision makers with insignificant direct and indirect interests could be deemed the primary beneficiary of a VIE. The provisions of this ASU are effective for years beginning after December 15, 2019, with early adoption permitted. We adopted the new standard effective January 1, 2020. This ASU did not have an impact on the Consolidated Financial Statements.
In November 2018, the FASB issued ASU 2018-18, Collaborative Arrangements (Topic 808): Clarifying the Interaction between Topic 808 and Topic 606. The amendments in this update make targeted improvements to GAAP for collaborative arrangements as follows: clarify that certain transactions between collaborative arrangement participants should be accounted for as revenue under Topic 606 when the collaborative arrangement participant is a customer in the context of a unit of account. In those situations, all the guidance in Topic 606 should be applied, including recognition, measurement, presentation, and disclosure requirements; add unit-of-account guidance in Topic 808 to align with the guidance in Topic 606 (that is, a distinct good or service) when an entity is assessing whether the collaborative arrangement or a part of the arrangement is within the scope of Topic 606; and require that in a transaction with a collaborative arrangement participant that is not directly related to sales to third parties, presenting the transaction together with revenue recognized under Topic 606 is precluded if the collaborative arrangement participant is not a customer. The provisions of this ASU are effective for years beginning after
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December 15, 2019, with early adoption permitted. We adopted the new standard effective January 1, 2020. This ASU did not have an impact on the Consolidated Financial Statements.
In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes. The amendments in this update remove certain exceptions of Topic 740 including: exception to the incremental approach for intraperiod tax allocation when there is a loss from continuing operations and income or gain from other items; exception to the requirement to recognize a deferred tax liability for equity method investments when a foreign subsidiary becomes an equity method investment; exception to the ability not to recognize a deferred tax liability for a foreign subsidiary when a foreign equity method investment becomes a subsidiary; exception to the general methodology for calculating income taxes in an interim period when a year-to-date loss exceeds the anticipated loss for the year. There are also additional areas of guidance in regards to: franchise and other taxes partially based on income and the interim recognition of enactment of tax laws and rate changes. The provisions of this ASU are effective for years beginning after December 15, 2020, with early adoption permitted. We are currently evaluating the impact of this ASU on our consolidated financial statements.
NOTE 2: BUSINESS ACQUISITIONS, DISPOSITIONS, GOODWILL AND INTANGIBLE ASSETS
Business Acquisitions. Our investments in businesses net of cash acquired in 2019, 2018 and 2017 totaled $9 million, $30,783 million (including debt assumed of $7,784 million and stock issued of $7,960 million), and $25 million respectively. Our investments in businesses in 2018 primarily consisted of the acquisition of Rockwell Collins, Inc. (Rockwell Collins).
As previously described in “Note 1: Summary of Accounting Principles,” on June 9, 2019, UTC entered into a merger agreement with Raytheon providing for an all-stock merger of equals transaction. The Raytheon merger agreement provides, among other things, that each share of Raytheon common stock issued and outstanding immediately prior to the closing of the Raytheon merger (except for shares held by Raytheon as treasury stock) will be converted into the right to receive 2.3348 shares of UTC common stock. Upon the closing of the Raytheon merger, Raytheon will become a wholly-owned subsidiary of UTC, and UTC will change its name to Raytheon Technologies Corporation. On October 11, 2019, the shareowners of each of UTC and Raytheon approved the proposals necessary to complete the Raytheon merger. The Raytheon merger is expected to close early in the second quarter 2020 and is subject to customary closing conditions, including receipt of required regulatory approvals, as well as the completion of UTC’s previously announced separation of its Otis and Carrier businesses.
On November 26, 2018, we completed the acquisition of Rockwell Collins (the Rockwell Acquisition), a leader in aviation and high-integrity solutions for commercial and military customers as well as leading-edge avionics, flight controls, aircraft interior and data connectivity solutions. Under the terms of the Rockwell acquisition agreement, each share of common stock, par value $0.01 per share, of Rockwell Collins issued and outstanding immediately prior to the effective time of the Rockwell Acquisition (other than shares held by Rockwell Collins, the Company, Riveter Merger Sub Corp or any of their respective wholly owned subsidiaries) was converted into the right to receive (1) $93.33 in cash, without interest, and (2) 0.37525 shares of Company common stock (together, the Acquisition Consideration), less any applicable withholding taxes, with cash paid in lieu of fractional shares. The total aggregate consideration payable in the Rockwell Acquisition was $15.5 billion in cash ($14.9 billion net of cash acquired) and 62.2 million shares of Company common stock. In addition, $7.8 billion of Rockwell Collins debt was outstanding at the time of the Rockwell Acquisition. This equated to a total enterprise value of $30.6 billion, including the $7.8 billion of Rockwell Collins’ outstanding debt.     
(dollars in millions)Amount
Cash consideration paid for Rockwell Collins outstanding common stock & equity awards$15,533 
Fair value of UTC common stock issued for Rockwell Collins outstanding common stock & equity awards
7,960 
Total consideration transferred$23,493 
The cash consideration utilized for the Rockwell Acquisition was partially financed through the previously disclosed issuance of $11.0 billion aggregate principal notes on August 16, 2018 for net proceeds of $10.9 billion. For the remainder of the cash consideration, we utilized repatriated cash and cash equivalents and cash flow generated from operating activities.
Final Allocation of Consideration Transferred to Net Assets Acquired:
The table below represents the final determination of the fair value of identifiable assets acquired and liabilities assumed from the Rockwell Collins acquisition after utilizing the one year measurement period allowed by the FASB ASC Topic 805, “Business Combinations.”
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(dollars in millions)
Cash and cash equivalents$640 
Accounts receivable1,659 
Inventory1,487 
Contract assets, current320 
Other assets, current251 
Future income tax benefits38 
Fixed assets1,542 
Intangible assets:
Customer relationships8,720 
Tradenames/trademarks1,870 
        Developed technology600 
Other assets217 
Total identifiable assets acquired17,344 
Short-term borrowings2,254 
Accounts payable520 
Accrued liabilities1,663 
Contract liabilities, current299 
Long-term debt5,530 
Future pension and postretirement benefit obligation502 
Other long-term liabilities3,614 
Noncontrolling interest6 
Total liabilities acquired14,388 
Total identifiable net assets2,956 
Goodwill20,537 
Total consideration transferred$23,493 
In order to allocate the consideration transferred for Rockwell Collins, the fair values of all identifiable assets and liabilities were established. For accounting and financial reporting purposes, fair value is defined under FASB ASC Topic 820, “Fair Value Measurements and Disclosures” as the price that would be received upon sale of an asset or the amount paid to transfer a liability in an orderly transaction between market participants at the measurement date. Market participants are assumed to be buyers and sellers in the principal (most advantageous) market for the asset or liability. Additionally, fair value measurements for an asset assume the highest and best use of that asset by market participants. Use of different estimates and judgments could yield different results. Fair value adjustments to Rockwell Collins’ identified assets and liabilities resulted in an increase in inventory and fixed assets of $282 million and $244 million, respectively. In determining the fair value of identifiable assets acquired and liabilities assumed, a review was conducted for any significant contingent assets or liabilities existing as of the acquisition date. This assessment did not note any significant contingencies related to existing legal or government action.
The fair values of the customer relationship and related program intangible assets, which include the related aerospace program original equipment (OEM) and aftermarket cash flows, were determined by using an “income approach.” Under this approach, the net earnings attributable to the asset or liability being measured are isolated using the discounted projected net cash flows. These projected cash flows are isolated from the projected cash flows of the combined asset group over the remaining economic life of the intangible asset or liability being measured. Both the amount and the duration of the cash flows are considered from a market participant perspective. Our estimates of market participant net cash flows considered historical and projected pricing, remaining developmental effort, operational performance, including company specific synergies, aftermarket retention, product life cycles, material and labor pricing, and other relevant customer, contractual and market factors. Where appropriate, the net cash flows are probability-adjusted to reflect the uncertainties associated with the underlying assumptions as well as the risk profile of the net cash flows utilized in the valuation. The probability-adjusted future cash flows are then discounted to present value using an appropriate discount rate. The customer relationship and related program intangible assets are being amortized on a straight-line basis (which approximates the economic pattern of benefits) over the
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estimated economic life of the underlying programs of 10 to 23 years. The developed technology intangible asset is being amortized over the economic pattern of benefit. The fair value of the tradename intangible assets were determined utilizing the relief from royalty method which is a form of the income approach. Under this method, a royalty rate based on observed market royalties is applied to projected revenue supporting the valuation of the tradename and discounted to present value using an appropriate discount rate. The tradename intangible assets have been determined to have an indefinite life. The intangible assets included above consist of the following:
(dollars in millions)
Fair Value		Estimated
Life
Acquired customer relationships$8,720 10-23 years
Acquired tradenames/trademarks1,870 indefinite
Acquired developed technology600 15 years
$11,190 
We also identified customer contractual obligations on certain contracts with economic returns that are lower than could be realized in market transactions as of the acquisition date. We measured these liabilities under the measurement provisions of FASB ASC Topic 820, “Fair Value Measurements and Disclosures,” which is based on the price to transfer the obligation to a market participant at the measurement date, assuming that the liability will remain outstanding in the marketplace. Based on the estimated net cash outflows of the programs plus a reasonable contracting profit margin required to transfer the contracts to market participants, we recorded assumed liabilities of approximately $1.02 billion in connection with the Rockwell Acquisition. These liabilities will be liquidated in accordance with the underlying pattern of obligations, as reflected by the expenses incurred on the contracts. Total consumption of the contractual obligation in 2019 was $129 million. Total consumption of the contractual obligation for the next five years is expected to be as follows: $104 million in 2020, $104 million in 2021, $112 million in 2022, $96 million in 2023, and $101 million in 2024.
Acquisition-Related Costs:
Acquisition-related costs have been expensed as incurred. In 2019, 2018, and 2017 approximately $40 million, $112 million, and $39 million respectively, of transaction and integration costs have been incurred. These costs were recorded in Selling, general and administrative expenses within the Consolidated Statement of Operations.
Supplemental Pro-Forma Data:
Rockwell Collins’ results of operations have been included in RTC’s financial statements for the period subsequent to the completion of the acquisition on November 26, 2018. Rockwell Collins contributed sales of approximately $778 million and operating profit of approximately $11 million for the year ended December 31, 2018. The following unaudited supplemental pro-forma data presents consolidated information as if the acquisition had been completed on January 1, 2017. The pro-forma results were calculated by combining the results of RTC with the stand-alone results of Rockwell Collins for the pre-acquisition periods, which were adjusted to account for certain costs that would have been incurred during this pre-acquisition period:
 Year Ended December 31,
(dollars in millions, except per share amounts; shares in millions)20182017
Net sales$42,336 $37,909 
Net income attributable to common shareowners from continuing operations$2,011 $1,423 
Basic earnings per share of common stock from continuing operations$2.26 $1.66 
Diluted earnings per share of common stock from continuing operations$2.24 $1.65 
The unaudited supplemental pro-forma data above includes the following significant adjustments made to account for certain costs which would have been incurred if the acquisition had been completed on January 1, 2017, as adjusted for the
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applicable tax impact. As our acquisition of Rockwell Collins was completed on November 26, 2018, the pro-forma adjustments in the table below only include the required adjustments through November 26, 2018:
 Year Ended December 31,
(dollars in millions)20182017
Amortization of inventory and fixed asset fair value adjustment (1)
58 $(192)
Amortization of acquired Rockwell Collins intangible assets, net (2)
(193)(202)
Utilization of contractual customer obligation (3)
16 116 
RTC/Rockwell fees for advisory, legal, accounting services (4)
212 (212)
Interest expense incurred on acquisition financing, net (5)
(199)(234)
Elimination of capitalized pre-production engineering amortization (6)
63 42 
Adjustment to net periodic pension cost (7)
42 34 
Adjustment to reflect the adoption of ASC 606 (8)
106 — 
Elimination of entities held for sale (9)
(47)(35)
Inclusion of B/E Aerospace (10)
— (51)
$58 $(734)
(1)    2018 reflects the elimination of the inventory step-up amortization recorded by RTC in 2018 as this would have been completed within the first two quarters of 2017. Additionally, this adjustment reflects the amortization of the fixed asset fair value adjustment as of the acquisition date.
(2)    Reflects the additional amortization of the acquired Rockwell Collins’ intangible assets recognized at fair value in purchase accounting and eliminates the historical Rockwell Collins intangible asset amortization expense.
(3)    Reflects the additional amortization of liabilities recognized for acquired contracts with terms less favorable than could be realized in market transactions as of the acquisition date and eliminates Rockwell Collins historical amortization of these liabilities.
(4)    2018 reflects the elimination of transaction-related fees incurred by RTC and Rockwell Collins in connection with the acquisition and assumes all of the fees were incurred during the first quarter of 2017.
(5)    Reflects the additional interest expense incurred on debt to finance our acquisition of Rockwell Collins and reduces interest expense for the debt fair value adjustment which would have been amortized.
(6)    Reflects the elimination of Rockwell Collins capitalized pre-production engineering amortization to conform to RTC policy.
(7)    Reflects adjustments for the elimination of amortization of prior service cost and actuarial loss amortization, which was recorded by Rockwell Collins, as a result of fair value purchase accounting, net of the impact of the revised pension and post-retirement benefit (expense) as determined under RTC’s plan assumptions.
(8)    Reflects adjustments to Rockwell Collins revenue recognition as if they adopted the New Revenue Standard as of January 1, 2018 and primarily relates to capitalization of contract costs and changes in timing of sales recognition for contracts requiring an over time method of revenue recognition, partially offset by deferral of revenue recognized on OEM product engineering and development.
(9)    Reflects the elimination of entities required to be sold for regulatory approvals.
(10)    Reflects adjustments to include the results and related adjustments for B/E Aerospace as if it had been acquired by Rockwell Collins on January 1, 2017.
The unaudited supplemental pro-forma financial information does not reflect the potential realization of cost savings related to the integration of the two companies. Further, the pro-forma data should not be considered indicative of the results that would have occurred if the acquisition and related financing had been consummated on January 1, 2017, nor are they indicative of future results.
Dispositions. Cash inflows related to dispositions during the 2019 were $134 million and primarily consisted of the dispositions of businesses held for sale associated with the Rockwell Collins acquisition. In accordance with conditions imposed for regulatory approval of the acquisition, Rockwell Collins was required to dispose of certain businesses. These businesses were held separate from RTC’s and Rockwell Collins’ ongoing businesses pursuant to regulatory requirements. Definitive agreements to sell each of the businesses were entered into prior to the completion of RTC’s acquisition of Rockwell Collins. The related assets and liabilities of these businesses had been accounted for as held for sale at fair value less cost to sell. As of December 31, 2018, assets held for sale of $175 million were included within Other assets, current and liabilities held for sale of $40 million were included within Accrued liabilities on the Consolidated Balance Sheet. The major classes of assets and liabilities primarily included net Inventory of $51 million and net Fixed assets of $37 million. In the first quarter of 2019, Rockwell Collins completed the sale of all businesses which were held for sale as of December 31, 2018.
As further discussed in “Note 3: Discontinued Operations,” on April 2, 2020, Carrier and Otis entered into a Separation and Distribution Agreement with UTC, pursuant to which, among other things, UTC agreed to separate into three independent, publicly traded companies – UTC, Otis and Carrier and distribute all of the outstanding common stock of Carrier and Otis to UTC shareowners who held shares of UTC common stock as of the close of business on March 19, 2020. As a result of the distributions, Carrier and Otis are independent publicly traded companies.
On January 20, 2020 the Company reached an agreement with BAE Systems, Inc. on a proposed sale of assets related to the Collins Aerospace Systems military global positioning system business for $1.93 billion. The proposed sale is required as a regulatory condition to the Raytheon Merger, and is subject to the completion of the Raytheon Merger, as well as the
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satisfaction of other customary closing conditions, including receipt of required regulatory approvals. Due to these closing conditions, the criteria for held for sale accounting treatment were not met as of December 31, 2019.
Goodwill. Changes in our goodwill balances for the year ended in 2019 were as follows:
(dollars in millions)Balance as of
January 1,
2019		Goodwill
resulting from
business
combinations		Foreign
currency
translation
and other		Balance as of
December 31,
2019
Pratt & Whitney$1,567 $— $(4)$1,563 
Collins Aerospace Systems35,002 75 (52)35,025 
Total Segments36,569 75 (56)36,588 
Eliminations and other21 — — 21 
Total$36,590 $75 $(56)$36,609 
The $75 million increase in Goodwill at Collins Aerospace Systems reflects a $475 million net increase in Goodwill resulting from several individually insignificant purchase accounting adjustments related to the Rockwell Acquisition, partially offset by a $400 million decrease in Goodwill related to adjustments to the customer relationship intangible asset associated with the Rockwell Acquisition.
Intangible Assets. Identifiable intangible assets are comprised of the following:
 20192018
(dollars in millions)Gross
Amount		Accumulated
Amortization		Gross
Amount		Accumulated
Amortization
Amortized:
Patents and trademarks$47 $(34)$47 $(32)
Collaboration intangible assets4,862 (920)4,509 (649)
Customer relationships and other21,026 (3,884)20,308 (2,913)
 25,935 (4,838)24,864 (3,594)
Unamortized:
Trademarks and other3,376 — 3,372 — 
Total$29,311 $(4,838)$28,236 $(3,594)
In addition to acquired customer relationship intangible assets, 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 is 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 may be used. We classify amortization of such payments as a reduction of sales. Amortization of intangible assets was $1,244 million, $736 million and $587 million in 2019, 2018 and 2017, respectively. The collaboration intangible assets are amortized based upon the pattern of economic benefits as represented by the underlying cash flows. The following is the expected amortization of total intangible assets for 2020 through 2024, which reflects the pattern of expected economic benefit on certain aerospace intangible assets:
(dollars in millions)20202021202220232024
Amortization expense$1,248$1,249$1,283$1,290$1,277
Other Matters. In January 2020, Boeing announced that it expects the 737 Max fleet to remain grounded until mid-2020. In addition, Boeing has also announced the temporary suspension of its production of the 737 Max. The Company considered the potential impact of these developments on goodwill and intangible asset balances that could be impacted by this situation and concluded that the balances remain recoverable and no adjustment was required.
NOTE 3: DISCONTINUED OPERATIONS
On April 2, 2020, Carrier and Otis entered into a Separation and Distribution Agreement with UTC (since renamed Raytheon Technologies Corporation), pursuant to which, among other things, UTC agreed to separate into three independent, publicly traded companies – UTC, Otis and Carrier and distribute all of the outstanding common stock of Carrier and Otis to
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UTC shareowners who held shares of UTC common stock as of the close of business on March 19, 2020. The Separation Transactions were completed on April 3, 2020.
Carrier and Otis are presented as discontinued operations and, as such, have been excluded from both continuing operations and segment results for all periods presented. Income (loss) from discontinued operations is as follows:
Year Ended December 31
(dollars, in millions)201920182017
Otis$1,033 $1,213 $1,123 
Carrier1,698 2,840 2,116 
Separation related transactions (1)
(704)— — 
Income (loss) from discontinued operations $2,027 $4,053 $3,239 
(1)    Reflects unallocable transaction costs incurred by the Company primarily related to professional services costs pertaining to the Separation Transactions and the establishment of Otis and Carrier as stand-alone public companies, facility relocation costs, costs to separate information systems, costs of retention bonuses and tax charges related to separation activities.

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The following summarized financial information related to discontinued operations has been reclassified from Income from continuing operations and included in Income (loss) from discontinued operations:
Year Ended December 31
(dollars, in millions)201920182017
Otis
Product sales$5,669 $5,636 $5,498 
Service sales7,444 7,268 6,843 
Cost of products sold4,656 4,624 4,392 
Cost of services sold4,635 4,568 4,220 
Research and development163 185 187 
Selling, general and administrative expense1,906 1,636 1,583 
Other (expense) income, net(40)26 37 
Non-operating expense, net4 (18)(4)
Income from discontinued operations, before income taxes1,709 1,935 2,000 
Income tax expense525 561 704 
Income from discontinued operations1,184 1,374 1,296 
Less: Noncontrolling interest in subsidiaries earnings from discontinued operations151 161 173 
Income from discontinued operations attributable to common shareowners$1,033 $1,213 $1,123 
Carrier
Product sales$15,337 $15,657 $14,744 
Service sales3,247 3,239 3,039 
Cost of products sold10,878 11,047 10,447 
Cost of services sold2,298 2,281 2,154 
Research and development400 399 364 
Selling, general and administrative expense2,888 2,566 2,459 
Other income (expense), net246 1,156 794 
Non-operating (income) expense, net(43)(82)(88)
Income from discontinued operations, before income taxes2,409 3,841 3,241 
Income tax expense672 967 1,085 
Income from discontinued operations1,737 2,874 2,156 
Less: Noncontrolling interest in subsidiaries earnings from discontinued operations39 34 40 
Income from discontinued operations attributable to common shareowners$1,698 $2,840 $2,116 
Separation related transactions (1)
Selling, general and administrative expense16 $— $— 
Other (expense) income, net$(11)
Loss from discontinued operations, before income taxes(27)— — 
Income tax (benefit) expense677 — — 
Income (loss) from discontinued operations, net of tax(704)— — 
Total Income (loss) from discontinued operations attributable to common shareowners$2,027 $4,053 $3,239 
(1)    Reflects unallocable transaction costs incurred by the Company primarily related to professional services costs pertaining to the Separation Transactions and the establishment of Otis and Carrier as stand-alone public companies, facility relocation costs, costs to separate information systems, costs of retention bonuses and tax charges related to separation activities.

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Selected financial information related to cash flows from discontinued operations is as follows:
Year Ended December 31
(dollars, in millions)201920182017
Net cash provided by operating activities$3,062 $3,652 $3,349 
Net cash (used in) provided by investing activities(416)286 108 
Net cash used in financing activities(2,651)(4,244)(3,431)
Net cash provided by operating activities includes the net operating cash flows of Otis and Carrier prior to the Separation Transactions, as well as costs incurred by the Company primarily related to professional services costs pertaining to the Separation Transactions and the establishment of Otis and Carrier as stand-alone public companies, facility relocation costs, costs to separate information systems, costs of retention bonuses and tax charges related to separation activities. Net cash used in financing activities primarily consists of net cash transfers from Otis and Carrier to RTC.
The major components of assets and liabilities related to discontinued operations at December 31, 2019 are provided below:
(dollars, in millions)OtisCarrierTotal
Assets
Cash and cash equivalents$1,446 $995 $2,441 
Accounts receivable, net2,899 2,728 5,627 
Contract assets, current530 679 1,209 
Inventories and contracts in progress, net571 1,332 1,903 
Other assets, current213 221 434 
Future income tax benefits355 370 725 
Fixed assets, net747 1,686 2,433 
Operating lease right-of-use assets529 818 1,347 
Goodwill1,647 9,807 11,454 
Intangible assets, net490 1,083 1,573 
Other assets220 2,457 2,677 
Total assets related to discontinued operations$9,647 $22,176 $31,823 
Liabilities and Redeemable Noncontrolling Interest
Short-term borrowings$33 $38 $71 
Accounts payable1,321 1,682 3,003 
Accrued liabilities1,651 2,889 4,540 
Contract liabilities, current2,288 611 2,899 
Long-term debt, currently due1 237 238 
Long-term debt5 82 87 
Future pension and postretirement benefit obligations560 455 1,015 
Operating lease liabilities383 668 1,051 
Other long-term liabilities (1)
514 1,025 1,539 
Total liabilities related to discontinued operations$6,756 $7,687 $14,443 
(1)    Amounts include a deferred tax jurisdictional netting adjustment of $145 million.
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The major components of assets and liabilities related to discontinued operations at December 31, 2018 are provided below:
(dollars, in millions)OtisCarrierTotal
Assets
Cash and cash equivalents$1,329 $1,130 $2,459 
Accounts receivable, net2,764 2,883 5,647 
Contract assets, current661 450 1,111 
Inventories and contracts in progress, net640 1,363 2,003 
Other assets, current264 295 559 
Future income tax benefits304 343 647 
Fixed assets, net709 1,681 2,390 
Goodwill1,688 9,835 11,523 
Intangible assets, net569 1,214 1,783 
Other assets169 2,449 2,618 
Total assets related to discontinued operations$9,097 $21,643 $30,740 
Liabilities and Redeemable Noncontrolling Interest
Short-term borrowings$27 $14 $41 
Accounts payable1,334 1,910 3,244 
Accrued liabilities1,462 2,076 3,538 
Contract liabilities, current2,359 612 2,971 
Long-term debt, currently due1 153 154 
Long-term debt4 146 150 
Future pension and postretirement benefit obligations542 426 968 
Other long-term liabilities 469 1,093 1,562 
Total liabilities related to discontinued operations$6,198 $6,430 $12,628 


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NOTE 4: EARNINGS PER SHARE
(dollars in millions, except per share amounts; shares in millions)201920182017
Net income attributable to common shareowners:
Income from continuing operations attributable to common shareowners$3,510 $1,216 $1,313 
Income from discontinued operations attributable to common shareowners2,027 4,053 3,239 
Net income attributable to common shareowners$5,537 $5,269 $4,552 
Basic weighted average number of shares outstanding854.8 800.4 790.0 
Stock awards and equity units (share equivalent)9.1 9.7 9.1 
Diluted weighted average number of shares outstanding863.9 810.1 799.1 
Earnings per share attributable to common shareowners - basic
Income from continuing operations attributable to common shareowners$4.11 $1.52 $1.66 
Income from discontinued operations2.37 5.06 4.10 
Net income attributable to common shareowners$6.48 $6.58 $5.76 
Earnings per share attributable to common shareowners - diluted
Income from continuing operations attributable to common shareowners$4.06 $1.50 $1.64 
Income from discontinued operations2.35 5.00 4.06 
Net income attributable to common shareowners$6.41 $6.50 $5.70 
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. In addition, the computation of diluted earnings per share excludes the effect of the potential exercise of stock awards when the awards’ assumed proceeds exceed the average market price of the common shares during the period. For 2019, 2018 and 2017, there were 8.3 million, 5.1 million and 5.9 million anti-dilutive stock awards excluded from the computation, respectively.
NOTE 5: COMMERCIAL AEROSPACE INDUSTRY ASSETS AND COMMITMENTS
    We have receivables and other financing assets with commercial aerospace industry customers totaling $11,293 million and $11,695 million at December 31, 2019 and 2018, respectively. These include customer financing assets related to commercial aerospace industry customers, consisting of products under lease of $3,185 million and $2,736 million, and notes and leases receivable of $308 million and $299 million, at December 31, 2019 and 2018, respectively.
Aircraft financing commitments, in the form of debt or lease financing, are provided to commercial aerospace customers. The extent to which the financing commitments will be utilized is not currently known, since customers may be able to obtain more favorable terms from other financing sources. We may also arrange for third-party investors to assume a portion of these commitments. If financing commitments are exercised, debt financing is generally secured by assets with fair market values equal to or exceeding the financed amounts consistent with market terms and conditions. We may also lease aircraft and subsequently sublease the aircraft to customers under long-term non-cancelable operating leases. Our financing commitments with customers are contingent upon maintenance of certain levels of financial condition by the customers.
We have also made residual value and other guarantees related to various commercial aerospace customer financing arrangements. The estimated fair market values of the guaranteed assets equal or exceed the value of the related guarantees, net of existing reserves. We have residual value and other guarantees of $333 million as of December 31, 2019. Partner share of these guarantees is $142 million. Refer to “Note 18: Guarantees” for additional discussion on guarantees.
We also have other contractual commitments, including commitments to secure certain contractual rights to provide product on new aircraft platforms, which are included in “Other commercial aerospace commitments” in the table below. Payments made on these contractual commitments are included within other intangible assets and are to be amortized over the term of underlying economic benefit. Our commercial aerospace financing and other contractual commitments as of December 31, 2019 were approximately $15.0 billion. We have entered into certain collaboration arrangements, which may include participation by our collaboration partners in these commitments. 
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The following is the expected maturity of commercial aerospace industry assets and commitments as of December 31, 2019:
(dollars in millions)Committed20202021202220232024Thereafter
Notes and leases receivable$308 $30 $23 $14 $22 $38 $181 
Commercial aerospace financing commitments$3,937 $911 $1,119 $974 $819 $44 $70 
Other commercial aerospace commitments11,055 702 736 717 668 627 7,605 
Collaboration partners’ share(5,284)(508)(623)(571)(538)(193)(2,851)
Total commercial commitments$9,708 $1,105 $1,232 $1,120 $949 $478 $4,824 
In connection with our 2012 agreement to acquire Rolls-Royce’s ownership and collaboration interests in IAE AG, additional payments are due to Rolls-Royce contingent upon each hour flown through June 2027 by the V2500-powered aircraft in service as of the acquisition date. These flight hour payments, included in “Other commercial aerospace commitments” in the table above, are being capitalized as collaboration intangible assets.
We have long-term aftermarket maintenance contracts with commercial aerospace industry customers for which revenue is recognized over-time in proportion to actual costs incurred relative to total expected costs to be incurred over the respective contract periods. Billings, however, are typically based on factors such as aircraft or engine flight hours. The timing differences between the billings and the maintenance costs incurred generates both Contract assets and Contract liabilities. Additionally, we have other contracts with commercial aerospace industry customers which can result in the generation of Contract assets and Contract liabilities. Contract assets totaled $2,741 million and $2,247 million at December 31, 2019 and 2018, respectively, and are included in “Contract assets, current” and “Other assets” in the accompanying Consolidated Balance Sheet.
Allowance for doubtful accounts was $248 million and $245 million at December 31, 2019 and 2018, respectively. Reserves related to financing commitments and guarantees were $7 million and $15 million at December 31, 2019 and 2018, respectively.
In addition, in connection with the acquisition of Rockwell Collins in 2018 and Goodrich in 2012, we recorded assumed liabilities of approximately $1.02 billion and $2.2 billion, respectively related to customer contractual obligations on certain programs with terms less favorable than could be realized in market transactions as of the acquisition date. These liabilities are being liquidated in accordance with the underlying pattern of obligations, as reflected by the net cash outflows incurred on the contracts. Total consumption of the contractual obligations for the years ended December 31, 2019 and 2018 was approximately $345 million and $252 million, respectively. The balance of the contractual obligations at December 31, 2019 was $1,408 million, with future consumption expected to be as follows: $263 million in 2020, $189 million in 2021, $148 million in 2022, $118 million in 2023, $127 million in 2024 and $563 million thereafter.
We also have intangible assets associated with commercial aerospace. Refer to “Note 2: Business Acquisitions, Dispositions, Goodwill and Intangible Assets” for discussion of intangible assets. Refer to “Note 1: Summary of Accounting Principles” for discussion of contract fulfillment costs. Refer to “Note 20: Leases” for discussion of leases, including those that were disclosed as commitments prior to the adoption of ASC 842.
NOTE 6: INVENTORY, NET
(dollars in millions)20192018
Raw materials$2,984 $2,624 
Work-in-process2,586 2,538 
Finished goods3,477 2,919 
$9,047 $8,081 
Raw materials, work-in-process and finished goods are net of valuation reserves of $1,122 million and $1,036 million as of December 31, 2019 and 2018, respectively.
NOTE 7: CONTRACT ASSETS AND LIABILITIES
Contract assets reflect revenue recognized and performance obligations satisfied in advance of customer billing. Contract liabilities relate to payments received in advance of the satisfaction of performance under the contract. We receive payments
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from customers based on the terms established in our contracts. Total contract assets and contract liabilities as of December 31, 2019 and 2018 are as follows:
(dollars in millions)December 31, 2019December 31, 2018
Total contract assets
$4,462 $3,666 
Total contract liabilities
(9,014)(7,818)
Net contract liabilities$(4,552)$(4,152)
Contract assets increased $796 million during the year ended December 31, 2019 due to revenue recognition in excess of customer billings, primarily on Pratt & Whitney military and commercial aftermarket service agreements and various programs at Collins Aerospace Systems. Contract liabilities increased $1,196 million during the year ended December 31, 2019 primarily due to customer billings in excess of revenue recognized on Pratt & Whitney commercial aftermarket service agreements and various programs at Collins Aerospace Systems. We recognized revenue of $2.9 billion during the year ended December 31, 2019 related to contract liabilities as of December 31, 2018.
NOTE 8: FIXED ASSETS
(dollars in millions)Estimated
Useful Lives		20192018
Land$292 $266 
Buildings and improvements
12-40 years
4,978 4,768 
Machinery, tools and equipment
3-20 years
12,936 11,951 
Other, including assets under construction 1,871 1,735 
20,077 18,720 
Accumulated depreciation (9,755)(8,814)
$10,322 $9,906 
Depreciation expense is recorded predominantly utilizing the straight-line method and was $1,191 million in 2019, $945 million in 2018 and $869 million in 2017.
NOTE 9: ACCRUED LIABILITIES
(dollars in millions)20192018
Accrued salaries, wages and employee benefits $1,353 $1,063 
Customer contractual obligations1,408 1,705 
Service and warranty accruals1,033 929 
Interest payable472 468 
Litigation and contract matters 405 324 
Income taxes payable 106 313 
Accrued property, sales and use taxes140 94 
Canadian government settlement - current portion— 34 
Accrued restructuring costs 123 159 
Accrued workers compensation91 80 
Liabilities held for sale— 40 
Operating lease liabilities, current245 — 
Other 4,394 4,186 
$9,770 $9,395 
Refer to “Note 20: Leases” for discussion of leases.
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NOTE 10: BORROWINGS AND LINES OF CREDIT
(dollars in millions)20192018
Short-term borrowings:
Commercial paper$— $1,257 
Other borrowings2,293 171 
Total short-term borrowings$2,293 $1,428 
At December 31, 2019, we had credit agreements with various banks permitting aggregate borrowings of up to $10.35 billion including a $2.20 billion revolving credit agreement and a $2.15 billion multicurrency revolving credit agreement, both of which expire in August 2021; and a $2.0 billion revolving credit agreement and a $4.0 billion term credit agreement, both of which we entered into on March 15, 2019 and which will expire on March 15, 2021 or, if earlier, the date that is 180 days after the date on which each of the separations of Otis and Carrier have been consummated. As of December 31, 2019, there were borrowings of $2.10 billion under the $4.0 billion term credit agreement. The undrawn portions of the revolving credit agreements are also available to serve as backup facilities for the issuance of commercial paper.
As of December 31, 2019, our maximum commercial paper borrowing limit was $6.35 billion. We had no commercial paper borrowings as of December 31, 2019. We use our commercial paper borrowings for general corporate purposes, including the funding of potential acquisitions, pension contributions, debt refinancing, dividend payments and repurchases of our common stock. The need for commercial paper borrowings arises when the use of domestic cash for general corporate purposes exceeds the sum of domestic cash generation and foreign cash repatriated to the U.S.
At December 31, 2019, approximately $2.3 billion was available under short-term lines of credit with local banks at our various domestic and international subsidiaries. The weighted-average interest expense rates applicable to short-term borrowings and total debt were as follows:
20192018
Average interest expense rate - average outstanding borrowings during the year:
Short-term borrowings1.7 %1.3 %
Total debt3.6 %3.5 %
Average interest expense rate - outstanding borrowings as of December 31:
Short-term borrowings2.3 %1.9 %
Total debt3.6 %3.5 %
Long-term debt consisted of the following as of December 31:
(dollars in millions)20192018
Libor plus 0.350% floating rate notes due 2019 (3)
$— $350 
1.500% notes due 2019 (1)
— 650 
1.950% notes due 2019 (4)
— 300 
Euribor plus 0.15% floating rate notes due 2019 (€750 million principal value) (2)
— 858 
5.250% notes due 2019 (4)
— 300 
8.875% notes due 2019
— 271 
4.875% notes due 2020 (1)
171 171 
4.500% notes due 2020 (1)
1,250 1,250 
1.900% notes due 2020 (1)
1,000 1,000 
EURIBOR plus 0.20% floating rate notes due 2020 (€750 million principal value) (2)
831 858 
8.750% notes due 2021
250 250 
3.100% notes due 2021 (4)
250 250 
3.350% notes due 2021 (1)
1,000 1,000 
LIBOR plus 0.650% floating rate notes due 2021 (1),(3)
750 750 
1.950% notes due 2021 (1)
750 750 
1.125% notes due 2021 (€950 million principal value) (1)
1,053 1,088 
2.300% notes due 2022 (1)
500 500 
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2.800% notes due 2022 (4)
1,100 1,100 
3.100% notes due 2022 (1)
2,300 2,300 
1.250% notes due 2023 (€750 million principal value) (1)
831 858 
3.650% notes due 2023 (1)
2,250 2,250 
3.700% notes due 2023 (4)
400 400 
2.800% notes due 2024 (1)
800 800 
3.200% notes due 2024 (4)
950 950 
1.150% notes due 2024 (€750 million principal value)(1)
831 858 
3.950% notes due 2025 (1)
1,500 1,500 
1.875% notes due 2026 (€500 million principal value)(1)
554 573 
2.650% notes due 2026 (1)
1,150 1,150 
3.125% notes due 2027 (1)
1,100 1,100 
3.500% notes due 2027 (4)
1,300 1,300 
7.100% notes due 2027
141 141 
6.700% notes due 2028
400 400 
4.125% notes due 2028 (1)
3,000 3,000 
7.500% notes due 2029 (1)
550 550 
2.150% notes due 2030 (€500 million principal value)(1)
554 573 
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 
4.450% notes due 2038 (1)
750 750 
5.700% notes due 2040 (1)
1,000 1,000 
4.500% notes due 2042 (1)
3,500 3,500 
4.800% notes due 2043 (4)
400 400 
4.150% notes due 2045 (1)
850 850 
3.750% notes due 2046 (1)
1,100 1,100 
4.050% notes due 2047 (1)
600 600 
4.350% notes due 2047 (4)
1,000 1,000 
4.625% notes due 2048 (1)
1,750 1,750 
Other (including finance leases)315 269 
Total principal long-term debt41,274 44,111 
Other (fair market value adjustments, discounts and debt issuance costs)(315)(348)
Total long-term debt40,959 43,763 
Less: current portion3,258 2,722 
Long-term debt, net of current portion$37,701 $41,041 
(1)    We may redeem these notes at our option pursuant to their terms.
(2)    The three-month EURIBOR rate as of December 31, 2019 was approximately (0.383)%. 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 December 31, 2019 was approximately 1.908%.
(4)    Rockwell Collins debt which remained outstanding following the Rockwell Acquisition.

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We had no debt issuances during 2019 and the following issuances of debt in 2018:
(dollars in millions)
Issuance DateDescription of NotesAggregate Principal Balance
August 16, 2018:
3.350% notes due 2021(1)
$1,000 
3.650% notes due 2023(1)
2,250 
3.950% notes due 2025(1)
1,500 
4.125% notes due 2028(1)
3,000 
4.450% notes due 2038(1)
750 
4.625% notes due 2048(2)
1,750 
LIBOR plus 0.65% floating rate notes due 2021(1)
750 
May 18, 2018:
1.150% notes due 2024(3)
€750 
2.150% notes due 2030(3)
500 
EURIBOR plus 0.20% floating rate notes due 2020(3)
750 
(1)    The net proceeds received from these debt issuances were used to partially finance the cash consideration portion of the purchase price for Rockwell Collins and fees, expenses and other amounts related to the acquisition of Rockwell Collins.
(2)    The net proceeds from these debt issuances were used to fund the repayment of commercial paper and for other general corporate purposes.
(3)    The net proceeds received from these debt issuances were used for general corporate purposes.
    We made the following repayments of debt in 2019 and 2018:
(dollars in millions)
Repayment DateDescription of NotesAggregate Principal Balance
November 15, 2019
8.875% notes
$271 
November 13, 2019
EURIBOR plus 0.15% floating rate notes
€750 
November 1, 2019:
LIBOR plus 0.350% floating rate notes
$350 
1.500% notes
$650 
July 15, 2019:
1.950% notes(1)
$300 
5.250% notes(1)
$300 
December 14, 2018
Variable-rate term loan due 2020 (1 month LIBOR plus 1.25%)(1)
$482 
May 4, 2018
1.778% junior subordinated notes
$1,100 
February 22, 2018
EURIBOR plus 0.80% floating rate notes
€750 
February 1, 2018
6.80% notes
$99 
(1)    These notes and term loan were assumed in connection with the Rockwell Collins acquisition and subsequently repaid.
The percentage of total short-term borrowings and long-term debt at variable interest rates was 9% and 10% at December 31, 2019 and 2018, respectively. Interest rates on our commercial paper borrowings are considered variable due to their short-term duration and high-frequency of turnover.
The average maturity of our long-term debt at December 31, 2019 is approximately 10 years. The schedule of principal payments required on long-term debt for the next five years and thereafter is:
(dollars in millions)  
2020$3,258 
20214,091 
20223,904 
20233,490 
20242,592 
Thereafter23,939 
Total$41,274 
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    On September 27, 2019 we filed a universal shelf registration statement with the SEC for an indeterminate amount of debt and equity securities for future issuance, subject to our internal limitations on the amount of debt to be issued under the shelf registration statement.  
NOTE 11: ACCUMULATED OTHER COMPREHENSIVE INCOME
A summary of the changes in each component of Accumulated other comprehensive (loss) income, net of tax for the years ended December 31, 2019 and 2018 is provided below:
(dollars in millions)Foreign
Currency
Translation		Defined Benefit
Pension and
Postretirement
Plans		Unrealized Gains
(Losses) on
Available-for-
Sale Securities		Unrealized
Hedging
(Losses)
Gains		Accumulated
Other
Comprehensive
(Loss) Income
Balance at December 31, 2017$(2,950)$(4,652)$5 $72 $(7,525)
Other comprehensive income before reclassifications, net(486)(1,736)— (307)(2,529)
Amounts reclassified, pre-tax(2)344 — (16)326 
Tax (expense) benefit(4)326 — 78 400 
ASU 2016-01 adoption impact$— $— $(5)$— $(5)
Balance at December 31, 2018$(3,442)$(5,718)$— $(173)$(9,333)
Other comprehensive loss before reclassifications, net280 (584)— (33)(337)
Amounts reclassified, pre-tax2 170 — 51 223 
Tax (expense) benefit(43)97 — (11)43 
ASU 2018-02 adoption impact(8)(737)— — (745)
Balance at December 31, 2019$(3,211)$(6,772)$— $(166)$(10,149)
In February 2018, the FASB issued ASU 2018-02, Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income (Topic 220). The new standard allows companies to reclassify to retained earnings the stranded tax effects in Accumulated other comprehensive income (AOCI) from the TCJA. We elected to reclassify the income tax effects of TCJA from AOCI of $745 million to retained earnings, effective January 1, 2019.
In January 2016, the FASB issued ASU 2016-01, Financial Instruments - Overall: Recognition and Measurement of Financial Assets and Financial Liabilities. This ASU modifies how entities measure equity investments and present changes in the fair value of financial liabilities. Upon adoption, investments that do not result in consolidation and are not accounted for under the equity method generally must be carried at fair value, with changes in fair value recognized in net income. We had approximately $5 million of unrealized gains on these securities recorded in Accumulated other comprehensive loss in our Consolidated Balance Sheet as of December 31, 2017. We adopted this standard effective January 1, 2018, with these amounts recorded directly to retained earnings as of that date.
Amounts reclassified that relate to our defined benefit pension and postretirement plans include the amortization of prior service costs and actuarial net losses recognized during each period presented. These costs are recorded as components of net periodic pension cost for each period presented. Additionally, during 2019, we recorded a curtailment gain of $98 million in the Consolidated Statement of Operations which is included within amounts reclassified related to our defined pension and postretirement plans (see “Note 13: Employee Benefit Plans” for additional details).
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 Consolidated Balance Sheet, between liabilities and equity, at the greater of redemption value or initial carrying value.
NOTE 12: INCOME TAXES
Income Before Income Taxes. The sources of income from continuing operations before income taxes are:
(dollars in millions)201920182017
United States$1,594 $635 $607 
Foreign2,558 1,869 1,915 
$4,152 $2,504 $2,522 
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On December 22, 2017 Public Law 115-97 “An Act to Provide for Reconciliation Pursuant to Titles II and V of the Concurrent Resolution on the Budget for Fiscal Year 2018” was enacted. This law is commonly referred to as the Tax Cuts and Jobs Act of 2017 (TCJA).
Company no longer intends to reinvest certain undistributed earnings of its international subsidiaries that have been previously taxed in the U.S. As such, in 2018 it recorded the international taxes associated with the future remittance of these earnings. For the remainder of the Company’s undistributed international earnings, unless tax effective to repatriate, RTC will continue to permanently reinvest these earnings. As of December 31, 2019, such undistributed earnings were approximately $21 billion, excluding other comprehensive income amounts. It is not practicable to estimate the amount of tax that might be payable on the remaining amounts. Total undistributed earnings include discontinued operations.
Provision for Income Taxes. The income tax expense (benefit) for the years ended December 31, 2019, 2018 and 2017 consisted of the following components:
(dollars in millions)201920182017
Current:
United States:
Federal$(100)$(68)$709 
State(58)1 (42)
Foreign541 402 284 
383 335 951 
Future:
United States:
Federal121 45 (48)
State56 58 85 
Foreign(139)660 66 
 38 763 103 
Income tax expense$421 $1,098 $1,054 
Attributable to items credited (charged) to equity$40 $501 $(128)
Reconciliation of Effective Income Tax Rate. Differences between effective income tax rates and the statutory U.S. federal income tax rate are as follows:
201920182017
Statutory U.S. federal income tax rate21.0 %21.0 %35.0 %
Tax on international activities(3.1)%(5.1)%(15.3)%
Tax audit settlements(7.0)%— %(2.2)%
U.S. tax reform— %29.7 %27.4 %
Other(0.8)%(1.8)%(3.1)%
Effective income tax rate10.1 %43.8 %41.8 %
The 2019 effective tax rate includes $290 million of tax benefits associated with the conclusion of the audit by the Examination Division of the Internal Revenue Service for the RTC 2014, 2015 and 2016 tax years and the filing by a subsidiary of the Company to participate in an amnesty program offered by the Italian Tax Authority. Additionally, tax benefits included in 2019 are those associated with Foreign Derived Intangible Income (FDII) and U.S. Research & Development Credits, offset by a tax charge associated with Global Intangible Low-Taxed Income (GILTI).
The 2019 decrease in the cost of U.S. and foreign tax on international activities is primarily attributable to the full phase-in of the TCJA provisions on the Company’s international subsidiaries. In addition, the decrease in the rate benefit of both international and other activities is impacted by the increase in pre-tax income related to the Rockwell Collins business.
The 2018 effective tax rate reflects a net tax charge of $744 million for TCJA related adjustments. The amount is primarily associated with non-U.S. taxes that will become due when previously reinvested earnings of certain international subsidiaries are remitted. The 2018 and 2019 effective tax rate reconciliation reflects the corporate rate reduction enacted by the TCJA. The decrease in international activities is primarily related to higher international tax costs compared to the U.S. federal statutory rate. The decrease in other activities is primarily attributable to non-deductible expenses, including costs relating to the Rockwell Collins acquisition.
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The 2017 effective tax rate reflects a net tax charge of $690 million attributable to the passage of the TCJA. These 2017 provisional amounts, recorded as described in SAB 118, relate to U.S. income tax attributable to previously undistributed earnings of RTC’s international subsidiaries and equity investments, net of foreign tax credits, and the revaluation of U.S. deferred income taxes.
Deferred Tax Assets and Liabilities. Future income taxes represent the tax effects of transactions which are reported in different periods for tax and financial reporting purposes. These amounts consist of the tax effects of temporary differences between the tax and financial reporting balance sheets and tax carryforwards. Future income tax benefits and payables within the same tax paying component of a particular jurisdiction are offset for presentation in the Consolidated Balance Sheet.
The tax effects of temporary differences and tax carryforwards which gave rise to future income tax benefits and payables at December 31, 2019 and 2018 are as follows:
(dollars in millions)20192018
Future income tax benefits:
Insurance and employee benefits$1,205 $1,154 
Other asset basis differences829 1,013 
Other liability basis differences2,153 1,482 
Tax loss carryforwards622 583 
Tax credit carryforwards1,021 1,050 
Valuation allowances(616)(605)
$5,214 $4,677 
Future income taxes payable:
Intangible assets$4,293 $4,462 
Other asset basis differences 2,904 2,159 
Other items, net143 123 
$7,340 $6,744 
Valuation allowances have been established primarily for tax credit carryforwards, tax loss carryforwards, and certain foreign temporary differences to reduce the future income tax benefits to expected realizable amounts.
This table includes $442 million net deferred tax assets in 2019 and $393 million net deferred tax assets in 2018 related to discontinued operations.
Tax Credit and Loss Carryforwards. At December 31, 2019, tax credit carryforwards, principally state and foreign, and tax loss carryforwards, principally state and foreign, were as follows:
(dollars in millions)Tax Credit
Carryforwards		Tax Loss
Carryforwards
Expiration period:
2020-2024$59 $393 
2025-202927 179 
2030-2039336 394 
Indefinite599 2,218 
Total$1,021 $3,184 
Total tax credit and loss carryforwards include discontinued operations.
Unrecognized Tax Benefits. At December 31, 2019, we had gross tax-effected unrecognized tax benefits of $1,347 million, of which $1,338 million, if recognized, would impact the effective tax rate. A reconciliation of the beginning and ending amounts of unrecognized tax benefits and interest expense related to unrecognized tax benefits for the years ended December 31, 2019, 2018 and 2017 is as follows: 
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(dollars in millions)201920182017
Balance at January 1$1,619 $1,189 $1,086 
Additions for tax positions related to the current year131 192 192 
Additions for tax positions of prior years73 344 73 
Reductions for tax positions of prior years(101)(91)(91)
Settlements(375)(15)(71)
Balance at December 31$1,347 $1,619 $1,189 
Gross interest expense related to unrecognized tax benefits$57 $37 $34 
Total accrued interest balance at December 31$249 $255 $215 

The 2018 amounts above include amounts related to the acquisition of Rockwell Collins. Total unrecognized tax benefits include discontinued operations.
We conduct business globally and, as a result, RTC 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 2009.
During 2019, the Company recognized a net gain of approximately $307 million, including pre-tax interest of approximately $56 million as a result of the conclusion of the IRS audit of the Company’s 2014, 2015 and 2016 tax years as well as an amnesty filing in Italy made to resolve certain tax litigation. The Company also recognized a non-cash gain of approximately $40 million, primarily tax, as a result of the closure of an IRS audit of the 2014 tax year of a subsidiary acquired as part of RTC’s acquisition of Rockwell Collins. This gain was partially offset by the unfavorable pre-tax impact of a reversal of a related indemnity asset of approximately $23 million. Finally, the Company recognized net non-cash gains of approximately $18 million, including pre-tax interest of approximately $5 million, as a result of various federal, state and non-U.S. statute of limitations expirations and settlements with tax authorities.
During 2017, the Company recognized a noncash gain of approximately $64 million, including a pre-tax interest adjustment of $9 million, 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, including expiration of the U.S. federal income tax statute of limitations for RTC’s 2013 tax year.
The Examination Division of the Internal Revenue Service (IRS) is currently auditing Rockwell Collins fiscal tax years 2016 and 2017, prior to its acquisition by RTC, which will continue into 2020. Separately, the Examination Division of the IRS has notified the Company of its intention to commence an audit of RTC tax years 2017 and 2018 during the first half of 2020.
It is reasonably possible that a net reduction within the range of $50 million to $650 million of unrecognized tax benefits may occur over the next 12 months as a result of the separation of Carrier and Otis, additional worldwide uncertain tax positions, the revaluation of current uncertain tax positions arising from developments in examinations, in appeals, or in the courts, or the closure of tax statutes. Total unrecognized tax benefits include discontinued operations.
NOTE 13: EMPLOYEE BENEFIT PLANS
We sponsor numerous domestic and foreign employee benefit plans, which are discussed below.
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(s) as other compensation costs arising from services rendered by the pertinent employees during the period, with other cost components presented separately from the service cost component and outside of income from operations. This ASU also allows only the service cost component of net periodic pension benefit cost to be eligible for capitalization when applicable. This ASU was effective for years beginning after December 15, 2017. The Company adopted this standard on January 1, 2018 applying the presentation requirements retrospectively. We elected to apply the practical expedient, which allows us to reclassify amounts disclosed previously in the employee benefit plans note as the basis for applying retrospective presentation for comparative periods as it is impracticable to determine the disaggregation of the cost components for amounts capitalized and amortized in those periods. Provisions related to presentation of the service cost component eligibility for capitalization were applied prospectively.
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The effect of the retrospective presentation change related to the net periodic benefit cost of our defined benefit pension and postretirement plans on our Consolidated Statement of Operations was a $455 million decrease in operating profit and a $455 million increase in non-service pension (benefit), with zero impact on income from continuing operations and net income.
Employee Savings Plans. We sponsor various employee savings plans. Our contributions to employer sponsored defined contribution plans were $485 million, $332 million and $286 million for 2019, 2018 and 2017, respectively.
Our non-union domestic employee savings plan uses an Employee Stock Ownership Plan (ESOP) for employer matching contributions. External borrowings were used by the ESOP to fund a portion of its purchase of ESOP stock from us. The external borrowings have been extinguished and only re-amortized loans remain between RTC and the ESOP Trust. As ESOP debt service payments are made, common stock is released from an unreleased shares account. ESOP debt may be prepaid or re-amortized to either increase or decrease the number of shares released so that the value of released shares equals the value of plan benefit. We may also, at our option, contribute additional common stock or cash to the ESOP.
Shares of common stock are allocated to employees’ ESOP accounts at fair value on the date earned. Cash dividends on common stock held by the ESOP are used for debt service payments. Participants may choose to have their ESOP dividends reinvested or distributed in cash. Common stock allocated to ESOP participants is included in the average number of common shares outstanding for both basic and diluted earnings per share. At December 31, 2019, 23.4 million common shares had been allocated to employees, leaving 7.9 million unallocated common shares in the ESOP Trust, with an approximate fair value of $1.2 billion.
Pension Plans. We sponsor both funded and unfunded domestic and foreign defined benefit pension plans that cover a large number of our employees. Our largest plans are generally closed to new participants. Our plans use a December 31 measurement date consistent with our fiscal year.

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(dollars in millions)20192018
Change in Benefit Obligation:
Beginning balance$34,344 $33,283 
Service cost attributable to continuing operations261 265 
Service cost attributable to discontinued operations34 40 
Interest cost1,245 1,058 
Actuarial loss (gain)4,247 (1,938)
Total benefits paid(2,016)(1,783)
Net settlement, curtailment and special termination benefits(206)(14)
Plan amendments— 56 
Business combinations(6)3,694 
Other124 (317)
Ending balance$38,027 $34,344 
Change in Plan Assets:
Beginning balance$32,150 $32,205 
Actual return on plan assets5,873 (1,516)
Employer contributions137 156 
Benefits paid(2,016)(1,783)
Settlements(17)(16)
Business combinations(10)3,355 
Other108 (251)
Ending balance$36,225 $32,150 
Funded Status:
Fair value of plan assets$36,225 $32,150 
Benefit obligations(38,027)(34,344)
Funded status of plan$(1,802)$(2,194)
Amounts Recognized in the Consolidated Balance Sheet Consist of:
Noncurrent assets$19 $157 
Current liability(51)(56)
Noncurrent liability(1,770)(2,295)
Net amount recognized$(1,802)$(2,194)
Amounts Recognized in Accumulated Other Comprehensive Loss Consist of:
Net actuarial loss$8,160 $7,948 
Prior service cost 190 130 
Net actuarial loss and prior service cost related to discontinued operations763 667 
Net amount recognized$9,113 $8,745 
In September 2019, we amended our domestic pension plans to cease accrual of additional benefits for future service and compensation for non-union participants effective December 31, 2019. Beginning January 1, 2020, these participants will earn additional contributions under our domestic savings plan. We utilized the practical expedient and remeasured plan assets and pension benefit obligations for the affected pension plans as of the nearest month-end, August 31, 2019, resulting in a net actuarial loss of $425 million. This reflects a benefit obligation gain of $180 million resulting from the benefit plan change that was offset by remeasurement losses of $605 million. The remeasurement losses are driven by a reduction of 124 basis points in the projected benefit obligation (PBO) discount rate as of the remeasurement date compared to December 31, 2018, partially offset by actual asset returns of approximately 17% as of the remeasurement date.
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In September 2019, we recorded a curtailment gain of $98 million in the Consolidated Statement of Operations, due to the recognition of previously unrecognized prior service credits for the affected pension plans. Additionally, as a result of the remeasurement, pension income (excluding curtailment) decreased by approximately $39 million for the year ended December 31, 2019.
The amounts included in “Other” in the above table primarily reflect the impact of foreign exchange translation, primarily for plans in the U.K. and Canada.
As part of the Rockwell acquisition on November 26, 2018, we assumed approximately $3.7 billion of pension projected benefit obligations and $3.4 billion of plan assets.
Qualified domestic pension plan benefits comprise approximately 82% of the projected benefit obligation. Benefits for union employees are generally based on a stated amount for each year of service. For non-union employees, benefits for service up to December 31, 2014 are generally based on an employee’s years of service and compensation through December 31, 2014. Benefits for service after December 31, 2014 through December 31, 2019 are based on the existing cash balance formula that was adopted in 2003 for newly hired non-union employees and for other non-union employees who made a one-time voluntary election to have future benefit accruals determined under this formula. Certain foreign plans, which comprise approximately 17% of the projected benefit obligation, are considered defined benefit plans for accounting purposes. Nonqualified domestic pension plans provide supplementary retirement benefits to certain employees and are not a material component of the projected benefit obligation.
We made $25 million of cash contributions to our domestic defined benefit pension plans and made $30 million of cash contributions to our foreign defined benefit pension plans in 2019. In 2018, we made no cash contributions to our domestic defined benefit pension plans and made $79 million of cash contributions to our foreign defined benefit pension plans.
Information for pension plans with accumulated benefit obligations in excess of plan assets: 
(dollars in millions)20192018
Projected benefit obligation$37,941 $24,796 
Accumulated benefit obligation37,599 24,471 
Fair value of plan assets36,120 22,558 
Information for pension plans with projected benefit obligations in excess of plan assets: 
(dollars in millions)20192018
Projected benefit obligation$37,943 $27,225 
Accumulated benefit obligation37,600 26,752 
Fair value of plan assets36,122 24,873 
The accumulated benefit obligation for all defined benefit pension plans was $37.7 billion and $33.8 billion at December 31, 2019 and 2018, respectively.
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The components of the net periodic pension benefit are as follows: 
(dollars in millions)201920182017
Pension Benefits:
Service cost$261 $265 $268 
Interest cost1,245 1,058 1,043 
Expected return on plan assets(2,252)(2,061)(2,033)
Amortization of prior service cost (credit)16 (42)(37)
Recognized actuarial net loss245 373 550 
Net settlement, curtailment and special termination benefits (gain) loss(59)3 3 
Net periodic pension benefit - employer$(544)$(404)$(206)
Other changes in plan assets and benefit obligations recognized in other comprehensive loss in 2019 are as follows: 
(dollars in millions)Continuing OperationsDiscontinued OperationsTotal
Current year actuarial loss$434 $119 $553 
Amortization of actuarial loss(245)(20)(265)
Current year prior service cost— 6 6 
Amortization of prior service cost(16)(1)(17)
Net settlement and curtailment 62 (5)57 
Other36 (2)34 
Total recognized in other comprehensive loss$271 97 $368 
Net recognized in net periodic pension benefit and other comprehensive loss$(232)97 $(135)
The amount included in “Other” in the above table primarily reflects the impact of foreign exchange translation, primarily for plans in the U.K. and Canada.
The estimated amount that will be amortized from accumulated other comprehensive loss into net periodic pension (benefit) cost in 2020 is as follows:
(dollars in millions)  
Net actuarial loss$336 
Prior service cost49 
$385 
Major assumptions used in determining the benefit obligation and net cost for pension plans are presented in the following table as weighted-averages: 
Benefit ObligationNet Cost
  20192018201920182017
Discount rate
PBO3.1 %4.0 %4.0 %3.5 %3.9 %
Interest cost (1)
— — 3.7 %3.1 %3.3 %
Service cost (1)
— — 3.7 %3.4 %3.8 %
Salary scale4.3 %4.3 %4.3 %4.3 %4.3 %
Expected return on plan assets— — 6.8 %6.9 %7.4 %
(1)    The discount rates used to measure the service cost and interest cost applies to our significant plans. The PBO discount rate is used for the service cost and interest cost measurements for non-significant plans.
In determining the expected return on plan assets, we consider the relative weighting of plan assets, the historical performance of total plan assets and individual asset classes, and economic and other indicators of future performance. In addition, we may consult with and consider the opinions of financial and other professionals in developing appropriate capital market assumptions. Return projections are also validated using a simulation model that incorporates yield curves, credit spreads and risk premiums to project long-term prospective returns.
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The plans’ investment management objectives include providing the liquidity and asset levels needed to meet current and future benefit payments, while maintaining a prudent degree of portfolio diversification considering interest rate risk and market volatility. Globally, investment strategies target a mix of 45% to 50% of growth seeking assets and 50% to 55% of income generating and hedging assets using a wide set of diversified asset types, fund strategies and investment managers. The growth seeking allocation consists of global public equities in developed and emerging countries, private equity, real estate and multi-asset class strategies. Growth assets include an enhanced alpha strategy that invests in publicly traded equity and fixed income securities, derivatives and foreign currency. Investments in private equity are primarily via limited partnership interests in buy-out strategies with smaller allocations to distressed debt funds. The real estate strategy is principally concentrated in directly held U.S. core investments with some smaller investments in international, value-added and opportunistic strategies. Within the income generating assets, the fixed income portfolio consists of mainly government and broadly diversified high quality corporate bonds.
The plans have continued their pension risk management techniques designed to reduce their interest rate risk. Specifically, the plans have incorporated liability hedging programs that include the adoption of a risk reduction objective as part of the long-term investment strategy. Under this objective the interest rate hedge is intended to increase as funded status improves. The hedging programs incorporate a range of assets and investment tools, each with varying interest rate sensitivities. As result of the improved funded status of the plans due to favorable asset returns and funding of the plans, the interest rate hedge increased significantly during 2017. The investment portfolios are currently hedging approximately 65% to 70% of the interest rate sensitivity of the pension plan liabilities. 
As a result of the shift in the target asset mix to higher income generating and hedging assets and lower growth seeking assets, combined with reduced capital market assumptions for most asset classes, we will reduce the expected return on plan assets assumption for 2020 including the assumption of a 6.5% return on plan assets for our qualified domestic pension plans, down from 7.0% in 2019.
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The fair values of pension plan assets at December 31, 2019 and 2018 by asset category are as follows:
(dollars in millions)Quoted Prices in
Active Markets
For Identical Assets
(Level 1)		Significant
Observable 
Inputs
(Level 2)		Significant
Unobservable 
Inputs
(Level 3)		Not Subject to LevelingTotal
Asset Category:
Public Equities
Global Equities$3,588 $5 $— $— $3,593 
Global Equity Commingled Funds (1)
— 1,496 — — 1,496 
Enhanced Global Equities (2)
322 393 — — 715 
Global Equity Funds at net asset value (8)
— — — 5,332 5,332 
Private Equities (3),(8)
— — 202 1,230 1,432 
Fixed Income Securities
Governments969 116 — — 1,085 
Corporate Bonds1 13,059 5 — 13,065 
Structured Products
— 17 — — 17 
Fixed Income Securities (8)
— — — 4,755 4,755 
Real Estate (4),(8)
— 13 1,464 366 1,843 
Other (5),(8)
— 343 — 2,834 3,177 
Cash & Cash Equivalents (6),(8)
— 47 — 36 83 
Subtotal$4,880 $15,489 $1,671 $14,553 36,593 
Other Assets & Liabilities (7)
   (368)
Total at December 31, 2019$36,225 
Public Equities
Global Equities$2,917 $4 $— $— $2,921 
Global Equity Commingled Funds (1)
185 219 — — 404 
Enhanced Global Equities (2)
79 605 — — 684 
Global Equity Funds at net asset value (8)
— — — 6,539 6,539 
Private Equities (3),(8)
— — 133 1,194 1,327 
Fixed Income Securities
Governments1,789 162 — — 1,951 
Corporate Bonds— 11,526 18 29 11,573 
Fixed Income Securities (8)
— — — 2,225 2,225 
Real Estate (4),(8)
— 13 1,387 409 1,809 
Other (5),(8)
— 262 — 2,368 2,630 
Cash & Cash Equivalents (6),(8)
— 220 — 100 320 
Subtotal$4,970 $13,011 $1,538 $12,864 32,383 
Other Assets & Liabilities (7)
   (233)
Total at December 31, 2018$32,150 
(1)    Represents commingled funds that invest primarily in common stocks.
(2)    Represents enhanced equity separate account and commingled fund portfolios. A portion of the portfolio may include long-short market neutral and relative value strategies that invest in publicly traded, equity and fixed income securities, as well as derivatives of equity and fixed income securities and foreign currency.
(3)    Represents limited partner investments with general partners that primarily invest in debt and equity.
(4)    Represents investments in real estate including commingled funds and directly held properties.
(5)    Represents insurance contracts and global balanced risk commingled funds consisting mainly of equity, bonds and some commodities.
(6)    Represents short-term commercial paper, bonds and other cash or cash-like instruments.
(7)    Represents trust receivables and payables that are not leveled.
(8)    In accordance with ASU 2015-07, Fair Value Measurement (Topic 820), certain investments that are measured at fair value using the net asset value per share (or its equivalent) practical expedient have not been classified in the fair value hierarchy. The fair value amounts presented in this table are intended to permit reconciliation of the fair value hierarchy to the amounts presented for the total pension benefits plan assets.
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Derivatives in the plan are primarily used to manage risk and gain asset class exposure while still maintaining liquidity. Derivative instruments mainly consist of equity futures, interest rate futures, interest rate swaps and currency forward contracts.
Our common stock represents less than 1% of total plan assets at December 31, 2019 and 2018. We review our assets at least quarterly to ensure we are within the targeted asset allocation ranges and, if necessary, asset balances are adjusted back within target allocations. We employ a broadly diversified investment manager structure that includes diversification by active and passive management, style, capitalization, country, sector, industry and number of investment managers.
The fair value measurement of plan assets using significant unobservable inputs (Level 3) changed due to the following:
(dollars in millions)Private
Equities		Corporate
Bonds		Real
Estate		Total
Balance, December 31, 2017$46 $— $1,446 $1,492 
Plan assets acquired— 33 — 33 
Realized (losses) gains— (1)10 9 
Unrealized gains relating to instruments still held in the reporting period— 2 38 40 
Purchases, sales, and settlements, net87 (16)(107)(36)
Balance, December 31, 2018133 18 1,387 1,538 
Realized losses— — (2)(2)
Unrealized gains relating to instruments still held in the reporting period32 — 27 59 
Purchases, sales, and settlements, net37 (13)52 76 
Balance, December 31, 2019$202 $5 $1,464 $1,671 
Quoted market prices are used to value investments when available. Investments in securities traded on exchanges, including listed futures and options, are valued at the last reported sale prices on the last business day of the year or, if not available, the last reported bid prices. Fixed income securities are primarily measured using a market approach pricing methodology, where observable prices are obtained by market transactions involving identical or comparable securities of issuers with similar credit ratings. Mortgages have been valued on the basis of their future principal and interest payments discounted at prevailing interest rates for similar investments. Investment contracts are valued at fair value by discounting the related cash flows based on current yields of similar instruments with comparable durations. Real estate investments are valued on a quarterly basis using discounted cash flow models which consider long-term lease estimates, future rental receipts and estimated residual values. Valuation estimates are supplemented by third-party appraisals on an annual basis.
Private equity limited partnerships are valued quarterly using discounted cash flows, earnings multiples and market multiples. Valuation adjustments reflect changes in operating results, financial condition, or prospects of the applicable portfolio company. Over-the-counter securities and government obligations are valued at the bid prices or the average of the bid and ask prices on the last business day of the year from published sources or, if not available, from other sources considered reliable, generally broker quotes. Temporary cash investments are stated at cost, which approximates fair value.
As a result of the $1.9 billion contribution in 2017, we are not required to make additional contributions to our domestic defined benefit pension plans through the end of 2025. We expect to make total contributions of approximately $100 million to our global defined benefit pension plans in 2020. Contributions do not reflect benefits to be paid directly from corporate assets.
Benefit payments, including amounts to be paid from corporate assets, and reflecting expected future service, as appropriate, are expected to be paid as follows: $2,249 million in 2020, $2,059 million in 2021, $2,087 million in 2022, $2,107 million in 2023, $2,123 million in 2024, and $10,645 million from 2025 through 2029.
Postretirement Benefit Plans. We sponsor a number of postretirement benefit plans that provide health and life benefits to eligible retirees. Such benefits are provided primarily from domestic plans, which comprise approximately 84% of the benefit obligation. The postretirement plans are primarily unfunded. The assets we hold are invested in approximately 50% growth seeking assets and 50% income generating assets.
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(dollars in millions)20192018
Change in Benefit Obligation:
Beginning balance$810 $767 
Service cost2 2 
Interest cost31 26 
Actuarial gain(11)(52)
Total benefits paid(69)(70)
Business combinations— 186 
Plan amendments— (43)
Other2 (6)
Ending balance$765 $810 
Change in Plan Assets:
Beginning balance$20 $— 
Employer contributions69 69 
Benefits paid(69)(70)
Business combinations— 20 
Other— 1 
Ending balance$20 $20 
Funded Status:
Fair value of plan assets$20 $20 
Benefit obligations(765)(810)
Funded status of plan$(745)$(790)
Amounts Recognized in the Consolidated Balance Sheet Consist of:
Current liability$(47)$(61)
Noncurrent liability(698)(729)
Net amount recognized$(745)$(790)
Amounts Recognized in Accumulated Other Comprehensive Loss Consist of:
Net actuarial gain$(181)$(184)
Prior service credit(4)(47)
Net amount recognized$(185)$(231)
As part of our acquisition of Rockwell on November 26, 2018, we assumed approximately $186 million of postretirement benefit obligations and $20 million of plan assets.
We modified the postretirement medical benefits provided to legacy Rockwell salaried employees by eliminating any company subsidy from retirements that occur after December 31, 2019. This resulted in a $43 million reduction in the benefit obligation as of November 26, 2018.
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The components of net periodic benefit cost are as follows:
(dollars in millions)201920182017
Other Postretirement Benefits:
Service cost$2 $2 $2 
Interest cost31 26 29 
Expected return on plan assets(1)— — 
Amortization of prior service credit(42)(6)(1)
Recognized actuarial net gain(12)(10)(9)
Net periodic other postretirement (benefit) cost$(22)$12 $21 
Other changes in plan assets and benefit obligations recognized in other comprehensive loss in 2019 are as follows:
(dollars in millions)  
Current year actuarial gain$(10)
Amortization of prior service credit42 
Amortization of actuarial net gain12 
Other2 
Total recognized in other comprehensive loss$46 
Net recognized in net periodic other postretirement benefit cost and other comprehensive loss$24 
The estimated amounts that will be amortized from accumulated other comprehensive loss into net periodic benefit cost in 2020 include actuarial net gains of $13 million and prior service credits of $3 million.
Major assumptions used in determining the benefit obligation and net cost for postretirement plans are presented in the following table as weighted-averages: 
 Benefit ObligationNet Cost
  20192018201920182017
Discount rate3.0 %4.1 %4.0 %3.4 %3.8 %
Expected return on assets— — 7.0 %7.0 %N/A
Assumed health care cost trend rates are as follows: 
20192018
Health care cost trend rate assumed for next year6.5 %7.0 %
Rate that the cost trend rate gradually declines to5.0 %5.0 %
Year that the rate reaches the rate it is assumed to remain at20262026
Assumed health care cost trend rates have a significant effect on the amounts reported for the health care plans. A one-percentage-point change in assumed health care cost trend rates would have the following effects:
 2019 One-Percentage-Point
(dollars in millions)IncreaseDecrease
Effect on total service and interest cost$1 $(1)
Effect on postretirement benefit obligation25 (22)
Benefit payments, including net amounts to be paid from corporate assets and reflecting expected future service, as appropriate, are expected to be paid as follows: $67 million in 2020, $64 million in 2021, $60 million in 2022, $56 million in 2023, $53 million in 2024, and $210 million from 2025 through 2029.
Stock-based Compensation. RTC’s long-term incentive plans authorize various types of market and performance based incentive awards that may be granted to officers and employees. The RTC 2018 Long-Term Incentive Plan (2018 LTIP) was approved by shareholders on April 30, 2018 and its predecessor plan (the Legacy LTIP), was last amended on February 5, 2016. A total of 184 million shares have been authorized for issuance pursuant to awards under these Plans. There are 252,000 shares outstanding that were issued under the Rockwell Collins, Inc. 2015 Long-Term Incentive Plan. No new equity awards will be issued under that plan. As of December 31, 2019, approximately 42 million shares remain available for awards under the 2018 LTIP. No shares remain available for future awards under the Legacy LTIP. Neither plan contains an aggregate annual award
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limit, however, each Plan sets an annual award limit per participant. We expect that the shares awarded on an annual basis will range from 1.0% to 1.5% of shares outstanding. The 2018 LTIP will expire after all authorized shares have been awarded or April 30, 2028, whichever is sooner.
Under both Plans, the exercise price of awards is set on the grant date and may not be less than the fair market value per share on that date. Generally, stock appreciation rights and stock options have a term of ten years and a three-year vesting period, subject to limited exceptions. In the event of retirement, annual stock appreciation rights, stock options, and restricted stock units held for more than one year may become vested and exercisable, subject to certain terms and conditions. LTIP awards with performance-based vesting generally have a minimum three-year vesting period and vest based on actual performance against pre-established metrics. In the event of retirement, performance-based awards held for more than one year, remain eligible to vest based on actual performance relative to target metrics. We have historically repurchased shares of our common stock in an amount at least equal to the number of shares issued under our equity compensation arrangements and will continue to evaluate this policy in conjunction with our overall share repurchase program.
We measure the cost of all share-based payments, including stock options, at fair value on the grant date and recognize this cost in the Consolidated Statement of Operations, net of expected forfeitures, as follows:
(dollars in millions)201920182017
Total compensation cost recognized$268 $169 $129 
The associated future income tax benefit recognized was $47 million, $31 million and $28 million for the years ended December 31, 2019, 2018 and 2017, respectively. The amounts have been adjusted for the impact of the TCJA.
For the years ended December 31, 2019, 2018 and 2017, the amount of cash received from the exercise of stock options was $27 million, $36 million and $29 million, respectively, with an associated tax benefit realized of $75 million, $59 million and $100 million, respectively. In addition, for the years ended December 31, 2019, 2018 and 2017, the associated tax benefit realized from the vesting of performance share units and other restricted awards was $36 million, $13 million and $12 million, respectively.
At December 31, 2019, there was $291 million of total unrecognized compensation cost related to non-vested equity awards granted under long-term incentive plans. This cost is expected to be recognized ratably over a weighted-average period of 2.9 years.
A summary of the transactions under all long-term incentive plans for the year ended December 31, 2019 follows. The amounts in the tables and paragraphs below have not been recast for discontinued operations.
 Stock OptionsStock Appreciation RightsPerformance Share UnitsOther
Incentive
Shares/Units
(shares and units in thousands)Shares
Average
Price (1)
Shares
Average
Price (1)
Units
Average
Price (1)
Outstanding at:
December 31, 20181,603 $99.89 32,066 $99.95 1,806 $110.41 3,047 
Granted339 124.72 8,081 123.54 839 121.22 1,223 
Ancillary (2)
— — — — 101 95.28 — 
Exercised / earned(317)88.61 (6,843)84.44 (758)95.28 (816)
Cancelled(57)121.69 (591)122.76 (69)118.21 (135)
December 31, 20191,568 $106.75 32,713 $108.61 1,919 $120.04 3,319 
(1)    Weighted-average grant / exercise price.
(2)    Ancillary shares earned based on actual performance achieved on the 2016 award.
The weighted-average grant date fair value of stock options and stock appreciation rights granted during 2019, 2018 and 2017 was $20.81, $20.24 and $17.22, respectively. The weighted-average grant date fair value of performance share units, which vest upon achieving certain performance metrics, granted during 2019, 2018 and 2017 was $117.87, $131.55 and $111.00, respectively. The total fair value of awards vested during the years ended December 31, 2019, 2018 and 2017 was $211 million, $149 million and $138 million, respectively. The total intrinsic value (which is the amount by which the stock price exceeded the exercise price on the date of exercise) of stock options and stock appreciation rights exercised during the years ended December 31, 2019, 2018 and 2017 was $383 million, $283 million and $320 million, respectively. The total intrinsic value (which is the stock price at vesting) of performance share units and other restricted awards vested was $188 million, $74 million and $49 million during the years ended December 31, 2019, 2018 and 2017, respectively.
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The following table summarizes information about equity awards outstanding that are vested and expected to vest as well as equity awards outstanding that are exercisable at December 31, 2019:
 Equity Awards Vested and Expected to VestEquity Awards That Are Exercisable
(shares in thousands; aggregate intrinsic value in millions)Awards
Average
Price (1)
Aggregate
Intrinsic
Value
Remaining Term (2)
Awards
Average
Price (1)
Aggregate
Intrinsic
Value
Remaining Term (2)
Stock Options/Stock Appreciation Rights33,769 $107.58 $1,424 5.9 years19,285 $96.56 $1,026 4.0 years
Performance Share Units/Restricted Stock5,514 — 826 2.1 years
(1)    Weighted-average exercise price per share.
(2)    Weighted-average contractual remaining term in years.
The fair value of each option award is estimated on the date of grant using a binomial lattice model. The following table indicates the assumptions used in estimating fair value for the years ended December 31, 2019, 2018 and 2017. Lattice-based option models incorporate ranges of assumptions for inputs; those ranges are as follows:
201920182017
Expected volatility
18.8% - 19.7%
17.5% - 21.1%
19 %
Weighted-average volatility20 %18 %19 %
Expected term (in years)
6.5 - 6.6
6.5 - 6.6
6.5
Expected dividend yield2.4 %2.2 %2.4 %
Risk-free rate
2.3% - 2.7%
1.3% - 2.7%
0.5% - 2.5%
Expected volatilities are based on the returns of our stock, including implied volatilities from traded options on our stock for the binomial lattice model. We use historical data to estimate equity award exercise and employee termination behavior within the valuation model. The expected term represents an estimate of the period of time equity awards are expected to remain outstanding. The risk-free rate is based on the term structure of interest rates at the time of equity award grant.
NOTE 14: RESTRUCTURING COSTS
During 2019, we recorded net pre-tax restructuring costs totaling $245 million for new and ongoing restructuring actions. We recorded charges in the segments as follows:
(dollars in millions)  
Pratt & Whitney133 
Collins Aerospace Systems106 
Eliminations and other6 
Total$245 
Restructuring charges incurred in 2019 primarily relate to actions initiated during 2019 and 2018, and were recorded as follows:
(dollars in millions)  
Cost of sales$177 
Selling, general & administrative64 
Non-service pension (benefit)4 
Total$245 
2019 Actions. During 2019, we recorded net pre-tax restructuring costs totaling $162 million for restructuring actions initiated in 2019, consisting of $122 million in cost of sales and $40 million in selling, general and administrative expenses. The 2019 actions relate to ongoing cost reduction efforts, including workforce reductions and consolidation of field operations.
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We are targeting to complete in 2020 and 2021 the majority of the remaining workforce and all facility related cost reduction actions initiated in 2019. No specific plans for significant other actions have been finalized at this time. The following table summarizes the accrual balances and utilization by cost type for the 2019 restructuring actions:
(dollars in millions)SeveranceFacility Exit & Other CostsTotal
Net pre-tax restructuring costs$151 $11 $162 
Utilization, foreign exchange and other costs(104)— (104)
Balance at December 31, 2019$47 $11 $58 
The following table summarizes expected, incurred and remaining costs for the 2019 restructuring actions by segment:
(dollars in millions)Expected CostsCost Incurred During 2019Remaining Costs at December 31, 2019
Pratt & Whitney133 (133)— 
Collins Aerospace Systems120 (27)93 
Eliminations and other2 (2)— 
Total$255 $(162)$93 
2018 Actions. During 2019, we recorded net pre-tax restructuring costs totaling $23 million for restructuring actions initiated in 2018, consisting of $12 million in cost of sales and $11 million in selling, general and administrative expenses. The 2018 actions relate to ongoing cost reduction efforts, including workforce reductions and the consolidation of field operations. The following table summarizes the accrual balances and utilization by cost type for the 2018 restructuring actions:
(dollars in millions)SeveranceFacility Exit
& Other
Costs		Total
Restructuring accruals at January 1, 2019$60 $22 $82 
Net pre-tax restructuring costs22 1 23 
Utilization, foreign exchange and other costs(76)(22)(98)
Balance at December 31, 2019$6 $1 $7 
The following table summarizes expected, incurred and remaining costs for the 2018 programs by segment:
(dollars in millions)Expected
Costs		Costs
Incurred
During
2018		Costs
Incurred
During
2019		Remaining
Costs at
December 31,
2019
Pratt & Whitney3 (3)— — 
Collins Aerospace Systems111 (87)(23)1 
Eliminations and other7 (5)— 2 
Total$121 $(95)$(23)$3 
2017 and Prior Actions. During 2019, we recorded net pre-tax restructuring costs totaling $60 million for restructuring actions initiated in 2017 and prior. As of December 31, 2019, we have approximately $59 million of accrual balances remaining related to 2017 and prior actions.
NOTE 15: FINANCIAL INSTRUMENTS
We enter into derivative instruments primarily for risk management purposes, including derivatives designated as hedging instruments under the Derivatives and Hedging Topic of the FASB ASC and those utilized as economic hedges. We operate internationally and in the normal course of business, are exposed to fluctuations in interest rates, foreign exchange rates and commodity prices. These fluctuations can increase the costs of financing, investing and operating the business. We have used derivative instruments, including swaps, forward contracts and options to manage certain foreign currency, interest rate and commodity price exposures.
The four quarter rolling average of the notional amount of foreign exchange contracts hedging foreign currency transactions was $17.8 billion and $20.1 billion at December 31, 2019 and 2018, respectively. These amounts are inclusive of the notional amount of Otis and Carrier foreign exchange contracts. Additional information pertaining to foreign exchange and hedging activities is included in “Note 1: Summary of Accounting Principles.”
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The following table summarizes the fair value and presentation in the Consolidated Balance Sheets for derivative instruments as of December 31, 2019 and 2018:
(dollars in millions)Balance Sheet LocationDecember 31, 2019December 31, 2018
Derivatives designated as hedging instruments:
Foreign exchange contractsAsset Derivatives:
Other assets, current$23 $22 
Liability Derivatives:
Accrued liabilities166 194 
Derivatives not designated as hedging instruments:
Foreign exchange contractsAsset Derivatives:
Other assets, current23 27 
Liability Derivatives:
Accrued liabilities116 89 
The effect of cash flow hedging relationships on accumulated other comprehensive income for the years ended December 31, 2019 and 2018 are presented in the table below. The amounts of gain or (loss) are attributable to foreign exchange contract activity and are recorded as a component of Product sales when reclassified from accumulated other comprehensive income.
  Year Ended December 31,
(dollars in millions)20192018
Loss recorded in Accumulated other comprehensive loss$(33)$(307)
Loss (Gain) reclassified from Accumulated other comprehensive loss into Product sales$51 $(16)
The table above reflects the effect of cash flow hedging relationships on the Consolidated Statement of Operations for the years ended December 31, 2019 and 2018. The Company utilizes the critical terms match method in assessing derivatives for hedge effectiveness. Accordingly, the hedged items and derivatives designated as hedging instruments are highly effective.
We have approximately €4.2 billion of euro-denominated long-term debt, which qualifies as a net investment hedge against our investments in European businesses. As of December 31, 2019, the net investment hedge is deemed to be effective.
Assuming current market conditions continue, a $33 million pre-tax loss is expected to be reclassified from Accumulated other comprehensive loss into Product sales to reflect the fixed prices obtained from foreign exchange hedging within the next 12 months. At December 31, 2019, all derivative contracts accounted for as cash flow hedges will mature by January 2024.
The effect of derivatives not designated as hedging instruments within Other income, net, on the Consolidated Statement of Operations was as follows:
  Year Ended December 31,
(dollars in millions)20192018
Foreign exchange contracts$91 $127 

NOTE 16: 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 Consolidated Balance Sheet as of December 31, 2019 and 2018:
December 31, 2019
 (dollars in millions)
TotalLevel 1Level 2Level 3
Recurring fair value measurements:
Available-for-sale securities$53 $53 $— $— 
Derivative assets46 — 46 — 
Derivative liabilities(282)— (282)— 

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December 31, 2018
 (dollars in millions)
TotalLevel 1Level 2Level 3
Recurring fair value measurements:
Available-for-sale securities$48 $48 $— $— 
Derivative assets49 — 49 — 
Derivative liabilities(283)— (283)— 
Valuation Techniques. Our available-for-sale securities include equity investments that are traded in active markets, either domestically or internationally, and are measured at fair value using closing stock prices from active markets. Our derivative assets and liabilities include foreign exchange contracts that are measured at fair value using internal models based on observable market inputs such as forward rates, interest rates, our own credit risk and our counterparties’ credit risks. As of December 31, 2019, there were no significant transfers in or out of Level 1 or Level 2.
As of December 31, 2019, 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 Consolidated Balance Sheet at December 31, 2019 and 2018:
 December 31, 2019December 31, 2018
(dollars in millions)Carrying
Amount		Fair
Value		Carrying
Amount		Fair
Value
Customer financing notes receivable220 220 226 219 
Short-term borrowings(2,293)(2,293)(1,428)(1,428)
Long-term debt (excluding finance leases)(40,883)(45,887)(43,703)(43,710)
Long-term liabilities(334)(320)(505)(464)
The following table provides the valuation hierarchy classification of assets and liabilities that are not carried at fair value in our Consolidated Balance Sheet as of December 31, 2019 and 2018:
December 31, 2019
(dollars in millions)TotalLevel 1Level 2Level 3
Customer financing notes receivable220 — 220 — 
Short-term borrowings(2,293)— — (2,293)
Long-term debt (excluding finance leases)(45,887)— (45,802)(85)
Long-term liabilities(320)— (320)— 

December 31, 2018
(dollars in millions)TotalLevel 1Level 2Level 3
Customer financing notes receivable219 — 219 — 
Short-term borrowings(1,428)— (1,258)(170)
Long-term debt (excluding finance leases)(43,710)— (43,620)(90)
Long-term liabilities(464)— (464)— 

NOTE 17: VARIABLE INTEREST ENTITIES
Pratt & Whitney holds a 61% program share interest in the 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 engine 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% program share 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
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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 Consolidated Balance Sheet as of December 31, 2019 and 2018 are as follows:
(dollars in millions)20192018
Current assets$5,448 $5,622 
Noncurrent assets894 710 
Total assets$6,342 $6,332 
Current liabilities$6,971 $6,742 
Noncurrent liabilities94 102 
Total liabilities$7,065 $6,844 

NOTE 18: GUARANTEES
We extend a variety of financial, market value and product performance guarantees to third parties. As of December 31, 2019 and 2018, the following financial guarantees were outstanding:
  December 31, 2019December 31, 2018
(dollars in millions)Maximum
Potential
Payment		Carrying
Amount of
Liability		Maximum
Potential
Payment		Carrying
Amount of
Liability
Commercial aerospace financing arrangements (see Note 5)$333 $7 $348 $9 
Credit facilities and debt obligations— — 15 — 
Performance guarantees48 — 55 5 
We also have obligations arising from sales of certain businesses and assets, including those from representations and warranties and related indemnities for environmental, health and safety, tax and employment matters. The maximum potential payment related to these obligations is not a specified amount as a number of the obligations do not contain financial caps. The carrying amount of liabilities related to these obligations was $166 million and $175 million at December 31, 2019 and 2018, respectively. For additional information regarding the environmental indemnifications, see “Note 19: Contingent Liabilities.”
We accrue for costs associated with guarantees when it is probable that a liability has been incurred and the amount can be reasonably estimated. The most likely cost to be incurred is accrued based on an evaluation of currently available facts, and where no amount within a range of estimates is more likely, the minimum is accrued. In accordance with the Guarantees Topic of the FASB ASC, we record these liabilities at fair value.
We provide service and warranty policies on our products and extend performance and operating cost guarantees beyond our normal service and warranty policies on some of our products, particularly commercial aircraft engines. In addition, we incur discretionary costs to service our products in connection with specific product performance issues. Liabilities for performance and operating cost guarantees are based upon future product performance and durability, and are largely estimated based upon historical experience. Adjustments are made to accruals as claim data and historical experience warrant. The changes in the carrying amount of service and product warranties and product performance guarantees for the years ended December 31, 2019 and 2018 are as follows:
(dollars in millions)20192018
Balance as of January 1$929 $591 
Warranties and performance guarantees issued444 421 
Settlements made(330)(284)
Other (1)
(10)201 
Balance as of December 31$1,033 $929 
(1)    Other in 2018 is driven by the Rockwell Collins acquisition.
NOTE 19: CONTINGENT LIABILITIES
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.
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Environmental. Our operations are subject to environmental regulation by federal, state and local authorities in the United States and regulatory authorities with jurisdiction over our foreign operations. As described in Note 1 to the Consolidated Financial Statements, 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. As of December 31, 2019 and 2018, we had $725 million and $662 million, respectively, reserved for environmental remediation. Additional information pertaining to environmental matters is included in “Note 1: Summary of Accounting Principles.”
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 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 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 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 recommending the reduction of certain contract prices because, for example, cost or pricing data or cost accounting practices used to price and negotiate those contracts may not have conformed to government regulations. Some of these audit reports recommend that certain payments be repaid, delayed, or withheld, and may involve substantial amounts. We have made voluntary refunds in those cases we believe appropriate, have settled some allegations and, in some cases, continue to negotiate and/or litigate. The Company may be, and has been, required to make payments into escrow of disputed liabilities while the related litigation is pending. If the litigation is resolved in the Company’s favor, any such payments will be returned to the Company with interest. 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 accrue the minimum amount.
Legal Proceedings.
Cost Accounting Standards Claims
As previously disclosed, in April 2019, a Divisional Administrative Contracting Officer (DACO) of the United States Defense Contract Management Agency (DCMA) asserted a claim against Pratt & Whitney to recover overpayments of approximately $1.73 billion plus interest (approximately $563 million through December 31, 2019). The claim is based on Pratt & Whitney’s alleged noncompliance with cost accounting standards from January 1, 2007 to March 31, 2019, due to its method of allocating independent research and development costs to government contracts. Pratt & Whitney believes that the claim is without merit and filed an appeal to the Armed Services Board of Contract Appeals (ASBCA) on June 7, 2019.
As previously disclosed, in December 2013, a DCMA DACO asserted a claim against Pratt & Whitney to recover overpayments of approximately $177 million plus interest (approximately $98.4 million through December 31, 2019). 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. In 2014, Pratt & Whitney filed an appeal to the ASBCA. An evidentiary hearing was held and completed in June 2019. The parties are now engaged in post-hearing briefing, and a decision from the ASBCA will follow. We continue to believe that the claim is without merit. In December 2018, a DCMA DACO issued a second claim against Pratt & Whitney that similarly alleges that its method of determining the cost of collaborator parts does not comply with the cost accounting standards for calendar years 2013 through 2017. This second claim demands payment of $269 million plus interest (approximately $56.2 million through December 31, 2019), which we also believe is without merit and which Pratt & Whitney appealed to the ASBCA in January 2019.
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Other. As described in “Note 18: Guarantees,” 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. Of note, the design, development, production and support of new aerospace technologies is inherently complex and subject to risk. Since the PW1000G Geared TurboFan engine entered into service in 2016, technical issues have been identified and experienced with the engine, which is usual for new engines and new aerospace technologies. Pratt & Whitney has addressed these issues through various improvements and modifications. These issues have resulted in financial impacts, including increased warranty provisions, customer contract settlements, and reductions in contract performance estimates. Additional technical issues may also arise in the normal course, which may result in financial impacts that could be material to the Company’s financial position, results of operations and cash flows.
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 of these proceedings, 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.
NOTE 20: LEASES
ASU 2016-02, Leases (Topic 842) and its related amendments (collectively, the New Lease Accounting Standard) are effective for reporting periods beginning after December 15, 2018. We adopted the New Lease Accounting Standard effective January 1, 2019 and elected the modified retrospective approach in which results for periods before 2019 were not adjusted for the new standard and the cumulative effect of the change in accounting was recognized through retained earnings at the date of adoption.
We have elected certain of the practical expedients available under the New Lease Accounting Standard. We have applied the practical expedient which allows prospective transition to the New Lease Accounting Standard on January 1, 2019. Under the transition practical expedient, we did not reassess lease classification, embedded leases or initial direct costs. We have applied the practical expedient for short-term leases. We have lease agreements with lease and non-lease components. We have elected the practical expedients to combine these components for certain equipment leases. Additionally, for certain equipment leases, we apply a portfolio approach to effectively account for the operating lease right-of-use assets and liabilities. The adoption of the New Lease Accounting Standard did not have a material effect on our Consolidated Statement of Operations or Consolidated Statement of Cash Flows. Upon adoption, we recorded a $1.7 billion right-of-use asset and a $1.7 billion lease liability. The adoption of the New Lease Accounting Standard had an immaterial impact on retained earnings.
Operating lease expense for the year ended December 31, 2019 was approximately $323 million.
Supplemental cash flow information related to operating leases was as follows:
(dollars in millions)Year ended December 31, 2019
Operating cash flows used in the measurement of operating lease liabilities$411 
Operating lease right-of-use assets obtained in exchange for operating lease obligations123 
Operating lease right-of-use assets and liabilities are reflected on our Consolidated Balance Sheet as follows:
(dollars in millions, except lease term and discount rate)December 31, 2019
Operating lease right-of-use assets$1,252 
Accrued liabilities$(245)
Operating lease liabilities(1,093)
Total operating lease liabilities$(1,338)
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Supplemental balance sheet information related to operating leases was as follows:
December 31, 2019
Weighted Average Remaining Lease Term (in years)8.6
Weighted Average Discount Rate3.5 %
Undiscounted maturities of operating lease liabilities as of December 31, 2019 are as follows:
(dollars in millions)
2020$298 
2021265 
2022196 
2023147 
2024120 
Thereafter595 
Total undiscounted lease payments1,621 
Less imputed interest(283)
Total discounted lease payments$1,338 
Prior to the adoption of the New Lease Accounting Standard, rental commitments on an undiscounted basis were approximately $1.8 billion at December 31, 2018 under long-term non-cancelable operating leases and were payable as follows: $359 million in 2019, $297 million in 2020, $230 million in 2021, $178 million in 2022, $151 million in 2023 and $606 million thereafter.
NOTE 21: SEGMENT FINANCIAL DATA
Our operations for the periods presented herein are classified into two principal segments. The segments are generally determined 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.
Pratt & Whitney products include commercial, military, business jet and general aviation aircraft engines, parts and services sold to a diversified customer base, including international and domestic commercial airlines and aircraft leasing companies, aircraft manufacturers, and U.S. and foreign governments. Pratt & Whitney also provides product support and a full range of overhaul, repair and fleet management services.
Collins Aerospace Systems provides technologically advanced aerospace products and aftermarket service solutions for aircraft manufacturers, airlines, regional, business and general aviation markets, military and space operations. Products include electric power generation, power management and distribution systems, air data and aircraft sensing systems, engine control systems, intelligence, surveillance and reconnaissance systems, engine components, environmental control systems, fire and ice detection and protection systems, propeller systems, engine nacelle systems, including thrust reversers and mounting pylons, interior and exterior aircraft lighting, aircraft seating and cargo systems, actuation systems, landing systems, including landing gear, wheels and brakes, and space products and subsystems, integrated avionics systems, precision targeting, electronic warfare and range and training systems, flight controls, communications systems, navigation systems, oxygen systems, simulation and training systems, food and beverage preparation, storage and galley systems, lavatory and wastewater management systems. Aftermarket services include spare parts, overhaul and repair, engineering and technical support, training and fleet management solutions, and information management services.
We have reported our financial and operational results for the periods presented herein under the two principal segments noted above, consistent with how we have reviewed our business operations for decision-making purposes, resource allocation and performance assessment during 2019.
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Segment Information. Total sales by segment include intersegment sales, which are generally made at prices approximating those that the selling entity is able to obtain on external sales. Segment information for the years ended December 31 is as follows:
 Net SalesOperating Profits
(dollars in millions)201920182017201920182017
Pratt & Whitney20,892 19,397 16,160 1,668 1,269 1,300 
Collins Aerospace Systems26,028 16,634 14,691 4,100 2,303 2,191 
Total segment46,920 36,031 30,851 5,768 3,572 3,491 
Eliminations and other(1,571)(1,330)(1,138)(339)(220)(63)
General corporate expenses— — — (515)(475)(439)
Consolidated$45,349 $34,701 $29,713 $4,914 $2,877 $2,989 

 Total AssetsCapital ExpendituresDepreciation & Amortization
(dollars in millions)201920182017201920182017201920182017
Pratt & Whitney31,271 29,341 26,768 822 866 923 980 852 672 
Collins Aerospace Systems74,049 73,115 34,567 959 515 527 1,749 883 823 
Total segment105,320 102,456 61,335 1,781 1,381 1,450 2,729 1,735 1,495 
Eliminations and other2,472 1,015 4,659 87 86 106 (21)161 85 
Assets related to discontinued operations$31,823 $30,740 $30,926 
Consolidated$139,615 $134,211 $96,920 $1,868 $1,467 $1,556 $2,708 $1,896 $1,580 
Geographic External Sales and Operating Profit. Geographic external sales and operating profits are attributed to the geographic regions based on their location of origin. U.S. external sales include export sales to commercial customers outside the U.S. and sales to the U.S. Government, commercial and affiliated customers, which are known to be for resale to customers outside the U.S. Long-lived assets are net fixed assets attributed to the specific geographic regions. 
 External Net SalesOperating ProfitsLong-Lived Assets
(dollars in millions)201920182017201920182017201920182017
United States Operations$35,125 $26,646 $21,975 $3,287 $1,790 $1,603 $6,507 $6,165 $4,424 
International Operations
Europe4,419 3,092 2,747 1,480 1,027 826 1,268 1,272 1,147 
Asia Pacific1,989 1,645 1,779 444 365 351 917 905 685 
Other5,387 4,648 4,350 557 390 711 1,089 1,064 1,082 
Eliminations and other(1,571)(1,330)(1,138)(854)(695)(502)541 500 469 
Consolidated$45,349 $34,701 $29,713 $4,914 $2,877 $2,989 $10,322 $9,906 $7,807 
Sales from U.S. operations include export sales as follows: 
(dollars in millions)201920182017
Europe$7,078 $6,217 $5,197 
Asia Pacific6,411 5,355 3,526 
Other3,295 1,966 1,675 
Total$16,784 $13,538 $10,398 
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Sales by primary geographical market for the year ended December 31, 2019 is as follows:
(dollars in millions)Pratt & WhitneyCollins Aerospace SystemsTotal
Primary Geographical Markets
United States $16,148 $18,977 $35,125 
Europe498 3,921 4,419 
Asia Pacific1,164 825 1,989 
Other*3,082 2,305 5,387 
Total segment$20,892 $26,028 $46,920 
Eliminations and other(1,571)
Consolidated$45,349 
Sales by primary geographical market for the year ended December 31, 2018 is as follows:
(dollars in millions)Pratt & WhitneyCollins Aerospace SystemsTotal
Primary Geographical Markets
United States $14,852 $11,794 $26,646 
Europe594 2,498 3,092 
Asia Pacific1,277 368 1,645 
Other (1)
2,674 1,974 4,648 
Total segment$19,397 $16,634 $36,031 
Eliminations and other(1,330)
Consolidated$34,701 
(1)    Other includes sales to other regions as well as intersegment sales.
Segment sales disaggregated by product type and product versus service for the year ended December 31, 2019 are as follows:
(dollars in millions)Pratt & WhitneyCollins Aerospace SystemsTotal
Product Type
Commercial and industrial, non aerospace$102 $51 $153 
Commercial aerospace14,516 19,005 33,521 
Military aerospace6,274 6,972 13,246 
Total segment$20,892 $26,028 $46,920 
Eliminations and other(1,571)
Consolidated$45,349 
Sales Type
Product $12,977 $21,440 $34,417 
Service 7,915 4,588 12,503 
Total segment$20,892 $26,028 $46,920 
Eliminations and other(1,571)
Consolidated$45,349 
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Segment sales disaggregated by product type and product versus service for the year ended December 31, 2018 are as follows:
(dollars in millions)Pratt & WhitneyCollins Aerospace SystemsTotal
Product Type
Commercial and industrial, non aerospace$55 $60 $115 
Commercial aerospace14,027 12,564 26,591 
Military aerospace5,315 4,010 9,325 
Total segment$19,397 $16,634 $36,031 
Eliminations and other(1,330)
Consolidated$34,701 
Sales Type
Product $11,410 $13,915 $25,325 
Service 7,987 2,719 10,706 
Total segment$19,397 $16,634 $36,031 
Eliminations and other(1,330)
Consolidated$34,701 
Major Customers. Net Sales include sales under prime contracts and subcontracts to the U.S. Government as follows:
(dollars in millions)201920182017
Pratt & Whitney$5,614 $4,489 $3,347 
Collins Aerospace Systems4,802 2,779 2,299 
Other12 10 12 
Total$10,428 $7,278 $5,658 
Sales to Airbus prior to discounts and incentives were approximately $9,879 million, $10,025 million and $8,908 million for the years ended December 31, 2019, 2018 and 2017, respectively.
NOTE 22: SUBSEQUENT EVENTS (UNAUDITED)
Separation Transactions and Distributions.
As previously described in “Note 1: Summary of Accounting Principles,” on April 3, 2020, the Company completed the previously announced separation of its business into three independent, publicly traded companies – UTC, Carrier and Otis (such separations, the Separation Transactions). UTC distributed all of the outstanding shares of Carrier common stock and all of the outstanding shares of Otis common stock to UTC shareowners who held shares of UTC common stock as of the close of business on March 19, 2020, the record date for the Distributions. UTC distributed 866,158,910 and 433,079,455 shares of common stock of Carrier and Otis, respectively in the Distributions, each of which was effective at 12:01 a.m., Eastern Time, on April 3, 2020. The historical results of Otis and Carrier are presented as discontinued operations and, as such, have been excluded from both continuing operations and segment results for all periods presented. Unless otherwise indicated, amounts and activity throughout this Form 8-K are presented on a continuing operations basis.
Raytheon Merger.
On April 3, 2020, following the completion of the Separation Transactions and Distributions, pursuant to an Agreement and Plan of Merger dated June 9, 2019, as amended UTC and Raytheon completed their previously announced all-stock merger of equals. Raytheon (previously NYSE: RTN) shares ceased trading prior to the market open on April 3, 2020, and each share of Raytheon common stock was converted in the merger into the right to receive 2.3348 shares of UTC common stock previously traded on the NYSE under the ticker symbol “UTX.” Upon closing of the Raytheon Merger, Raytheon Company became a wholly-owned subsidiary of UTC, which changed its name to “Raytheon Technologies Corporation,” (Raytheon Technologies), and its shares of common stock began trading as of April 3, 2020 on the NYSE under the ticker symbol “RTX.”
In the third quarter of 2020, in accordance with conditions imposed for regulatory approval of the Raytheon Merger, we completed the sale of our Collins Aerospace military Global Positioning System (GPS) and space-based precision optics
81


businesses for $2.3 billion in cash, resulting in an aggregate pre-tax gain, net of transaction costs, of $580 million ($253 million after tax).
COVID-19 Pandemic and related impacts.
In March 2020, the coronavirus disease 2019 (COVID-19) was declared a pandemic by the World Health Organization and a national emergency by the U.S. government. The pandemic has negatively affected the U.S. and global economy, disrupted global supply chains and financial markets, and resulted in significant travel restrictions, mandated facility closures and shelter-in-place and social distancing orders in numerous jurisdictions around the world. Raytheon Technologies is taking all prudent measures to protect the health and safety of our employees, such as practicing social distancing, performing deep cleaning in all of our facilities, and enabling our employees to work from home where possible. We have also taken appropriate actions to help support our communities in addressing the challenges posed by the pandemic, including the production and donation of personal protective equipment.
Our business and operations and the industries in which we operate have been significantly impacted by public and private sector policies and initiatives in the U.S. and worldwide to address the transmission of COVID-19, such as the imposition of travel restrictions and the adoption of remote working. Additionally, public sentiments regarding air travel have also had a significant impact. We began to experience issues related to COVID-19 in the first quarter of 2020, primarily related to a limited number of facility closures, less than full staffing, and disruptions in supplier deliveries, most significantly in our Collins Aerospace and Pratt & Whitney businesses. However, our customers continued to receive our products and services during the first quarter and the outbreak did not have a significant impact on our operating results for the quarter ended March 31, 2020.
The continued disruption to air travel and commercial activities and the significant restrictions and limitations on businesses, particularly within the aerospace and commercial airline industries, have negatively impacted global supply, demand and distribution capabilities. These conditions, which began in the second quarter of 2020, have continued in the third quarter of 2020. In particular, the unprecedented decrease in air travel resulting from the COVID-19 pandemic is adversely affecting our airline and airframer customers, and their demand for the products and services of our Collins Aerospace and Pratt & Whitney businesses. Based on recent public data and estimates, revenue passenger miles (RPMs) for the year ending December 31, 2020 could decline by more than 60% in comparison to the prior year due to the pandemic. As a result, our airline customers have reported significant reductions in fleet utilization, aircraft grounding and unplanned retirements, and have deferred and, in some cases, cancelled new aircraft deliveries. Airlines have shifted to cash conservation behaviors such as deferring engine maintenance due to lower flight hours and aircraft utilization, requesting extended payment terms, deferring delivery of new aircraft and spare engines and requesting discounts on engine maintenance. Some airline customers have filed for bankruptcy due to their inability to meet their financial obligations. Additionally, we are seeing purchase order declines in line with publicly communicated aircraft production volumes as original equipment manufacturer (OEM) customers delay and cancel orders. We continue to monitor these trends and are working closely with our customers. We are actively mitigating costs and adjusting production schedules to accommodate these declines in demand. We have also been taking actions to preserve capital and protect the long-term needs of our businesses, including cutting discretionary spending, significantly reducing capital expenditures and research and development spend, suspending our share buybacks, deferring merit increases and implementing temporary pay reductions, freezing non-essential hiring, repositioning employees to defense work, furloughing employees when needed, and personnel reductions. In the nine months ended September 30, 2020, we recorded total restructuring charges of $685 million primarily related to personnel reductions at our Collins Aerospace and Pratt & Whitney businesses to preserve capital and at our Corporate Headquarters due to consolidation from the Raytheon Merger. The former Raytheon Company businesses have not experienced significant facility closures or other significant business disruptions as a result of the COVID-19 pandemic.
Given the significant reduction in business and leisure passenger air travel, the number of planes temporarily grounded, and continued travel restrictions that have resulted from the pandemic, we expect our future operating results, particularly those of our Collins Aerospace and Pratt & Whitney businesses to continue to be significantly negatively impacted. Our expectations regarding the COVID-19 pandemic and its potential financial impact are based on available information and assumptions that we believe are reasonable at this time; however, the actual financial impact is highly uncertain and subject to a wide range of factors and future developments. While we believe that the long-term outlook for the aerospace industry remains positive due to the fundamental drivers of air travel demand, there is significant uncertainty with respect to when and if commercial air traffic levels will begin to recover, and whether and at what point capacity will return to and/or exceed pre-COVID-19 levels. Our latest estimates are that this recovery may occur in 2023 or 2024. New information may emerge concerning the scope, severity and duration of the COVID-19 pandemic, as well as any worsening of the pandemic and whether there will be additional outbreaks of the pandemic, actions to contain its spread or treat its impact, and governmental, business and individuals’ actions taken in response to the pandemic (including restrictions and limitations on travel and transportation) among others.
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We considered the deterioration in general economic and market conditions primarily due to the COVID-19 pandemic to be a triggering event in the first and second quarters of 2020 requiring us to reassess our commercial aerospace business goodwill and intangibles valuations, as well as our significant assumptions of future cash flows from our underlying assets and potential changes in our liabilities. Beginning in the second quarter of 2020, our revenue at Collins Aerospace and Pratt & Whitney has been significantly negatively impacted by the decline in flight hours, aircraft fleet utilization, shop visits and commercial OEM deliveries. In order to evaluate the ongoing impact, in the second quarter of 2020, we updated our forecast assumptions of future business activity which are subject to a wide range of uncertainties, including those noted above. Based upon our analysis, we concluded that the carrying value of two of our Collins Aerospace reporting units was greater than its respective fair value, and accordingly, recorded a goodwill impairment charge of $3.2 billion.
As described further in “Note 5: Commercial Aerospace Industry Assets and Commitments,” we have significant exposure related to our airline and airframer customers, including significant accounts receivable and contract assets balances. Given the uncertainty related to the severity and length of the pandemic, as well as any worsening of the pandemic and whether there will be additional outbreaks of the pandemic and its impact across the aerospace industry, we may be required to record additional charges or impairments in future periods.
Borrowings and lines of credit:
Although the impact of COVID-19 on our commercial markets is significant, we currently believe we have sufficient liquidity to withstand the potential impacts of COVID-19. With the completion of the Separation Transactions, the Distributions and the Raytheon Merger, we have a balanced and diversified portfolio of both aerospace and defense businesses which we believe will help mitigate the impacts of the COVID-19 pandemic and future business cycles.
In preparation for and in anticipation of the Separation Transactions, the Distributions and the Raytheon Merger, the Company entered into and terminated a number of credit agreements.
On February 11, 2020 and March 3, 2020, we terminated a $2.0 billion revolving credit agreement and a $4.0 billion term loan credit agreement, respectively. Upon termination, we repaid the $2.1 billion of borrowings outstanding on the $4.0 billion term loan credit agreement. On April 3, 2020, upon the completion of the Raytheon Merger, we terminated a $2.20 billion revolving credit agreement and a $2.15 billion multicurrency revolving credit agreement.
On March 20, 2020 and March 23, 2020, we entered into two $500 million term loan credit agreements and borrowed $1.0 billion under these agreements in the first quarter of 2020. We terminated these agreements on May 5, 2020 and April 28, 2020, respectively, upon repayment.
On March 16, 2020, we entered into a revolving credit agreement with various banks permitting aggregate borrowings of up to $5.0 billion which became available upon completion of the Raytheon Merger on April 3, 2020. This credit agreement matures on April 3, 2025. On May 6, 2020, we entered into a revolving credit agreement with various banks permitting aggregate borrowings of up to $2.0 billion. This credit agreement matures on May 5, 2021. As of September 30, 2020 we had revolving credit agreements with various banks permitting aggregate borrowings of up to $7.0 billion.
In preparation for and in anticipation of the Separation Transactions and Distributions, the Company, Otis and Carrier issued and the Company repaid long-term debt in the nine months ended September 30, 2020, which are included in the tables below. On February 10, 2020, Otis entered into a term loan credit agreement providing for a $1.0 billion unsecured, unsubordinated 3-year term loan credit facility which matures on February 10, 2023. Also on February 10, 2020, Carrier entered into a term loan credit agreement providing for a $1.75 billion unsecured, unsubordinated 3-year term loan credit facility. On March 27, 2020, Otis and Carrier drew on the full amounts of the term loans and distributed the full proceeds to Raytheon Technologies in connection with the Separation Transactions. UTC utilized those amounts to extinguish Raytheon Technologies’ short-term and long-term debt in order to not exceed the maximum applicable net indebtedness required by the Raytheon Merger Agreement.
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We had the following issuances of long-term debt during the nine months ended September 30, 2020, which is inclusive of issuances made by Otis and Carrier which were primarily used by the Company to extinguish Raytheon Technologies short-term and long-term debt.
(dollars in millions)


Issuance DateDescription of NotesAggregate Principal Balance
May 18, 2020
2.250% notes due 2030
$1,000 
3.125% notes due 2050
1,000 
March 27, 2020
Term Loan due 2023 (Otis) (1)
1,000 
Term Loan due 2023 (Carrier) (1)
1,750 
February 27, 2020
1.923% notes due 2023 (1)
500 
LIBOR plus 0.450% floating rate notes due 2023 (1)
500 
2.056% notes due 2025 (1)
1,300 
2.242% notes due 2025 (1)
2,000 
2.293% notes due 2027 (1)
500 
2.493% notes due 2027 (1)
1,250 
2.565% notes due 2030 (1)
1,500 
2.722% notes due 2030 (1)
2,000 
3.112% notes due 2040 (1)
750 
3.377% notes due 2040 (1)
1,500 
3.362% notes due 2050 (1)
750 
3.577% notes due 2050 (1)
2,000 
$19,300 
(1)    The debt issuances and term loan draws reflect debt incurred by Otis and Carrier. The net proceeds of these issuances were primarily utilized to extinguish Raytheon Technologies short-term and long-term debt in order to not exceed the maximum applicable net indebtedness required by the Raytheon Merger Agreement.
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We had the following repayments of long-term debt during the nine months ended September 30, 2020:
(dollars in millions)
Repayment DateDescription of NotesAggregate Principal Balance
May 19, 2020
3.650% notes due 2023 (1)(2)
$410 
May 15, 2020
EURIBOR plus 0.20% floating rate notes due 2020 (€750 million principal value)(2)
817 
March 29, 2020
4.500% notes due 2020 (1)(2)
1,250 
1.125% notes due 2021 (€950 million principal value) (1)(2)
1,082 
1.250% notes due 2023 (€750 million principal value) (1)(2)
836 
1.150% notes due 2024 (€750 million principal value) (1)(2)
841 
1.875% notes due 2026 (€500 million principal value) (1)(2)
567 
March 3, 2020
1.900% notes due 2020 (1)(2)
1,000 
3.350% notes due 2021 (1)(2)
1,000 
LIBOR plus 0.650% floating rate notes due 2021 (1)(2)
750 
1.950% notes due 2021 (1)(2)
750 
2.300% notes due 2022 (1)(2)
500 
3.100% notes due 2022 (1)(2)
2,300 
2.800% notes due 2024 (1)(2)
800 
March 2, 2020
4.875% notes due 2020 (1)(2)
171 
February 28, 2020
3.650% notes due 2023 (1)(2)
1,669 
2.650% notes due 2026 (1)(2)
431 
$15,174 
(1)    In connection with the early repayment of outstanding principal, Raytheon Technologies recorded debt extinguishment costs of $703 million for the nine months ended September 30, 2020. No proceeds of the notes issued May 18, 2020 were used to fund the May 19, 2020 redemption.
(2)    Extinguishment of Raytheon Technologies short-term and long-term debt in order to not exceed the maximum net indebtedness required by the Raytheon Merger Agreement.
On June 10, 2020, we completed an exchange offer with eligible holders of the outstanding notes of Goodrich Corporation maturing through 2046, Raytheon Company maturing through 2044 and Rockwell Collins Inc. maturing through 2047 (collectively, the “Subsidiary Notes”). An aggregate principal amount of approximately $8.2 billion of the Subsidiary Notes was exchanged for approximately $8.2 billion of Raytheon Technologies notes with identical interest rates, maturity dates, and redemption provisions, if any, as the Subsidiary Notes exchanged. Because the exchange was for substantially identical notes, the change was treated as a debt modification for accounting purposes with no gain or loss recognized.
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SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)
2019 Quarters2018 Quarters
(dollars in millions,
except per share amounts)		FirstSecondThirdFourthFirstSecondThirdFourth
Net Sales$10,953 $11,329 $11,373 $11,694 $7,836 $8,333 $8,412 $10,121 
Gross margin2,534 2,775 2,864 2,578 1,791 1,819 1,586 2,041 
Income (loss) from continuing operations7121,183958657598 541 318 (240)
Income from discontinued operations634717190486699 1,507 920 926 
Net income attributable to common shareowners1,346 1,900 1,148 1,143 1,297 2,048 1,238 686 
Earnings per share of Common Stock - Basic:
Income (loss) from continuing operations0.841.381.12$0.77 $0.76 $0.68 $0.40 $(0.29)
Income from discontinued operations0.740.840.22$0.56 $0.88 $1.91 $1.16 $1.12 
Net income attributable to common shareholders$1.58 $2.22 $1.34 $1.33 $1.64 $2.59 $1.56 $0.83 
Earnings per share of Common Stock - Diluted:
Income (loss) from continuing operations$0.83 $1.37 $1.11 $0.76 $0.75 $0.68 $0.39 $(0.29)
Income from discontinued operations$0.73 $0.83 $0.22 $0.56 $0.87 $1.88 $1.15 $1.12 
Net income attributable to common shareholders$1.56 $2.20 $1.33 $1.32 $1.62 $2.56 $1.54 $0.83 
86



PERFORMANCE GRAPH (UNAUDITED)
The following graph presents the cumulative total shareholder return for the five years ending December 31, 2019 for our common stock, as compared to the Standard & Poor’s 500 Stock Index and to the Dow Jones 30 Industrial Average. Our common stock price is a component of both indices. These figures assume that all dividends paid over the five-year period were reinvested, and that the starting value of each index and the investment in common stock was $100.00 on December 31, 2014.
COMPARISON OF CUMULATIVE FIVE YEAR TOTAL RETURN 
utx-20201027_g1.jpg
87

 v3.20.2
Cover
Oct. 27, 2020
Document Information [Line Items]  
Amendment Flag false
Entity Central Index Key 0000101829
Document Type 8-K
Document Period End Date Oct. 27, 2020
Entity Registrant Name RAYTHEON TECHNOLOGIES CORPORATION
Entity Incorporation, State or Country Code DE
Entity File Number 001-00812
Entity Tax Identification Number 06-0570975
Entity Address, Address Line One 870 Winter Street,
Entity Address, City or Town Waltham,
Entity Address, State or Province MA
Entity Address, Postal Zip Code 02451
City Area Code (781)
Local Phone Number 522-3000
Written Communications false
Soliciting Material false
Pre-commencement Tender Offer false
Pre-commencement Issuer Tender Offer false
Entity Emerging Growth Company false
Common Stock [Member]  
Document Information [Line Items]  
Title of 12(b) Security Common Stock ($1 par value)
Trading Symbol RTX
Security Exchange Name NYSE
Notes 2.150% Due 2030 [Member]  
Document Information [Line Items]  
Title of 12(b) Security 2.150% Notes due 2030
Trading Symbol RTX 30
Security Exchange Name NYSE
v3.20.2
Consolidated Statement of Operations - USD ($)
$ in Millions
 12 Months Ended
Dec. 31, 2019
Dec. 31, 2018
Dec. 31, 2017
Revenues $ 45,349 $ 34,701 $ 29,713
Income (Loss) from Continuing Operations, Net of Tax, Attributable to Parent 3,510 1,216 1,313
Income from discontinued operations, before income taxes 4,091 5,776 5,241
Income tax expense 1,874 1,528 1,789
Income from discontinued operations 2,217 4,248 3,452
Less: Noncontrolling interest in subsidiaries earnings from discontinued operations 190 195 213
Net (loss) income from discontinued operations $ 2,027 $ 4,053 $ 3,239
Net income from continuing operations attributable to common shareowners $ 4.11 $ 1.52 $ 1.66
Net (loss) income from discontinued operations 2.37 5.06 4.10
Net income from continuing operations attributable to common shareowners 4.06 1.50 1.64
Net (loss) income from discontinued operations $ 2.35 $ 5.00 $ 4.06
Costs and Expenses:      
Research and development $ 2,452 $ 1,878 $ 1,876
Selling, general and administrative 3,711 2,864 2,387
Total costs and expenses 40,761 32,207 27,251
Other Income 326 383 527
Operating profit 4,914 2,877 2,989
Non-service pension cost (benefit) (829) (659) (455)
Interest Expense, net 1,591 1,032 922
Income from continuing operations before income taxes 4,152 2,504 2,522
Income tax expense 421 1,098 1,054
Net income from continuing operations 3,731 1,406 1,468
Less: Noncontrolling interest in subsidiaries' earnings from continuing operations 221 190 155
Income from continuing operations attributable to common shareowners 3,510 1,216 1,313
Net Income - Retained Earnings $ 5,537 $ 5,269 $ 4,552
Earnings Per Share of Common Stock - Basic:      
Net income from continuing operations attributable to common shareowners $ 4.11 $ 1.52 $ 1.66
Net income attributable to common shareowners 6.48 6.58 5.76
Earnings Per Share of Common Stock - Diluted:      
Net income from continuing operations attributable to common shareowners 4.06 1.50 1.64
Net income attributable to common shareowners $ 6.41 $ 6.50 $ 5.70
Weighted average number of shares outstanding:      
Basic shares 854,800,000 800,400,000 790,000,000.0
Diluted shares 863,900,000 810,100,000 799,100,000
Product [Member]      
Revenues $ 32,998 $ 24,141 $ 21,119
Cost of Goods and Services Sold 26,910 21,083 16,385
Costs and Expenses:      
Cost of Goods and Services Sold 26,910 21,083 16,385
Service [Member]      
Revenues 12,351 10,560 8,594
Cost of Goods and Services Sold 7,688 6,382 6,603
Costs and Expenses:      
Cost of Goods and Services Sold $ 7,688 $ 6,382 $ 6,603
v3.20.2
Consolidated Statement of Comprehensive Income - USD ($)
$ in Millions
 12 Months Ended
Dec. 31, 2019
Dec. 31, 2018
Dec. 31, 2017
Statement of Comprehensive Income [Abstract]      
Net income $ 5,948 $ 5,654 $ 4,920
Foreign currency translation adjustments      
Foreign currency translation adjustments arising during period 266 (516) 620
Reclassification adjustments for from sale of an investment in a foreign entity recognized in net income (2) 2 10
Other Comprehensive Income (Loss), Foreign Currency Transaction and Translation Adjustment, before Tax 268 (518) 610
Tax expense (benefit) 43 4 0
Other Comprehensive Income (Loss), Foreign Currency Transaction and Translation Adjustment, Net of Tax 225 (522) 610
Change in pension and post-retirement benefit plans      
Net actuarial (loss) gain arising during period (543) (1,819) 241
Prior service cost (credit) arising during period 6 22 (2)
Amortization of prior service credit 228 344 529
Other (93) 105 (116)
Other Comprehensive Income (Loss), Pension and Other Postretirement Benefit Plans, Adjustment, before Tax, Portion Attributable to Parent (414) (1,392) 656
Tax expense (benefit) 97 326 (263)
Other Comprehensive Income (Loss), Defined Benefit Plan, after Reclassification Adjustment, after Tax (317) (1,066) 393
Unrealized gain (loss) on available-for-sale securities      
Unrealized holding gain arising during period 0 0 5
Reclassification adjustments for gain included in Other income, net 0 0 566
Other Comprehensive Income (Loss), ASU 2016-01 adoption impact on Securities Arising During Period 0 (5) 0
Other Comprehensive Income (Loss), Available-for-sale Securities Adjustment, before Tax, Portion Attributable to Parent 0 (5) (561)
Tax expense (benefit) 0 0 (213)
Other Comprehensive Income (Loss), Available-for-sale Securities Adjustment, Net of Tax, Portion Attributable to Parent 0 (5) (348)
Change in unrealized cash flow hedging      
Unrealized cash flow hedging gain (loss) arising during period (33) (307) 347
Gain (Loss) reclassified into Product sales (51) 16 39
Other Comprehensive Income (Loss), Derivatives Qualifying as Hedges, before Tax, Portion Attributable to Parent 18 (323) 308
Tax expense (benefit) 11 (78) 74
Other Comprehensive Income (Loss), Derivatives Qualifying as Hedges, Net of Tax, Portion Attributable to Parent 7 (245) 234
Other comprehensive (loss) income, net of tax (85) (1,838) 889
Comprehensive income 5,863 3,816 5,809
Less: Comprehensive income attributable to noncontrolling interest 399 355 448
Comprehensive income atrributable to common shareowners $ 5,464 $ 3,461 $ 5,361
v3.20.2
Consolidated Balance Sheet - USD ($)
$ in Millions
Dec. 31, 2019
Dec. 31, 2018
Assets    
Cash and cash equivalents $ 4,937 $ 3,693
Accounts receivable (net of allowance for doubtful accounts of $254 and $251) 8,743 9,602
Allowance for doubtful accounts 254 251
Contract with Customer, Asset, Net, Current 4,462 3,666
Inventory, net 9,047 8,081
Total assets related to discontinued operations 31,823 30,740
Other assets, current 2,565 1,896
Total Current Assets 61,577 57,678
Customer financing assets 3,463 3,010
Future income tax benefits 884 999
Fixed assets, net 10,322 9,906
Operating Lease, Right-of-Use Asset 1,252 0
Goodwill 36,609 36,590
Intangible assets, net 24,473 24,642
Other assets 1,035 1,386
Total Assets 139,615 134,211
Liabilities and Equity    
Short-term borrowings 2,293 1,428
Accounts payable 7,816 7,859
Accrued liabilities 9,770 9,395
Contract with Customer, Liability, Current 9,014 7,818
Total liabilities related to discontinued operations 14,443 12,628
Long-term debt currently due 3,258 2,722
Total Current Liabilities 46,594 41,850
Long-term debt 37,701 41,041
Future pension and postretirement benefit obligations 2,487 3,050
Operating Lease, Liability, Noncurrent 1,093 0
Other long-term liabilities 7,414 7,551
Total Liabilities 95,289 93,492
Redeemable noncontrolling interest 95 109
Capital Stock:    
Preferred Stock, $1 par value; 250,000 shares authorized; None issued or outstanding $ 0 0
Preferred Stock, par value $ 1  
Preferred Stock. shares authorized 250,000  
Common Stock, $1 par value; 4,000,000 shares authorized; 1,450,845 and 1,446,961 shares issued $ 23,019 $ 22,514
Common Stock, par value $ 1  
Common Stock, shares authorized 4,000,000  
Common Stock, Shares, Issued 1,450,845 1,446,961
Treasury Stock— 586,479 and 585,479 common shares at average cost $ 32,626 $ 32,482
Treasury Stock, shares 586,479 585,479
Retained earnings $ 61,594 $ 57,823
Unearned ESOP shares 64 76
Total Accumulated other comprehensive loss (10,149) (9,333)
Total Shareowners' Equity 41,774 38,446
Noncontrolling interest 2,457 2,164
Total Equity 44,231 40,610
Total Liabilities and Equity $ 139,615 $ 134,211
v3.20.2
Consolidated Balance Sheet (Parenthetical) - shares
shares in Millions
Dec. 31, 2019
Dec. 31, 2018
Statement of Financial Position [Abstract]    
Preferred Stock, shares issued 0 0
v3.20.2
Consolidated Statement of Cash Flows - USD ($)
$ in Millions
 12 Months Ended
Dec. 31, 2019
Dec. 31, 2018
Dec. 31, 2017
Operating Activities of Continuing Operations:      
Income from continuing operations $ 3,731 $ 1,406 $ 1,468
Adjustments to reconcile income from continuing operations to net cash flows provided by operating activities of continuing operations:      
Depreciation and amortization 2,708 1,896 1,580
Deferred income tax provision 38 763 103
Stock compensation cost 268 169 129
Net periodic pension and other postretirement benefit (566) (392) (185)
Change in:      
Accounts receivable (88) 1,147 593
Contract assets, current 679 651 0
Inventory 1,267 417 866
Other current assets 984 645 31
Accounts payable and accrued liabilities 1,111 2,738 1,802
Contract liabilities, current 1,234 325 0
Income Taxes (293) (246) 1,744
Global pension contributions 55 79 2,044
Canadian Government Settlement (38) (429) (285)
Other operating activities, net (525) 621 540
Net Cash Provided by Operating Activities, Continuing Operations 5,821 2,670 2,282
Investing Activities of Continuing Operations:      
Capital expenditures 1,868 1,467 1,556
Increase in customer financing assets 787 988 1,189
Decrease in customer financing assets 128 604 221
Investments in businesses 9 15,039 25
Dispositions of businesses 134 74 19
Increase in collaboration intangible assets 351 400 380
Payments (receipts) from settlements of derivative contracts (342) (140) 316
Other investing activities, net 265 183 (99)
Net cash flows used in investing activities of continuing operations (2,676) (17,259) (3,127)
Financing Activities of Continuing Operations:      
Issuance of long-term debt (19) 13,337 4,852
Repayment of long-term debt 2,693 2,520 1,501
(Decrease) increase in short-term borrowings, net 896 (370) (263)
Common Stock issued under employee stock plans 27 36 31
Dividends paid on Common Stock 2,442 2,170 2,074
Repurchase of Common Stock 151 325 1,453
Inter-entity lending 2,387 3,979 2,836
Other financing activities, net 82 242 10
Net cash flows provided by (used in) financing activities of continuing operations (1,913) 12,209 2,438
Discontinued Operations:      
Net cash provided by operating activities 3,062 3,652 3,349
Net cash (used in) provided by investing activities (416) 286 108
Net cash used in financing activities (2,651) (4,244) (3,431)
Net cash flows (used in) provided by discontinued operations (5) (306) 26
Effect of foreign exchange rate changes on cash and cash equivalents 1 (6) 34
Effect of Exchange Rate on Cash and Cash Equivalents, Discontinued Operations (20) (114) 176
Net (decrease) increase in cash and cash equivalents 1,208 (2,806) 1,829
Cash, Cash Equivalents, Restricted Cash and Restricted Cash Equivalents, Beginning Balance 3,731 6,118 4,486
Cash, Cash Equivalents, Restricted Cash and Restricted Cash Equivalents, Including Disposal Group and Discontinued Operations, Beginning Balance 2,481 2,900 2,703
Cash and Cash Equivalents, end of period 7,420 6,212 9,018
Less: Restricted cash, included in Other assets 24 38 10
Cash, Cash Equivalents, Restricted Cash and Restricted Cash Equivalents, Including Disposal Group and Discontinued Operations, Ending Balance 2,459 2,481 2,900
Cash and cash equivalents of continuing operations, end of year 4,937 3,693 6,108
Supplemental Disclosure of Cash Flow Information:      
Interest paid, net of amounts capitalized 1,801 1,027 974
Income taxes paid, net of refunds $ 1,768 $ 1,714 $ 1,326
v3.20.2
Consolidated Statement of Changes in Equity - USD ($)
shares in Thousands, $ in Millions
Total
ASU 2014-09 [Member]
Common Stock [Member]
Treasury Stock [Member]
Retained Earnings [Member]
Unearned ESOP Shares [Member]
Accumulated Other Comprehensive (Loss) Income [Member]
Noncontrolling Interest
Increase (Decrease) In Equity [Roll Forward]                
Stockholders' Equity Attributable to Parent     $ 17,285 $ (34,150) $ 52,873 $ (95) $ (8,334)  
Noncontrolling interest               $ 1,590
Stockholders' Equity, Including Portion Attributable to Noncontrolling Interest $ 29,169              
Common Stock issued under employee plans     331 7   10    
Common Stock repurchased     (1) 1,453        
Common Stock issued for Rockwell Collins     0 0        
Purchase (sale) of subsidiary shares from noncontrolling interest     (4)          
Redeemable noncontrolling interest fair value adjustment     (47)   (42)      
Net Income - Retained Earnings 4,552       4,552      
Dividends on Common Stock         2,074      
Dividends on ESOP Common Stock         72      
Reclassification from OCI, current period, ASU 2018-02 adoption impact $ 0              
Other   $ 0     5     1
Other comprehensive income (loss), net of tax - AOCI             809  
Net Income - NCI               368
Redeemable Noncontrolling Interest in subsidiaries' earnings               17
Other comprehensive income (loss), net of tax - NCI               56
Dividends attributable to noncontrolling interest               336
Sale (purchase) of subsidiary shares in noncontrolling interest               0
Acquisition (disposition) of noncontrolling interest               14
Noncontrolling Interest, Increase from Capital Contributions               135
Shares Issued, Shares, Share-based Payment Arrangement, after Forfeiture 3,205              
Stock Repurchased During Period, Shares 12,900              
Dividends Per Share of Common Stock $ 2.72              
Stockholders' Equity Attributable to Parent     17,574 (35,596) 55,242 (85) (7,525)  
Noncontrolling interest               1,811
Stockholders' Equity, Including Portion Attributable to Noncontrolling Interest $ 31,421              
Common Stock issued under employee plans     423 6   9    
Common Stock repurchased     0 329        
Common Stock issued for Rockwell Collins     4,523 3,437        
Purchase (sale) of subsidiary shares from noncontrolling interest     6          
Redeemable noncontrolling interest fair value adjustment     0   7      
Net Income - Retained Earnings 5,269       5,269      
Dividends on Common Stock         2,170      
Dividends on ESOP Common Stock         71      
Reclassification from OCI, current period, ASU 2018-02 adoption impact $ 0              
Other   (480)     26     6
Other comprehensive income (loss), net of tax - AOCI             (1,808)  
Net Income - NCI               385
Redeemable Noncontrolling Interest in subsidiaries' earnings               4
Other comprehensive income (loss), net of tax - NCI               (30)
Dividends attributable to noncontrolling interest               315
Sale (purchase) of subsidiary shares in noncontrolling interest               (23)
Acquisition (disposition) of noncontrolling interest               (8)
Noncontrolling Interest, Increase from Capital Contributions               342
Shares Issued, Shares, Share-based Payment Arrangement, after Forfeiture 2,775              
Stock Repurchased During Period, Shares 2,727              
Dividends Per Share of Common Stock $ 2.84              
Stockholders' Equity Attributable to Parent $ 38,446   22,514 (32,482) 57,823 (76) (9,333)  
Noncontrolling interest 2,164             2,164
Stockholders' Equity, Including Portion Attributable to Noncontrolling Interest 40,610              
Common Stock issued under employee plans     525 7   12    
Common Stock repurchased     0 151        
Common Stock issued for Rockwell Collins     0 0        
Purchase (sale) of subsidiary shares from noncontrolling interest     20          
Redeemable noncontrolling interest fair value adjustment     0   4      
Net Income - Retained Earnings 5,537       5,537      
Dividends on Common Stock         2,442      
Dividends on ESOP Common Stock         70      
Reclassification from OCI, current period, ASU 2018-02 adoption impact $ 745              
Other   $ 0     (3)     0
Other comprehensive income (loss), net of tax - AOCI             (816)  
Net Income - NCI               411
Redeemable Noncontrolling Interest in subsidiaries' earnings               (7)
Other comprehensive income (loss), net of tax - NCI               (12)
Dividends attributable to noncontrolling interest               268
Sale (purchase) of subsidiary shares in noncontrolling interest               70
Acquisition (disposition) of noncontrolling interest               (23)
Noncontrolling Interest, Increase from Capital Contributions               108
Shares Issued, Shares, Share-based Payment Arrangement, after Forfeiture 3,883              
Stock Repurchased During Period, Shares 1,133              
Dividends Per Share of Common Stock $ 2.94              
Stockholders' Equity Attributable to Parent $ 41,774   $ 23,019 $ (32,626) $ 61,594 $ (64) $ (10,149)  
Noncontrolling interest 2,457             $ 2,457
Stockholders' Equity, Including Portion Attributable to Noncontrolling Interest $ 44,231              
v3.20.2
Summary of Accounting Principles
 12 Months Ended
Dec. 31, 2019
Accounting Policies [Abstract]  
Summary of Accounting Principles SUMMARY OF ACCOUNTING PRINCIPLES
The preparation of financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses. Actual results could differ from those estimates.
Separation Transactions and Distributions. On April 3, 2020, United Technologies Corporation (UTC) (since renamed Raytheon Technologies Corporation) completed the previously announced separation of its business into three independent, publicly traded companies – UTC, Carrier Global Corporation (Carrier) and Otis Worldwide Corporation (Otis) (such separations, the Separation Transactions). UTC distributed all of the outstanding shares of Carrier common stock and all of the outstanding shares of Otis common stock to UTC shareowners who held shares of UTC common stock as of the close of business on March 19, 2020, the record date for the distributions (the Distributions). UTC distributed 866,158,910 and 433,079,455 shares of common stock of Carrier and Otis, respectively in the Distributions, each of which was effective at 12:01 a.m., Eastern Time, on April 3, 2020. The historical results of Otis and Carrier are presented as discontinued operations and, as such, have been excluded from both continuing operations and segment results for all periods presented. Unless otherwise indicated, amounts and activity throughout this Form 8-K are presented on a continuing operations basis, and includes the reclassification of certain long term assets and liabilities to current using the duration of the related contract or program as our operating cycle. Refer to “Note 3: Discontinued Operations” and “Consolidation” below for further details.
Raytheon Merger. On April 3, 2020, following the completion of the Separation Transactions and the Distributions, pursuant to an Agreement and Plan of Merger dated June 9, 2019, as amended, UTC and Raytheon Company (Raytheon) completed the Raytheon Merger. Upon closing of the Raytheon Merger, Raytheon became a wholly-owned subsidiary of UTC, which changed its name to “Raytheon Technologies Corporation.” Throughout this Form 8-K filing, we may refer to the Company as “Raytheon Technologies Corporation” or “RTC” whether we are discussing events prior to or subsequent to the Raytheon Merger and name change.
Consolidation. The Consolidated Financial Statements include the accounts of Raytheon Technologies Corporation and its controlled subsidiaries. Intercompany transactions have been eliminated. As a result of the Separation Transactions, we are now a focused aerospace and defense company with a defined operating cycle. Accordingly, to determine our classification of certain current assets and liabilities, the duration of our contracts or programs is utilized to determine our operating cycle, which is generally longer than one year. Included within our current assets and liabilities are contract assets and liabilities related to our aftermarket and development arrangements, which can generally span up to fifteen years. Certain reclassifications have been made to the prior year amounts to conform to the current year presentation.
Cash and Cash Equivalents. Cash and cash equivalents includes cash on hand, demand deposits and short-term cash investments that are highly liquid in nature and have original maturities of three months or less.
On occasion, we are required to maintain cash deposits with certain banks with respect to contractual obligations related to acquisitions or divestitures or other legal obligations. As of December 31, 2019 and 2018, the amount of such restricted cash was approximately $24 million and $38 million, respectively.
Accounts Receivable. Accounts receivable are stated at their net estimated realized value. The allowance for doubtful accounts is based upon an assessment of customer creditworthiness, historical payment experience, and the age and status of outstanding receivables. Accounts receivable as of December 31, 2019 and December 31, 2018 includes unbilled receivables of $265 million and $439 million, respectively, which primarily includes unbilled receivables with commercial aerospace customers. See “Note 5: Commercial Aerospace Industry Assets and Commitments” for discussion of commercial aerospace industry assets and commitments.
Unbilled receivables represent revenues that are not currently billable to the customer under the terms of the contract. These items are expected to be billed and collected in the normal course of business. Unbilled receivables where we have an unconditional right to payment are included in Accounts receivable.
Contract Assets and Liabilities. Contract assets and liabilities represent the difference in the timing of revenue recognition from receipt of cash from our customers. Contract assets reflect revenue recognized and performance obligations satisfied in advance of customer billing. Performance obligations partially satisfied in advance of customer billings are included in contract assets.
Contract liabilities relate to payments received in advance of the satisfaction of performance under the contract. We receive payments from customers based on the terms established in our contracts. See “Note 7: Contract Assets and Liabilities” for further discussion of contract assets and liabilities.
Inventory. Inventory is stated at the lower of cost or estimated realizable value and are primarily based on first-in, first-out (FIFO) or average cost methods.
Valuation reserves for excess, obsolete, and slow-moving inventory are estimated by comparing the inventory levels of individual parts to both future sales forecasts or production requirements and historical usage rates in order to identify inventory where the resale value or replacement value is less than inventoriable cost. Other factors that management considers in determining the adequacy of these reserves include whether individual inventory parts meet current specifications and cannot be substituted for a part currently being sold or used as a service part, overall market conditions, and other inventory management initiatives. Manufacturing costs are allocated to current production and firm contracts.
Equity Method Investments. Investments in which we have the ability to exercise significant influence, but do not control, are accounted for under the equity method of accounting and are included in Other assets on the Consolidated Balance Sheet. Under this method of accounting, our share of the net earnings or losses of the investee is included in Other income, net on the Consolidated Statement of Operations since the activities of the investee are closely aligned with the operations of the business segment holding the investment. We evaluate our equity method investments whenever events or changes in circumstance indicate that the carrying amounts of such investments may be impaired. If a decline in the value of an equity method investment is determined to be other than temporary, a loss is recorded in earnings in the current period. RTC sells products to and purchases products from unconsolidated entities accounted for under the equity method, which are considered related parties. This activity is not considered material to the Consolidated Statement of Operations nor Consolidated Balance Sheet of RTC.
Customer Financing Assets. Customer Financing Assets (CFA) primarily relate to the aerospace business in which we provide financing to airline customers. The most common types of financing include products under lease, notes receivable, long-term accounts receivable and lease receivable. We record revenue from lease assets by applying Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) Topic 842, Leases, and from interest on the notes, accounts and lease receivables. Interest from notes and financing leases, rental income from operating lease assets and gains or losses on sales of operating lease assets is aggregated under the caption of “Other income, net” in the Consolidated Statement of Operations. The current portion of these financing arrangements are aggregated under the caption of “Other assets, current” and the non-current portions of these financing arrangements are aggregated under the caption of “Customer financing assets” in the Consolidated Balance Sheet. The increases and decreases in CFA from funding, receipts and certain other activity, are reflected as Investing Activities in the Consolidated Statement of Cash Flows. The product under lease assets are valued at cost and reviewed for impairment when circumstances indicate that the related carrying amounts may not be recoverable. Notes, accounts and lease receivable are valued at cost and reviewed for impairment when it is probable that we will be unable to collect amounts due. As of December 31, 2019 the reserves related to customer financing assets are not material.
Business Combinations. We account for transactions that are classified as business combinations in accordance with FASB ASC Topic 805, “Business Combinations.” Once a business is acquired, the fair value of the identifiable assets acquired and liabilities assumed is determined with the excess cost recorded to goodwill. As required, a preliminary fair value is determined once a business is acquired, with the final determination of the fair value being completed within the one year measurement period from the date of acquisition.
Goodwill and Intangible Assets. Goodwill represents costs in excess of fair values assigned to the underlying net assets of acquired businesses. Goodwill and intangible assets deemed to have indefinite lives are not amortized. Goodwill and indefinite-lived intangible assets are subject to annual impairment testing or when a triggering event occurs using the guidance and criteria described in the Intangibles - Goodwill and Other Topic of the FASB ASC. This testing compares carrying values to fair values and, when appropriate, the carrying value of these assets is reduced to fair value.
Intangible assets consist of patents, trademarks/tradenames, customer relationships and other intangible assets including collaboration assets, as discussed further in “Note 2: Business Acquisitions, Dispositions, Goodwill and Intangible Assets.” Acquired intangible assets are recognized at fair value in purchase accounting and then amortized to cost of sales and selling, general & administrative expenses over the applicable useful lives. Also included within other intangible assets are commercial aerospace payments made to secure certain contractual rights to provide product on new aircraft platforms. We classify amortization of such payments as a reduction of sales. Such payments are capitalized when there are distinct rights obtained and there are sufficient incremental cash flows to support the recoverability of the assets established. Otherwise, the applicable portion of the payments are expensed. Consideration paid on these contractual commitments is capitalized when it is no longer conditional.
Useful lives of finite-lived intangible assets are estimated based upon the nature of the intangible asset and the industry in which the intangible asset is used. These intangible assets are amortized based on the pattern in which the economic benefits of the intangible assets are consumed. For both our commercial aerospace collaboration assets and exclusivity arrangements, the pattern of economic benefit generally results in lower amortization during the development period with increasing amortization
as programs enter full rate production and aftermarket cycles. If a pattern of economic benefit cannot be reliably determined or if straight-line amortization approximates the pattern of economic benefit, a straight-line amortization method may be used. The range of estimated useful lives is as follows:
Collaboration assets
30 years
Customer relationships and related programs
1 to 32 years
Patents & trademarks
5 to 30 years
Exclusivity assets
5 to 25 years
Leases. We account for leases in accordance with ASC Topic 842: Leases. Under Topic 842, the right-of-use model requires a lessee to record a right-of-use asset and a lease liability on the Consolidated Balance Sheet for all leases with terms longer than 12 months. Leases are classified as either finance or operating, with classification affecting the pattern of expense recognition in the Consolidated Statement of Operations. In addition, Topic 842 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.
We enter into lease agreements for the use of real estate space, vehicles, information technology equipment, and certain other equipment under operating and finance leases. We determine if an arrangement contains a lease at inception. Operating leases are included in Operating lease right-of-use assets, Accrued liabilities, and Operating lease liabilities in our Consolidated Balance Sheet. Finance leases are not considered significant to our Consolidated Balance Sheet or Consolidated Statement of Operations.
Right-of-use assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. Lease right-of-use assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. As most of our leases do not provide an implicit rate, we use our incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments, and use the implicit rate when readily determinable. We determine our incremental borrowing rate through market sources including relevant industry rates. Our lease right-of-use assets also include any lease pre-payments and exclude lease incentives. Certain of our leases include variable payments, which may vary based upon changes in facts or circumstances after the start of the lease. We exclude variable payments from lease right-of-use assets and lease liabilities, to the extent not considered fixed, and instead, expense variable payments as incurred. Variable lease expense and lease expense for short duration contracts is not a material component of lease expense. Our leases generally have remaining lease terms of 1 to 20 years, some of which include options to extend leases. For the majority of our leases with options to extend, those options are up to 5 years with the ability to terminate the lease within 1 year. The exercise of lease renewal options is at our sole discretion and our lease right-of-use assets and liabilities reflect only the options we are reasonably certain that we will exercise. Lease expense is recognized on a straight-line basis over the lease term.
In limited instances we act as a lessor, primarily for commercial aerospace engines, the majority of which are classified as operating leases. These leases are not significant to our Consolidated Balance Sheet or Consolidated Statement of Operations.
Other Long-Lived Assets. We evaluate the potential impairment of other long-lived assets whenever events or changes in circumstances indicate that the related carrying amounts may not be recoverable. If the carrying value of other long-lived assets held and used exceeds the sum of the undiscounted expected future cash flows, the carrying value is written down to fair value.
Income Taxes. 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. For those tax positions where it is more-likely-than-not that a tax benefit will be sustained, we have recorded the largest amount of tax benefit with a greater than 50% likelihood of being realized upon ultimate settlement with a taxing authority that has full knowledge of all relevant information. For those income tax positions where it is not more-likely-than-not that a tax benefit will be sustained, no tax benefit has been recognized in the financial statements. Where applicable, associated interest expense has also been recognized. We recognize accrued interest related to unrecognized tax benefits in interest expense. Penalties, if incurred, would be recognized as a component of income tax expense.
On December 22, 2017 the TCJA was enacted. The TCJA contains a new law that subjects the Company to a tax on Global Intangible Low-Taxed Income (GILTI), beginning in 2018. GILTI is a tax on foreign income in excess of a deemed return on tangible assets of foreign corporations. The FASB has provided that companies subject to GILTI have the option to account for the GILTI tax as a period cost if and when incurred, or to recognize deferred taxes for temporary differences,
including outside basis differences, expected to reverse as GILTI. We have elected to account for GILTI as a period cost, as incurred.
Revenue Recognition. We account for revenue in accordance with ASC Topic 606: Revenue from Contracts with Customers. We adopted ASC 606 effective January 1, 2018 and elected the modified retrospective approach. The results for periods before 2018 were not adjusted for the new standard and the cumulative effect of the change in accounting was recognized through retained earnings at the date of adoption. Under Topic 606, a performance obligation is a promise in a contract with a customer to transfer a distinct good or service to the customer. Some of our contracts with customers contain a single performance obligation, while others contain multiple performance obligations most commonly when a contract spans multiple phases of the product life-cycle such as development, production, maintenance and support. A contract’s transaction price is allocated to each distinct performance obligation and recognized as revenue when, or as, the performance obligation is satisfied. When there are multiple performance obligations within a contract, we allocate the transaction price to each performance obligation based on its standalone selling price.
We consider the contractual consideration payable by the customer and assess variable consideration that may affect the total transaction price, including contractual discounts, contract incentive payments, estimates of award fees, unfunded contract value under U.S. Government contracts, and other sources of variable consideration, when determining the transaction price of each contract. We include variable consideration in the estimated transaction price when there is a basis to reasonably estimate the amount. These estimates are based on historical experience, anticipated performance and our best judgment at the time. We also consider whether our contracts provide customers with significant financing. Generally, our contracts do not contain significant financing.
Timing of the satisfaction of performance obligations varies across our businesses due to our diverse product and service mix, customer base, and contractual terms.
Point in time revenue recognition. Performance obligations are satisfied as of a point in time for certain aerospace components, engines, and spare parts. Revenue is recognized when control of the product transfers to the customer, generally upon product shipment.
Over-time revenue recognition. Performance obligations are satisfied over-time if the customer receives the benefits as we perform work, if the customer controls the asset as it is being produced, or if the product being produced for the customer has no alternative use and we have a contractual right to payment. We recognize revenue on an over-time basis on certain long-term aerospace aftermarket contracts and aftermarket service work; and development, fixed price, and other cost reimbursement contracts. Revenue is recognized using costs incurred to date relative to total estimated costs at completion to measure progress for performance obligations satisfied over time. Incurred costs represent work performed, which correspond with and best depict transfer of control to the customer. Contract costs include labor, materials, and subcontractors’ costs, or other direct costs, and where applicable on government and commercial contracts, indirect costs.
For certain of our long-term aftermarket contracts, revenue is recognized over the contract period. We generally account for such contracts as a series of daily obligations to stand ready to provide spare parts and product maintenance and aftermarket services. These arrangements include the sale of spare parts with integral services to our customers, and are generally classified as Service sales, with the corresponding costs classified in Cost of services sold, within the Consolidated Statement of Operations. Revenue is primarily recognized in proportion to cost as sufficient historical evidence indicates that the cost of performing services under the contract is incurred on an other than straight-line basis. Aerospace contract modifications are routine and contracts are often modified to account for changes in contract specifications or requirements. Contract modifications that are for goods or services that are not distinct are accounted for as part of the existing contract.
We incur costs for engineering and development of aerospace products directly related to existing or anticipated contracts with customers. Such costs generate or enhance our ability to satisfy our performance obligations under these contracts. We capitalize these costs as contract fulfillment costs to the extent the costs are recoverable from the associated contract margin and subsequently amortize the costs as the original equipment (OEM) products performance obligations are satisfied. In instances where intellectual property does not transfer to the customer, we defer the customer funding of OEM product engineering and development and recognize revenue when the OEM products performance obligations are satisfied. Capitalized contract fulfillment costs were $1,519 million and $914 million as of December 31, 2019 and 2018, respectively and are recognized in “Other assets” in our Consolidated Balance Sheet and are included in Other operating activities, net in our Consolidated Statement of Cash Flows. The increase in capitalized net contract fulfillment costs is driven by current year activity at Collins Aerospace Systems. Costs to obtain contracts are not material.
Loss provisions on OEM contracts are recognized to the extent that estimated contract costs exceed the estimated consideration from the products contemplated under the contractual arrangement. For new commitments, we generally record loss provisions at the earlier of contract announcement or contract signing except for certain contracts under which losses are
recorded upon receipt of the purchase order that obligates us to perform. For existing commitments, anticipated losses on contractual arrangements are recognized in the period in which losses become evident. Products contemplated under contractual arrangements include firm quantities of product sold under contract and, in the commercial engine and wheels and brakes businesses, future highly probable sales of replacement parts required by regulation that are expected to be sold subsequently for incorporation into the original equipment. In the commercial engine and wheels and brakes businesses, when the combined original equipment and aftermarket arrangement for each individual sales campaign are profitable, we record original equipment product losses, as applicable, at the time of delivery.
We review our cost estimates on significant contracts on a quarterly basis and for others, no less frequently than annually or when circumstances change and warrant a modification to a previous estimate. We record changes in contract estimates using the cumulative catch-up method. Operating profits included net unfavorable changes in contract estimates of approximately $69 million, $50 million, and $110 million in 2019, 2018 and 2017, respectively, primarily the result of unexpected increases in estimated costs related to Pratt & Whitney long-term aftermarket contracts.
Collaborations. Sales generated from engine programs, spare parts sales, and aftermarket business under collaboration arrangements are recorded consistent with our revenue recognition policies in our Consolidated Financial Statements. Amounts attributable to our collaborators for their share of sales are recorded as cost of sales in our Consolidated Financial Statements based upon the terms and nature of the arrangement. Costs associated with engine programs under collaborative arrangements are expensed as incurred. Under these arrangements, collaborators contribute their program share of engine parts, incur their own production costs and make certain payments to Pratt & Whitney for shared or joint program costs. The reimbursement from collaborators of their share of program costs is recorded as a reduction of the related expense item at that time.
Cash Payments to Customers. We may offer customers incentives to purchase our products, which may result in payments made to those customers. In addition, we make participation payments to certain aerospace customers to secure certain contractual rights. To the extent these rights are incremental and are supported by the incremental cash flows obtained, they are capitalized as intangible assets. Otherwise, such payments are recorded as a reduction in sales. We classify the subsequent amortization of the capitalized acquired intangible assets from our customers as a reduction in sales.
Remaining Performance Obligations (RPO). RPO represents the aggregate amount of total contract transaction price that is unsatisfied or partially unsatisfied. As of December 31, 2019 our total RPO was approximately $111.7 billion compared to $93.8 billion as of December 31, 2018. Of the total RPO as of December 31, 2019, we expect approximately 37% will be recognized as sales over the following 24 months.
Research and Development. Research and development costs not specifically covered by contracts and those related to the company sponsored share of research and development activity in connection with cost-sharing arrangements are charged to expense as incurred. Government research and development support, not associated with specific contracts, is recorded as a reduction to research and development expense in the period earned.
Research and development costs incurred under contracts with customers are included as a contract cost and reported as a component of cost of products sold when revenue from such contracts is recognized. Research and development costs in excess of contractual consideration are expensed as incurred.
Foreign Exchange. We conduct business in many different currencies and, accordingly, are subject to the inherent risks associated with foreign exchange rate movements. The financial position and results of operations of substantially all of our foreign subsidiaries are measured using the local currency as the functional currency. Foreign currency denominated assets and liabilities are translated into U.S. Dollars at the exchange rates existing at the respective balance sheet dates, and income and expense items are translated at the average exchange rates during the respective periods. The aggregate effects of translating the balance sheets of these subsidiaries are deferred as a separate component of shareowners' equity.
Derivatives and Hedging Activity. We have used derivative instruments, including swaps, forward contracts and options, to help manage certain foreign currency, interest rate and commodity price exposures. Derivative instruments are viewed as risk management tools by us and are not used for trading or speculative purposes. By their nature, all financial instruments involve market and credit risks. We enter into derivative and other financial instruments with major investment grade financial institutions and have policies to monitor the credit risk of those counterparties. We limit counterparty exposure and concentration of risk by diversifying counterparties. While there can be no assurance, we do not anticipate any material non-performance by any of these counterparties. We enter into transactions that are subject to enforceable master netting arrangements or similar agreements with various counterparties. However, we have not elected to offset multiple contracts with a single counterparty and, as a result, the fair value of the derivative instruments in a loss position is not offset against the fair value of derivative instruments in a gain position.
Derivatives used for hedging purposes may be designated and effective as a hedge of the identified risk exposure at the inception of the contract. All derivative instruments are recorded on the balance sheet at fair value. Derivatives used to hedge
foreign currency denominated balance sheet items are reported directly in earnings along with offsetting transaction gains and losses on the items being hedged. Derivatives used to hedge forecasted cash flows associated with foreign currency commitments or forecasted commodity purchases may be accounted for as cash flow hedges, as deemed appropriate. Gains and losses on derivatives designated as cash flow hedges are recorded in other comprehensive income and reclassified to earnings as a component of product sales or expenses, as applicable, when the hedged transaction occurs. Gains and losses on derivatives designated as cash flow hedges are recorded in Other operating activities, net within the Consolidated Statement of Cash Flows. To the extent that a previously designated hedging transaction is no longer an effective hedge, any ineffectiveness measured in the hedging relationship is recorded currently in earnings in the period it occurs. As discussed in Note 15, at December 31, 2019 we have approximately €4.20 billion of euro-denominated long-term debt, which qualifies as a net investment hedge against our investments in European businesses.
To the extent the hedge accounting criteria are not met, the foreign currency forward contracts are utilized as economic hedges and changes in the fair value of these contracts are recorded currently in earnings in the period in which they occur. Additional information pertaining to foreign currency forward contracts and net investment hedging is included in Note 15.
Environmental. Environmental investigatory, remediation, operating and maintenance costs are accrued when it is probable that a liability has been incurred and the amount can be reasonably estimated. The most likely cost to be incurred is accrued based on an evaluation of currently available facts with respect to each individual site, including existing technology, current laws and regulations and prior remediation experience. Where no amount within a range of estimates is more likely, the minimum is accrued. For sites with multiple responsible parties, we consider our likely proportionate share of the anticipated remediation costs and the ability of the other parties to fulfill their obligations in establishing a provision for those costs. Liabilities with fixed or reliably determinable future cash payments are discounted. Accrued environmental liabilities are not reduced by potential insurance reimbursements. See Note 19 for additional details on the environmental remediation activities.
Pension and Postretirement Obligations. Guidance under the Compensation - Retirement Benefits Topic of the FASB ASC requires balance sheet recognition of the overfunded or underfunded status of pension and postretirement benefit plans. Under this guidance, actuarial gains and losses, prior service costs or credits, and any remaining transition assets or obligations that have not been recognized under previous accounting standards must be recognized in other comprehensive income, net of tax effects, until they are amortized as a component of net periodic benefit cost.
Product Performance Obligations. We extend performance and operating cost guarantees beyond our normal service and warranty policies for extended periods on some of our products, particularly commercial aircraft engines. Liability under such guarantees is based upon future product performance and durability. We accrue for such costs that are probable and can be reasonably estimated. In addition, we incur discretionary costs to service our products in connection with product performance issues. The costs associated with these product performance and operating cost guarantees require estimates over the full terms of the agreements, and require management to consider factors such as the extent of future maintenance requirements and the future cost of material and labor to perform the services. These cost estimates are largely based upon historical experience. See Note 18 for further discussion.
Collaborative Arrangements. In view of the risks and costs associated with developing new engines, Pratt & Whitney has entered into certain collaboration arrangements in which sales, costs and risks are shared. Sales generated from engine programs, spare parts, and aftermarket business under collaboration arrangements are recognized in our financial statements when earned. Amounts attributable to our collaborators for their share of sales are recorded as an expense in our financial statements based upon the terms and nature of the arrangement. Costs associated with engine programs under collaborative arrangements are expensed as incurred. Under these arrangements, collaborators contribute their program share of engine parts, incur their own production costs and make certain payments to Pratt & Whitney for shared or joint program costs. The reimbursement from the collaborators of their share of program costs is recorded as a reduction of the related expense item at that time. As of December 31, 2019, the collaborators’ interests in all commercial engine programs ranged from 13% to 49%, inclusive of a portion of Pratt & Whitney's interests held by other participants. Pratt & Whitney is the principal participant in all existing collaborative arrangements, with the exception of the Engine Alliance (EA), a joint venture with GE Aviation, which markets and manufactures the GP7000 engine for the Airbus A380 aircraft. There are no individually significant collaborative arrangements and none of the collaborators individually exceed a 31% share in an individual program. The following table illustrates the Consolidated Statement of Operations classification and amounts attributable to transactions arising from the collaborative arrangements between participants for each period presented.
(dollars in millions)201920182017
Collaborator share of sales:
Cost of products sold$2,097 $1,688 $1,789 
Cost of services sold1,674 1,765 929 
Collaborator share of program costs (reimbursement of expenses incurred):
Cost of products sold(190)(209)(143)
Research and development(219)(225)(190)
Selling, general and administrative(101)(87)(74)
Accounting Pronouncements. In June 2016, the FASB issued Accounting Standards Update (ASU) 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. This ASU and its related amendments modifies the impairment model to utilize an expected loss methodology in place of the incurred loss methodology for financial instruments, including trade receivables, contract assets, long-term receivables and off-balance sheet credit exposures. The amendment requires entities to consider a broader range of information to estimate expected credit losses, including historical information, current conditions and a reasonable forecast period, which may result in earlier recognition of certain losses. The provisions of this ASU are effective for years beginning after December 15, 2019, with early adoption permitted. A modified retrospective approach is required with a cumulative-effect adjustment to retained earnings as of January 1, 2020. We are still quantifying the impact of this ASU and its related amendments on our Consolidated Financial Statements which is not expected to be material.
In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement. The new standard removes the disclosure requirements for the amount of and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy. This standard did not have a material impact on our financial statement disclosures. We early adopted this standard effective January 1, 2019.
In August 2018, the FASB issued ASU 2018-14, Compensation—Retirement Benefits—Defined Benefit Plans—General (Subtopic 715-20): Disclosure Framework—Changes to the Disclosure Requirements for Defined Benefit Plans. The new standard includes updates to the disclosure requirements for defined benefit plans including several additions, deletions and modifications to the disclosure requirements. The provisions of this ASU are effective for fiscal years ending after December 15, 2020, with early adoption permitted. We are currently evaluating the impact of this ASU.
In August 2018, the FASB issued ASU 2018-15, Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract. The new standard provides updated guidance surrounding implementation costs associated with cloud computing arrangements that are service contracts. The provisions of this ASU are effective for years beginning after December 15, 2019, with early adoption permitted. We adopted the new standard prospectively effective January 1, 2020. We do not expect this ASU to have a material impact on the Consolidated Financial Statements.
In October 2018, the FASB issued ASU 2018-17, Consolidation (Topic 810): Targeted Improvements to Related Party Guidance for Variable Interest Entities. The amendments in this update for determining whether a decision-making fee is a variable interest require reporting entities to consider indirect interests held through related parties under common control on a proportional basis rather than as the equivalent of a direct interest in its entirety (as currently required in generally accepted accounting principles (GAAP)). These amendments also will create alignment between determining whether a decision making fee is a variable interest and determining whether a reporting entity within a related party group is the primary beneficiary of a VIE. This will significantly reduce the risk that decision makers with insignificant direct and indirect interests could be deemed the primary beneficiary of a VIE. The provisions of this ASU are effective for years beginning after December 15, 2019, with early adoption permitted. We adopted the new standard effective January 1, 2020. This ASU did not have an impact on the Consolidated Financial Statements.
In November 2018, the FASB issued ASU 2018-18, Collaborative Arrangements (Topic 808): Clarifying the Interaction between Topic 808 and Topic 606. The amendments in this update make targeted improvements to GAAP for collaborative arrangements as follows: clarify that certain transactions between collaborative arrangement participants should be accounted for as revenue under Topic 606 when the collaborative arrangement participant is a customer in the context of a unit of account. In those situations, all the guidance in Topic 606 should be applied, including recognition, measurement, presentation, and disclosure requirements; add unit-of-account guidance in Topic 808 to align with the guidance in Topic 606 (that is, a distinct good or service) when an entity is assessing whether the collaborative arrangement or a part of the arrangement is within the scope of Topic 606; and require that in a transaction with a collaborative arrangement participant that is not directly related to sales to third parties, presenting the transaction together with revenue recognized under Topic 606 is precluded if the collaborative arrangement participant is not a customer. The provisions of this ASU are effective for years beginning after
December 15, 2019, with early adoption permitted. We adopted the new standard effective January 1, 2020. This ASU did not have an impact on the Consolidated Financial Statements.
In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes. The amendments in this update remove certain exceptions of Topic 740 including: exception to the incremental approach for intraperiod tax allocation when there is a loss from continuing operations and income or gain from other items; exception to the requirement to recognize a deferred tax liability for equity method investments when a foreign subsidiary becomes an equity method investment; exception to the ability not to recognize a deferred tax liability for a foreign subsidiary when a foreign equity method investment becomes a subsidiary; exception to the general methodology for calculating income taxes in an interim period when a year-to-date loss exceeds the anticipated loss for the year. There are also additional areas of guidance in regards to: franchise and other taxes partially based on income and the interim recognition of enactment of tax laws and rate changes. The provisions of this ASU are effective for years beginning after December 15, 2020, with early adoption permitted. We are currently evaluating the impact of this ASU on our consolidated financial statements.
Commercial Aerospace Industry Assets and Commitments
NOTE 5: COMMERCIAL AEROSPACE INDUSTRY ASSETS AND COMMITMENTS
    We have receivables and other financing assets with commercial aerospace industry customers totaling $11,293 million and $11,695 million at December 31, 2019 and 2018, respectively. These include customer financing assets related to commercial aerospace industry customers, consisting of products under lease of $3,185 million and $2,736 million, and notes and leases receivable of $308 million and $299 million, at December 31, 2019 and 2018, respectively.
Aircraft financing commitments, in the form of debt or lease financing, are provided to commercial aerospace customers. The extent to which the financing commitments will be utilized is not currently known, since customers may be able to obtain more favorable terms from other financing sources. We may also arrange for third-party investors to assume a portion of these commitments. If financing commitments are exercised, debt financing is generally secured by assets with fair market values equal to or exceeding the financed amounts consistent with market terms and conditions. We may also lease aircraft and subsequently sublease the aircraft to customers under long-term non-cancelable operating leases. Our financing commitments with customers are contingent upon maintenance of certain levels of financial condition by the customers.
We have also made residual value and other guarantees related to various commercial aerospace customer financing arrangements. The estimated fair market values of the guaranteed assets equal or exceed the value of the related guarantees, net of existing reserves. We have residual value and other guarantees of $333 million as of December 31, 2019. Partner share of these guarantees is $142 million. Refer to “Note 18: Guarantees” for additional discussion on guarantees.
We also have other contractual commitments, including commitments to secure certain contractual rights to provide product on new aircraft platforms, which are included in “Other commercial aerospace commitments” in the table below. Payments made on these contractual commitments are included within other intangible assets and are to be amortized over the term of underlying economic benefit. Our commercial aerospace financing and other contractual commitments as of December 31, 2019 were approximately $15.0 billion. We have entered into certain collaboration arrangements, which may include participation by our collaboration partners in these commitments. 
The following is the expected maturity of commercial aerospace industry assets and commitments as of December 31, 2019:
(dollars in millions)Committed20202021202220232024Thereafter
Notes and leases receivable$308 $30 $23 $14 $22 $38 $181 
Commercial aerospace financing commitments$3,937 $911 $1,119 $974 $819 $44 $70 
Other commercial aerospace commitments11,055 702 736 717 668 627 7,605 
Collaboration partners’ share(5,284)(508)(623)(571)(538)(193)(2,851)
Total commercial commitments$9,708 $1,105 $1,232 $1,120 $949 $478 $4,824 
In connection with our 2012 agreement to acquire Rolls-Royce’s ownership and collaboration interests in IAE AG, additional payments are due to Rolls-Royce contingent upon each hour flown through June 2027 by the V2500-powered aircraft in service as of the acquisition date. These flight hour payments, included in “Other commercial aerospace commitments” in the table above, are being capitalized as collaboration intangible assets.
We have long-term aftermarket maintenance contracts with commercial aerospace industry customers for which revenue is recognized over-time in proportion to actual costs incurred relative to total expected costs to be incurred over the respective contract periods. Billings, however, are typically based on factors such as aircraft or engine flight hours. The timing differences between the billings and the maintenance costs incurred generates both Contract assets and Contract liabilities. Additionally, we have other contracts with commercial aerospace industry customers which can result in the generation of Contract assets and Contract liabilities. Contract assets totaled $2,741 million and $2,247 million at December 31, 2019 and 2018, respectively, and are included in “Contract assets, current” and “Other assets” in the accompanying Consolidated Balance Sheet.
Allowance for doubtful accounts was $248 million and $245 million at December 31, 2019 and 2018, respectively. Reserves related to financing commitments and guarantees were $7 million and $15 million at December 31, 2019 and 2018, respectively.
In addition, in connection with the acquisition of Rockwell Collins in 2018 and Goodrich in 2012, we recorded assumed liabilities of approximately $1.02 billion and $2.2 billion, respectively related to customer contractual obligations on certain programs with terms less favorable than could be realized in market transactions as of the acquisition date. These liabilities are being liquidated in accordance with the underlying pattern of obligations, as reflected by the net cash outflows incurred on the contracts. Total consumption of the contractual obligations for the years ended December 31, 2019 and 2018 was approximately $345 million and $252 million, respectively. The balance of the contractual obligations at December 31, 2019 was $1,408 million, with future consumption expected to be as follows: $263 million in 2020, $189 million in 2021, $148 million in 2022, $118 million in 2023, $127 million in 2024 and $563 million thereafter.
We also have intangible assets associated with commercial aerospace. Refer to “Note 2: Business Acquisitions, Dispositions, Goodwill and Intangible Assets” for discussion of intangible assets. Refer to “Note 1: Summary of Accounting Principles” for discussion of contract fulfillment costs. Refer to “Note 20: Leases” for discussion of leases, including those that were disclosed as commitments prior to the adoption of ASC 842.
v3.20.2
Business Combinations
 12 Months Ended
Dec. 31, 2019
Business Combinations [Abstract]  
Business Combination Disclosure BUSINESS ACQUISITIONS, DISPOSITIONS, GOODWILL AND INTANGIBLE ASSETS
Business Acquisitions. Our investments in businesses net of cash acquired in 2019, 2018 and 2017 totaled $9 million, $30,783 million (including debt assumed of $7,784 million and stock issued of $7,960 million), and $25 million respectively. Our investments in businesses in 2018 primarily consisted of the acquisition of Rockwell Collins, Inc. (Rockwell Collins).
As previously described in “Note 1: Summary of Accounting Principles,” on June 9, 2019, UTC entered into a merger agreement with Raytheon providing for an all-stock merger of equals transaction. The Raytheon merger agreement provides, among other things, that each share of Raytheon common stock issued and outstanding immediately prior to the closing of the Raytheon merger (except for shares held by Raytheon as treasury stock) will be converted into the right to receive 2.3348 shares of UTC common stock. Upon the closing of the Raytheon merger, Raytheon will become a wholly-owned subsidiary of UTC, and UTC will change its name to Raytheon Technologies Corporation. On October 11, 2019, the shareowners of each of UTC and Raytheon approved the proposals necessary to complete the Raytheon merger. The Raytheon merger is expected to close early in the second quarter 2020 and is subject to customary closing conditions, including receipt of required regulatory approvals, as well as the completion of UTC’s previously announced separation of its Otis and Carrier businesses.
On November 26, 2018, we completed the acquisition of Rockwell Collins (the Rockwell Acquisition), a leader in aviation and high-integrity solutions for commercial and military customers as well as leading-edge avionics, flight controls, aircraft interior and data connectivity solutions. Under the terms of the Rockwell acquisition agreement, each share of common stock, par value $0.01 per share, of Rockwell Collins issued and outstanding immediately prior to the effective time of the Rockwell Acquisition (other than shares held by Rockwell Collins, the Company, Riveter Merger Sub Corp or any of their respective wholly owned subsidiaries) was converted into the right to receive (1) $93.33 in cash, without interest, and (2) 0.37525 shares of Company common stock (together, the Acquisition Consideration), less any applicable withholding taxes, with cash paid in lieu of fractional shares. The total aggregate consideration payable in the Rockwell Acquisition was $15.5 billion in cash ($14.9 billion net of cash acquired) and 62.2 million shares of Company common stock. In addition, $7.8 billion of Rockwell Collins debt was outstanding at the time of the Rockwell Acquisition. This equated to a total enterprise value of $30.6 billion, including the $7.8 billion of Rockwell Collins’ outstanding debt.     
(dollars in millions)Amount
Cash consideration paid for Rockwell Collins outstanding common stock & equity awards$15,533 
Fair value of UTC common stock issued for Rockwell Collins outstanding common stock & equity awards
7,960 
Total consideration transferred$23,493 
The cash consideration utilized for the Rockwell Acquisition was partially financed through the previously disclosed issuance of $11.0 billion aggregate principal notes on August 16, 2018 for net proceeds of $10.9 billion. For the remainder of the cash consideration, we utilized repatriated cash and cash equivalents and cash flow generated from operating activities.
Final Allocation of Consideration Transferred to Net Assets Acquired:
The table below represents the final determination of the fair value of identifiable assets acquired and liabilities assumed from the Rockwell Collins acquisition after utilizing the one year measurement period allowed by the FASB ASC Topic 805, “Business Combinations.”
(dollars in millions)
Cash and cash equivalents$640 
Accounts receivable1,659 
Inventory1,487 
Contract assets, current320 
Other assets, current251 
Future income tax benefits38 
Fixed assets1,542 
Intangible assets:
Customer relationships8,720 
Tradenames/trademarks1,870 
        Developed technology600 
Other assets217 
Total identifiable assets acquired17,344 
Short-term borrowings2,254 
Accounts payable520 
Accrued liabilities1,663 
Contract liabilities, current299 
Long-term debt5,530 
Future pension and postretirement benefit obligation502 
Other long-term liabilities3,614 
Noncontrolling interest6 
Total liabilities acquired14,388 
Total identifiable net assets2,956 
Goodwill20,537 
Total consideration transferred$23,493 
In order to allocate the consideration transferred for Rockwell Collins, the fair values of all identifiable assets and liabilities were established. For accounting and financial reporting purposes, fair value is defined under FASB ASC Topic 820, “Fair Value Measurements and Disclosures” as the price that would be received upon sale of an asset or the amount paid to transfer a liability in an orderly transaction between market participants at the measurement date. Market participants are assumed to be buyers and sellers in the principal (most advantageous) market for the asset or liability. Additionally, fair value measurements for an asset assume the highest and best use of that asset by market participants. Use of different estimates and judgments could yield different results. Fair value adjustments to Rockwell Collins’ identified assets and liabilities resulted in an increase in inventory and fixed assets of $282 million and $244 million, respectively. In determining the fair value of identifiable assets acquired and liabilities assumed, a review was conducted for any significant contingent assets or liabilities existing as of the acquisition date. This assessment did not note any significant contingencies related to existing legal or government action.
The fair values of the customer relationship and related program intangible assets, which include the related aerospace program original equipment (OEM) and aftermarket cash flows, were determined by using an “income approach.” Under this approach, the net earnings attributable to the asset or liability being measured are isolated using the discounted projected net cash flows. These projected cash flows are isolated from the projected cash flows of the combined asset group over the remaining economic life of the intangible asset or liability being measured. Both the amount and the duration of the cash flows are considered from a market participant perspective. Our estimates of market participant net cash flows considered historical and projected pricing, remaining developmental effort, operational performance, including company specific synergies, aftermarket retention, product life cycles, material and labor pricing, and other relevant customer, contractual and market factors. Where appropriate, the net cash flows are probability-adjusted to reflect the uncertainties associated with the underlying assumptions as well as the risk profile of the net cash flows utilized in the valuation. The probability-adjusted future cash flows are then discounted to present value using an appropriate discount rate. The customer relationship and related program intangible assets are being amortized on a straight-line basis (which approximates the economic pattern of benefits) over the
estimated economic life of the underlying programs of 10 to 23 years. The developed technology intangible asset is being amortized over the economic pattern of benefit. The fair value of the tradename intangible assets were determined utilizing the relief from royalty method which is a form of the income approach. Under this method, a royalty rate based on observed market royalties is applied to projected revenue supporting the valuation of the tradename and discounted to present value using an appropriate discount rate. The tradename intangible assets have been determined to have an indefinite life. The intangible assets included above consist of the following:
(dollars in millions)
Fair Value		Estimated
Life
Acquired customer relationships$8,720 10-23 years
Acquired tradenames/trademarks1,870 indefinite
Acquired developed technology600 15 years
$11,190 
We also identified customer contractual obligations on certain contracts with economic returns that are lower than could be realized in market transactions as of the acquisition date. We measured these liabilities under the measurement provisions of FASB ASC Topic 820, “Fair Value Measurements and Disclosures,” which is based on the price to transfer the obligation to a market participant at the measurement date, assuming that the liability will remain outstanding in the marketplace. Based on the estimated net cash outflows of the programs plus a reasonable contracting profit margin required to transfer the contracts to market participants, we recorded assumed liabilities of approximately $1.02 billion in connection with the Rockwell Acquisition. These liabilities will be liquidated in accordance with the underlying pattern of obligations, as reflected by the expenses incurred on the contracts. Total consumption of the contractual obligation in 2019 was $129 million. Total consumption of the contractual obligation for the next five years is expected to be as follows: $104 million in 2020, $104 million in 2021, $112 million in 2022, $96 million in 2023, and $101 million in 2024.
Acquisition-Related Costs:
Acquisition-related costs have been expensed as incurred. In 2019, 2018, and 2017 approximately $40 million, $112 million, and $39 million respectively, of transaction and integration costs have been incurred. These costs were recorded in Selling, general and administrative expenses within the Consolidated Statement of Operations.
Supplemental Pro-Forma Data:
Rockwell Collins’ results of operations have been included in RTC’s financial statements for the period subsequent to the completion of the acquisition on November 26, 2018. Rockwell Collins contributed sales of approximately $778 million and operating profit of approximately $11 million for the year ended December 31, 2018. The following unaudited supplemental pro-forma data presents consolidated information as if the acquisition had been completed on January 1, 2017. The pro-forma results were calculated by combining the results of RTC with the stand-alone results of Rockwell Collins for the pre-acquisition periods, which were adjusted to account for certain costs that would have been incurred during this pre-acquisition period:
 Year Ended December 31,
(dollars in millions, except per share amounts; shares in millions)20182017
Net sales$42,336 $37,909 
Net income attributable to common shareowners from continuing operations$2,011 $1,423 
Basic earnings per share of common stock from continuing operations$2.26 $1.66 
Diluted earnings per share of common stock from continuing operations$2.24 $1.65 
The unaudited supplemental pro-forma data above includes the following significant adjustments made to account for certain costs which would have been incurred if the acquisition had been completed on January 1, 2017, as adjusted for the
applicable tax impact. As our acquisition of Rockwell Collins was completed on November 26, 2018, the pro-forma adjustments in the table below only include the required adjustments through November 26, 2018:
 Year Ended December 31,
(dollars in millions)20182017
Amortization of inventory and fixed asset fair value adjustment (1)
58 $(192)
Amortization of acquired Rockwell Collins intangible assets, net (2)
(193)(202)
Utilization of contractual customer obligation (3)
16 116 
RTC/Rockwell fees for advisory, legal, accounting services (4)
212 (212)
Interest expense incurred on acquisition financing, net (5)
(199)(234)
Elimination of capitalized pre-production engineering amortization (6)
63 42 
Adjustment to net periodic pension cost (7)
42 34 
Adjustment to reflect the adoption of ASC 606 (8)
106 — 
Elimination of entities held for sale (9)
(47)(35)
Inclusion of B/E Aerospace (10)
— (51)
$58 $(734)
(1)    2018 reflects the elimination of the inventory step-up amortization recorded by RTC in 2018 as this would have been completed within the first two quarters of 2017. Additionally, this adjustment reflects the amortization of the fixed asset fair value adjustment as of the acquisition date.
(2)    Reflects the additional amortization of the acquired Rockwell Collins’ intangible assets recognized at fair value in purchase accounting and eliminates the historical Rockwell Collins intangible asset amortization expense.
(3)    Reflects the additional amortization of liabilities recognized for acquired contracts with terms less favorable than could be realized in market transactions as of the acquisition date and eliminates Rockwell Collins historical amortization of these liabilities.
(4)    2018 reflects the elimination of transaction-related fees incurred by RTC and Rockwell Collins in connection with the acquisition and assumes all of the fees were incurred during the first quarter of 2017.
(5)    Reflects the additional interest expense incurred on debt to finance our acquisition of Rockwell Collins and reduces interest expense for the debt fair value adjustment which would have been amortized.
(6)    Reflects the elimination of Rockwell Collins capitalized pre-production engineering amortization to conform to RTC policy.
(7)    Reflects adjustments for the elimination of amortization of prior service cost and actuarial loss amortization, which was recorded by Rockwell Collins, as a result of fair value purchase accounting, net of the impact of the revised pension and post-retirement benefit (expense) as determined under RTC’s plan assumptions.
(8)    Reflects adjustments to Rockwell Collins revenue recognition as if they adopted the New Revenue Standard as of January 1, 2018 and primarily relates to capitalization of contract costs and changes in timing of sales recognition for contracts requiring an over time method of revenue recognition, partially offset by deferral of revenue recognized on OEM product engineering and development.
(9)    Reflects the elimination of entities required to be sold for regulatory approvals.
(10)    Reflects adjustments to include the results and related adjustments for B/E Aerospace as if it had been acquired by Rockwell Collins on January 1, 2017.
The unaudited supplemental pro-forma financial information does not reflect the potential realization of cost savings related to the integration of the two companies. Further, the pro-forma data should not be considered indicative of the results that would have occurred if the acquisition and related financing had been consummated on January 1, 2017, nor are they indicative of future results.
Dispositions. Cash inflows related to dispositions during the 2019 were $134 million and primarily consisted of the dispositions of businesses held for sale associated with the Rockwell Collins acquisition. In accordance with conditions imposed for regulatory approval of the acquisition, Rockwell Collins was required to dispose of certain businesses. These businesses were held separate from RTC’s and Rockwell Collins’ ongoing businesses pursuant to regulatory requirements. Definitive agreements to sell each of the businesses were entered into prior to the completion of RTC’s acquisition of Rockwell Collins. The related assets and liabilities of these businesses had been accounted for as held for sale at fair value less cost to sell. As of December 31, 2018, assets held for sale of $175 million were included within Other assets, current and liabilities held for sale of $40 million were included within Accrued liabilities on the Consolidated Balance Sheet. The major classes of assets and liabilities primarily included net Inventory of $51 million and net Fixed assets of $37 million. In the first quarter of 2019, Rockwell Collins completed the sale of all businesses which were held for sale as of December 31, 2018.
As further discussed in “Note 3: Discontinued Operations,” on April 2, 2020, Carrier and Otis entered into a Separation and Distribution Agreement with UTC, pursuant to which, among other things, UTC agreed to separate into three independent, publicly traded companies – UTC, Otis and Carrier and distribute all of the outstanding common stock of Carrier and Otis to UTC shareowners who held shares of UTC common stock as of the close of business on March 19, 2020. As a result of the distributions, Carrier and Otis are independent publicly traded companies.
On January 20, 2020 the Company reached an agreement with BAE Systems, Inc. on a proposed sale of assets related to the Collins Aerospace Systems military global positioning system business for $1.93 billion. The proposed sale is required as a regulatory condition to the Raytheon Merger, and is subject to the completion of the Raytheon Merger, as well as the
satisfaction of other customary closing conditions, including receipt of required regulatory approvals. Due to these closing conditions, the criteria for held for sale accounting treatment were not met as of December 31, 2019.
Goodwill. Changes in our goodwill balances for the year ended in 2019 were as follows:
(dollars in millions)Balance as of
January 1,
2019		Goodwill
resulting from
business
combinations		Foreign
currency
translation
and other		Balance as of
December 31,
2019
Pratt & Whitney$1,567 $— $(4)$1,563 
Collins Aerospace Systems35,002 75 (52)35,025 
Total Segments36,569 75 (56)36,588 
Eliminations and other21 — — 21 
Total$36,590 $75 $(56)$36,609 
The $75 million increase in Goodwill at Collins Aerospace Systems reflects a $475 million net increase in Goodwill resulting from several individually insignificant purchase accounting adjustments related to the Rockwell Acquisition, partially offset by a $400 million decrease in Goodwill related to adjustments to the customer relationship intangible asset associated with the Rockwell Acquisition.
Intangible Assets. Identifiable intangible assets are comprised of the following:
 20192018
(dollars in millions)Gross
Amount		Accumulated
Amortization		Gross
Amount		Accumulated
Amortization
Amortized:
Patents and trademarks$47 $(34)$47 $(32)
Collaboration intangible assets4,862 (920)4,509 (649)
Customer relationships and other21,026 (3,884)20,308 (2,913)
 25,935 (4,838)24,864 (3,594)
Unamortized:
Trademarks and other3,376 — 3,372 — 
Total$29,311 $(4,838)$28,236 $(3,594)
In addition to acquired customer relationship intangible assets, 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 is 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 may be used. We classify amortization of such payments as a reduction of sales. Amortization of intangible assets was $1,244 million, $736 million and $587 million in 2019, 2018 and 2017, respectively. The collaboration intangible assets are amortized based upon the pattern of economic benefits as represented by the underlying cash flows. The following is the expected amortization of total intangible assets for 2020 through 2024, which reflects the pattern of expected economic benefit on certain aerospace intangible assets:
(dollars in millions)20202021202220232024
Amortization expense$1,248$1,249$1,283$1,290$1,277
Other Matters. In January 2020, Boeing announced that it expects the 737 Max fleet to remain grounded until mid-2020. In addition, Boeing has also announced the temporary suspension of its production of the 737 Max. The Company considered the potential impact of these developments on goodwill and intangible asset balances that could be impacted by this situation and concluded that the balances remain recoverable and no adjustment was required.
v3.20.2
Discontinued Operations and Disposal Groups
 12 Months Ended
Dec. 31, 2019
Discontinued Operations and Disposal Groups [Abstract]  
Disposal Groups, Including Discontinued Operations, Disclosure DISCONTINUED OPERATIONSOn April 2, 2020, Carrier and Otis entered into a Separation and Distribution Agreement with UTC (since renamed Raytheon Technologies Corporation), pursuant to which, among other things, UTC agreed to separate into three independent, publicly traded companies – UTC, Otis and Carrier and distribute all of the outstanding common stock of Carrier and Otis to
UTC shareowners who held shares of UTC common stock as of the close of business on March 19, 2020. The Separation Transactions were completed on April 3, 2020.
Carrier and Otis are presented as discontinued operations and, as such, have been excluded from both continuing operations and segment results for all periods presented. Income (loss) from discontinued operations is as follows:
Year Ended December 31
(dollars, in millions)201920182017
Otis$1,033 $1,213 $1,123 
Carrier1,698 2,840 2,116 
Separation related transactions (1)
(704)— — 
Income (loss) from discontinued operations $2,027 $4,053 $3,239 
(1)    Reflects unallocable transaction costs incurred by the Company primarily related to professional services costs pertaining to the Separation Transactions and the establishment of Otis and Carrier as stand-alone public companies, facility relocation costs, costs to separate information systems, costs of retention bonuses and tax charges related to separation activities.
The following summarized financial information related to discontinued operations has been reclassified from Income from continuing operations and included in Income (loss) from discontinued operations:
Year Ended December 31
(dollars, in millions)201920182017
Otis
Product sales$5,669 $5,636 $5,498 
Service sales7,444 7,268 6,843 
Cost of products sold4,656 4,624 4,392 
Cost of services sold4,635 4,568 4,220 
Research and development163 185 187 
Selling, general and administrative expense1,906 1,636 1,583 
Other (expense) income, net(40)26 37 
Non-operating expense, net4 (18)(4)
Income from discontinued operations, before income taxes1,709 1,935 2,000 
Income tax expense525 561 704 
Income from discontinued operations1,184 1,374 1,296 
Less: Noncontrolling interest in subsidiaries earnings from discontinued operations151 161 173 
Income from discontinued operations attributable to common shareowners$1,033 $1,213 $1,123 
Carrier
Product sales$15,337 $15,657 $14,744 
Service sales3,247 3,239 3,039 
Cost of products sold10,878 11,047 10,447 
Cost of services sold2,298 2,281 2,154 
Research and development400 399 364 
Selling, general and administrative expense2,888 2,566 2,459 
Other income (expense), net246 1,156 794 
Non-operating (income) expense, net(43)(82)(88)
Income from discontinued operations, before income taxes2,409 3,841 3,241 
Income tax expense672 967 1,085 
Income from discontinued operations1,737 2,874 2,156 
Less: Noncontrolling interest in subsidiaries earnings from discontinued operations39 34 40 
Income from discontinued operations attributable to common shareowners$1,698 $2,840 $2,116 
Separation related transactions (1)
Selling, general and administrative expense16 $— $— 
Other (expense) income, net$(11)
Loss from discontinued operations, before income taxes(27)— — 
Income tax (benefit) expense677 — — 
Income (loss) from discontinued operations, net of tax(704)— — 
Total Income (loss) from discontinued operations attributable to common shareowners$2,027 $4,053 $3,239 
(1)    Reflects unallocable transaction costs incurred by the Company primarily related to professional services costs pertaining to the Separation Transactions and the establishment of Otis and Carrier as stand-alone public companies, facility relocation costs, costs to separate information systems, costs of retention bonuses and tax charges related to separation activities.
Selected financial information related to cash flows from discontinued operations is as follows:
Year Ended December 31
(dollars, in millions)201920182017
Net cash provided by operating activities$3,062 $3,652 $3,349 
Net cash (used in) provided by investing activities(416)286 108 
Net cash used in financing activities(2,651)(4,244)(3,431)
Net cash provided by operating activities includes the net operating cash flows of Otis and Carrier prior to the Separation Transactions, as well as costs incurred by the Company primarily related to professional services costs pertaining to the Separation Transactions and the establishment of Otis and Carrier as stand-alone public companies, facility relocation costs, costs to separate information systems, costs of retention bonuses and tax charges related to separation activities. Net cash used in financing activities primarily consists of net cash transfers from Otis and Carrier to RTC.
The major components of assets and liabilities related to discontinued operations at December 31, 2019 are provided below:
(dollars, in millions)OtisCarrierTotal
Assets
Cash and cash equivalents$1,446 $995 $2,441 
Accounts receivable, net2,899 2,728 5,627 
Contract assets, current530 679 1,209 
Inventories and contracts in progress, net571 1,332 1,903 
Other assets, current213 221 434 
Future income tax benefits355 370 725 
Fixed assets, net747 1,686 2,433 
Operating lease right-of-use assets529 818 1,347 
Goodwill1,647 9,807 11,454 
Intangible assets, net490 1,083 1,573 
Other assets220 2,457 2,677 
Total assets related to discontinued operations$9,647 $22,176 $31,823 
Liabilities and Redeemable Noncontrolling Interest
Short-term borrowings$33 $38 $71 
Accounts payable1,321 1,682 3,003 
Accrued liabilities1,651 2,889 4,540 
Contract liabilities, current2,288 611 2,899 
Long-term debt, currently due1 237 238 
Long-term debt5 82 87 
Future pension and postretirement benefit obligations560 455 1,015 
Operating lease liabilities383 668 1,051 
Other long-term liabilities (1)
514 1,025 1,539 
Total liabilities related to discontinued operations$6,756 $7,687 $14,443 
(1)    Amounts include a deferred tax jurisdictional netting adjustment of $145 million.
The major components of assets and liabilities related to discontinued operations at December 31, 2018 are provided below:
(dollars, in millions)OtisCarrierTotal
Assets
Cash and cash equivalents$1,329 $1,130 $2,459 
Accounts receivable, net2,764 2,883 5,647 
Contract assets, current661 450 1,111 
Inventories and contracts in progress, net640 1,363 2,003 
Other assets, current264 295 559 
Future income tax benefits304 343 647 
Fixed assets, net709 1,681 2,390 
Goodwill1,688 9,835 11,523 
Intangible assets, net569 1,214 1,783 
Other assets169 2,449 2,618 
Total assets related to discontinued operations$9,097 $21,643 $30,740 
Liabilities and Redeemable Noncontrolling Interest
Short-term borrowings$27 $14 $41 
Accounts payable1,334 1,910 3,244 
Accrued liabilities1,462 2,076 3,538 
Contract liabilities, current2,359 612 2,971 
Long-term debt, currently due1 153 154 
Long-term debt4 146 150 
Future pension and postretirement benefit obligations542 426 968 
Other long-term liabilities 469 1,093 1,562 
Total liabilities related to discontinued operations$6,198 $6,430 $12,628 
v3.20.2
Earnings Per Share
 12 Months Ended
Dec. 31, 2019
Earnings Per Share [Abstract]  
Earnings Per Share Text Block EARNINGS PER SHARE
(dollars in millions, except per share amounts; shares in millions)201920182017
Net income attributable to common shareowners:
Income from continuing operations attributable to common shareowners$3,510 $1,216 $1,313 
Income from discontinued operations attributable to common shareowners2,027 4,053 3,239 
Net income attributable to common shareowners$5,537 $5,269 $4,552 
Basic weighted average number of shares outstanding854.8 800.4 790.0 
Stock awards and equity units (share equivalent)9.1 9.7 9.1 
Diluted weighted average number of shares outstanding863.9 810.1 799.1 
Earnings per share attributable to common shareowners - basic
Income from continuing operations attributable to common shareowners$4.11 $1.52 $1.66 
Income from discontinued operations2.37 5.06 4.10 
Net income attributable to common shareowners$6.48 $6.58 $5.76 
Earnings per share attributable to common shareowners - diluted
Income from continuing operations attributable to common shareowners$4.06 $1.50 $1.64 
Income from discontinued operations2.35 5.00 4.06 
Net income attributable to common shareowners$6.41 $6.50 $5.70 
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. In addition, the computation of diluted earnings per share excludes the effect of the potential exercise of stock awards when the awards’ assumed proceeds exceed the average market price of the common shares during the period. For 2019, 2018 and 2017, there were 8.3 million, 5.1 million and 5.9 million anti-dilutive stock awards excluded from the computation, respectively.
v3.20.2
Commercial Aerospace Industry Assets and Commitments
 12 Months Ended
Dec. 31, 2019
Other Commitments [Abstract]  
Commercial Aerospace Industry Assets and Commitments
NOTE 5: COMMERCIAL AEROSPACE INDUSTRY ASSETS AND COMMITMENTS
    We have receivables and other financing assets with commercial aerospace industry customers totaling $11,293 million and $11,695 million at December 31, 2019 and 2018, respectively. These include customer financing assets related to commercial aerospace industry customers, consisting of products under lease of $3,185 million and $2,736 million, and notes and leases receivable of $308 million and $299 million, at December 31, 2019 and 2018, respectively.
Aircraft financing commitments, in the form of debt or lease financing, are provided to commercial aerospace customers. The extent to which the financing commitments will be utilized is not currently known, since customers may be able to obtain more favorable terms from other financing sources. We may also arrange for third-party investors to assume a portion of these commitments. If financing commitments are exercised, debt financing is generally secured by assets with fair market values equal to or exceeding the financed amounts consistent with market terms and conditions. We may also lease aircraft and subsequently sublease the aircraft to customers under long-term non-cancelable operating leases. Our financing commitments with customers are contingent upon maintenance of certain levels of financial condition by the customers.
We have also made residual value and other guarantees related to various commercial aerospace customer financing arrangements. The estimated fair market values of the guaranteed assets equal or exceed the value of the related guarantees, net of existing reserves. We have residual value and other guarantees of $333 million as of December 31, 2019. Partner share of these guarantees is $142 million. Refer to “Note 18: Guarantees” for additional discussion on guarantees.
We also have other contractual commitments, including commitments to secure certain contractual rights to provide product on new aircraft platforms, which are included in “Other commercial aerospace commitments” in the table below. Payments made on these contractual commitments are included within other intangible assets and are to be amortized over the term of underlying economic benefit. Our commercial aerospace financing and other contractual commitments as of December 31, 2019 were approximately $15.0 billion. We have entered into certain collaboration arrangements, which may include participation by our collaboration partners in these commitments. 
The following is the expected maturity of commercial aerospace industry assets and commitments as of December 31, 2019:
(dollars in millions)Committed20202021202220232024Thereafter
Notes and leases receivable$308 $30 $23 $14 $22 $38 $181 
Commercial aerospace financing commitments$3,937 $911 $1,119 $974 $819 $44 $70 
Other commercial aerospace commitments11,055 702 736 717 668 627 7,605 
Collaboration partners’ share(5,284)(508)(623)(571)(538)(193)(2,851)
Total commercial commitments$9,708 $1,105 $1,232 $1,120 $949 $478 $4,824 
In connection with our 2012 agreement to acquire Rolls-Royce’s ownership and collaboration interests in IAE AG, additional payments are due to Rolls-Royce contingent upon each hour flown through June 2027 by the V2500-powered aircraft in service as of the acquisition date. These flight hour payments, included in “Other commercial aerospace commitments” in the table above, are being capitalized as collaboration intangible assets.
We have long-term aftermarket maintenance contracts with commercial aerospace industry customers for which revenue is recognized over-time in proportion to actual costs incurred relative to total expected costs to be incurred over the respective contract periods. Billings, however, are typically based on factors such as aircraft or engine flight hours. The timing differences between the billings and the maintenance costs incurred generates both Contract assets and Contract liabilities. Additionally, we have other contracts with commercial aerospace industry customers which can result in the generation of Contract assets and Contract liabilities. Contract assets totaled $2,741 million and $2,247 million at December 31, 2019 and 2018, respectively, and are included in “Contract assets, current” and “Other assets” in the accompanying Consolidated Balance Sheet.
Allowance for doubtful accounts was $248 million and $245 million at December 31, 2019 and 2018, respectively. Reserves related to financing commitments and guarantees were $7 million and $15 million at December 31, 2019 and 2018, respectively.
In addition, in connection with the acquisition of Rockwell Collins in 2018 and Goodrich in 2012, we recorded assumed liabilities of approximately $1.02 billion and $2.2 billion, respectively related to customer contractual obligations on certain programs with terms less favorable than could be realized in market transactions as of the acquisition date. These liabilities are being liquidated in accordance with the underlying pattern of obligations, as reflected by the net cash outflows incurred on the contracts. Total consumption of the contractual obligations for the years ended December 31, 2019 and 2018 was approximately $345 million and $252 million, respectively. The balance of the contractual obligations at December 31, 2019 was $1,408 million, with future consumption expected to be as follows: $263 million in 2020, $189 million in 2021, $148 million in 2022, $118 million in 2023, $127 million in 2024 and $563 million thereafter.
We also have intangible assets associated with commercial aerospace. Refer to “Note 2: Business Acquisitions, Dispositions, Goodwill and Intangible Assets” for discussion of intangible assets. Refer to “Note 1: Summary of Accounting Principles” for discussion of contract fulfillment costs. Refer to “Note 20: Leases” for discussion of leases, including those that were disclosed as commitments prior to the adoption of ASC 842.
v3.20.2
Inventory, Net
 12 Months Ended
Dec. 31, 2019
Inventory Disclosure [Abstract]  
Inventory, Net [Text Block] INVENTORY, NET
(dollars in millions)20192018
Raw materials$2,984 $2,624 
Work-in-process2,586 2,538 
Finished goods3,477 2,919 
$9,047 $8,081 
Raw materials, work-in-process and finished goods are net of valuation reserves of $1,122 million and $1,036 million as of December 31, 2019 and 2018, respectively.
v3.20.2
Contract Assets and Liabilities
 12 Months Ended
Dec. 31, 2019
Revenue from Contract with Customer [Abstract]  
Revenue from Contract with Customer CONTRACT ASSETS AND LIABILITIESContract assets reflect revenue recognized and performance obligations satisfied in advance of customer billing. Contract liabilities relate to payments received in advance of the satisfaction of performance under the contract. We receive payments
from customers based on the terms established in our contracts. Total contract assets and contract liabilities as of December 31, 2019 and 2018 are as follows:
(dollars in millions)December 31, 2019December 31, 2018
Total contract assets
$4,462 $3,666 
Total contract liabilities
(9,014)(7,818)
Net contract liabilities$(4,552)$(4,152)
Contract assets increased $796 million during the year ended December 31, 2019 due to revenue recognition in excess of customer billings, primarily on Pratt & Whitney military and commercial aftermarket service agreements and various programs at Collins Aerospace Systems. Contract liabilities increased $1,196 million during the year ended December 31, 2019 primarily due to customer billings in excess of revenue recognized on Pratt & Whitney commercial aftermarket service agreements and various programs at Collins Aerospace Systems. We recognized revenue of $2.9 billion during the year ended December 31, 2019 related to contract liabilities as of December 31, 2018.
v3.20.2
Fixed Assets
 12 Months Ended
Dec. 31, 2019
Property, Plant and Equipment [Abstract]  
Fixed Assets FIXED ASSETS
(dollars in millions)Estimated
Useful Lives		20192018
Land$292 $266 
Buildings and improvements
12-40 years
4,978 4,768 
Machinery, tools and equipment
3-20 years
12,936 11,951 
Other, including assets under construction 1,871 1,735 
20,077 18,720 
Accumulated depreciation (9,755)(8,814)
$10,322 $9,906 
Depreciation expense is recorded predominantly utilizing the straight-line method and was $1,191 million in 2019, $945 million in 2018 and $869 million in 2017.
v3.20.2
Accrued Liabilities
 12 Months Ended
Dec. 31, 2019
Accrued Liabilities [Abstract]  
Accrued Liabilities ACCRUED LIABILITIES
(dollars in millions)20192018
Accrued salaries, wages and employee benefits $1,353 $1,063 
Customer contractual obligations1,408 1,705 
Service and warranty accruals1,033 929 
Interest payable472 468 
Litigation and contract matters 405 324 
Income taxes payable 106 313 
Accrued property, sales and use taxes140 94 
Canadian government settlement - current portion— 34 
Accrued restructuring costs 123 159 
Accrued workers compensation91 80 
Liabilities held for sale— 40 
Operating lease liabilities, current245 — 
Other 4,394 4,186 
$9,770 $9,395 
Refer to “Note 20: Leases” for discussion of leases.
v3.20.2
Borrowings and Lines of Credit
 12 Months Ended
Dec. 31, 2019
Debt Disclosure [Abstract]  
Borrowings and Lines of Credit
(dollars in millions)20192018
Short-term borrowings:
Commercial paper$— $1,257 
Other borrowings2,293 171 
Total short-term borrowings$2,293 $1,428 
At December 31, 2019, we had credit agreements with various banks permitting aggregate borrowings of up to $10.35 billion including a $2.20 billion revolving credit agreement and a $2.15 billion multicurrency revolving credit agreement, both of which expire in August 2021; and a $2.0 billion revolving credit agreement and a $4.0 billion term credit agreement, both of which we entered into on March 15, 2019 and which will expire on March 15, 2021 or, if earlier, the date that is 180 days after the date on which each of the separations of Otis and Carrier have been consummated. As of December 31, 2019, there were borrowings of $2.10 billion under the $4.0 billion term credit agreement. The undrawn portions of the revolving credit agreements are also available to serve as backup facilities for the issuance of commercial paper.
As of December 31, 2019, our maximum commercial paper borrowing limit was $6.35 billion. We had no commercial paper borrowings as of December 31, 2019. We use our commercial paper borrowings for general corporate purposes, including the funding of potential acquisitions, pension contributions, debt refinancing, dividend payments and repurchases of our common stock. The need for commercial paper borrowings arises when the use of domestic cash for general corporate purposes exceeds the sum of domestic cash generation and foreign cash repatriated to the U.S.
At December 31, 2019, approximately $2.3 billion was available under short-term lines of credit with local banks at our various domestic and international subsidiaries. The weighted-average interest expense rates applicable to short-term borrowings and total debt were as follows:
20192018
Average interest expense rate - average outstanding borrowings during the year:
Short-term borrowings1.7 %1.3 %
Total debt3.6 %3.5 %
Average interest expense rate - outstanding borrowings as of December 31:
Short-term borrowings2.3 %1.9 %
Total debt3.6 %3.5 %
Long-term debt consisted of the following as of December 31:
(dollars in millions)20192018
Libor plus 0.350% floating rate notes due 2019 (3)
$— $350 
1.500% notes due 2019 (1)
— 650 
1.950% notes due 2019 (4)
— 300 
Euribor plus 0.15% floating rate notes due 2019 (€750 million principal value) (2)
— 858 
5.250% notes due 2019 (4)
— 300 
8.875% notes due 2019
— 271 
4.875% notes due 2020 (1)
171 171 
4.500% notes due 2020 (1)
1,250 1,250 
1.900% notes due 2020 (1)
1,000 1,000 
EURIBOR plus 0.20% floating rate notes due 2020 (€750 million principal value) (2)
831 858 
8.750% notes due 2021
250 250 
3.100% notes due 2021 (4)
250 250 
3.350% notes due 2021 (1)
1,000 1,000 
LIBOR plus 0.650% floating rate notes due 2021 (1),(3)
750 750 
1.950% notes due 2021 (1)
750 750 
1.125% notes due 2021 (€950 million principal value) (1)
1,053 1,088 
2.300% notes due 2022 (1)
500 500 
2.800% notes due 2022 (4)
1,100 1,100 
3.100% notes due 2022 (1)
2,300 2,300 
1.250% notes due 2023 (€750 million principal value) (1)
831 858 
3.650% notes due 2023 (1)
2,250 2,250 
3.700% notes due 2023 (4)
400 400 
2.800% notes due 2024 (1)
800 800 
3.200% notes due 2024 (4)
950 950 
1.150% notes due 2024 (€750 million principal value)(1)
831 858 
3.950% notes due 2025 (1)
1,500 1,500 
1.875% notes due 2026 (€500 million principal value)(1)
554 573 
2.650% notes due 2026 (1)
1,150 1,150 
3.125% notes due 2027 (1)
1,100 1,100 
3.500% notes due 2027 (4)
1,300 1,300 
7.100% notes due 2027
141 141 
6.700% notes due 2028
400 400 
4.125% notes due 2028 (1)
3,000 3,000 
7.500% notes due 2029 (1)
550 550 
2.150% notes due 2030 (€500 million principal value)(1)
554 573 
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 
4.450% notes due 2038 (1)
750 750 
5.700% notes due 2040 (1)
1,000 1,000 
4.500% notes due 2042 (1)
3,500 3,500 
4.800% notes due 2043 (4)
400 400 
4.150% notes due 2045 (1)
850 850 
3.750% notes due 2046 (1)
1,100 1,100 
4.050% notes due 2047 (1)
600 600 
4.350% notes due 2047 (4)
1,000 1,000 
4.625% notes due 2048 (1)
1,750 1,750 
Other (including finance leases)315 269 
Total principal long-term debt41,274 44,111 
Other (fair market value adjustments, discounts and debt issuance costs)(315)(348)
Total long-term debt40,959 43,763 
Less: current portion3,258 2,722 
Long-term debt, net of current portion$37,701 $41,041 
(1)    We may redeem these notes at our option pursuant to their terms.
(2)    The three-month EURIBOR rate as of December 31, 2019 was approximately (0.383)%. 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 December 31, 2019 was approximately 1.908%.
(4)    Rockwell Collins debt which remained outstanding following the Rockwell Acquisition.
We had no debt issuances during 2019 and the following issuances of debt in 2018:
(dollars in millions)
Issuance DateDescription of NotesAggregate Principal Balance
August 16, 2018:
3.350% notes due 2021(1)
$1,000 
3.650% notes due 2023(1)
2,250 
3.950% notes due 2025(1)
1,500 
4.125% notes due 2028(1)
3,000 
4.450% notes due 2038(1)
750 
4.625% notes due 2048(2)
1,750 
LIBOR plus 0.65% floating rate notes due 2021(1)
750 
May 18, 2018:
1.150% notes due 2024(3)
€750 
2.150% notes due 2030(3)
500 
EURIBOR plus 0.20% floating rate notes due 2020(3)
750 
(1)    The net proceeds received from these debt issuances were used to partially finance the cash consideration portion of the purchase price for Rockwell Collins and fees, expenses and other amounts related to the acquisition of Rockwell Collins.
(2)    The net proceeds from these debt issuances were used to fund the repayment of commercial paper and for other general corporate purposes.
(3)    The net proceeds received from these debt issuances were used for general corporate purposes.
    We made the following repayments of debt in 2019 and 2018:
(dollars in millions)
Repayment DateDescription of NotesAggregate Principal Balance
November 15, 2019
8.875% notes
$271 
November 13, 2019
EURIBOR plus 0.15% floating rate notes
€750 
November 1, 2019:
LIBOR plus 0.350% floating rate notes
$350 
1.500% notes
$650 
July 15, 2019:
1.950% notes(1)
$300 
5.250% notes(1)
$300 
December 14, 2018
Variable-rate term loan due 2020 (1 month LIBOR plus 1.25%)(1)
$482 
May 4, 2018
1.778% junior subordinated notes
$1,100 
February 22, 2018
EURIBOR plus 0.80% floating rate notes
€750 
February 1, 2018
6.80% notes
$99 
(1)    These notes and term loan were assumed in connection with the Rockwell Collins acquisition and subsequently repaid.
The percentage of total short-term borrowings and long-term debt at variable interest rates was 9% and 10% at December 31, 2019 and 2018, respectively. Interest rates on our commercial paper borrowings are considered variable due to their short-term duration and high-frequency of turnover.
The average maturity of our long-term debt at December 31, 2019 is approximately 10 years. The schedule of principal payments required on long-term debt for the next five years and thereafter is:
(dollars in millions)  
2020$3,258 
20214,091 
20223,904 
20233,490 
20242,592 
Thereafter23,939 
Total$41,274 
    On September 27, 2019 we filed a universal shelf registration statement with the SEC for an indeterminate amount of debt and equity securities for future issuance, subject to our internal limitations on the amount of debt to be issued under the shelf registration statement.
v3.20.2
Accumulated Other Comprehensive Income
 12 Months Ended
Dec. 31, 2019
Stockholders' Equity Note [Abstract]  
AOCI Note Disclosure [Text Block]
A summary of the changes in each component of Accumulated other comprehensive (loss) income, net of tax for the years ended December 31, 2019 and 2018 is provided below:
(dollars in millions)Foreign
Currency
Translation		Defined Benefit
Pension and
Postretirement
Plans		Unrealized Gains
(Losses) on
Available-for-
Sale Securities		Unrealized
Hedging
(Losses)
Gains		Accumulated
Other
Comprehensive
(Loss) Income
Balance at December 31, 2017$(2,950)$(4,652)$5 $72 $(7,525)
Other comprehensive income before reclassifications, net(486)(1,736)— (307)(2,529)
Amounts reclassified, pre-tax(2)344 — (16)326 
Tax (expense) benefit(4)326 — 78 400 
ASU 2016-01 adoption impact$— $— $(5)$— $(5)
Balance at December 31, 2018$(3,442)$(5,718)$— $(173)$(9,333)
Other comprehensive loss before reclassifications, net280 (584)— (33)(337)
Amounts reclassified, pre-tax2 170 — 51 223 
Tax (expense) benefit(43)97 — (11)43 
ASU 2018-02 adoption impact(8)(737)— — (745)
Balance at December 31, 2019$(3,211)$(6,772)$— $(166)$(10,149)
In February 2018, the FASB issued ASU 2018-02, Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income (Topic 220). The new standard allows companies to reclassify to retained earnings the stranded tax effects in Accumulated other comprehensive income (AOCI) from the TCJA. We elected to reclassify the income tax effects of TCJA from AOCI of $745 million to retained earnings, effective January 1, 2019.
In January 2016, the FASB issued ASU 2016-01, Financial Instruments - Overall: Recognition and Measurement of Financial Assets and Financial Liabilities. This ASU modifies how entities measure equity investments and present changes in the fair value of financial liabilities. Upon adoption, investments that do not result in consolidation and are not accounted for under the equity method generally must be carried at fair value, with changes in fair value recognized in net income. We had approximately $5 million of unrealized gains on these securities recorded in Accumulated other comprehensive loss in our Consolidated Balance Sheet as of December 31, 2017. We adopted this standard effective January 1, 2018, with these amounts recorded directly to retained earnings as of that date.
Amounts reclassified that relate to our defined benefit pension and postretirement plans include the amortization of prior service costs and actuarial net losses recognized during each period presented. These costs are recorded as components of net periodic pension cost for each period presented. Additionally, during 2019, we recorded a curtailment gain of $98 million in the Consolidated Statement of Operations which is included within amounts reclassified related to our defined pension and postretirement plans (see “Note 13: Employee Benefit Plans” for additional details).
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 Consolidated Balance Sheet, between liabilities and equity, at the greater of redemption value or initial carrying value.
v3.20.2
Employee Benefit Plans
 12 Months Ended
Dec. 31, 2019
Employee Benefit and Share-based Payment Arrangement, Noncash Expense [Abstract]  
Employee Benefit Plans EMPLOYEE BENEFIT PLANS
We sponsor numerous domestic and foreign employee benefit plans, which are discussed below.
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(s) as other compensation costs arising from services rendered by the pertinent employees during the period, with other cost components presented separately from the service cost component and outside of income from operations. This ASU also allows only the service cost component of net periodic pension benefit cost to be eligible for capitalization when applicable. This ASU was effective for years beginning after December 15, 2017. The Company adopted this standard on January 1, 2018 applying the presentation requirements retrospectively. We elected to apply the practical expedient, which allows us to reclassify amounts disclosed previously in the employee benefit plans note as the basis for applying retrospective presentation for comparative periods as it is impracticable to determine the disaggregation of the cost components for amounts capitalized and amortized in those periods. Provisions related to presentation of the service cost component eligibility for capitalization were applied prospectively.
The effect of the retrospective presentation change related to the net periodic benefit cost of our defined benefit pension and postretirement plans on our Consolidated Statement of Operations was a $455 million decrease in operating profit and a $455 million increase in non-service pension (benefit), with zero impact on income from continuing operations and net income.
Employee Savings Plans. We sponsor various employee savings plans. Our contributions to employer sponsored defined contribution plans were $485 million, $332 million and $286 million for 2019, 2018 and 2017, respectively.
Our non-union domestic employee savings plan uses an Employee Stock Ownership Plan (ESOP) for employer matching contributions. External borrowings were used by the ESOP to fund a portion of its purchase of ESOP stock from us. The external borrowings have been extinguished and only re-amortized loans remain between RTC and the ESOP Trust. As ESOP debt service payments are made, common stock is released from an unreleased shares account. ESOP debt may be prepaid or re-amortized to either increase or decrease the number of shares released so that the value of released shares equals the value of plan benefit. We may also, at our option, contribute additional common stock or cash to the ESOP.
Shares of common stock are allocated to employees’ ESOP accounts at fair value on the date earned. Cash dividends on common stock held by the ESOP are used for debt service payments. Participants may choose to have their ESOP dividends reinvested or distributed in cash. Common stock allocated to ESOP participants is included in the average number of common shares outstanding for both basic and diluted earnings per share. At December 31, 2019, 23.4 million common shares had been allocated to employees, leaving 7.9 million unallocated common shares in the ESOP Trust, with an approximate fair value of $1.2 billion.
Pension Plans. We sponsor both funded and unfunded domestic and foreign defined benefit pension plans that cover a large number of our employees. Our largest plans are generally closed to new participants. Our plans use a December 31 measurement date consistent with our fiscal year.
(dollars in millions)20192018
Change in Benefit Obligation:
Beginning balance$34,344 $33,283 
Service cost attributable to continuing operations261 265 
Service cost attributable to discontinued operations34 40 
Interest cost1,245 1,058 
Actuarial loss (gain)4,247 (1,938)
Total benefits paid(2,016)(1,783)
Net settlement, curtailment and special termination benefits(206)(14)
Plan amendments— 56 
Business combinations(6)3,694 
Other124 (317)
Ending balance$38,027 $34,344 
Change in Plan Assets:
Beginning balance$32,150 $32,205 
Actual return on plan assets5,873 (1,516)
Employer contributions137 156 
Benefits paid(2,016)(1,783)
Settlements(17)(16)
Business combinations(10)3,355 
Other108 (251)
Ending balance$36,225 $32,150 
Funded Status:
Fair value of plan assets$36,225 $32,150 
Benefit obligations(38,027)(34,344)
Funded status of plan$(1,802)$(2,194)
Amounts Recognized in the Consolidated Balance Sheet Consist of:
Noncurrent assets$19 $157 
Current liability(51)(56)
Noncurrent liability(1,770)(2,295)
Net amount recognized$(1,802)$(2,194)
Amounts Recognized in Accumulated Other Comprehensive Loss Consist of:
Net actuarial loss$8,160 $7,948 
Prior service cost 190 130 
Net actuarial loss and prior service cost related to discontinued operations763 667 
Net amount recognized$9,113 $8,745 
In September 2019, we amended our domestic pension plans to cease accrual of additional benefits for future service and compensation for non-union participants effective December 31, 2019. Beginning January 1, 2020, these participants will earn additional contributions under our domestic savings plan. We utilized the practical expedient and remeasured plan assets and pension benefit obligations for the affected pension plans as of the nearest month-end, August 31, 2019, resulting in a net actuarial loss of $425 million. This reflects a benefit obligation gain of $180 million resulting from the benefit plan change that was offset by remeasurement losses of $605 million. The remeasurement losses are driven by a reduction of 124 basis points in the projected benefit obligation (PBO) discount rate as of the remeasurement date compared to December 31, 2018, partially offset by actual asset returns of approximately 17% as of the remeasurement date.
In September 2019, we recorded a curtailment gain of $98 million in the Consolidated Statement of Operations, due to the recognition of previously unrecognized prior service credits for the affected pension plans. Additionally, as a result of the remeasurement, pension income (excluding curtailment) decreased by approximately $39 million for the year ended December 31, 2019.
The amounts included in “Other” in the above table primarily reflect the impact of foreign exchange translation, primarily for plans in the U.K. and Canada.
As part of the Rockwell acquisition on November 26, 2018, we assumed approximately $3.7 billion of pension projected benefit obligations and $3.4 billion of plan assets.
Qualified domestic pension plan benefits comprise approximately 82% of the projected benefit obligation. Benefits for union employees are generally based on a stated amount for each year of service. For non-union employees, benefits for service up to December 31, 2014 are generally based on an employee’s years of service and compensation through December 31, 2014. Benefits for service after December 31, 2014 through December 31, 2019 are based on the existing cash balance formula that was adopted in 2003 for newly hired non-union employees and for other non-union employees who made a one-time voluntary election to have future benefit accruals determined under this formula. Certain foreign plans, which comprise approximately 17% of the projected benefit obligation, are considered defined benefit plans for accounting purposes. Nonqualified domestic pension plans provide supplementary retirement benefits to certain employees and are not a material component of the projected benefit obligation.
We made $25 million of cash contributions to our domestic defined benefit pension plans and made $30 million of cash contributions to our foreign defined benefit pension plans in 2019. In 2018, we made no cash contributions to our domestic defined benefit pension plans and made $79 million of cash contributions to our foreign defined benefit pension plans.
Information for pension plans with accumulated benefit obligations in excess of plan assets: 
(dollars in millions)20192018
Projected benefit obligation$37,941 $24,796 
Accumulated benefit obligation37,599 24,471 
Fair value of plan assets36,120 22,558 
Information for pension plans with projected benefit obligations in excess of plan assets: 
(dollars in millions)20192018
Projected benefit obligation$37,943 $27,225 
Accumulated benefit obligation37,600 26,752 
Fair value of plan assets36,122 24,873 
The accumulated benefit obligation for all defined benefit pension plans was $37.7 billion and $33.8 billion at December 31, 2019 and 2018, respectively.
The components of the net periodic pension benefit are as follows: 
(dollars in millions)201920182017
Pension Benefits:
Service cost$261 $265 $268 
Interest cost1,245 1,058 1,043 
Expected return on plan assets(2,252)(2,061)(2,033)
Amortization of prior service cost (credit)16 (42)(37)
Recognized actuarial net loss245 373 550 
Net settlement, curtailment and special termination benefits (gain) loss(59)3 3 
Net periodic pension benefit - employer$(544)$(404)$(206)
Other changes in plan assets and benefit obligations recognized in other comprehensive loss in 2019 are as follows: 
(dollars in millions)Continuing OperationsDiscontinued OperationsTotal
Current year actuarial loss$434 $119 $553 
Amortization of actuarial loss(245)(20)(265)
Current year prior service cost— 6 6 
Amortization of prior service cost(16)(1)(17)
Net settlement and curtailment 62 (5)57 
Other36 (2)34 
Total recognized in other comprehensive loss$271 97 $368 
Net recognized in net periodic pension benefit and other comprehensive loss$(232)97 $(135)
The amount included in “Other” in the above table primarily reflects the impact of foreign exchange translation, primarily for plans in the U.K. and Canada.
The estimated amount that will be amortized from accumulated other comprehensive loss into net periodic pension (benefit) cost in 2020 is as follows:
(dollars in millions)  
Net actuarial loss$336 
Prior service cost49 
$385 
Major assumptions used in determining the benefit obligation and net cost for pension plans are presented in the following table as weighted-averages: 
Benefit ObligationNet Cost
  20192018201920182017
Discount rate
PBO3.1 %4.0 %4.0 %3.5 %3.9 %
Interest cost (1)
— — 3.7 %3.1 %3.3 %
Service cost (1)
— — 3.7 %3.4 %3.8 %
Salary scale4.3 %4.3 %4.3 %4.3 %4.3 %
Expected return on plan assets— — 6.8 %6.9 %7.4 %
(1)    The discount rates used to measure the service cost and interest cost applies to our significant plans. The PBO discount rate is used for the service cost and interest cost measurements for non-significant plans.
In determining the expected return on plan assets, we consider the relative weighting of plan assets, the historical performance of total plan assets and individual asset classes, and economic and other indicators of future performance. In addition, we may consult with and consider the opinions of financial and other professionals in developing appropriate capital market assumptions. Return projections are also validated using a simulation model that incorporates yield curves, credit spreads and risk premiums to project long-term prospective returns.
The plans’ investment management objectives include providing the liquidity and asset levels needed to meet current and future benefit payments, while maintaining a prudent degree of portfolio diversification considering interest rate risk and market volatility. Globally, investment strategies target a mix of 45% to 50% of growth seeking assets and 50% to 55% of income generating and hedging assets using a wide set of diversified asset types, fund strategies and investment managers. The growth seeking allocation consists of global public equities in developed and emerging countries, private equity, real estate and multi-asset class strategies. Growth assets include an enhanced alpha strategy that invests in publicly traded equity and fixed income securities, derivatives and foreign currency. Investments in private equity are primarily via limited partnership interests in buy-out strategies with smaller allocations to distressed debt funds. The real estate strategy is principally concentrated in directly held U.S. core investments with some smaller investments in international, value-added and opportunistic strategies. Within the income generating assets, the fixed income portfolio consists of mainly government and broadly diversified high quality corporate bonds.
The plans have continued their pension risk management techniques designed to reduce their interest rate risk. Specifically, the plans have incorporated liability hedging programs that include the adoption of a risk reduction objective as part of the long-term investment strategy. Under this objective the interest rate hedge is intended to increase as funded status improves. The hedging programs incorporate a range of assets and investment tools, each with varying interest rate sensitivities. As result of the improved funded status of the plans due to favorable asset returns and funding of the plans, the interest rate hedge increased significantly during 2017. The investment portfolios are currently hedging approximately 65% to 70% of the interest rate sensitivity of the pension plan liabilities. 
As a result of the shift in the target asset mix to higher income generating and hedging assets and lower growth seeking assets, combined with reduced capital market assumptions for most asset classes, we will reduce the expected return on plan assets assumption for 2020 including the assumption of a 6.5% return on plan assets for our qualified domestic pension plans, down from 7.0% in 2019.
The fair values of pension plan assets at December 31, 2019 and 2018 by asset category are as follows:
(dollars in millions)Quoted Prices in
Active Markets
For Identical Assets
(Level 1)		Significant
Observable 
Inputs
(Level 2)		Significant
Unobservable 
Inputs
(Level 3)		Not Subject to LevelingTotal
Asset Category:
Public Equities
Global Equities$3,588 $5 $— $— $3,593 
Global Equity Commingled Funds (1)
— 1,496 — — 1,496 
Enhanced Global Equities (2)
322 393 — — 715 
Global Equity Funds at net asset value (8)
— — — 5,332 5,332 
Private Equities (3),(8)
— — 202 1,230 1,432 
Fixed Income Securities
Governments969 116 — — 1,085 
Corporate Bonds1 13,059 5 — 13,065 
Structured Products
— 17 — — 17 
Fixed Income Securities (8)
— — — 4,755 4,755 
Real Estate (4),(8)
— 13 1,464 366 1,843 
Other (5),(8)
— 343 — 2,834 3,177 
Cash & Cash Equivalents (6),(8)
— 47 — 36 83 
Subtotal$4,880 $15,489 $1,671 $14,553 36,593 
Other Assets & Liabilities (7)
   (368)
Total at December 31, 2019$36,225 
Public Equities
Global Equities$2,917 $4 $— $— $2,921 
Global Equity Commingled Funds (1)
185 219 — — 404 
Enhanced Global Equities (2)
79 605 — — 684 
Global Equity Funds at net asset value (8)
— — — 6,539 6,539 
Private Equities (3),(8)
— — 133 1,194 1,327 
Fixed Income Securities
Governments1,789 162 — — 1,951 
Corporate Bonds— 11,526 18 29 11,573 
Fixed Income Securities (8)
— — — 2,225 2,225 
Real Estate (4),(8)
— 13 1,387 409 1,809 
Other (5),(8)
— 262 — 2,368 2,630 
Cash & Cash Equivalents (6),(8)
— 220 — 100 320 
Subtotal$4,970 $13,011 $1,538 $12,864 32,383 
Other Assets & Liabilities (7)
   (233)
Total at December 31, 2018$32,150 
(1)    Represents commingled funds that invest primarily in common stocks.
(2)    Represents enhanced equity separate account and commingled fund portfolios. A portion of the portfolio may include long-short market neutral and relative value strategies that invest in publicly traded, equity and fixed income securities, as well as derivatives of equity and fixed income securities and foreign currency.
(3)    Represents limited partner investments with general partners that primarily invest in debt and equity.
(4)    Represents investments in real estate including commingled funds and directly held properties.
(5)    Represents insurance contracts and global balanced risk commingled funds consisting mainly of equity, bonds and some commodities.
(6)    Represents short-term commercial paper, bonds and other cash or cash-like instruments.
(7)    Represents trust receivables and payables that are not leveled.
(8)    In accordance with ASU 2015-07, Fair Value Measurement (Topic 820), certain investments that are measured at fair value using the net asset value per share (or its equivalent) practical expedient have not been classified in the fair value hierarchy. The fair value amounts presented in this table are intended to permit reconciliation of the fair value hierarchy to the amounts presented for the total pension benefits plan assets.
Derivatives in the plan are primarily used to manage risk and gain asset class exposure while still maintaining liquidity. Derivative instruments mainly consist of equity futures, interest rate futures, interest rate swaps and currency forward contracts.
Our common stock represents less than 1% of total plan assets at December 31, 2019 and 2018. We review our assets at least quarterly to ensure we are within the targeted asset allocation ranges and, if necessary, asset balances are adjusted back within target allocations. We employ a broadly diversified investment manager structure that includes diversification by active and passive management, style, capitalization, country, sector, industry and number of investment managers.
The fair value measurement of plan assets using significant unobservable inputs (Level 3) changed due to the following:
(dollars in millions)Private
Equities		Corporate
Bonds		Real
Estate		Total
Balance, December 31, 2017$46 $— $1,446 $1,492 
Plan assets acquired— 33 — 33 
Realized (losses) gains— (1)10 9 
Unrealized gains relating to instruments still held in the reporting period— 2 38 40 
Purchases, sales, and settlements, net87 (16)(107)(36)
Balance, December 31, 2018133 18 1,387 1,538 
Realized losses— — (2)(2)
Unrealized gains relating to instruments still held in the reporting period32 — 27 59 
Purchases, sales, and settlements, net37 (13)52 76 
Balance, December 31, 2019$202 $5 $1,464 $1,671 
Quoted market prices are used to value investments when available. Investments in securities traded on exchanges, including listed futures and options, are valued at the last reported sale prices on the last business day of the year or, if not available, the last reported bid prices. Fixed income securities are primarily measured using a market approach pricing methodology, where observable prices are obtained by market transactions involving identical or comparable securities of issuers with similar credit ratings. Mortgages have been valued on the basis of their future principal and interest payments discounted at prevailing interest rates for similar investments. Investment contracts are valued at fair value by discounting the related cash flows based on current yields of similar instruments with comparable durations. Real estate investments are valued on a quarterly basis using discounted cash flow models which consider long-term lease estimates, future rental receipts and estimated residual values. Valuation estimates are supplemented by third-party appraisals on an annual basis.
Private equity limited partnerships are valued quarterly using discounted cash flows, earnings multiples and market multiples. Valuation adjustments reflect changes in operating results, financial condition, or prospects of the applicable portfolio company. Over-the-counter securities and government obligations are valued at the bid prices or the average of the bid and ask prices on the last business day of the year from published sources or, if not available, from other sources considered reliable, generally broker quotes. Temporary cash investments are stated at cost, which approximates fair value.
As a result of the $1.9 billion contribution in 2017, we are not required to make additional contributions to our domestic defined benefit pension plans through the end of 2025. We expect to make total contributions of approximately $100 million to our global defined benefit pension plans in 2020. Contributions do not reflect benefits to be paid directly from corporate assets.
Benefit payments, including amounts to be paid from corporate assets, and reflecting expected future service, as appropriate, are expected to be paid as follows: $2,249 million in 2020, $2,059 million in 2021, $2,087 million in 2022, $2,107 million in 2023, $2,123 million in 2024, and $10,645 million from 2025 through 2029.
Postretirement Benefit Plans. We sponsor a number of postretirement benefit plans that provide health and life benefits to eligible retirees. Such benefits are provided primarily from domestic plans, which comprise approximately 84% of the benefit obligation. The postretirement plans are primarily unfunded. The assets we hold are invested in approximately 50% growth seeking assets and 50% income generating assets.
(dollars in millions)20192018
Change in Benefit Obligation:
Beginning balance$810 $767 
Service cost2 2 
Interest cost31 26 
Actuarial gain(11)(52)
Total benefits paid(69)(70)
Business combinations— 186 
Plan amendments— (43)
Other2 (6)
Ending balance$765 $810 
Change in Plan Assets:
Beginning balance$20 $— 
Employer contributions69 69 
Benefits paid(69)(70)
Business combinations— 20 
Other— 1 
Ending balance$20 $20 
Funded Status:
Fair value of plan assets$20 $20 
Benefit obligations(765)(810)
Funded status of plan$(745)$(790)
Amounts Recognized in the Consolidated Balance Sheet Consist of:
Current liability$(47)$(61)
Noncurrent liability(698)(729)
Net amount recognized$(745)$(790)
Amounts Recognized in Accumulated Other Comprehensive Loss Consist of:
Net actuarial gain$(181)$(184)
Prior service credit(4)(47)
Net amount recognized$(185)$(231)
As part of our acquisition of Rockwell on November 26, 2018, we assumed approximately $186 million of postretirement benefit obligations and $20 million of plan assets.
We modified the postretirement medical benefits provided to legacy Rockwell salaried employees by eliminating any company subsidy from retirements that occur after December 31, 2019. This resulted in a $43 million reduction in the benefit obligation as of November 26, 2018.
The components of net periodic benefit cost are as follows:
(dollars in millions)201920182017
Other Postretirement Benefits:
Service cost$2 $2 $2 
Interest cost31 26 29 
Expected return on plan assets(1)— — 
Amortization of prior service credit(42)(6)(1)
Recognized actuarial net gain(12)(10)(9)
Net periodic other postretirement (benefit) cost$(22)$12 $21 
Other changes in plan assets and benefit obligations recognized in other comprehensive loss in 2019 are as follows:
(dollars in millions)  
Current year actuarial gain$(10)
Amortization of prior service credit42 
Amortization of actuarial net gain12 
Other2 
Total recognized in other comprehensive loss$46 
Net recognized in net periodic other postretirement benefit cost and other comprehensive loss$24 
The estimated amounts that will be amortized from accumulated other comprehensive loss into net periodic benefit cost in 2020 include actuarial net gains of $13 million and prior service credits of $3 million.
Major assumptions used in determining the benefit obligation and net cost for postretirement plans are presented in the following table as weighted-averages: 
 Benefit ObligationNet Cost
  20192018201920182017
Discount rate3.0 %4.1 %4.0 %3.4 %3.8 %
Expected return on assets— — 7.0 %7.0 %N/A
Assumed health care cost trend rates are as follows: 
20192018
Health care cost trend rate assumed for next year6.5 %7.0 %
Rate that the cost trend rate gradually declines to5.0 %5.0 %
Year that the rate reaches the rate it is assumed to remain at20262026
Assumed health care cost trend rates have a significant effect on the amounts reported for the health care plans. A one-percentage-point change in assumed health care cost trend rates would have the following effects:
 2019 One-Percentage-Point
(dollars in millions)IncreaseDecrease
Effect on total service and interest cost$1 $(1)
Effect on postretirement benefit obligation25 (22)
Benefit payments, including net amounts to be paid from corporate assets and reflecting expected future service, as appropriate, are expected to be paid as follows: $67 million in 2020, $64 million in 2021, $60 million in 2022, $56 million in 2023, $53 million in 2024, and $210 million from 2025 through 2029.
Stock-based Compensation. RTC’s long-term incentive plans authorize various types of market and performance based incentive awards that may be granted to officers and employees. The RTC 2018 Long-Term Incentive Plan (2018 LTIP) was approved by shareholders on April 30, 2018 and its predecessor plan (the Legacy LTIP), was last amended on February 5, 2016. A total of 184 million shares have been authorized for issuance pursuant to awards under these Plans. There are 252,000 shares outstanding that were issued under the Rockwell Collins, Inc. 2015 Long-Term Incentive Plan. No new equity awards will be issued under that plan. As of December 31, 2019, approximately 42 million shares remain available for awards under the 2018 LTIP. No shares remain available for future awards under the Legacy LTIP. Neither plan contains an aggregate annual award
limit, however, each Plan sets an annual award limit per participant. We expect that the shares awarded on an annual basis will range from 1.0% to 1.5% of shares outstanding. The 2018 LTIP will expire after all authorized shares have been awarded or April 30, 2028, whichever is sooner.
Under both Plans, the exercise price of awards is set on the grant date and may not be less than the fair market value per share on that date. Generally, stock appreciation rights and stock options have a term of ten years and a three-year vesting period, subject to limited exceptions. In the event of retirement, annual stock appreciation rights, stock options, and restricted stock units held for more than one year may become vested and exercisable, subject to certain terms and conditions. LTIP awards with performance-based vesting generally have a minimum three-year vesting period and vest based on actual performance against pre-established metrics. In the event of retirement, performance-based awards held for more than one year, remain eligible to vest based on actual performance relative to target metrics. We have historically repurchased shares of our common stock in an amount at least equal to the number of shares issued under our equity compensation arrangements and will continue to evaluate this policy in conjunction with our overall share repurchase program.
We measure the cost of all share-based payments, including stock options, at fair value on the grant date and recognize this cost in the Consolidated Statement of Operations, net of expected forfeitures, as follows:
(dollars in millions)201920182017
Total compensation cost recognized$268 $169 $129 
The associated future income tax benefit recognized was $47 million, $31 million and $28 million for the years ended December 31, 2019, 2018 and 2017, respectively. The amounts have been adjusted for the impact of the TCJA.
For the years ended December 31, 2019, 2018 and 2017, the amount of cash received from the exercise of stock options was $27 million, $36 million and $29 million, respectively, with an associated tax benefit realized of $75 million, $59 million and $100 million, respectively. In addition, for the years ended December 31, 2019, 2018 and 2017, the associated tax benefit realized from the vesting of performance share units and other restricted awards was $36 million, $13 million and $12 million, respectively.
At December 31, 2019, there was $291 million of total unrecognized compensation cost related to non-vested equity awards granted under long-term incentive plans. This cost is expected to be recognized ratably over a weighted-average period of 2.9 years.
A summary of the transactions under all long-term incentive plans for the year ended December 31, 2019 follows. The amounts in the tables and paragraphs below have not been recast for discontinued operations.
 Stock OptionsStock Appreciation RightsPerformance Share UnitsOther
Incentive
Shares/Units
(shares and units in thousands)Shares
Average
Price (1)
Shares
Average
Price (1)
Units
Average
Price (1)
Outstanding at:
December 31, 20181,603 $99.89 32,066 $99.95 1,806 $110.41 3,047 
Granted339 124.72 8,081 123.54 839 121.22 1,223 
Ancillary (2)
— — — — 101 95.28 — 
Exercised / earned(317)88.61 (6,843)84.44 (758)95.28 (816)
Cancelled(57)121.69 (591)122.76 (69)118.21 (135)
December 31, 20191,568 $106.75 32,713 $108.61 1,919 $120.04 3,319 
(1)    Weighted-average grant / exercise price.
(2)    Ancillary shares earned based on actual performance achieved on the 2016 award.
The weighted-average grant date fair value of stock options and stock appreciation rights granted during 2019, 2018 and 2017 was $20.81, $20.24 and $17.22, respectively. The weighted-average grant date fair value of performance share units, which vest upon achieving certain performance metrics, granted during 2019, 2018 and 2017 was $117.87, $131.55 and $111.00, respectively. The total fair value of awards vested during the years ended December 31, 2019, 2018 and 2017 was $211 million, $149 million and $138 million, respectively. The total intrinsic value (which is the amount by which the stock price exceeded the exercise price on the date of exercise) of stock options and stock appreciation rights exercised during the years ended December 31, 2019, 2018 and 2017 was $383 million, $283 million and $320 million, respectively. The total intrinsic value (which is the stock price at vesting) of performance share units and other restricted awards vested was $188 million, $74 million and $49 million during the years ended December 31, 2019, 2018 and 2017, respectively.
The following table summarizes information about equity awards outstanding that are vested and expected to vest as well as equity awards outstanding that are exercisable at December 31, 2019:
 Equity Awards Vested and Expected to VestEquity Awards That Are Exercisable
(shares in thousands; aggregate intrinsic value in millions)Awards
Average
Price (1)
Aggregate
Intrinsic
Value
Remaining Term (2)
Awards
Average
Price (1)
Aggregate
Intrinsic
Value
Remaining Term (2)
Stock Options/Stock Appreciation Rights33,769 $107.58 $1,424 5.9 years19,285 $96.56 $1,026 4.0 years
Performance Share Units/Restricted Stock5,514 — 826 2.1 years
(1)    Weighted-average exercise price per share.
(2)    Weighted-average contractual remaining term in years.
The fair value of each option award is estimated on the date of grant using a binomial lattice model. The following table indicates the assumptions used in estimating fair value for the years ended December 31, 2019, 2018 and 2017. Lattice-based option models incorporate ranges of assumptions for inputs; those ranges are as follows:
201920182017
Expected volatility
18.8% - 19.7%
17.5% - 21.1%
19 %
Weighted-average volatility20 %18 %19 %
Expected term (in years)
6.5 - 6.6
6.5 - 6.6
6.5
Expected dividend yield2.4 %2.2 %2.4 %
Risk-free rate
2.3% - 2.7%
1.3% - 2.7%
0.5% - 2.5%
Expected volatilities are based on the returns of our stock, including implied volatilities from traded options on our stock for the binomial lattice model. We use historical data to estimate equity award exercise and employee termination behavior within the valuation model. The expected term represents an estimate of the period of time equity awards are expected to remain outstanding. The risk-free rate is based on the term structure of interest rates at the time of equity award grant.
v3.20.2
Income Taxes
 12 Months Ended
Dec. 31, 2019
Income Tax Contingency [Line Items]  
Income Taxes INCOME TAXES
Income Before Income Taxes. The sources of income from continuing operations before income taxes are:
(dollars in millions)201920182017
United States$1,594 $635 $607 
Foreign2,558 1,869 1,915 
$4,152 $2,504 $2,522 
On December 22, 2017 Public Law 115-97 “An Act to Provide for Reconciliation Pursuant to Titles II and V of the Concurrent Resolution on the Budget for Fiscal Year 2018” was enacted. This law is commonly referred to as the Tax Cuts and Jobs Act of 2017 (TCJA).
Company no longer intends to reinvest certain undistributed earnings of its international subsidiaries that have been previously taxed in the U.S. As such, in 2018 it recorded the international taxes associated with the future remittance of these earnings. For the remainder of the Company’s undistributed international earnings, unless tax effective to repatriate, RTC will continue to permanently reinvest these earnings. As of December 31, 2019, such undistributed earnings were approximately $21 billion, excluding other comprehensive income amounts. It is not practicable to estimate the amount of tax that might be payable on the remaining amounts. Total undistributed earnings include discontinued operations.
Provision for Income Taxes. The income tax expense (benefit) for the years ended December 31, 2019, 2018 and 2017 consisted of the following components:
(dollars in millions)201920182017
Current:
United States:
Federal$(100)$(68)$709 
State(58)1 (42)
Foreign541 402 284 
383 335 951 
Future:
United States:
Federal121 45 (48)
State56 58 85 
Foreign(139)660 66 
 38 763 103 
Income tax expense$421 $1,098 $1,054 
Attributable to items credited (charged) to equity$40 $501 $(128)
Reconciliation of Effective Income Tax Rate. Differences between effective income tax rates and the statutory U.S. federal income tax rate are as follows:
201920182017
Statutory U.S. federal income tax rate21.0 %21.0 %35.0 %
Tax on international activities(3.1)%(5.1)%(15.3)%
Tax audit settlements(7.0)%— %(2.2)%
U.S. tax reform— %29.7 %27.4 %
Other(0.8)%(1.8)%(3.1)%
Effective income tax rate10.1 %43.8 %41.8 %
The 2019 effective tax rate includes $290 million of tax benefits associated with the conclusion of the audit by the Examination Division of the Internal Revenue Service for the RTC 2014, 2015 and 2016 tax years and the filing by a subsidiary of the Company to participate in an amnesty program offered by the Italian Tax Authority. Additionally, tax benefits included in 2019 are those associated with Foreign Derived Intangible Income (FDII) and U.S. Research & Development Credits, offset by a tax charge associated with Global Intangible Low-Taxed Income (GILTI).
The 2019 decrease in the cost of U.S. and foreign tax on international activities is primarily attributable to the full phase-in of the TCJA provisions on the Company’s international subsidiaries. In addition, the decrease in the rate benefit of both international and other activities is impacted by the increase in pre-tax income related to the Rockwell Collins business.
The 2018 effective tax rate reflects a net tax charge of $744 million for TCJA related adjustments. The amount is primarily associated with non-U.S. taxes that will become due when previously reinvested earnings of certain international subsidiaries are remitted. The 2018 and 2019 effective tax rate reconciliation reflects the corporate rate reduction enacted by the TCJA. The decrease in international activities is primarily related to higher international tax costs compared to the U.S. federal statutory rate. The decrease in other activities is primarily attributable to non-deductible expenses, including costs relating to the Rockwell Collins acquisition.
The 2017 effective tax rate reflects a net tax charge of $690 million attributable to the passage of the TCJA. These 2017 provisional amounts, recorded as described in SAB 118, relate to U.S. income tax attributable to previously undistributed earnings of RTC’s international subsidiaries and equity investments, net of foreign tax credits, and the revaluation of U.S. deferred income taxes.
Deferred Tax Assets and Liabilities. Future income taxes represent the tax effects of transactions which are reported in different periods for tax and financial reporting purposes. These amounts consist of the tax effects of temporary differences between the tax and financial reporting balance sheets and tax carryforwards. Future income tax benefits and payables within the same tax paying component of a particular jurisdiction are offset for presentation in the Consolidated Balance Sheet.
The tax effects of temporary differences and tax carryforwards which gave rise to future income tax benefits and payables at December 31, 2019 and 2018 are as follows:
(dollars in millions)20192018
Future income tax benefits:
Insurance and employee benefits$1,205 $1,154 
Other asset basis differences829 1,013 
Other liability basis differences2,153 1,482 
Tax loss carryforwards622 583 
Tax credit carryforwards1,021 1,050 
Valuation allowances(616)(605)
$5,214 $4,677 
Future income taxes payable:
Intangible assets$4,293 $4,462 
Other asset basis differences 2,904 2,159 
Other items, net143 123 
$7,340 $6,744 
Valuation allowances have been established primarily for tax credit carryforwards, tax loss carryforwards, and certain foreign temporary differences to reduce the future income tax benefits to expected realizable amounts.
This table includes $442 million net deferred tax assets in 2019 and $393 million net deferred tax assets in 2018 related to discontinued operations.
Tax Credit and Loss Carryforwards. At December 31, 2019, tax credit carryforwards, principally state and foreign, and tax loss carryforwards, principally state and foreign, were as follows:
(dollars in millions)Tax Credit
Carryforwards		Tax Loss
Carryforwards
Expiration period:
2020-2024$59 $393 
2025-202927 179 
2030-2039336 394 
Indefinite599 2,218 
Total$1,021 $3,184 
Total tax credit and loss carryforwards include discontinued operations.
Unrecognized Tax Benefits. At December 31, 2019, we had gross tax-effected unrecognized tax benefits of $1,347 million, of which $1,338 million, if recognized, would impact the effective tax rate. A reconciliation of the beginning and ending amounts of unrecognized tax benefits and interest expense related to unrecognized tax benefits for the years ended December 31, 2019, 2018 and 2017 is as follows: 
(dollars in millions)201920182017
Balance at January 1$1,619 $1,189 $1,086 
Additions for tax positions related to the current year131 192 192 
Additions for tax positions of prior years73 344 73 
Reductions for tax positions of prior years(101)(91)(91)
Settlements(375)(15)(71)
Balance at December 31$1,347 $1,619 $1,189 
Gross interest expense related to unrecognized tax benefits$57 $37 $34 
Total accrued interest balance at December 31$249 $255 $215 

The 2018 amounts above include amounts related to the acquisition of Rockwell Collins. Total unrecognized tax benefits include discontinued operations.
We conduct business globally and, as a result, RTC 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 2009.
During 2019, the Company recognized a net gain of approximately $307 million, including pre-tax interest of approximately $56 million as a result of the conclusion of the IRS audit of the Company’s 2014, 2015 and 2016 tax years as well as an amnesty filing in Italy made to resolve certain tax litigation. The Company also recognized a non-cash gain of approximately $40 million, primarily tax, as a result of the closure of an IRS audit of the 2014 tax year of a subsidiary acquired as part of RTC’s acquisition of Rockwell Collins. This gain was partially offset by the unfavorable pre-tax impact of a reversal of a related indemnity asset of approximately $23 million. Finally, the Company recognized net non-cash gains of approximately $18 million, including pre-tax interest of approximately $5 million, as a result of various federal, state and non-U.S. statute of limitations expirations and settlements with tax authorities.
During 2017, the Company recognized a noncash gain of approximately $64 million, including a pre-tax interest adjustment of $9 million, 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, including expiration of the U.S. federal income tax statute of limitations for RTC’s 2013 tax year.
The Examination Division of the Internal Revenue Service (IRS) is currently auditing Rockwell Collins fiscal tax years 2016 and 2017, prior to its acquisition by RTC, which will continue into 2020. Separately, the Examination Division of the IRS has notified the Company of its intention to commence an audit of RTC tax years 2017 and 2018 during the first half of 2020.
It is reasonably possible that a net reduction within the range of $50 million to $650 million of unrecognized tax benefits may occur over the next 12 months as a result of the separation of Carrier and Otis, additional worldwide uncertain tax positions, the revaluation of current uncertain tax positions arising from developments in examinations, in appeals, or in the courts, or the closure of tax statutes. Total unrecognized tax benefits include discontinued operations.
v3.20.2
Restructuring and Other Costs
 12 Months Ended
Dec. 31, 2019
Restructuring and Related Activities [Abstract]  
Restructuring and Related Activities Disclosure [Text Block]
During 2019, we recorded net pre-tax restructuring costs totaling $245 million for new and ongoing restructuring actions. We recorded charges in the segments as follows:
(dollars in millions)  
Pratt & Whitney133 
Collins Aerospace Systems106 
Eliminations and other6 
Total$245 
Restructuring charges incurred in 2019 primarily relate to actions initiated during 2019 and 2018, and were recorded as follows:
(dollars in millions)  
Cost of sales$177 
Selling, general & administrative64 
Non-service pension (benefit)4 
Total$245 
2019 Actions. During 2019, we recorded net pre-tax restructuring costs totaling $162 million for restructuring actions initiated in 2019, consisting of $122 million in cost of sales and $40 million in selling, general and administrative expenses. The 2019 actions relate to ongoing cost reduction efforts, including workforce reductions and consolidation of field operations.
We are targeting to complete in 2020 and 2021 the majority of the remaining workforce and all facility related cost reduction actions initiated in 2019. No specific plans for significant other actions have been finalized at this time. The following table summarizes the accrual balances and utilization by cost type for the 2019 restructuring actions:
(dollars in millions)SeveranceFacility Exit & Other CostsTotal
Net pre-tax restructuring costs$151 $11 $162 
Utilization, foreign exchange and other costs(104)— (104)
Balance at December 31, 2019$47 $11 $58 
The following table summarizes expected, incurred and remaining costs for the 2019 restructuring actions by segment:
(dollars in millions)Expected CostsCost Incurred During 2019Remaining Costs at December 31, 2019
Pratt & Whitney133 (133)— 
Collins Aerospace Systems120 (27)93 
Eliminations and other2 (2)— 
Total$255 $(162)$93 
2018 Actions. During 2019, we recorded net pre-tax restructuring costs totaling $23 million for restructuring actions initiated in 2018, consisting of $12 million in cost of sales and $11 million in selling, general and administrative expenses. The 2018 actions relate to ongoing cost reduction efforts, including workforce reductions and the consolidation of field operations. The following table summarizes the accrual balances and utilization by cost type for the 2018 restructuring actions:
(dollars in millions)SeveranceFacility Exit
& Other
Costs		Total
Restructuring accruals at January 1, 2019$60 $22 $82 
Net pre-tax restructuring costs22 1 23 
Utilization, foreign exchange and other costs(76)(22)(98)
Balance at December 31, 2019$6 $1 $7 
The following table summarizes expected, incurred and remaining costs for the 2018 programs by segment:
(dollars in millions)Expected
Costs		Costs
Incurred
During
2018		Costs
Incurred
During
2019		Remaining
Costs at
December 31,
2019
Pratt & Whitney3 (3)— — 
Collins Aerospace Systems111 (87)(23)1 
Eliminations and other7 (5)— 2 
Total$121 $(95)$(23)$3 
2017 and Prior Actions. During 2019, we recorded net pre-tax restructuring costs totaling $60 million for restructuring actions initiated in 2017 and prior. As of December 31, 2019, we have approximately $59 million of accrual balances remaining related to 2017 and prior actions.
v3.20.2
Financial Instruments
 12 Months Ended
Dec. 31, 2019
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
Financial Instruments Disclosure [Text Block]
NOTE 15: FINANCIAL INSTRUMENTS
We enter into derivative instruments primarily for risk management purposes, including derivatives designated as hedging instruments under the Derivatives and Hedging Topic of the FASB ASC and those utilized as economic hedges. We operate internationally and in the normal course of business, are exposed to fluctuations in interest rates, foreign exchange rates and commodity prices. These fluctuations can increase the costs of financing, investing and operating the business. We have used derivative instruments, including swaps, forward contracts and options to manage certain foreign currency, interest rate and commodity price exposures.
The four quarter rolling average of the notional amount of foreign exchange contracts hedging foreign currency transactions was $17.8 billion and $20.1 billion at December 31, 2019 and 2018, respectively. These amounts are inclusive of the notional amount of Otis and Carrier foreign exchange contracts. Additional information pertaining to foreign exchange and hedging activities is included in “Note 1: Summary of Accounting Principles.”
The following table summarizes the fair value and presentation in the Consolidated Balance Sheets for derivative instruments as of December 31, 2019 and 2018:
(dollars in millions)Balance Sheet LocationDecember 31, 2019December 31, 2018
Derivatives designated as hedging instruments:
Foreign exchange contractsAsset Derivatives:
Other assets, current$23 $22 
Liability Derivatives:
Accrued liabilities166 194 
Derivatives not designated as hedging instruments:
Foreign exchange contractsAsset Derivatives:
Other assets, current23 27 
Liability Derivatives:
Accrued liabilities116 89 
The effect of cash flow hedging relationships on accumulated other comprehensive income for the years ended December 31, 2019 and 2018 are presented in the table below. The amounts of gain or (loss) are attributable to foreign exchange contract activity and are recorded as a component of Product sales when reclassified from accumulated other comprehensive income.
  Year Ended December 31,
(dollars in millions)20192018
Loss recorded in Accumulated other comprehensive loss$(33)$(307)
Loss (Gain) reclassified from Accumulated other comprehensive loss into Product sales$51 $(16)
The table above reflects the effect of cash flow hedging relationships on the Consolidated Statement of Operations for the years ended December 31, 2019 and 2018. The Company utilizes the critical terms match method in assessing derivatives for hedge effectiveness. Accordingly, the hedged items and derivatives designated as hedging instruments are highly effective.
We have approximately €4.2 billion of euro-denominated long-term debt, which qualifies as a net investment hedge against our investments in European businesses. As of December 31, 2019, the net investment hedge is deemed to be effective.
Assuming current market conditions continue, a $33 million pre-tax loss is expected to be reclassified from Accumulated other comprehensive loss into Product sales to reflect the fixed prices obtained from foreign exchange hedging within the next 12 months. At December 31, 2019, all derivative contracts accounted for as cash flow hedges will mature by January 2024.
The effect of derivatives not designated as hedging instruments within Other income, net, on the Consolidated Statement of Operations was as follows:
  Year Ended December 31,
(dollars in millions)20192018
Foreign exchange contracts$91 $127 
v3.20.2
Fair Value Measurements
 12 Months Ended
Dec. 31, 2019
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 Consolidated Balance Sheet as of December 31, 2019 and 2018:
December 31, 2019
 (dollars in millions)
TotalLevel 1Level 2Level 3
Recurring fair value measurements:
Available-for-sale securities$53 $53 $— $— 
Derivative assets46 — 46 — 
Derivative liabilities(282)— (282)— 
December 31, 2018
 (dollars in millions)
TotalLevel 1Level 2Level 3
Recurring fair value measurements:
Available-for-sale securities$48 $48 $— $— 
Derivative assets49 — 49 — 
Derivative liabilities(283)— (283)— 
Valuation Techniques. Our available-for-sale securities include equity investments that are traded in active markets, either domestically or internationally, and are measured at fair value using closing stock prices from active markets. Our derivative assets and liabilities include foreign exchange contracts that are measured at fair value using internal models based on observable market inputs such as forward rates, interest rates, our own credit risk and our counterparties’ credit risks. As of December 31, 2019, there were no significant transfers in or out of Level 1 or Level 2.
As of December 31, 2019, 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 Consolidated Balance Sheet at December 31, 2019 and 2018:
 December 31, 2019December 31, 2018
(dollars in millions)Carrying
Amount		Fair
Value		Carrying
Amount		Fair
Value
Customer financing notes receivable220 220 226 219 
Short-term borrowings(2,293)(2,293)(1,428)(1,428)
Long-term debt (excluding finance leases)(40,883)(45,887)(43,703)(43,710)
Long-term liabilities(334)(320)(505)(464)
The following table provides the valuation hierarchy classification of assets and liabilities that are not carried at fair value in our Consolidated Balance Sheet as of December 31, 2019 and 2018:
December 31, 2019
(dollars in millions)TotalLevel 1Level 2Level 3
Customer financing notes receivable220 — 220 — 
Short-term borrowings(2,293)— — (2,293)
Long-term debt (excluding finance leases)(45,887)— (45,802)(85)
Long-term liabilities(320)— (320)— 

December 31, 2018
(dollars in millions)TotalLevel 1Level 2Level 3
Customer financing notes receivable219 — 219 — 
Short-term borrowings(1,428)— (1,258)(170)
Long-term debt (excluding finance leases)(43,710)— (43,620)(90)
Long-term liabilities(464)— (464)— 
v3.20.2
Variable Interest Entities (Notes)
 12 Months Ended
Dec. 31, 2019
Schedule of Variable Interest Entities [Abstract]  
Variable Interest Entity Disclosure [Text Block] VARIABLE INTEREST ENTITIESPratt & Whitney holds a 61% program share interest in the 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 engine 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% program share 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 Consolidated Balance Sheet as of December 31, 2019 and 2018 are as follows:
(dollars in millions)20192018
Current assets$5,448 $5,622 
Noncurrent assets894 710 
Total assets$6,342 $6,332 
Current liabilities$6,971 $6,742 
Noncurrent liabilities94 102 
Total liabilities$7,065 $6,844 
v3.20.2
Guarantees
 12 Months Ended
Dec. 31, 2019
Guarantees [Abstract]  
Guarantees
We extend a variety of financial, market value and product performance guarantees to third parties. As of December 31, 2019 and 2018, the following financial guarantees were outstanding:
  December 31, 2019December 31, 2018
(dollars in millions)Maximum
Potential
Payment		Carrying
Amount of
Liability		Maximum
Potential
Payment		Carrying
Amount of
Liability
Commercial aerospace financing arrangements (see Note 5)$333 $7 $348 $9 
Credit facilities and debt obligations— — 15 — 
Performance guarantees48 — 55 5 
We also have obligations arising from sales of certain businesses and assets, including those from representations and warranties and related indemnities for environmental, health and safety, tax and employment matters. The maximum potential payment related to these obligations is not a specified amount as a number of the obligations do not contain financial caps. The carrying amount of liabilities related to these obligations was $166 million and $175 million at December 31, 2019 and 2018, respectively. For additional information regarding the environmental indemnifications, see “Note 19: Contingent Liabilities.”
We accrue for costs associated with guarantees when it is probable that a liability has been incurred and the amount can be reasonably estimated. The most likely cost to be incurred is accrued based on an evaluation of currently available facts, and where no amount within a range of estimates is more likely, the minimum is accrued. In accordance with the Guarantees Topic of the FASB ASC, we record these liabilities at fair value.
We provide service and warranty policies on our products and extend performance and operating cost guarantees beyond our normal service and warranty policies on some of our products, particularly commercial aircraft engines. In addition, we incur discretionary costs to service our products in connection with specific product performance issues. Liabilities for performance and operating cost guarantees are based upon future product performance and durability, and are largely estimated based upon historical experience. Adjustments are made to accruals as claim data and historical experience warrant. The changes in the carrying amount of service and product warranties and product performance guarantees for the years ended December 31, 2019 and 2018 are as follows:
(dollars in millions)20192018
Balance as of January 1$929 $591 
Warranties and performance guarantees issued444 421 
Settlements made(330)(284)
Other (1)
(10)201 
Balance as of December 31$1,033 $929 
(1)    Other in 2018 is driven by the Rockwell Collins acquisition.
v3.20.2
Contingent Liabilities
 12 Months Ended
Dec. 31, 2019
Commitments and Contingencies Disclosure [Abstract]  
Contingent Liabilities CONTINGENT LIABILITIESExcept 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 regulatory authorities with jurisdiction over our foreign operations. As described in Note 1 to the Consolidated Financial Statements, 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. As of December 31, 2019 and 2018, we had $725 million and $662 million, respectively, reserved for environmental remediation. Additional information pertaining to environmental matters is included in “Note 1: Summary of Accounting Principles.”
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 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 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 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 recommending the reduction of certain contract prices because, for example, cost or pricing data or cost accounting practices used to price and negotiate those contracts may not have conformed to government regulations. Some of these audit reports recommend that certain payments be repaid, delayed, or withheld, and may involve substantial amounts. We have made voluntary refunds in those cases we believe appropriate, have settled some allegations and, in some cases, continue to negotiate and/or litigate. The Company may be, and has been, required to make payments into escrow of disputed liabilities while the related litigation is pending. If the litigation is resolved in the Company’s favor, any such payments will be returned to the Company with interest. 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 accrue the minimum amount.
Legal Proceedings.
Cost Accounting Standards Claims
As previously disclosed, in April 2019, a Divisional Administrative Contracting Officer (DACO) of the United States Defense Contract Management Agency (DCMA) asserted a claim against Pratt & Whitney to recover overpayments of approximately $1.73 billion plus interest (approximately $563 million through December 31, 2019). The claim is based on Pratt & Whitney’s alleged noncompliance with cost accounting standards from January 1, 2007 to March 31, 2019, due to its method of allocating independent research and development costs to government contracts. Pratt & Whitney believes that the claim is without merit and filed an appeal to the Armed Services Board of Contract Appeals (ASBCA) on June 7, 2019.
As previously disclosed, in December 2013, a DCMA DACO asserted a claim against Pratt & Whitney to recover overpayments of approximately $177 million plus interest (approximately $98.4 million through December 31, 2019). 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. In 2014, Pratt & Whitney filed an appeal to the ASBCA. An evidentiary hearing was held and completed in June 2019. The parties are now engaged in post-hearing briefing, and a decision from the ASBCA will follow. We continue to believe that the claim is without merit. In December 2018, a DCMA DACO issued a second claim against Pratt & Whitney that similarly alleges that its method of determining the cost of collaborator parts does not comply with the cost accounting standards for calendar years 2013 through 2017. This second claim demands payment of $269 million plus interest (approximately $56.2 million through December 31, 2019), which we also believe is without merit and which Pratt & Whitney appealed to the ASBCA in January 2019.
Other. As described in “Note 18: Guarantees,” 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. Of note, the design, development, production and support of new aerospace technologies is inherently complex and subject to risk. Since the PW1000G Geared TurboFan engine entered into service in 2016, technical issues have been identified and experienced with the engine, which is usual for new engines and new aerospace technologies. Pratt & Whitney has addressed these issues through various improvements and modifications. These issues have resulted in financial impacts, including increased warranty provisions, customer contract settlements, and reductions in contract performance estimates. Additional technical issues may also arise in the normal course, which may result in financial impacts that could be material to the Company’s financial position, results of operations and cash flows.
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 of these proceedings, 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.
v3.20.2
Segment Financial Data
 12 Months Ended
Dec. 31, 2019
Segment Reporting [Abstract]  
Segment Financial Data SEGMENT FINANCIAL DATA
Our operations for the periods presented herein are classified into two principal segments. The segments are generally determined 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.
Pratt & Whitney products include commercial, military, business jet and general aviation aircraft engines, parts and services sold to a diversified customer base, including international and domestic commercial airlines and aircraft leasing companies, aircraft manufacturers, and U.S. and foreign governments. Pratt & Whitney also provides product support and a full range of overhaul, repair and fleet management services.
Collins Aerospace Systems provides technologically advanced aerospace products and aftermarket service solutions for aircraft manufacturers, airlines, regional, business and general aviation markets, military and space operations. Products include electric power generation, power management and distribution systems, air data and aircraft sensing systems, engine control systems, intelligence, surveillance and reconnaissance systems, engine components, environmental control systems, fire and ice detection and protection systems, propeller systems, engine nacelle systems, including thrust reversers and mounting pylons, interior and exterior aircraft lighting, aircraft seating and cargo systems, actuation systems, landing systems, including landing gear, wheels and brakes, and space products and subsystems, integrated avionics systems, precision targeting, electronic warfare and range and training systems, flight controls, communications systems, navigation systems, oxygen systems, simulation and training systems, food and beverage preparation, storage and galley systems, lavatory and wastewater management systems. Aftermarket services include spare parts, overhaul and repair, engineering and technical support, training and fleet management solutions, and information management services.
We have reported our financial and operational results for the periods presented herein under the two principal segments noted above, consistent with how we have reviewed our business operations for decision-making purposes, resource allocation and performance assessment during 2019.
Segment Information. Total sales by segment include intersegment sales, which are generally made at prices approximating those that the selling entity is able to obtain on external sales. Segment information for the years ended December 31 is as follows:
 Net SalesOperating Profits
(dollars in millions)201920182017201920182017
Pratt & Whitney20,892 19,397 16,160 1,668 1,269 1,300 
Collins Aerospace Systems26,028 16,634 14,691 4,100 2,303 2,191 
Total segment46,920 36,031 30,851 5,768 3,572 3,491 
Eliminations and other(1,571)(1,330)(1,138)(339)(220)(63)
General corporate expenses— — — (515)(475)(439)
Consolidated$45,349 $34,701 $29,713 $4,914 $2,877 $2,989 

 Total AssetsCapital ExpendituresDepreciation & Amortization
(dollars in millions)201920182017201920182017201920182017
Pratt & Whitney31,271 29,341 26,768 822 866 923 980 852 672 
Collins Aerospace Systems74,049 73,115 34,567 959 515 527 1,749 883 823 
Total segment105,320 102,456 61,335 1,781 1,381 1,450 2,729 1,735 1,495 
Eliminations and other2,472 1,015 4,659 87 86 106 (21)161 85 
Assets related to discontinued operations$31,823 $30,740 $30,926 
Consolidated$139,615 $134,211 $96,920 $1,868 $1,467 $1,556 $2,708 $1,896 $1,580 
Geographic External Sales and Operating Profit. Geographic external sales and operating profits are attributed to the geographic regions based on their location of origin. U.S. external sales include export sales to commercial customers outside the U.S. and sales to the U.S. Government, commercial and affiliated customers, which are known to be for resale to customers outside the U.S. Long-lived assets are net fixed assets attributed to the specific geographic regions. 
 External Net SalesOperating ProfitsLong-Lived Assets
(dollars in millions)201920182017201920182017201920182017
United States Operations$35,125 $26,646 $21,975 $3,287 $1,790 $1,603 $6,507 $6,165 $4,424 
International Operations
Europe4,419 3,092 2,747 1,480 1,027 826 1,268 1,272 1,147 
Asia Pacific1,989 1,645 1,779 444 365 351 917 905 685 
Other5,387 4,648 4,350 557 390 711 1,089 1,064 1,082 
Eliminations and other(1,571)(1,330)(1,138)(854)(695)(502)541 500 469 
Consolidated$45,349 $34,701 $29,713 $4,914 $2,877 $2,989 $10,322 $9,906 $7,807 
Sales from U.S. operations include export sales as follows: 
(dollars in millions)201920182017
Europe$7,078 $6,217 $5,197 
Asia Pacific6,411 5,355 3,526 
Other3,295 1,966 1,675 
Total$16,784 $13,538 $10,398 
Sales by primary geographical market for the year ended December 31, 2019 is as follows:
(dollars in millions)Pratt & WhitneyCollins Aerospace SystemsTotal
Primary Geographical Markets
United States $16,148 $18,977 $35,125 
Europe498 3,921 4,419 
Asia Pacific1,164 825 1,989 
Other*3,082 2,305 5,387 
Total segment$20,892 $26,028 $46,920 
Eliminations and other(1,571)
Consolidated$45,349 
Sales by primary geographical market for the year ended December 31, 2018 is as follows:
(dollars in millions)Pratt & WhitneyCollins Aerospace SystemsTotal
Primary Geographical Markets
United States $14,852 $11,794 $26,646 
Europe594 2,498 3,092 
Asia Pacific1,277 368 1,645 
Other (1)
2,674 1,974 4,648 
Total segment$19,397 $16,634 $36,031 
Eliminations and other(1,330)
Consolidated$34,701 
(1)    Other includes sales to other regions as well as intersegment sales.
Segment sales disaggregated by product type and product versus service for the year ended December 31, 2019 are as follows:
(dollars in millions)Pratt & WhitneyCollins Aerospace SystemsTotal
Product Type
Commercial and industrial, non aerospace$102 $51 $153 
Commercial aerospace14,516 19,005 33,521 
Military aerospace6,274 6,972 13,246 
Total segment$20,892 $26,028 $46,920 
Eliminations and other(1,571)
Consolidated$45,349 
Sales Type
Product $12,977 $21,440 $34,417 
Service 7,915 4,588 12,503 
Total segment$20,892 $26,028 $46,920 
Eliminations and other(1,571)
Consolidated$45,349 
Segment sales disaggregated by product type and product versus service for the year ended December 31, 2018 are as follows:
(dollars in millions)Pratt & WhitneyCollins Aerospace SystemsTotal
Product Type
Commercial and industrial, non aerospace$55 $60 $115 
Commercial aerospace14,027 12,564 26,591 
Military aerospace5,315 4,010 9,325 
Total segment$19,397 $16,634 $36,031 
Eliminations and other(1,330)
Consolidated$34,701 
Sales Type
Product $11,410 $13,915 $25,325 
Service 7,987 2,719 10,706 
Total segment$19,397 $16,634 $36,031 
Eliminations and other(1,330)
Consolidated$34,701 
Major Customers. Net Sales include sales under prime contracts and subcontracts to the U.S. Government as follows:
(dollars in millions)201920182017
Pratt & Whitney$5,614 $4,489 $3,347 
Collins Aerospace Systems4,802 2,779 2,299 
Other12 10 12 
Total$10,428 $7,278 $5,658 
Sales to Airbus prior to discounts and incentives were approximately $9,879 million, $10,025 million and $8,908 million for the years ended December 31, 2019, 2018 and 2017, respectively.
v3.20.2
Subsequent Events
 12 Months Ended
Dec. 31, 2019
Subsequent Events [Abstract]  
Subsequent Events SUBSEQUENT EVENTS (UNAUDITED)
Separation Transactions and Distributions.
As previously described in “Note 1: Summary of Accounting Principles,” on April 3, 2020, the Company completed the previously announced separation of its business into three independent, publicly traded companies – UTC, Carrier and Otis (such separations, the Separation Transactions). UTC distributed all of the outstanding shares of Carrier common stock and all of the outstanding shares of Otis common stock to UTC shareowners who held shares of UTC common stock as of the close of business on March 19, 2020, the record date for the Distributions. UTC distributed 866,158,910 and 433,079,455 shares of common stock of Carrier and Otis, respectively in the Distributions, each of which was effective at 12:01 a.m., Eastern Time, on April 3, 2020. The historical results of Otis and Carrier are presented as discontinued operations and, as such, have been excluded from both continuing operations and segment results for all periods presented. Unless otherwise indicated, amounts and activity throughout this Form 8-K are presented on a continuing operations basis.
Raytheon Merger.
On April 3, 2020, following the completion of the Separation Transactions and Distributions, pursuant to an Agreement and Plan of Merger dated June 9, 2019, as amended UTC and Raytheon completed their previously announced all-stock merger of equals. Raytheon (previously NYSE: RTN) shares ceased trading prior to the market open on April 3, 2020, and each share of Raytheon common stock was converted in the merger into the right to receive 2.3348 shares of UTC common stock previously traded on the NYSE under the ticker symbol “UTX.” Upon closing of the Raytheon Merger, Raytheon Company became a wholly-owned subsidiary of UTC, which changed its name to “Raytheon Technologies Corporation,” (Raytheon Technologies), and its shares of common stock began trading as of April 3, 2020 on the NYSE under the ticker symbol “RTX.”
In the third quarter of 2020, in accordance with conditions imposed for regulatory approval of the Raytheon Merger, we completed the sale of our Collins Aerospace military Global Positioning System (GPS) and space-based precision optics
businesses for $2.3 billion in cash, resulting in an aggregate pre-tax gain, net of transaction costs, of $580 million ($253 million after tax).
COVID-19 Pandemic and related impacts.
In March 2020, the coronavirus disease 2019 (COVID-19) was declared a pandemic by the World Health Organization and a national emergency by the U.S. government. The pandemic has negatively affected the U.S. and global economy, disrupted global supply chains and financial markets, and resulted in significant travel restrictions, mandated facility closures and shelter-in-place and social distancing orders in numerous jurisdictions around the world. Raytheon Technologies is taking all prudent measures to protect the health and safety of our employees, such as practicing social distancing, performing deep cleaning in all of our facilities, and enabling our employees to work from home where possible. We have also taken appropriate actions to help support our communities in addressing the challenges posed by the pandemic, including the production and donation of personal protective equipment.
Our business and operations and the industries in which we operate have been significantly impacted by public and private sector policies and initiatives in the U.S. and worldwide to address the transmission of COVID-19, such as the imposition of travel restrictions and the adoption of remote working. Additionally, public sentiments regarding air travel have also had a significant impact. We began to experience issues related to COVID-19 in the first quarter of 2020, primarily related to a limited number of facility closures, less than full staffing, and disruptions in supplier deliveries, most significantly in our Collins Aerospace and Pratt & Whitney businesses. However, our customers continued to receive our products and services during the first quarter and the outbreak did not have a significant impact on our operating results for the quarter ended March 31, 2020.
The continued disruption to air travel and commercial activities and the significant restrictions and limitations on businesses, particularly within the aerospace and commercial airline industries, have negatively impacted global supply, demand and distribution capabilities. These conditions, which began in the second quarter of 2020, have continued in the third quarter of 2020. In particular, the unprecedented decrease in air travel resulting from the COVID-19 pandemic is adversely affecting our airline and airframer customers, and their demand for the products and services of our Collins Aerospace and Pratt & Whitney businesses. Based on recent public data and estimates, revenue passenger miles (RPMs) for the year ending December 31, 2020 could decline by more than 60% in comparison to the prior year due to the pandemic. As a result, our airline customers have reported significant reductions in fleet utilization, aircraft grounding and unplanned retirements, and have deferred and, in some cases, cancelled new aircraft deliveries. Airlines have shifted to cash conservation behaviors such as deferring engine maintenance due to lower flight hours and aircraft utilization, requesting extended payment terms, deferring delivery of new aircraft and spare engines and requesting discounts on engine maintenance. Some airline customers have filed for bankruptcy due to their inability to meet their financial obligations. Additionally, we are seeing purchase order declines in line with publicly communicated aircraft production volumes as original equipment manufacturer (OEM) customers delay and cancel orders. We continue to monitor these trends and are working closely with our customers. We are actively mitigating costs and adjusting production schedules to accommodate these declines in demand. We have also been taking actions to preserve capital and protect the long-term needs of our businesses, including cutting discretionary spending, significantly reducing capital expenditures and research and development spend, suspending our share buybacks, deferring merit increases and implementing temporary pay reductions, freezing non-essential hiring, repositioning employees to defense work, furloughing employees when needed, and personnel reductions. In the nine months ended September 30, 2020, we recorded total restructuring charges of $685 million primarily related to personnel reductions at our Collins Aerospace and Pratt & Whitney businesses to preserve capital and at our Corporate Headquarters due to consolidation from the Raytheon Merger. The former Raytheon Company businesses have not experienced significant facility closures or other significant business disruptions as a result of the COVID-19 pandemic.
Given the significant reduction in business and leisure passenger air travel, the number of planes temporarily grounded, and continued travel restrictions that have resulted from the pandemic, we expect our future operating results, particularly those of our Collins Aerospace and Pratt & Whitney businesses to continue to be significantly negatively impacted. Our expectations regarding the COVID-19 pandemic and its potential financial impact are based on available information and assumptions that we believe are reasonable at this time; however, the actual financial impact is highly uncertain and subject to a wide range of factors and future developments. While we believe that the long-term outlook for the aerospace industry remains positive due to the fundamental drivers of air travel demand, there is significant uncertainty with respect to when and if commercial air traffic levels will begin to recover, and whether and at what point capacity will return to and/or exceed pre-COVID-19 levels. Our latest estimates are that this recovery may occur in 2023 or 2024. New information may emerge concerning the scope, severity and duration of the COVID-19 pandemic, as well as any worsening of the pandemic and whether there will be additional outbreaks of the pandemic, actions to contain its spread or treat its impact, and governmental, business and individuals’ actions taken in response to the pandemic (including restrictions and limitations on travel and transportation) among others.
We considered the deterioration in general economic and market conditions primarily due to the COVID-19 pandemic to be a triggering event in the first and second quarters of 2020 requiring us to reassess our commercial aerospace business goodwill and intangibles valuations, as well as our significant assumptions of future cash flows from our underlying assets and potential changes in our liabilities. Beginning in the second quarter of 2020, our revenue at Collins Aerospace and Pratt & Whitney has been significantly negatively impacted by the decline in flight hours, aircraft fleet utilization, shop visits and commercial OEM deliveries. In order to evaluate the ongoing impact, in the second quarter of 2020, we updated our forecast assumptions of future business activity which are subject to a wide range of uncertainties, including those noted above. Based upon our analysis, we concluded that the carrying value of two of our Collins Aerospace reporting units was greater than its respective fair value, and accordingly, recorded a goodwill impairment charge of $3.2 billion.
As described further in “Note 5: Commercial Aerospace Industry Assets and Commitments,” we have significant exposure related to our airline and airframer customers, including significant accounts receivable and contract assets balances. Given the uncertainty related to the severity and length of the pandemic, as well as any worsening of the pandemic and whether there will be additional outbreaks of the pandemic and its impact across the aerospace industry, we may be required to record additional charges or impairments in future periods.
Borrowings and lines of credit:
Although the impact of COVID-19 on our commercial markets is significant, we currently believe we have sufficient liquidity to withstand the potential impacts of COVID-19. With the completion of the Separation Transactions, the Distributions and the Raytheon Merger, we have a balanced and diversified portfolio of both aerospace and defense businesses which we believe will help mitigate the impacts of the COVID-19 pandemic and future business cycles.
In preparation for and in anticipation of the Separation Transactions, the Distributions and the Raytheon Merger, the Company entered into and terminated a number of credit agreements.
On February 11, 2020 and March 3, 2020, we terminated a $2.0 billion revolving credit agreement and a $4.0 billion term loan credit agreement, respectively. Upon termination, we repaid the $2.1 billion of borrowings outstanding on the $4.0 billion term loan credit agreement. On April 3, 2020, upon the completion of the Raytheon Merger, we terminated a $2.20 billion revolving credit agreement and a $2.15 billion multicurrency revolving credit agreement.
On March 20, 2020 and March 23, 2020, we entered into two $500 million term loan credit agreements and borrowed $1.0 billion under these agreements in the first quarter of 2020. We terminated these agreements on May 5, 2020 and April 28, 2020, respectively, upon repayment.
On March 16, 2020, we entered into a revolving credit agreement with various banks permitting aggregate borrowings of up to $5.0 billion which became available upon completion of the Raytheon Merger on April 3, 2020. This credit agreement matures on April 3, 2025. On May 6, 2020, we entered into a revolving credit agreement with various banks permitting aggregate borrowings of up to $2.0 billion. This credit agreement matures on May 5, 2021. As of September 30, 2020 we had revolving credit agreements with various banks permitting aggregate borrowings of up to $7.0 billion.
In preparation for and in anticipation of the Separation Transactions and Distributions, the Company, Otis and Carrier issued and the Company repaid long-term debt in the nine months ended September 30, 2020, which are included in the tables below. On February 10, 2020, Otis entered into a term loan credit agreement providing for a $1.0 billion unsecured, unsubordinated 3-year term loan credit facility which matures on February 10, 2023. Also on February 10, 2020, Carrier entered into a term loan credit agreement providing for a $1.75 billion unsecured, unsubordinated 3-year term loan credit facility. On March 27, 2020, Otis and Carrier drew on the full amounts of the term loans and distributed the full proceeds to Raytheon Technologies in connection with the Separation Transactions. UTC utilized those amounts to extinguish Raytheon Technologies’ short-term and long-term debt in order to not exceed the maximum applicable net indebtedness required by the Raytheon Merger Agreement.
We had the following issuances of long-term debt during the nine months ended September 30, 2020, which is inclusive of issuances made by Otis and Carrier which were primarily used by the Company to extinguish Raytheon Technologies short-term and long-term debt.
(dollars in millions)


Issuance DateDescription of NotesAggregate Principal Balance
May 18, 2020
2.250% notes due 2030
$1,000 
3.125% notes due 2050
1,000 
March 27, 2020
Term Loan due 2023 (Otis) (1)
1,000 
Term Loan due 2023 (Carrier) (1)
1,750 
February 27, 2020
1.923% notes due 2023 (1)
500 
LIBOR plus 0.450% floating rate notes due 2023 (1)
500 
2.056% notes due 2025 (1)
1,300 
2.242% notes due 2025 (1)
2,000 
2.293% notes due 2027 (1)
500 
2.493% notes due 2027 (1)
1,250 
2.565% notes due 2030 (1)
1,500 
2.722% notes due 2030 (1)
2,000 
3.112% notes due 2040 (1)
750 
3.377% notes due 2040 (1)
1,500 
3.362% notes due 2050 (1)
750 
3.577% notes due 2050 (1)
2,000 
$19,300 
(1)    The debt issuances and term loan draws reflect debt incurred by Otis and Carrier. The net proceeds of these issuances were primarily utilized to extinguish Raytheon Technologies short-term and long-term debt in order to not exceed the maximum applicable net indebtedness required by the Raytheon Merger Agreement.
We had the following repayments of long-term debt during the nine months ended September 30, 2020:
(dollars in millions)
Repayment DateDescription of NotesAggregate Principal Balance
May 19, 2020
3.650% notes due 2023 (1)(2)
$410 
May 15, 2020
EURIBOR plus 0.20% floating rate notes due 2020 (€750 million principal value)(2)
817 
March 29, 2020
4.500% notes due 2020 (1)(2)
1,250 
1.125% notes due 2021 (€950 million principal value) (1)(2)
1,082 
1.250% notes due 2023 (€750 million principal value) (1)(2)
836 
1.150% notes due 2024 (€750 million principal value) (1)(2)
841 
1.875% notes due 2026 (€500 million principal value) (1)(2)
567 
March 3, 2020
1.900% notes due 2020 (1)(2)
1,000 
3.350% notes due 2021 (1)(2)
1,000 
LIBOR plus 0.650% floating rate notes due 2021 (1)(2)
750 
1.950% notes due 2021 (1)(2)
750 
2.300% notes due 2022 (1)(2)
500 
3.100% notes due 2022 (1)(2)
2,300 
2.800% notes due 2024 (1)(2)
800 
March 2, 2020
4.875% notes due 2020 (1)(2)
171 
February 28, 2020
3.650% notes due 2023 (1)(2)
1,669 
2.650% notes due 2026 (1)(2)
431 
$15,174 
(1)    In connection with the early repayment of outstanding principal, Raytheon Technologies recorded debt extinguishment costs of $703 million for the nine months ended September 30, 2020. No proceeds of the notes issued May 18, 2020 were used to fund the May 19, 2020 redemption.
(2)    Extinguishment of Raytheon Technologies short-term and long-term debt in order to not exceed the maximum net indebtedness required by the Raytheon Merger Agreement.
On June 10, 2020, we completed an exchange offer with eligible holders of the outstanding notes of Goodrich Corporation maturing through 2046, Raytheon Company maturing through 2044 and Rockwell Collins Inc. maturing through 2047 (collectively, the “Subsidiary Notes”). An aggregate principal amount of approximately $8.2 billion of the Subsidiary Notes was exchanged for approximately $8.2 billion of Raytheon Technologies notes with identical interest rates, maturity dates, and redemption provisions, if any, as the Subsidiary Notes exchanged. Because the exchange was for substantially identical notes, the change was treated as a debt modification for accounting purposes with no gain or loss recognized.
v3.20.2
Selected Quarterly Financial Data - Unaudited
 12 Months Ended
Dec. 31, 2019
Selected Quarterly Financial Information [Abstract]  
Quarterly Financial Information [Text Block] SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)
2019 Quarters2018 Quarters
(dollars in millions,
except per share amounts)		FirstSecondThirdFourthFirstSecondThirdFourth
Net Sales$10,953 $11,329 $11,373 $11,694 $7,836 $8,333 $8,412 $10,121 
Gross margin2,534 2,775 2,864 2,578 1,791 1,819 1,586 2,041 
Income (loss) from continuing operations7121,183958657598 541 318 (240)
Income from discontinued operations634717190486699 1,507 920 926 
Net income attributable to common shareowners1,346 1,900 1,148 1,143 1,297 2,048 1,238 686 
Earnings per share of Common Stock - Basic:
Income (loss) from continuing operations0.841.381.12$0.77 $0.76 $0.68 $0.40 $(0.29)
Income from discontinued operations0.740.840.22$0.56 $0.88 $1.91 $1.16 $1.12 
Net income attributable to common shareholders$1.58 $2.22 $1.34 $1.33 $1.64 $2.59 $1.56 $0.83 
Earnings per share of Common Stock - Diluted:
Income (loss) from continuing operations$0.83 $1.37 $1.11 $0.76 $0.75 $0.68 $0.39 $(0.29)
Income from discontinued operations$0.73 $0.83 $0.22 $0.56 $0.87 $1.88 $1.15 $1.12 
Net income attributable to common shareholders$1.56 $2.20 $1.33 $1.32 $1.62 $2.56 $1.54 $0.83 
v3.20.2
Performance Graph - Unaudited
 12 Months Ended
Dec. 31, 2019
Performance Graph [Abstract]  
Cumulative Total Shareholder Return [Text Block]
PERFORMANCE GRAPH (UNAUDITED)
The following graph presents the cumulative total shareholder return for the five years ending December 31, 2019 for our common stock, as compared to the Standard & Poor’s 500 Stock Index and to the Dow Jones 30 Industrial Average. Our common stock price is a component of both indices. These figures assume that all dividends paid over the five-year period were reinvested, and that the starting value of each index and the investment in common stock was $100.00 on December 31, 2014.
v3.20.2
Leases (Notes)
 12 Months Ended
Dec. 31, 2019
Leases [Abstract]  
Lessee, Operating Leases [Text Block] 20: LEASES
ASU 2016-02, Leases (Topic 842) and its related amendments (collectively, the New Lease Accounting Standard) are effective for reporting periods beginning after December 15, 2018. We adopted the New Lease Accounting Standard effective January 1, 2019 and elected the modified retrospective approach in which results for periods before 2019 were not adjusted for the new standard and the cumulative effect of the change in accounting was recognized through retained earnings at the date of adoption.
We have elected certain of the practical expedients available under the New Lease Accounting Standard. We have applied the practical expedient which allows prospective transition to the New Lease Accounting Standard on January 1, 2019. Under the transition practical expedient, we did not reassess lease classification, embedded leases or initial direct costs. We have applied the practical expedient for short-term leases. We have lease agreements with lease and non-lease components. We have elected the practical expedients to combine these components for certain equipment leases. Additionally, for certain equipment leases, we apply a portfolio approach to effectively account for the operating lease right-of-use assets and liabilities. The adoption of the New Lease Accounting Standard did not have a material effect on our Consolidated Statement of Operations or Consolidated Statement of Cash Flows. Upon adoption, we recorded a $1.7 billion right-of-use asset and a $1.7 billion lease liability. The adoption of the New Lease Accounting Standard had an immaterial impact on retained earnings.
Operating lease expense for the year ended December 31, 2019 was approximately $323 million.
Supplemental cash flow information related to operating leases was as follows:
(dollars in millions)Year ended December 31, 2019
Operating cash flows used in the measurement of operating lease liabilities$411 
Operating lease right-of-use assets obtained in exchange for operating lease obligations123 
Operating lease right-of-use assets and liabilities are reflected on our Consolidated Balance Sheet as follows:
(dollars in millions, except lease term and discount rate)December 31, 2019
Operating lease right-of-use assets$1,252 
Accrued liabilities$(245)
Operating lease liabilities(1,093)
Total operating lease liabilities$(1,338)
Supplemental balance sheet information related to operating leases was as follows:
December 31, 2019
Weighted Average Remaining Lease Term (in years)8.6
Weighted Average Discount Rate3.5 %
Undiscounted maturities of operating lease liabilities as of December 31, 2019 are as follows:
(dollars in millions)
2020$298 
2021265 
2022196 
2023147 
2024120 
Thereafter595 
Total undiscounted lease payments1,621 
Less imputed interest(283)
Total discounted lease payments$1,338 
Prior to the adoption of the New Lease Accounting Standard, rental commitments on an undiscounted basis were approximately $1.8 billion at December 31, 2018 under long-term non-cancelable operating leases and were payable as follows: $359 million in 2019, $297 million in 2020, $230 million in 2021, $178 million in 2022, $151 million in 2023 and $606 million thereafter.
v3.20.2
Summary of Accounting Principles (Policy)
 12 Months Ended
Dec. 31, 2019
Accounting Policies [Abstract]  
Consolidation Policy [Text Block] Consolidation. The Consolidated Financial Statements include the accounts of Raytheon Technologies Corporation and its controlled subsidiaries. Intercompany transactions have been eliminated. As a result of the Separation Transactions, we are now a focused aerospace and defense company with a defined operating cycle. Accordingly, to determine our classification of certain current assets and liabilities, the duration of our contracts or programs is utilized to determine our operating cycle, which is generally longer than one year. Included within our current assets and liabilities are contract assets and liabilities related to our aftermarket and development arrangements, which can generally span up to fifteen years. Certain reclassifications have been made to the prior year amounts to conform to the current year presentation.
Cash And Cash Equivalents Policy [Text Block] Cash and Cash Equivalents. Cash and cash equivalents includes cash on hand, demand deposits and short-term cash investments that are highly liquid in nature and have original maturities of three months or less.
Cash And Cash Equivalents Restricted Cash And Cash Equivalents Policy On occasion, we are required to maintain cash deposits with certain banks with respect to contractual obligations related to acquisitions or divestitures or other legal obligations. As of December 31, 2019 and 2018, the amount of such restricted cash was approximately $24 million and $38 million, respectively.
Accounts Receivable Policy [Text Block] Accounts Receivable. Accounts receivable are stated at their net estimated realized value. The allowance for doubtful accounts is based upon an assessment of customer creditworthiness, historical payment experience, and the age and status of outstanding receivables. Accounts receivable as of December 31, 2019 and December 31, 2018 includes unbilled receivables of $265 million and $439 million, respectively, which primarily includes unbilled receivables with commercial aerospace customers. See “Note 5: Commercial Aerospace Industry Assets and Commitments” for discussion of commercial aerospace industry assets and commitments. Unbilled receivables represent revenues that are not currently billable to the customer under the terms of the contract. These items are expected to be billed and collected in the normal course of business. Unbilled receivables where we have an unconditional right to payment are included in Accounts receivable.
Contract with Customer, Assets and Liabilities [Policy Text Block] Contract Assets and Liabilities. Contract assets and liabilities represent the difference in the timing of revenue recognition from receipt of cash from our customers. Contract assets reflect revenue recognized and performance obligations satisfied in advance of customer billing. Performance obligations partially satisfied in advance of customer billings are included in contract assets.Contract liabilities relate to payments received in advance of the satisfaction of performance under the contract. We receive payments from customers based on the terms established in our contracts. See “Note 7: Contract Assets and Liabilities” for further discussion of contract assets and liabilities.
Inventories and Contracts in Progress Policy Text Block Inventory. Inventory is stated at the lower of cost or estimated realizable value and are primarily based on first-in, first-out (FIFO) or average cost methods.Valuation reserves for excess, obsolete, and slow-moving inventory are estimated by comparing the inventory levels of individual parts to both future sales forecasts or production requirements and historical usage rates in order to identify inventory where the resale value or replacement value is less than inventoriable cost. Other factors that management considers in determining the adequacy of these reserves include whether individual inventory parts meet current specifications and cannot be substituted for a part currently being sold or used as a service part, overall market conditions, and other inventory management initiatives. Manufacturing costs are allocated to current production and firm contracts.
Equity Method Investments Policy [Policy Text Block] Equity Method Investments. Investments in which we have the ability to exercise significant influence, but do not control, are accounted for under the equity method of accounting and are included in Other assets on the Consolidated Balance Sheet. Under this method of accounting, our share of the net earnings or losses of the investee is included in Other income, net on the Consolidated Statement of Operations since the activities of the investee are closely aligned with the operations of the business segment holding the investment. We evaluate our equity method investments whenever events or changes in circumstance indicate that the carrying amounts of such investments may be impaired. If a decline in the value of an equity method investment is determined to be other than temporary, a loss is recorded in earnings in the current period. RTC sells products to and purchases products from unconsolidated entities accounted for under the equity method, which are considered related parties. This activity is not considered material to the Consolidated Statement of Operations nor Consolidated Balance Sheet of RTC.
Financing Receivable Customer Financing Assets. Customer Financing Assets (CFA) primarily relate to the aerospace business in which we provide financing to airline customers. The most common types of financing include products under lease, notes receivable, long-term accounts receivable and lease receivable. We record revenue from lease assets by applying Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) Topic 842, Leases, and from interest on the notes, accounts and lease receivables. Interest from notes and financing leases, rental income from operating lease assets and gains or losses on sales of operating lease assets is aggregated under the caption of “Other income, net” in the Consolidated Statement of Operations. The current portion of these financing arrangements are aggregated under the caption of “Other assets, current” and the non-current portions of these financing arrangements are aggregated under the caption of “Customer financing assets” in the Consolidated Balance Sheet. The increases and decreases in CFA from funding, receipts and certain other activity, are reflected as Investing Activities in the Consolidated Statement of Cash Flows. The product under lease assets are valued at cost and reviewed for impairment when circumstances indicate that the related carrying amounts may not be recoverable. Notes, accounts and lease receivable are valued at cost and reviewed for impairment when it is probable that we will be unable to collect amounts due. As of December 31, 2019 the reserves related to customer financing assets are not material.
Business Combinations Policy Business Combinations. We account for transactions that are classified as business combinations in accordance with FASB ASC Topic 805, “Business Combinations.” Once a business is acquired, the fair value of the identifiable assets acquired and liabilities assumed is determined with the excess cost recorded to goodwill. As required, a preliminary fair value is determined once a business is acquired, with the final determination of the fair value being completed within the one year measurement period from the date of acquisition.
Goodwill And Intangible Assets Policy [Text Block]
Goodwill and Intangible Assets. Goodwill represents costs in excess of fair values assigned to the underlying net assets of acquired businesses. Goodwill and intangible assets deemed to have indefinite lives are not amortized. Goodwill and indefinite-lived intangible assets are subject to annual impairment testing or when a triggering event occurs using the guidance and criteria described in the Intangibles - Goodwill and Other Topic of the FASB ASC. This testing compares carrying values to fair values and, when appropriate, the carrying value of these assets is reduced to fair value.
Intangible assets consist of patents, trademarks/tradenames, customer relationships and other intangible assets including collaboration assets, as discussed further in “Note 2: Business Acquisitions, Dispositions, Goodwill and Intangible Assets.” Acquired intangible assets are recognized at fair value in purchase accounting and then amortized to cost of sales and selling, general & administrative expenses over the applicable useful lives. Also included within other intangible assets are commercial aerospace payments made to secure certain contractual rights to provide product on new aircraft platforms. We classify amortization of such payments as a reduction of sales. Such payments are capitalized when there are distinct rights obtained and there are sufficient incremental cash flows to support the recoverability of the assets established. Otherwise, the applicable portion of the payments are expensed. Consideration paid on these contractual commitments is capitalized when it is no longer conditional.
Useful lives of finite-lived intangible assets are estimated based upon the nature of the intangible asset and the industry in which the intangible asset is used. These intangible assets are amortized based on the pattern in which the economic benefits of the intangible assets are consumed. For both our commercial aerospace collaboration assets and exclusivity arrangements, the pattern of economic benefit generally results in lower amortization during the development period with increasing amortization
as programs enter full rate production and aftermarket cycles. If a pattern of economic benefit cannot be reliably determined or if straight-line amortization approximates the pattern of economic benefit, a straight-line amortization method may be used. The range of estimated useful lives is as follows:
Collaboration assets
30 years
Customer relationships and related programs
1 to 32 years
Patents & trademarks
5 to 30 years
Exclusivity assets
5 to 25 years
Lessee, Leases
Leases. We account for leases in accordance with ASC Topic 842: Leases. Under Topic 842, the right-of-use model requires a lessee to record a right-of-use asset and a lease liability on the Consolidated Balance Sheet for all leases with terms longer than 12 months. Leases are classified as either finance or operating, with classification affecting the pattern of expense recognition in the Consolidated Statement of Operations. In addition, Topic 842 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.
We enter into lease agreements for the use of real estate space, vehicles, information technology equipment, and certain other equipment under operating and finance leases. We determine if an arrangement contains a lease at inception. Operating leases are included in Operating lease right-of-use assets, Accrued liabilities, and Operating lease liabilities in our Consolidated Balance Sheet. Finance leases are not considered significant to our Consolidated Balance Sheet or Consolidated Statement of Operations.
Right-of-use assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. Lease right-of-use assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. As most of our leases do not provide an implicit rate, we use our incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments, and use the implicit rate when readily determinable. We determine our incremental borrowing rate through market sources including relevant industry rates. Our lease right-of-use assets also include any lease pre-payments and exclude lease incentives. Certain of our leases include variable payments, which may vary based upon changes in facts or circumstances after the start of the lease. We exclude variable payments from lease right-of-use assets and lease liabilities, to the extent not considered fixed, and instead, expense variable payments as incurred. Variable lease expense and lease expense for short duration contracts is not a material component of lease expense. Our leases generally have remaining lease terms of 1 to 20 years, some of which include options to extend leases. For the majority of our leases with options to extend, those options are up to 5 years with the ability to terminate the lease within 1 year. The exercise of lease renewal options is at our sole discretion and our lease right-of-use assets and liabilities reflect only the options we are reasonably certain that we will exercise. Lease expense is recognized on a straight-line basis over the lease term.
In limited instances we act as a lessor, primarily for commercial aerospace engines, the majority of which are classified as operating leases. These leases are not significant to our Consolidated Balance Sheet or Consolidated Statement of Operations.
Other Long Lived Assets Policy [Text Block] Other Long-Lived Assets. We evaluate the potential impairment of other long-lived assets whenever events or changes in circumstances indicate that the related carrying amounts may not be recoverable. If the carrying value of other long-lived assets held and used exceeds the sum of the undiscounted expected future cash flows, the carrying value is written down to fair value.
Income Tax Policy [Text Block]
Income Taxes. 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. For those tax positions where it is more-likely-than-not that a tax benefit will be sustained, we have recorded the largest amount of tax benefit with a greater than 50% likelihood of being realized upon ultimate settlement with a taxing authority that has full knowledge of all relevant information. For those income tax positions where it is not more-likely-than-not that a tax benefit will be sustained, no tax benefit has been recognized in the financial statements. Where applicable, associated interest expense has also been recognized. We recognize accrued interest related to unrecognized tax benefits in interest expense. Penalties, if incurred, would be recognized as a component of income tax expense.
On December 22, 2017 the TCJA was enacted. The TCJA contains a new law that subjects the Company to a tax on Global Intangible Low-Taxed Income (GILTI), beginning in 2018. GILTI is a tax on foreign income in excess of a deemed return on tangible assets of foreign corporations. The FASB has provided that companies subject to GILTI have the option to account for the GILTI tax as a period cost if and when incurred, or to recognize deferred taxes for temporary differences,
including outside basis differences, expected to reverse as GILTI. We have elected to account for GILTI as a period cost, as incurred.
Revenue Recognition Policy
Revenue Recognition. We account for revenue in accordance with ASC Topic 606: Revenue from Contracts with Customers. We adopted ASC 606 effective January 1, 2018 and elected the modified retrospective approach. The results for periods before 2018 were not adjusted for the new standard and the cumulative effect of the change in accounting was recognized through retained earnings at the date of adoption. Under Topic 606, a performance obligation is a promise in a contract with a customer to transfer a distinct good or service to the customer. Some of our contracts with customers contain a single performance obligation, while others contain multiple performance obligations most commonly when a contract spans multiple phases of the product life-cycle such as development, production, maintenance and support. A contract’s transaction price is allocated to each distinct performance obligation and recognized as revenue when, or as, the performance obligation is satisfied. When there are multiple performance obligations within a contract, we allocate the transaction price to each performance obligation based on its standalone selling price.
We consider the contractual consideration payable by the customer and assess variable consideration that may affect the total transaction price, including contractual discounts, contract incentive payments, estimates of award fees, unfunded contract value under U.S. Government contracts, and other sources of variable consideration, when determining the transaction price of each contract. We include variable consideration in the estimated transaction price when there is a basis to reasonably estimate the amount. These estimates are based on historical experience, anticipated performance and our best judgment at the time. We also consider whether our contracts provide customers with significant financing. Generally, our contracts do not contain significant financing.
Timing of the satisfaction of performance obligations varies across our businesses due to our diverse product and service mix, customer base, and contractual terms.
Point in time revenue recognition. Performance obligations are satisfied as of a point in time for certain aerospace components, engines, and spare parts. Revenue is recognized when control of the product transfers to the customer, generally upon product shipment.
Over-time revenue recognition. Performance obligations are satisfied over-time if the customer receives the benefits as we perform work, if the customer controls the asset as it is being produced, or if the product being produced for the customer has no alternative use and we have a contractual right to payment. We recognize revenue on an over-time basis on certain long-term aerospace aftermarket contracts and aftermarket service work; and development, fixed price, and other cost reimbursement contracts. Revenue is recognized using costs incurred to date relative to total estimated costs at completion to measure progress for performance obligations satisfied over time. Incurred costs represent work performed, which correspond with and best depict transfer of control to the customer. Contract costs include labor, materials, and subcontractors’ costs, or other direct costs, and where applicable on government and commercial contracts, indirect costs.
For certain of our long-term aftermarket contracts, revenue is recognized over the contract period. We generally account for such contracts as a series of daily obligations to stand ready to provide spare parts and product maintenance and aftermarket services. These arrangements include the sale of spare parts with integral services to our customers, and are generally classified as Service sales, with the corresponding costs classified in Cost of services sold, within the Consolidated Statement of Operations. Revenue is primarily recognized in proportion to cost as sufficient historical evidence indicates that the cost of performing services under the contract is incurred on an other than straight-line basis. Aerospace contract modifications are routine and contracts are often modified to account for changes in contract specifications or requirements. Contract modifications that are for goods or services that are not distinct are accounted for as part of the existing contract.
We incur costs for engineering and development of aerospace products directly related to existing or anticipated contracts with customers. Such costs generate or enhance our ability to satisfy our performance obligations under these contracts. We capitalize these costs as contract fulfillment costs to the extent the costs are recoverable from the associated contract margin and subsequently amortize the costs as the original equipment (OEM) products performance obligations are satisfied. In instances where intellectual property does not transfer to the customer, we defer the customer funding of OEM product engineering and development and recognize revenue when the OEM products performance obligations are satisfied. Capitalized contract fulfillment costs were $1,519 million and $914 million as of December 31, 2019 and 2018, respectively and are recognized in “Other assets” in our Consolidated Balance Sheet and are included in Other operating activities, net in our Consolidated Statement of Cash Flows. The increase in capitalized net contract fulfillment costs is driven by current year activity at Collins Aerospace Systems. Costs to obtain contracts are not material.
Loss provisions on OEM contracts are recognized to the extent that estimated contract costs exceed the estimated consideration from the products contemplated under the contractual arrangement. For new commitments, we generally record loss provisions at the earlier of contract announcement or contract signing except for certain contracts under which losses are
recorded upon receipt of the purchase order that obligates us to perform. For existing commitments, anticipated losses on contractual arrangements are recognized in the period in which losses become evident. Products contemplated under contractual arrangements include firm quantities of product sold under contract and, in the commercial engine and wheels and brakes businesses, future highly probable sales of replacement parts required by regulation that are expected to be sold subsequently for incorporation into the original equipment. In the commercial engine and wheels and brakes businesses, when the combined original equipment and aftermarket arrangement for each individual sales campaign are profitable, we record original equipment product losses, as applicable, at the time of delivery.
We review our cost estimates on significant contracts on a quarterly basis and for others, no less frequently than annually or when circumstances change and warrant a modification to a previous estimate. We record changes in contract estimates using the cumulative catch-up method. Operating profits included net unfavorable changes in contract estimates of approximately $69 million, $50 million, and $110 million in 2019, 2018 and 2017, respectively, primarily the result of unexpected increases in estimated costs related to Pratt & Whitney long-term aftermarket contracts.
Collaborations. Sales generated from engine programs, spare parts sales, and aftermarket business under collaboration arrangements are recorded consistent with our revenue recognition policies in our Consolidated Financial Statements. Amounts attributable to our collaborators for their share of sales are recorded as cost of sales in our Consolidated Financial Statements based upon the terms and nature of the arrangement. Costs associated with engine programs under collaborative arrangements are expensed as incurred. Under these arrangements, collaborators contribute their program share of engine parts, incur their own production costs and make certain payments to Pratt & Whitney for shared or joint program costs. The reimbursement from collaborators of their share of program costs is recorded as a reduction of the related expense item at that time.
Cash Payments to Customers. We may offer customers incentives to purchase our products, which may result in payments made to those customers. In addition, we make participation payments to certain aerospace customers to secure certain contractual rights. To the extent these rights are incremental and are supported by the incremental cash flows obtained, they are capitalized as intangible assets. Otherwise, such payments are recorded as a reduction in sales. We classify the subsequent amortization of the capitalized acquired intangible assets from our customers as a reduction in sales.
Remaining Performance Obligations Remaining Performance Obligations (RPO). RPO represents the aggregate amount of total contract transaction price that is unsatisfied or partially unsatisfied. As of December 31, 2019 our total RPO was approximately $111.7 billion compared to $93.8 billion as of December 31, 2018. Of the total RPO as of December 31, 2019, we expect approximately 37% will be recognized as sales over the following 24 months.
Research and Development Policy [Text Block]
Research and Development. Research and development costs not specifically covered by contracts and those related to the company sponsored share of research and development activity in connection with cost-sharing arrangements are charged to expense as incurred. Government research and development support, not associated with specific contracts, is recorded as a reduction to research and development expense in the period earned.
Research and development costs incurred under contracts with customers are included as a contract cost and reported as a component of cost of products sold when revenue from such contracts is recognized. Research and development costs in excess of contractual consideration are expensed as incurred.
Foreign Currency Transactions And Translations Policy [Text Block] Foreign Exchange. We conduct business in many different currencies and, accordingly, are subject to the inherent risks associated with foreign exchange rate movements. The financial position and results of operations of substantially all of our foreign subsidiaries are measured using the local currency as the functional currency. Foreign currency denominated assets and liabilities are translated into U.S. Dollars at the exchange rates existing at the respective balance sheet dates, and income and expense items are translated at the average exchange rates during the respective periods. The aggregate effects of translating the balance sheets of these subsidiaries are deferred as a separate component of shareowners' equity.
Derivatives and Hedging Activity Policy [Text Block]
Derivatives and Hedging Activity. We have used derivative instruments, including swaps, forward contracts and options, to help manage certain foreign currency, interest rate and commodity price exposures. Derivative instruments are viewed as risk management tools by us and are not used for trading or speculative purposes. By their nature, all financial instruments involve market and credit risks. We enter into derivative and other financial instruments with major investment grade financial institutions and have policies to monitor the credit risk of those counterparties. We limit counterparty exposure and concentration of risk by diversifying counterparties. While there can be no assurance, we do not anticipate any material non-performance by any of these counterparties. We enter into transactions that are subject to enforceable master netting arrangements or similar agreements with various counterparties. However, we have not elected to offset multiple contracts with a single counterparty and, as a result, the fair value of the derivative instruments in a loss position is not offset against the fair value of derivative instruments in a gain position.
Derivatives used for hedging purposes may be designated and effective as a hedge of the identified risk exposure at the inception of the contract. All derivative instruments are recorded on the balance sheet at fair value. Derivatives used to hedge
foreign currency denominated balance sheet items are reported directly in earnings along with offsetting transaction gains and losses on the items being hedged. Derivatives used to hedge forecasted cash flows associated with foreign currency commitments or forecasted commodity purchases may be accounted for as cash flow hedges, as deemed appropriate. Gains and losses on derivatives designated as cash flow hedges are recorded in other comprehensive income and reclassified to earnings as a component of product sales or expenses, as applicable, when the hedged transaction occurs. Gains and losses on derivatives designated as cash flow hedges are recorded in Other operating activities, net within the Consolidated Statement of Cash Flows. To the extent that a previously designated hedging transaction is no longer an effective hedge, any ineffectiveness measured in the hedging relationship is recorded currently in earnings in the period it occurs. As discussed in Note 15, at December 31, 2019 we have approximately €4.20 billion of euro-denominated long-term debt, which qualifies as a net investment hedge against our investments in European businesses.To the extent the hedge accounting criteria are not met, the foreign currency forward contracts are utilized as economic hedges and changes in the fair value of these contracts are recorded currently in earnings in the period in which they occur. Additional information pertaining to foreign currency forward contracts and net investment hedging is included in Note 15.
Environmental Costs Policy Environmental. Environmental investigatory, remediation, operating and maintenance costs are accrued when it is probable that a liability has been incurred and the amount can be reasonably estimated. The most likely cost to be incurred is accrued based on an evaluation of currently available facts with respect to each individual site, including existing technology, current laws and regulations and prior remediation experience. Where no amount within a range of estimates is more likely, the minimum is accrued. For sites with multiple responsible parties, we consider our likely proportionate share of the anticipated remediation costs and the ability of the other parties to fulfill their obligations in establishing a provision for those costs. Liabilities with fixed or reliably determinable future cash payments are discounted. Accrued environmental liabilities are not reduced by potential insurance reimbursements. See Note 19 for additional details on the environmental remediation activities.
Pension and Postretirement Obligations Policy Pension and Postretirement Obligations. Guidance under the Compensation - Retirement Benefits Topic of the FASB ASC requires balance sheet recognition of the overfunded or underfunded status of pension and postretirement benefit plans. Under this guidance, actuarial gains and losses, prior service costs or credits, and any remaining transition assets or obligations that have not been recognized under previous accounting standards must be recognized in other comprehensive income, net of tax effects, until they are amortized as a component of net periodic benefit cost.
Product Performance Obligations [Policy Text Block] Product Performance Obligations. We extend performance and operating cost guarantees beyond our normal service and warranty policies for extended periods on some of our products, particularly commercial aircraft engines. Liability under such guarantees is based upon future product performance and durability. We accrue for such costs that are probable and can be reasonably estimated. In addition, we incur discretionary costs to service our products in connection with product performance issues. The costs associated with these product performance and operating cost guarantees require estimates over the full terms of the agreements, and require management to consider factors such as the extent of future maintenance requirements and the future cost of material and labor to perform the services. These cost estimates are largely based upon historical experience. See Note 18 for further discussion.
Collaborative Arrangements Policy Collaborative Arrangements. In view of the risks and costs associated with developing new engines, Pratt & Whitney has entered into certain collaboration arrangements in which sales, costs and risks are shared. Sales generated from engine programs, spare parts, and aftermarket business under collaboration arrangements are recognized in our financial statements when earned. Amounts attributable to our collaborators for their share of sales are recorded as an expense in our financial statements based upon the terms and nature of the arrangement. Costs associated with engine programs under collaborative arrangements are expensed as incurred. Under these arrangements, collaborators contribute their program share of engine parts, incur their own production costs and make certain payments to Pratt & Whitney for shared or joint program costs. The reimbursement from the collaborators of their share of program costs is recorded as a reduction of the related expense item at that time. As of December 31, 2019, the collaborators’ interests in all commercial engine programs ranged from 13% to 49%, inclusive of a portion of Pratt & Whitney's interests held by other participants. Pratt & Whitney is the principal participant in all existing collaborative arrangements, with the exception of the Engine Alliance (EA), a joint venture with GE Aviation, which markets and manufactures the GP7000 engine for the Airbus A380 aircraft. There are no individually significant collaborative arrangements and none of the collaborators individually exceed a 31% share in an individual program. The following table illustrates the Consolidated Statement of Operations classification and amounts attributable to transactions arising from the collaborative arrangements between participants for each period presented.
(dollars in millions)201920182017
Collaborator share of sales:
Cost of products sold$2,097 $1,688 $1,789 
Cost of services sold1,674 1,765 929 
Collaborator share of program costs (reimbursement of expenses incurred):
Cost of products sold(190)(209)(143)
Research and development(219)(225)(190)
Selling, general and administrative(101)(87)(74)
New Accounting Pronouncements, Policy
Accounting Pronouncements. In June 2016, the FASB issued Accounting Standards Update (ASU) 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. This ASU and its related amendments modifies the impairment model to utilize an expected loss methodology in place of the incurred loss methodology for financial instruments, including trade receivables, contract assets, long-term receivables and off-balance sheet credit exposures. The amendment requires entities to consider a broader range of information to estimate expected credit losses, including historical information, current conditions and a reasonable forecast period, which may result in earlier recognition of certain losses. The provisions of this ASU are effective for years beginning after December 15, 2019, with early adoption permitted. A modified retrospective approach is required with a cumulative-effect adjustment to retained earnings as of January 1, 2020. We are still quantifying the impact of this ASU and its related amendments on our Consolidated Financial Statements which is not expected to be material.
In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement. The new standard removes the disclosure requirements for the amount of and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy. This standard did not have a material impact on our financial statement disclosures. We early adopted this standard effective January 1, 2019.
In August 2018, the FASB issued ASU 2018-14, Compensation—Retirement Benefits—Defined Benefit Plans—General (Subtopic 715-20): Disclosure Framework—Changes to the Disclosure Requirements for Defined Benefit Plans. The new standard includes updates to the disclosure requirements for defined benefit plans including several additions, deletions and modifications to the disclosure requirements. The provisions of this ASU are effective for fiscal years ending after December 15, 2020, with early adoption permitted. We are currently evaluating the impact of this ASU.
In August 2018, the FASB issued ASU 2018-15, Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract. The new standard provides updated guidance surrounding implementation costs associated with cloud computing arrangements that are service contracts. The provisions of this ASU are effective for years beginning after December 15, 2019, with early adoption permitted. We adopted the new standard prospectively effective January 1, 2020. We do not expect this ASU to have a material impact on the Consolidated Financial Statements.
In October 2018, the FASB issued ASU 2018-17, Consolidation (Topic 810): Targeted Improvements to Related Party Guidance for Variable Interest Entities. The amendments in this update for determining whether a decision-making fee is a variable interest require reporting entities to consider indirect interests held through related parties under common control on a proportional basis rather than as the equivalent of a direct interest in its entirety (as currently required in generally accepted accounting principles (GAAP)). These amendments also will create alignment between determining whether a decision making fee is a variable interest and determining whether a reporting entity within a related party group is the primary beneficiary of a VIE. This will significantly reduce the risk that decision makers with insignificant direct and indirect interests could be deemed the primary beneficiary of a VIE. The provisions of this ASU are effective for years beginning after December 15, 2019, with early adoption permitted. We adopted the new standard effective January 1, 2020. This ASU did not have an impact on the Consolidated Financial Statements.
In November 2018, the FASB issued ASU 2018-18, Collaborative Arrangements (Topic 808): Clarifying the Interaction between Topic 808 and Topic 606. The amendments in this update make targeted improvements to GAAP for collaborative arrangements as follows: clarify that certain transactions between collaborative arrangement participants should be accounted for as revenue under Topic 606 when the collaborative arrangement participant is a customer in the context of a unit of account. In those situations, all the guidance in Topic 606 should be applied, including recognition, measurement, presentation, and disclosure requirements; add unit-of-account guidance in Topic 808 to align with the guidance in Topic 606 (that is, a distinct good or service) when an entity is assessing whether the collaborative arrangement or a part of the arrangement is within the scope of Topic 606; and require that in a transaction with a collaborative arrangement participant that is not directly related to sales to third parties, presenting the transaction together with revenue recognized under Topic 606 is precluded if the collaborative arrangement participant is not a customer. The provisions of this ASU are effective for years beginning after
December 15, 2019, with early adoption permitted. We adopted the new standard effective January 1, 2020. This ASU did not have an impact on the Consolidated Financial Statements.
In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes. The amendments in this update remove certain exceptions of Topic 740 including: exception to the incremental approach for intraperiod tax allocation when there is a loss from continuing operations and income or gain from other items; exception to the requirement to recognize a deferred tax liability for equity method investments when a foreign subsidiary becomes an equity method investment; exception to the ability not to recognize a deferred tax liability for a foreign subsidiary when a foreign equity method investment becomes a subsidiary; exception to the general methodology for calculating income taxes in an interim period when a year-to-date loss exceeds the anticipated loss for the year. There are also additional areas of guidance in regards to: franchise and other taxes partially based on income and the interim recognition of enactment of tax laws and rate changes. The provisions of this ASU are effective for years beginning after December 15, 2020, with early adoption permitted. We are currently evaluating the impact of this ASU on our consolidated financial statements.
v3.20.2
Business Combinations (Tables)
 12 Months Ended
Dec. 31, 2019
Business Combinations [Abstract]  
Schedule of consideration transferred
(dollars in millions)Amount
Cash consideration paid for Rockwell Collins outstanding common stock & equity awards$15,533 
Fair value of UTC common stock issued for Rockwell Collins outstanding common stock & equity awards
7,960 
Total consideration transferred$23,493 
Schedule of Recognized Identified Assets Acquired and Liabilities Assumed The table below represents the final determination of the fair value of identifiable assets acquired and liabilities assumed from the Rockwell Collins acquisition after utilizing the one year measurement period allowed by the FASB ASC Topic 805, “Business Combinations.”
(dollars in millions)
Cash and cash equivalents$640 
Accounts receivable1,659 
Inventory1,487 
Contract assets, current320 
Other assets, current251 
Future income tax benefits38 
Fixed assets1,542 
Intangible assets:
Customer relationships8,720 
Tradenames/trademarks1,870 
        Developed technology600 
Other assets217 
Total identifiable assets acquired17,344 
Short-term borrowings2,254 
Accounts payable520 
Accrued liabilities1,663 
Contract liabilities, current299 
Long-term debt5,530 
Future pension and postretirement benefit obligation502 
Other long-term liabilities3,614 
Noncontrolling interest6 
Total liabilities acquired14,388 
Total identifiable net assets2,956 
Goodwill20,537 
Total consideration transferred$23,493 
Finite-Lived and Indefinite-Lived Intangible Assets Acquired as Part of Business Combination The tradename intangible assets have been determined to have an indefinite life. The intangible assets included above consist of the following:
(dollars in millions)
Fair Value		Estimated
Life
Acquired customer relationships$8,720 10-23 years
Acquired tradenames/trademarks1,870 indefinite
Acquired developed technology600 15 years
$11,190 
Business Acquisition, Pro Forma Information, Nonrecurring Adjustments The pro-forma results were calculated by combining the results of RTC with the stand-alone results of Rockwell Collins for the pre-acquisition periods, which were adjusted to account for certain costs that would have been incurred during this pre-acquisition period:
 Year Ended December 31,
(dollars in millions, except per share amounts; shares in millions)20182017
Net sales$42,336 $37,909 
Net income attributable to common shareowners from continuing operations$2,011 $1,423 
Basic earnings per share of common stock from continuing operations$2.26 $1.66 
Diluted earnings per share of common stock from continuing operations$2.24 $1.65 
The unaudited supplemental pro-forma data above includes the following significant adjustments made to account for certain costs which would have been incurred if the acquisition had been completed on January 1, 2017, as adjusted for the
applicable tax impact. As our acquisition of Rockwell Collins was completed on November 26, 2018, the pro-forma adjustments in the table below only include the required adjustments through November 26, 2018:
 Year Ended December 31,
(dollars in millions)20182017
Amortization of inventory and fixed asset fair value adjustment (1)
58 $(192)
Amortization of acquired Rockwell Collins intangible assets, net (2)
(193)(202)
Utilization of contractual customer obligation (3)
16 116 
RTC/Rockwell fees for advisory, legal, accounting services (4)
212 (212)
Interest expense incurred on acquisition financing, net (5)
(199)(234)
Elimination of capitalized pre-production engineering amortization (6)
63 42 
Adjustment to net periodic pension cost (7)
42 34 
Adjustment to reflect the adoption of ASC 606 (8)
106 — 
Elimination of entities held for sale (9)
(47)(35)
Inclusion of B/E Aerospace (10)
— (51)
$58 $(734)
(1)    2018 reflects the elimination of the inventory step-up amortization recorded by RTC in 2018 as this would have been completed within the first two quarters of 2017. Additionally, this adjustment reflects the amortization of the fixed asset fair value adjustment as of the acquisition date.
(2)    Reflects the additional amortization of the acquired Rockwell Collins’ intangible assets recognized at fair value in purchase accounting and eliminates the historical Rockwell Collins intangible asset amortization expense.
(3)    Reflects the additional amortization of liabilities recognized for acquired contracts with terms less favorable than could be realized in market transactions as of the acquisition date and eliminates Rockwell Collins historical amortization of these liabilities.
(4)    2018 reflects the elimination of transaction-related fees incurred by RTC and Rockwell Collins in connection with the acquisition and assumes all of the fees were incurred during the first quarter of 2017.
(5)    Reflects the additional interest expense incurred on debt to finance our acquisition of Rockwell Collins and reduces interest expense for the debt fair value adjustment which would have been amortized.
(6)    Reflects the elimination of Rockwell Collins capitalized pre-production engineering amortization to conform to RTC policy.
(7)    Reflects adjustments for the elimination of amortization of prior service cost and actuarial loss amortization, which was recorded by Rockwell Collins, as a result of fair value purchase accounting, net of the impact of the revised pension and post-retirement benefit (expense) as determined under RTC’s plan assumptions.
(8)    Reflects adjustments to Rockwell Collins revenue recognition as if they adopted the New Revenue Standard as of January 1, 2018 and primarily relates to capitalization of contract costs and changes in timing of sales recognition for contracts requiring an over time method of revenue recognition, partially offset by deferral of revenue recognized on OEM product engineering and development.
(9)    Reflects the elimination of entities required to be sold for regulatory approvals.
(10)    Reflects adjustments to include the results and related adjustments for B/E Aerospace as if it had been acquired by Rockwell Collins on January 1, 2017.
Schedule of Goodwill Changes in our goodwill balances for the year ended in 2019 were as follows:
(dollars in millions)Balance as of
January 1,
2019		Goodwill
resulting from
business
combinations		Foreign
currency
translation
and other		Balance as of
December 31,
2019
Pratt & Whitney$1,567 $— $(4)$1,563 
Collins Aerospace Systems35,002 75 (52)35,025 
Total Segments36,569 75 (56)36,588 
Eliminations and other21 — — 21 
Total$36,590 $75 $(56)$36,609 
Schedule of Indefinite-Lived Intangible Assets Identifiable intangible assets are comprised of the following:
 20192018
(dollars in millions)Gross
Amount		Accumulated
Amortization		Gross
Amount		Accumulated
Amortization
Amortized:
Patents and trademarks$47 $(34)$47 $(32)
Collaboration intangible assets4,862 (920)4,509 (649)
Customer relationships and other21,026 (3,884)20,308 (2,913)
 25,935 (4,838)24,864 (3,594)
Unamortized:
Trademarks and other3,376 — 3,372 — 
Total$29,311 $(4,838)$28,236 $(3,594)
Schedule of Finite-Lived Intangible Assets, Future Amortization Expense The following is the expected amortization of total intangible assets for 2020 through 2024, which reflects the pattern of expected economic benefit on certain aerospace intangible assets:
(dollars in millions)20202021202220232024
Amortization expense$1,248$1,249$1,283$1,290$1,277
v3.20.2
Discontinued Operations and Disposal Groups (Tables)
 12 Months Ended
Dec. 31, 2019
Discontinued Operations and Disposal Groups [Abstract]  
Schedule of income (loss) from discontinued operations
Carrier and Otis are presented as discontinued operations and, as such, have been excluded from both continuing operations and segment results for all periods presented. Income (loss) from discontinued operations is as follows:
Year Ended December 31
(dollars, in millions)201920182017
Otis$1,033 $1,213 $1,123 
Carrier1,698 2,840 2,116 
Separation related transactions (1)
(704)— — 
Income (loss) from discontinued operations $2,027 $4,053 $3,239 
(1)    Reflects unallocable transaction costs incurred by the Company primarily related to professional services costs pertaining to the Separation Transactions and the establishment of Otis and Carrier as stand-alone public companies, facility relocation costs, costs to separate information systems, costs of retention bonuses and tax charges related to separation activities.
The following summarized financial information related to discontinued operations has been reclassified from Income from continuing operations and included in Income (loss) from discontinued operations:
Year Ended December 31
(dollars, in millions)201920182017
Otis
Product sales$5,669 $5,636 $5,498 
Service sales7,444 7,268 6,843 
Cost of products sold4,656 4,624 4,392 
Cost of services sold4,635 4,568 4,220 
Research and development163 185 187 
Selling, general and administrative expense1,906 1,636 1,583 
Other (expense) income, net(40)26 37 
Non-operating expense, net4 (18)(4)
Income from discontinued operations, before income taxes1,709 1,935 2,000 
Income tax expense525 561 704 
Income from discontinued operations1,184 1,374 1,296 
Less: Noncontrolling interest in subsidiaries earnings from discontinued operations151 161 173 
Income from discontinued operations attributable to common shareowners$1,033 $1,213 $1,123 
Carrier
Product sales$15,337 $15,657 $14,744 
Service sales3,247 3,239 3,039 
Cost of products sold10,878 11,047 10,447 
Cost of services sold2,298 2,281 2,154 
Research and development400 399 364 
Selling, general and administrative expense2,888 2,566 2,459 
Other income (expense), net246 1,156 794 
Non-operating (income) expense, net(43)(82)(88)
Income from discontinued operations, before income taxes2,409 3,841 3,241 
Income tax expense672 967 1,085 
Income from discontinued operations1,737 2,874 2,156 
Less: Noncontrolling interest in subsidiaries earnings from discontinued operations39 34 40 
Income from discontinued operations attributable to common shareowners$1,698 $2,840 $2,116 
Separation related transactions (1)
Selling, general and administrative expense16 $— $— 
Other (expense) income, net$(11)
Loss from discontinued operations, before income taxes(27)— — 
Income tax (benefit) expense677 — — 
Income (loss) from discontinued operations, net of tax(704)— — 
Total Income (loss) from discontinued operations attributable to common shareowners$2,027 $4,053 $3,239 
(1)    Reflects unallocable transaction costs incurred by the Company primarily related to professional services costs pertaining to the Separation Transactions and the establishment of Otis and Carrier as stand-alone public companies, facility relocation costs, costs to separate information systems, costs of retention bonuses and tax charges related to separation activities.
Schedule of cash flows from discontinued operations
Selected financial information related to cash flows from discontinued operations is as follows:
Year Ended December 31
(dollars, in millions)201920182017
Net cash provided by operating activities$3,062 $3,652 $3,349 
Net cash (used in) provided by investing activities(416)286 108 
Net cash used in financing activities(2,651)(4,244)(3,431)
Major components of assets and liabilities related to discontinued operations
The major components of assets and liabilities related to discontinued operations at December 31, 2019 are provided below:
(dollars, in millions)OtisCarrierTotal
Assets
Cash and cash equivalents$1,446 $995 $2,441 
Accounts receivable, net2,899 2,728 5,627 
Contract assets, current530 679 1,209 
Inventories and contracts in progress, net571 1,332 1,903 
Other assets, current213 221 434 
Future income tax benefits355 370 725 
Fixed assets, net747 1,686 2,433 
Operating lease right-of-use assets529 818 1,347 
Goodwill1,647 9,807 11,454 
Intangible assets, net490 1,083 1,573 
Other assets220 2,457 2,677 
Total assets related to discontinued operations$9,647 $22,176 $31,823 
Liabilities and Redeemable Noncontrolling Interest
Short-term borrowings$33 $38 $71 
Accounts payable1,321 1,682 3,003 
Accrued liabilities1,651 2,889 4,540 
Contract liabilities, current2,288 611 2,899 
Long-term debt, currently due1 237 238 
Long-term debt5 82 87 
Future pension and postretirement benefit obligations560 455 1,015 
Operating lease liabilities383 668 1,051 
Other long-term liabilities (1)
514 1,025 1,539 
Total liabilities related to discontinued operations$6,756 $7,687 $14,443 
(1)    Amounts include a deferred tax jurisdictional netting adjustment of $145 million.
The major components of assets and liabilities related to discontinued operations at December 31, 2018 are provided below:
(dollars, in millions)OtisCarrierTotal
Assets
Cash and cash equivalents$1,329 $1,130 $2,459 
Accounts receivable, net2,764 2,883 5,647 
Contract assets, current661 450 1,111 
Inventories and contracts in progress, net640 1,363 2,003 
Other assets, current264 295 559 
Future income tax benefits304 343 647 
Fixed assets, net709 1,681 2,390 
Goodwill1,688 9,835 11,523 
Intangible assets, net569 1,214 1,783 
Other assets169 2,449 2,618 
Total assets related to discontinued operations$9,097 $21,643 $30,740 
Liabilities and Redeemable Noncontrolling Interest
Short-term borrowings$27 $14 $41 
Accounts payable1,334 1,910 3,244 
Accrued liabilities1,462 2,076 3,538 
Contract liabilities, current2,359 612 2,971 
Long-term debt, currently due1 153 154 
Long-term debt4 146 150 
Future pension and postretirement benefit obligations542 426 968 
Other long-term liabilities 469 1,093 1,562 
Total liabilities related to discontinued operations$6,198 $6,430 $12,628 
v3.20.2
Earnings Per Share (Tables)
 12 Months Ended
Dec. 31, 2019
Earnings Per Share [Abstract]  
Schedule of Earnings Per Share, Basic and Diluted [Table Text Block]
(dollars in millions, except per share amounts; shares in millions)201920182017
Net income attributable to common shareowners:
Income from continuing operations attributable to common shareowners$3,510 $1,216 $1,313 
Income from discontinued operations attributable to common shareowners2,027 4,053 3,239 
Net income attributable to common shareowners$5,537 $5,269 $4,552 
Basic weighted average number of shares outstanding854.8 800.4 790.0 
Stock awards and equity units (share equivalent)9.1 9.7 9.1 
Diluted weighted average number of shares outstanding863.9 810.1 799.1 
Earnings per share attributable to common shareowners - basic
Income from continuing operations attributable to common shareowners$4.11 $1.52 $1.66 
Income from discontinued operations2.37 5.06 4.10 
Net income attributable to common shareowners$6.48 $6.58 $5.76 
Earnings per share attributable to common shareowners - diluted
Income from continuing operations attributable to common shareowners$4.06 $1.50 $1.64 
Income from discontinued operations2.35 5.00 4.06 
Net income attributable to common shareowners$6.41 $6.50 $5.70 
v3.20.2
Commercial Aerospace Industry Assets and Commitments (Tables)
 12 Months Ended
Dec. 31, 2019
Other Commitments [Abstract]  
Commercial Aerospace Industry Assets and Commitments [Table Text Block]
The following is the expected maturity of commercial aerospace industry assets and commitments as of December 31, 2019:
(dollars in millions)Committed20202021202220232024Thereafter
Notes and leases receivable$308 $30 $23 $14 $22 $38 $181 
Commercial aerospace financing commitments$3,937 $911 $1,119 $974 $819 $44 $70 
Other commercial aerospace commitments11,055 702 736 717 668 627 7,605 
Collaboration partners’ share(5,284)(508)(623)(571)(538)(193)(2,851)
Total commercial commitments$9,708 $1,105 $1,232 $1,120 $949 $478 $4,824 
v3.20.2
Inventory, Net (Tables)
 12 Months Ended
Dec. 31, 2019
Inventory Disclosure [Abstract]  
Inventory Table [Table Text Block]
(dollars in millions)20192018
Raw materials$2,984 $2,624 
Work-in-process2,586 2,538 
Finished goods3,477 2,919 
$9,047 $8,081 
v3.20.2
Contract Asset & Liability (Tables)
 12 Months Ended
Dec. 31, 2019
Contract with Customer, Asset and Liability [Abstract]  
Contract with Customer, Asset and Liability [Table Text Block] Total contract assets and contract liabilities as of December 31, 2019 and 2018 are as follows:
(dollars in millions)December 31, 2019December 31, 2018
Total contract assets
$4,462 $3,666 
Total contract liabilities
(9,014)(7,818)
Net contract liabilities$(4,552)$(4,152)
v3.20.2
Fixed Assets (Tables)
 12 Months Ended
Dec. 31, 2019
Property, Plant and Equipment [Abstract]  
Fixed Assets [Text Block]
(dollars in millions)Estimated
Useful Lives		20192018
Land$292 $266 
Buildings and improvements
12-40 years
4,978 4,768 
Machinery, tools and equipment
3-20 years
12,936 11,951 
Other, including assets under construction 1,871 1,735 
20,077 18,720 
Accumulated depreciation (9,755)(8,814)
$10,322 $9,906 
v3.20.2
Accrued Liabilities (Tables)
 12 Months Ended
Dec. 31, 2019
Accrued Liabilities [Abstract]  
Schedule of Accrued Liabilities Table [Text Block]
(dollars in millions)20192018
Accrued salaries, wages and employee benefits $1,353 $1,063 
Customer contractual obligations1,408 1,705 
Service and warranty accruals1,033 929 
Interest payable472 468 
Litigation and contract matters 405 324 
Income taxes payable 106 313 
Accrued property, sales and use taxes140 94 
Canadian government settlement - current portion— 34 
Accrued restructuring costs 123 159 
Accrued workers compensation91 80 
Liabilities held for sale— 40 
Operating lease liabilities, current245 — 
Other 4,394 4,186 
$9,770 $9,395 
v3.20.2
Borrowings and Lines of Credit (Tables)
 12 Months Ended
Dec. 31, 2019
Debt Disclosure [Abstract]  
Short-term Debt [Table Text Block]
(dollars in millions)20192018
Short-term borrowings:
Commercial paper$— $1,257 
Other borrowings2,293 171 
Total short-term borrowings$2,293 $1,428 
Schedule of Weighted average interest rates [Table Text Block] The weighted-average interest expense rates applicable to short-term borrowings and total debt were as follows:
20192018
Average interest expense rate - average outstanding borrowings during the year:
Short-term borrowings1.7 %1.3 %
Total debt3.6 %3.5 %
Average interest expense rate - outstanding borrowings as of December 31:
Short-term borrowings2.3 %1.9 %
Total debt3.6 %3.5 %
Schedule of Debt Issuances and Repayments [Table Text Block]
We had no debt issuances during 2019 and the following issuances of debt in 2018:
(dollars in millions)
Issuance DateDescription of NotesAggregate Principal Balance
August 16, 2018:
3.350% notes due 2021(1)
$1,000 
3.650% notes due 2023(1)
2,250 
3.950% notes due 2025(1)
1,500 
4.125% notes due 2028(1)
3,000 
4.450% notes due 2038(1)
750 
4.625% notes due 2048(2)
1,750 
LIBOR plus 0.65% floating rate notes due 2021(1)
750 
May 18, 2018:
1.150% notes due 2024(3)
€750 
2.150% notes due 2030(3)
500 
EURIBOR plus 0.20% floating rate notes due 2020(3)
750 
(1)    The net proceeds received from these debt issuances were used to partially finance the cash consideration portion of the purchase price for Rockwell Collins and fees, expenses and other amounts related to the acquisition of Rockwell Collins.
(2)    The net proceeds from these debt issuances were used to fund the repayment of commercial paper and for other general corporate purposes.
(3)    The net proceeds received from these debt issuances were used for general corporate purposes.
    We made the following repayments of debt in 2019 and 2018:
(dollars in millions)
Repayment DateDescription of NotesAggregate Principal Balance
November 15, 2019
8.875% notes
$271 
November 13, 2019
EURIBOR plus 0.15% floating rate notes
€750 
November 1, 2019:
LIBOR plus 0.350% floating rate notes
$350 
1.500% notes
$650 
July 15, 2019:
1.950% notes(1)
$300 
5.250% notes(1)
$300 
December 14, 2018
Variable-rate term loan due 2020 (1 month LIBOR plus 1.25%)(1)
$482 
May 4, 2018
1.778% junior subordinated notes
$1,100 
February 22, 2018
EURIBOR plus 0.80% floating rate notes
€750 
February 1, 2018
6.80% notes
$99 
(1)    These notes and term loan were assumed in connection with the Rockwell Collins acquisition and subsequently repaid.
Schedule of Principal Payments on Long-term Debt [Table Text Block]
(dollars in millions)  
2020$3,258 
20214,091 
20223,904 
20233,490 
20242,592 
Thereafter23,939 
Total$41,274 
v3.20.2
Accumulated Other Comprehensive Income (Tables)
 12 Months Ended
Dec. 31, 2019
Stockholders' Equity Note [Abstract]  
Schedule of Accumulated Other Comprehensive Income (Loss) [Table Text Block]
A summary of the changes in each component of Accumulated other comprehensive (loss) income, net of tax for the years ended December 31, 2019 and 2018 is provided below:
(dollars in millions)Foreign
Currency
Translation		Defined Benefit
Pension and
Postretirement
Plans		Unrealized Gains
(Losses) on
Available-for-
Sale Securities		Unrealized
Hedging
(Losses)
Gains		Accumulated
Other
Comprehensive
(Loss) Income
Balance at December 31, 2017$(2,950)$(4,652)$5 $72 $(7,525)
Other comprehensive income before reclassifications, net(486)(1,736)— (307)(2,529)
Amounts reclassified, pre-tax(2)344 — (16)326 
Tax (expense) benefit(4)326 — 78 400 
ASU 2016-01 adoption impact$— $— $(5)$— $(5)
Balance at December 31, 2018$(3,442)$(5,718)$— $(173)$(9,333)
Other comprehensive loss before reclassifications, net280 (584)— (33)(337)
Amounts reclassified, pre-tax2 170 — 51 223 
Tax (expense) benefit(43)97 — (11)43 
ASU 2018-02 adoption impact(8)(737)— — (745)
Balance at December 31, 2019$(3,211)$(6,772)$— $(166)$(10,149)
v3.20.2
Employee Benefit Plans (Tables)
 12 Months Ended
Dec. 31, 2019
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items]  
Share-based Payment Arrangement, Cost by Plan [Table Text Block]
We measure the cost of all share-based payments, including stock options, at fair value on the grant date and recognize this cost in the Consolidated Statement of Operations, net of expected forfeitures, as follows:
(dollars in millions)201920182017
Total compensation cost recognized$268 $169 $129 
Schedule of Stock Options Roll Forward [Table Text Block]
A summary of the transactions under all long-term incentive plans for the year ended December 31, 2019 follows. The amounts in the tables and paragraphs below have not been recast for discontinued operations.
 Stock OptionsStock Appreciation RightsPerformance Share UnitsOther
Incentive
Shares/Units
(shares and units in thousands)Shares
Average
Price (1)
Shares
Average
Price (1)
Units
Average
Price (1)
Outstanding at:
December 31, 20181,603 $99.89 32,066 $99.95 1,806 $110.41 3,047 
Granted339 124.72 8,081 123.54 839 121.22 1,223 
Ancillary (2)
— — — — 101 95.28 — 
Exercised / earned(317)88.61 (6,843)84.44 (758)95.28 (816)
Cancelled(57)121.69 (591)122.76 (69)118.21 (135)
December 31, 20191,568 $106.75 32,713 $108.61 1,919 $120.04 3,319 
(1)    Weighted-average grant / exercise price.
(2)    Ancillary shares earned based on actual performance achieved on the 2016 award.
Disclosure Of Share Based Compensation Arrangements By Share Based Payment Award Text Block
The following table summarizes information about equity awards outstanding that are vested and expected to vest as well as equity awards outstanding that are exercisable at December 31, 2019:
 Equity Awards Vested and Expected to VestEquity Awards That Are Exercisable
(shares in thousands; aggregate intrinsic value in millions)Awards
Average
Price (1)
Aggregate
Intrinsic
Value
Remaining Term (2)
Awards
Average
Price (1)
Aggregate
Intrinsic
Value
Remaining Term (2)
Stock Options/Stock Appreciation Rights33,769 $107.58 $1,424 5.9 years19,285 $96.56 $1,026 4.0 years
Performance Share Units/Restricted Stock5,514 — 826 2.1 years
(1)    Weighted-average exercise price per share.
(2)    Weighted-average contractual remaining term in years.
Schedule of Share-based Payment Award, Stock Options, Valuation Assumptions [Table Text Block] The following table indicates the assumptions used in estimating fair value for the years ended December 31, 2019, 2018 and 2017. Lattice-based option models incorporate ranges of assumptions for inputs; those ranges are as follows:
201920182017
Expected volatility
18.8% - 19.7%
17.5% - 21.1%
19 %
Weighted-average volatility20 %18 %19 %
Expected term (in years)
6.5 - 6.6
6.5 - 6.6
6.5
Expected dividend yield2.4 %2.2 %2.4 %
Risk-free rate
2.3% - 2.7%
1.3% - 2.7%
0.5% - 2.5%
Pension Plan [Member]  
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items]  
Schedule of Defined Benefit Plans Disclosures [Text Block]
(dollars in millions)20192018
Change in Benefit Obligation:
Beginning balance$34,344 $33,283 
Service cost attributable to continuing operations261 265 
Service cost attributable to discontinued operations34 40 
Interest cost1,245 1,058 
Actuarial loss (gain)4,247 (1,938)
Total benefits paid(2,016)(1,783)
Net settlement, curtailment and special termination benefits(206)(14)
Plan amendments— 56 
Business combinations(6)3,694 
Other124 (317)
Ending balance$38,027 $34,344 
Change in Plan Assets:
Beginning balance$32,150 $32,205 
Actual return on plan assets5,873 (1,516)
Employer contributions137 156 
Benefits paid(2,016)(1,783)
Settlements(17)(16)
Business combinations(10)3,355 
Other108 (251)
Ending balance$36,225 $32,150 
Funded Status:
Fair value of plan assets$36,225 $32,150 
Benefit obligations(38,027)(34,344)
Funded status of plan$(1,802)$(2,194)
Amounts Recognized in the Consolidated Balance Sheet Consist of:
Noncurrent assets$19 $157 
Current liability(51)(56)
Noncurrent liability(1,770)(2,295)
Net amount recognized$(1,802)$(2,194)
Amounts Recognized in Accumulated Other Comprehensive Loss Consist of:
Net actuarial loss$8,160 $7,948 
Prior service cost 190 130 
Net actuarial loss and prior service cost related to discontinued operations763 667 
Net amount recognized$9,113 $8,745 
Defined Benefit Plan, Plan with Accumulated Benefit Obligation in Excess of Plan Assets [Table Text Block]
Information for pension plans with accumulated benefit obligations in excess of plan assets: 
(dollars in millions)20192018
Projected benefit obligation$37,941 $24,796 
Accumulated benefit obligation37,599 24,471 
Fair value of plan assets36,120 22,558 
Defined Benefit Plan, Plan with Projected Benefit Obligation in Excess of Plan Assets [Table Text Block]
Information for pension plans with projected benefit obligations in excess of plan assets: 
(dollars in millions)20192018
Projected benefit obligation$37,943 $27,225 
Accumulated benefit obligation37,600 26,752 
Fair value of plan assets36,122 24,873 
Schedule of Net Benefit Costs [Table Text Block]
The components of the net periodic pension benefit are as follows: 
(dollars in millions)201920182017
Pension Benefits:
Service cost$261 $265 $268 
Interest cost1,245 1,058 1,043 
Expected return on plan assets(2,252)(2,061)(2,033)
Amortization of prior service cost (credit)16 (42)(37)
Recognized actuarial net loss245 373 550 
Net settlement, curtailment and special termination benefits (gain) loss(59)3 3 
Net periodic pension benefit - employer$(544)$(404)$(206)
Schedule of Amounts Recognized in Other Comprehensive Income (Loss) [Table Text Block]
Other changes in plan assets and benefit obligations recognized in other comprehensive loss in 2019 are as follows: 
(dollars in millions)Continuing OperationsDiscontinued OperationsTotal
Current year actuarial loss$434 $119 $553 
Amortization of actuarial loss(245)(20)(265)
Current year prior service cost— 6 6 
Amortization of prior service cost(16)(1)(17)
Net settlement and curtailment 62 (5)57 
Other36 (2)34 
Total recognized in other comprehensive loss$271 97 $368 
Net recognized in net periodic pension benefit and other comprehensive loss$(232)97 $(135)
Schedule of Amounts in Accumulated Other Comprehensive Income (Loss) to be Recognized over Next Fiscal Year [Table Text Block]
The estimated amount that will be amortized from accumulated other comprehensive loss into net periodic pension (benefit) cost in 2020 is as follows:
(dollars in millions)  
Net actuarial loss$336 
Prior service cost49 
$385 
Defined Benefit Plan, Assumptions [Table Text Block]
Major assumptions used in determining the benefit obligation and net cost for pension plans are presented in the following table as weighted-averages: 
Benefit ObligationNet Cost
  20192018201920182017
Discount rate
PBO3.1 %4.0 %4.0 %3.5 %3.9 %
Interest cost (1)
— — 3.7 %3.1 %3.3 %
Service cost (1)
— — 3.7 %3.4 %3.8 %
Salary scale4.3 %4.3 %4.3 %4.3 %4.3 %
Expected return on plan assets— — 6.8 %6.9 %7.4 %
(1)    The discount rates used to measure the service cost and interest cost applies to our significant plans. The PBO discount rate is used for the service cost and interest cost measurements for non-significant plans.
Schedule of Allocation of Plan Assets [Table Text Block]
The fair values of pension plan assets at December 31, 2019 and 2018 by asset category are as follows:
(dollars in millions)Quoted Prices in
Active Markets
For Identical Assets
(Level 1)		Significant
Observable 
Inputs
(Level 2)		Significant
Unobservable 
Inputs
(Level 3)		Not Subject to LevelingTotal
Asset Category:
Public Equities
Global Equities$3,588 $5 $— $— $3,593 
Global Equity Commingled Funds (1)
— 1,496 — — 1,496 
Enhanced Global Equities (2)
322 393 — — 715 
Global Equity Funds at net asset value (8)
— — — 5,332 5,332 
Private Equities (3),(8)
— — 202 1,230 1,432 
Fixed Income Securities
Governments969 116 — — 1,085 
Corporate Bonds1 13,059 5 — 13,065 
Structured Products
— 17 — — 17 
Fixed Income Securities (8)
— — — 4,755 4,755 
Real Estate (4),(8)
— 13 1,464 366 1,843 
Other (5),(8)
— 343 — 2,834 3,177 
Cash & Cash Equivalents (6),(8)
— 47 — 36 83 
Subtotal$4,880 $15,489 $1,671 $14,553 36,593 
Other Assets & Liabilities (7)
   (368)
Total at December 31, 2019$36,225 
Public Equities
Global Equities$2,917 $4 $— $— $2,921 
Global Equity Commingled Funds (1)
185 219 — — 404 
Enhanced Global Equities (2)
79 605 — — 684 
Global Equity Funds at net asset value (8)
— — — 6,539 6,539 
Private Equities (3),(8)
— — 133 1,194 1,327 
Fixed Income Securities
Governments1,789 162 — — 1,951 
Corporate Bonds— 11,526 18 29 11,573 
Fixed Income Securities (8)
— — — 2,225 2,225 
Real Estate (4),(8)
— 13 1,387 409 1,809 
Other (5),(8)
— 262 — 2,368 2,630 
Cash & Cash Equivalents (6),(8)
— 220 — 100 320 
Subtotal$4,970 $13,011 $1,538 $12,864 32,383 
Other Assets & Liabilities (7)
   (233)
Total at December 31, 2018$32,150 
(1)    Represents commingled funds that invest primarily in common stocks.
(2)    Represents enhanced equity separate account and commingled fund portfolios. A portion of the portfolio may include long-short market neutral and relative value strategies that invest in publicly traded, equity and fixed income securities, as well as derivatives of equity and fixed income securities and foreign currency.
(3)    Represents limited partner investments with general partners that primarily invest in debt and equity.
(4)    Represents investments in real estate including commingled funds and directly held properties.
(5)    Represents insurance contracts and global balanced risk commingled funds consisting mainly of equity, bonds and some commodities.
(6)    Represents short-term commercial paper, bonds and other cash or cash-like instruments.
(7)    Represents trust receivables and payables that are not leveled.
(8)    In accordance with ASU 2015-07, Fair Value Measurement (Topic 820), certain investments that are measured at fair value using the net asset value per share (or its equivalent) practical expedient have not been classified in the fair value hierarchy. The fair value amounts presented in this table are intended to permit reconciliation of the fair value hierarchy to the amounts presented for the total pension benefits plan assets.
Schedule of Effect of Significant Unobservable Inputs, Changes in Plan Assets [Table Text Block]
The fair value measurement of plan assets using significant unobservable inputs (Level 3) changed due to the following:
(dollars in millions)Private
Equities		Corporate
Bonds		Real
Estate		Total
Balance, December 31, 2017$46 $— $1,446 $1,492 
Plan assets acquired— 33 — 33 
Realized (losses) gains— (1)10 9 
Unrealized gains relating to instruments still held in the reporting period— 2 38 40 
Purchases, sales, and settlements, net87 (16)(107)(36)
Balance, December 31, 2018133 18 1,387 1,538 
Realized losses— — (2)(2)
Unrealized gains relating to instruments still held in the reporting period32 — 27 59 
Purchases, sales, and settlements, net37 (13)52 76 
Balance, December 31, 2019$202 $5 $1,464 $1,671 
Other Postretirement Benefits Plan [Member]  
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items]  
Schedule of Defined Benefit Plans Disclosures [Text Block]
(dollars in millions)20192018
Change in Benefit Obligation:
Beginning balance$810 $767 
Service cost2 2 
Interest cost31 26 
Actuarial gain(11)(52)
Total benefits paid(69)(70)
Business combinations— 186 
Plan amendments— (43)
Other2 (6)
Ending balance$765 $810 
Change in Plan Assets:
Beginning balance$20 $— 
Employer contributions69 69 
Benefits paid(69)(70)
Business combinations— 20 
Other— 1 
Ending balance$20 $20 
Funded Status:
Fair value of plan assets$20 $20 
Benefit obligations(765)(810)
Funded status of plan$(745)$(790)
Amounts Recognized in the Consolidated Balance Sheet Consist of:
Current liability$(47)$(61)
Noncurrent liability(698)(729)
Net amount recognized$(745)$(790)
Amounts Recognized in Accumulated Other Comprehensive Loss Consist of:
Net actuarial gain$(181)$(184)
Prior service credit(4)(47)
Net amount recognized$(185)$(231)
Schedule of Net Benefit Costs [Table Text Block]
The components of net periodic benefit cost are as follows:
(dollars in millions)201920182017
Other Postretirement Benefits:
Service cost$2 $2 $2 
Interest cost31 26 29 
Expected return on plan assets(1)— — 
Amortization of prior service credit(42)(6)(1)
Recognized actuarial net gain(12)(10)(9)
Net periodic other postretirement (benefit) cost$(22)$12 $21 
Schedule of Amounts Recognized in Other Comprehensive Income (Loss) [Table Text Block]
Other changes in plan assets and benefit obligations recognized in other comprehensive loss in 2019 are as follows:
(dollars in millions)  
Current year actuarial gain$(10)
Amortization of prior service credit42 
Amortization of actuarial net gain12 
Other2 
Total recognized in other comprehensive loss$46 
Net recognized in net periodic other postretirement benefit cost and other comprehensive loss$24 
Defined Benefit Plan, Assumptions [Table Text Block]
Major assumptions used in determining the benefit obligation and net cost for postretirement plans are presented in the following table as weighted-averages: 
 Benefit ObligationNet Cost
  20192018201920182017
Discount rate3.0 %4.1 %4.0 %3.4 %3.8 %
Expected return on assets— — 7.0 %7.0 %N/A
Schedule of Health Care Cost Trend Rates [Table Text Block]
Assumed health care cost trend rates are as follows: 
20192018
Health care cost trend rate assumed for next year6.5 %7.0 %
Rate that the cost trend rate gradually declines to5.0 %5.0 %
Year that the rate reaches the rate it is assumed to remain at20262026
Schedule of Effect of One-Percentage-Point Change in Assumed Health Care Cost Trend Rates [Table Text Block] A one-percentage-point change in assumed health care cost trend rates would have the following effects:
 2019 One-Percentage-Point
(dollars in millions)IncreaseDecrease
Effect on total service and interest cost$1 $(1)
Effect on postretirement benefit obligation25 (22)
v3.20.2
Income Taxes (Tables)
 12 Months Ended
Dec. 31, 2019
Notes to Consolidated Financial Statements [Abstract]  
Schedule of Income before Income Tax Domestic and Foreign [Table Text Block] The sources of income from continuing operations before income taxes are:
(dollars in millions)201920182017
United States$1,594 $635 $607 
Foreign2,558 1,869 1,915 
$4,152 $2,504 $2,522 
Schedule of Components of Income Tax Expense (Benefit) [Table Text Block] The income tax expense (benefit) for the years ended December 31, 2019, 2018 and 2017 consisted of the following components:
(dollars in millions)201920182017
Current:
United States:
Federal$(100)$(68)$709 
State(58)1 (42)
Foreign541 402 284 
383 335 951 
Future:
United States:
Federal121 45 (48)
State56 58 85 
Foreign(139)660 66 
 38 763 103 
Income tax expense$421 $1,098 $1,054 
Attributable to items credited (charged) to equity$40 $501 $(128)
Schedule of Effective Income Tax Rate Reconciliation [Table Text Block] Differences between effective income tax rates and the statutory U.S. federal income tax rate are as follows:
201920182017
Statutory U.S. federal income tax rate21.0 %21.0 %35.0 %
Tax on international activities(3.1)%(5.1)%(15.3)%
Tax audit settlements(7.0)%— %(2.2)%
U.S. tax reform— %29.7 %27.4 %
Other(0.8)%(1.8)%(3.1)%
Effective income tax rate10.1 %43.8 %41.8 %
Schedule of Deferred Tax Assets and Liabilities [Table Text Block]
The tax effects of temporary differences and tax carryforwards which gave rise to future income tax benefits and payables at December 31, 2019 and 2018 are as follows:
(dollars in millions)20192018
Future income tax benefits:
Insurance and employee benefits$1,205 $1,154 
Other asset basis differences829 1,013 
Other liability basis differences2,153 1,482 
Tax loss carryforwards622 583 
Tax credit carryforwards1,021 1,050 
Valuation allowances(616)(605)
$5,214 $4,677 
Future income taxes payable:
Intangible assets$4,293 $4,462 
Other asset basis differences 2,904 2,159 
Other items, net143 123 
$7,340 $6,744 
Summary Of Tax Credit Carryforwards [Table Text Block] At December 31, 2019, tax credit carryforwards, principally state and foreign, and tax loss carryforwards, principally state and foreign, were as follows:
(dollars in millions)Tax Credit
Carryforwards		Tax Loss
Carryforwards
Expiration period:
2020-2024$59 $393 
2025-202927 179 
2030-2039336 394 
Indefinite599 2,218 
Total$1,021 $3,184 
Summary Of Income Tax Contingencies [Table Text Block] A reconciliation of the beginning and ending amounts of unrecognized tax benefits and interest expense related to unrecognized tax benefits for the years ended December 31, 2019, 2018 and 2017 is as follows: 
(dollars in millions)201920182017
Balance at January 1$1,619 $1,189 $1,086 
Additions for tax positions related to the current year131 192 192 
Additions for tax positions of prior years73 344 73 
Reductions for tax positions of prior years(101)(91)(91)
Settlements(375)(15)(71)
Balance at December 31$1,347 $1,619 $1,189 
Gross interest expense related to unrecognized tax benefits$57 $37 $34 
Total accrued interest balance at December 31$249 $255 $215 
v3.20.2
Restructuring and Other Costs (Tables)
 12 Months Ended
Dec. 31, 2019
Restructuring Cost and Reserve [Line Items]  
Schedule of Restructuring and Related Costs [Table Text Block] We recorded charges in the segments as follows:
(dollars in millions)  
Pratt & Whitney133 
Collins Aerospace Systems106 
Eliminations and other6 
Total$245 
Restructuring charges incurred in 2019 primarily relate to actions initiated during 2019 and 2018, and were recorded as follows:
(dollars in millions)  
Cost of sales$177 
Selling, general & administrative64 
Non-service pension (benefit)4 
Total$245 
Current Year Actions [Member]  
Restructuring Cost and Reserve [Line Items]  
Schedule of Restructuring Reserve by Type of Cost [Table Text Block] The following table summarizes the accrual balances and utilization by cost type for the 2019 restructuring actions:
(dollars in millions)SeveranceFacility Exit & Other CostsTotal
Net pre-tax restructuring costs$151 $11 $162 
Utilization, foreign exchange and other costs(104)— (104)
Balance at December 31, 2019$47 $11 $58 
Schedule of Restructuring and Related Costs [Table Text Block]
The following table summarizes expected, incurred and remaining costs for the 2019 restructuring actions by segment:
(dollars in millions)Expected CostsCost Incurred During 2019Remaining Costs at December 31, 2019
Pratt & Whitney133 (133)— 
Collins Aerospace Systems120 (27)93 
Eliminations and other2 (2)— 
Total$255 $(162)$93 
Prior Year Actions [Member]  
Restructuring Cost and Reserve [Line Items]  
Schedule of Restructuring Reserve by Type of Cost [Table Text Block] The following table summarizes the accrual balances and utilization by cost type for the 2018 restructuring actions:
(dollars in millions)SeveranceFacility Exit
& Other
Costs		Total
Restructuring accruals at January 1, 2019$60 $22 $82 
Net pre-tax restructuring costs22 1 23 
Utilization, foreign exchange and other costs(76)(22)(98)
Balance at December 31, 2019$6 $1 $7 
Schedule of Restructuring and Related Costs [Table Text Block]
The following table summarizes expected, incurred and remaining costs for the 2018 programs by segment:
(dollars in millions)Expected
Costs		Costs
Incurred
During
2018		Costs
Incurred
During
2019		Remaining
Costs at
December 31,
2019
Pratt & Whitney3 (3)— — 
Collins Aerospace Systems111 (87)(23)1 
Eliminations and other7 (5)— 2 
Total$121 $(95)$(23)$3 
v3.20.2
Financial Instruments (Tables)
 12 Months Ended
Dec. 31, 2019
Derivative Instruments, Gain (Loss) [Line Items]  
Schedule of Derivative Instruments in Statement of Financial Position, Fair Value [Table Text Block]
The following table summarizes the fair value and presentation in the Consolidated Balance Sheets for derivative instruments as of December 31, 2019 and 2018:
(dollars in millions)Balance Sheet LocationDecember 31, 2019December 31, 2018
Derivatives designated as hedging instruments:
Foreign exchange contractsAsset Derivatives:
Other assets, current$23 $22 
Liability Derivatives:
Accrued liabilities166 194 
Derivatives not designated as hedging instruments:
Foreign exchange contractsAsset Derivatives:
Other assets, current23 27 
Liability Derivatives:
Accrued liabilities116 89 
Reclassification out of Accumulated Other Comprehensive Income [Member]  
Derivative Instruments, Gain (Loss) [Line Items]  
Derivative Instruments, Gain (Loss) [Table Text Block]
  Year Ended December 31,
(dollars in millions)20192018
Loss recorded in Accumulated other comprehensive loss$(33)$(307)
Loss (Gain) reclassified from Accumulated other comprehensive loss into Product sales$51 $(16)
Other Income (Expense) [Member]  
Derivative Instruments, Gain (Loss) [Line Items]  
Derivative Instruments, Gain (Loss) [Table Text Block]
  Year Ended December 31,
(dollars in millions)20192018
Foreign exchange contracts$91 $127 
v3.20.2
Fair Value Measurements (Tables)
 12 Months Ended
Dec. 31, 2019
Fair Value Disclosures [Abstract]  
Fair Value Measurements, Recurring and Nonrecurring [Table Text Block] 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 Consolidated Balance Sheet as of December 31, 2019 and 2018:
December 31, 2019
 (dollars in millions)
TotalLevel 1Level 2Level 3
Recurring fair value measurements:
Available-for-sale securities$53 $53 $— $— 
Derivative assets46 — 46 — 
Derivative liabilities(282)— (282)— 
December 31, 2018
 (dollars in millions)
TotalLevel 1Level 2Level 3
Recurring fair value measurements:
Available-for-sale securities$48 $48 $— $— 
Derivative assets49 — 49 — 
Derivative liabilities(283)— (283)— 
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 Consolidated Balance Sheet at December 31, 2019 and 2018:
 December 31, 2019December 31, 2018
(dollars in millions)Carrying
Amount		Fair
Value		Carrying
Amount		Fair
Value
Customer financing notes receivable220 220 226 219 
Short-term borrowings(2,293)(2,293)(1,428)(1,428)
Long-term debt (excluding finance leases)(40,883)(45,887)(43,703)(43,710)
Long-term liabilities(334)(320)(505)(464)
The following table provides the valuation hierarchy classification of assets and liabilities that are not carried at fair value in our Consolidated Balance Sheet as of December 31, 2019 and 2018:
December 31, 2019
(dollars in millions)TotalLevel 1Level 2Level 3
Customer financing notes receivable220 — 220 — 
Short-term borrowings(2,293)— — (2,293)
Long-term debt (excluding finance leases)(45,887)— (45,802)(85)
Long-term liabilities(320)— (320)— 

December 31, 2018
(dollars in millions)TotalLevel 1Level 2Level 3
Customer financing notes receivable219 — 219 — 
Short-term borrowings(1,428)— (1,258)(170)
Long-term debt (excluding finance leases)(43,710)— (43,620)(90)
Long-term liabilities(464)— (464)— 
v3.20.2
Variable Interest Entities (Tables)
 12 Months Ended
Dec. 31, 2019
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 Consolidated Balance Sheet as of December 31, 2019 and 2018 are as follows:
(dollars in millions)20192018
Current assets$5,448 $5,622 
Noncurrent assets894 710 
Total assets$6,342 $6,332 
Current liabilities$6,971 $6,742 
Noncurrent liabilities94 102 
Total liabilities$7,065 $6,844 
v3.20.2
Guarantees (Tables)
 12 Months Ended
Dec. 31, 2019
Guarantees [Abstract]  
Schedule of Guarantor Obligations [Table Text Block] As of December 31, 2019 and 2018, the following financial guarantees were outstanding:
  December 31, 2019December 31, 2018
(dollars in millions)Maximum
Potential
Payment		Carrying
Amount of
Liability		Maximum
Potential
Payment		Carrying
Amount of
Liability
Commercial aerospace financing arrangements (see Note 5)$333 $7 $348 $9 
Credit facilities and debt obligations— — 15 — 
Performance guarantees48 — 55 5 
Product Warranty Disclosure [Table Text Block] The changes in the carrying amount of service and product warranties and product performance guarantees for the years ended December 31, 2019 and 2018 are as follows:
(dollars in millions)20192018
Balance as of January 1$929 $591 
Warranties and performance guarantees issued444 421 
Settlements made(330)(284)
Other (1)
(10)201 
Balance as of December 31$1,033 $929 
(1)    Other in 2018 is driven by the Rockwell Collins acquisition.
v3.20.2
Segment Financial Data (Tables)
 12 Months Ended
Dec. 31, 2019
Segment Reporting [Abstract]  
Schedule Of Segment Reporting Information By Segment [Table Text Block]
 Net SalesOperating Profits
(dollars in millions)201920182017201920182017
Pratt & Whitney20,892 19,397 16,160 1,668 1,269 1,300 
Collins Aerospace Systems26,028 16,634 14,691 4,100 2,303 2,191 
Total segment46,920 36,031 30,851 5,768 3,572 3,491 
Eliminations and other(1,571)(1,330)(1,138)(339)(220)(63)
General corporate expenses— — — (515)(475)(439)
Consolidated$45,349 $34,701 $29,713 $4,914 $2,877 $2,989 

 Total AssetsCapital ExpendituresDepreciation & Amortization
(dollars in millions)201920182017201920182017201920182017
Pratt & Whitney31,271 29,341 26,768 822 866 923 980 852 672 
Collins Aerospace Systems74,049 73,115 34,567 959 515 527 1,749 883 823 
Total segment105,320 102,456 61,335 1,781 1,381 1,450 2,729 1,735 1,495 
Eliminations and other2,472 1,015 4,659 87 86 106 (21)161 85 
Assets related to discontinued operations$31,823 $30,740 $30,926 
Consolidated$139,615 $134,211 $96,920 $1,868 $1,467 $1,556 $2,708 $1,896 $1,580 
Schedule of Revenues From External Customers And Long Lived Assets By Geographic Areas [Table Text Block]
 External Net SalesOperating ProfitsLong-Lived Assets
(dollars in millions)201920182017201920182017201920182017
United States Operations$35,125 $26,646 $21,975 $3,287 $1,790 $1,603 $6,507 $6,165 $4,424 
International Operations
Europe4,419 3,092 2,747 1,480 1,027 826 1,268 1,272 1,147 
Asia Pacific1,989 1,645 1,779 444 365 351 917 905 685 
Other5,387 4,648 4,350 557 390 711 1,089 1,064 1,082 
Eliminations and other(1,571)(1,330)(1,138)(854)(695)(502)541 500 469 
Consolidated$45,349 $34,701 $29,713 $4,914 $2,877 $2,989 $10,322 $9,906 $7,807 
Schedule Of Revenue By Major Customers By Reporting Segments [Table Text Block]
(dollars in millions)201920182017
Pratt & Whitney$5,614 $4,489 $3,347 
Collins Aerospace Systems4,802 2,779 2,299 
Other12 10 12 
Total$10,428 $7,278 $5,658 
Revenue from External Customers by Geographic Areas [Table Text Block]
(dollars in millions)201920182017
Europe$7,078 $6,217 $5,197 
Asia Pacific6,411 5,355 3,526 
Other3,295 1,966 1,675 
Total$16,784 $13,538 $10,398 
Schedule of Segment Reporting Information, by Geographic Market [Table Text Block]
Sales by primary geographical market for the year ended December 31, 2019 is as follows:
(dollars in millions)Pratt & WhitneyCollins Aerospace SystemsTotal
Primary Geographical Markets
United States $16,148 $18,977 $35,125 
Europe498 3,921 4,419 
Asia Pacific1,164 825 1,989 
Other*3,082 2,305 5,387 
Total segment$20,892 $26,028 $46,920 
Eliminations and other(1,571)
Consolidated$45,349 
Segment Reporting Disclosure, Product & Sales Type [Text Block] for the year ended December 31, 2019 are as follows:
(dollars in millions)Pratt & WhitneyCollins Aerospace SystemsTotal
Product Type
Commercial and industrial, non aerospace$102 $51 $153 
Commercial aerospace14,516 19,005 33,521 
Military aerospace6,274 6,972 13,246 
Total segment$20,892 $26,028 $46,920 
Eliminations and other(1,571)
Consolidated$45,349 
Sales Type
Product $12,977 $21,440 $34,417 
Service 7,915 4,588 12,503 
Total segment$20,892 $26,028 $46,920 
Eliminations and other(1,571)
Consolidated$45,349 
v3.20.2
Selected Quarterly Financial Data - Unaudited (Tables)
 12 Months Ended
Dec. 31, 2019
Selected Quarterly Financial Information [Abstract]  
Schedule Of Quarterly Financial Information [Table Text Block] SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)
2019 Quarters2018 Quarters
(dollars in millions,
except per share amounts)		FirstSecondThirdFourthFirstSecondThirdFourth
Net Sales$10,953 $11,329 $11,373 $11,694 $7,836 $8,333 $8,412 $10,121 
Gross margin2,534 2,775 2,864 2,578 1,791 1,819 1,586 2,041 
Income (loss) from continuing operations7121,183958657598 541 318 (240)
Income from discontinued operations634717190486699 1,507 920 926 
Net income attributable to common shareowners1,346 1,900 1,148 1,143 1,297 2,048 1,238 686 
Earnings per share of Common Stock - Basic:
Income (loss) from continuing operations0.841.381.12$0.77 $0.76 $0.68 $0.40 $(0.29)
Income from discontinued operations0.740.840.22$0.56 $0.88 $1.91 $1.16 $1.12 
Net income attributable to common shareholders$1.58 $2.22 $1.34 $1.33 $1.64 $2.59 $1.56 $0.83 
Earnings per share of Common Stock - Diluted:
Income (loss) from continuing operations$0.83 $1.37 $1.11 $0.76 $0.75 $0.68 $0.39 $(0.29)
Income from discontinued operations$0.73 $0.83 $0.22 $0.56 $0.87 $1.88 $1.15 $1.12 
Net income attributable to common shareholders$1.56 $2.20 $1.33 $1.32 $1.62 $2.56 $1.54 $0.83 
v3.20.2
Performance Graph - Unaudited (Tables)
 12 Months Ended
Dec. 31, 2019
Performance Graph [Abstract]  
Cumulative Total Shareholder Return [Table Text Block]
COMPARISON OF CUMULATIVE FIVE YEAR TOTAL RETURN 
utx-20201027_g1.jpg
v3.20.2
Leases (Tables)
 12 Months Ended
Dec. 31, 2019
Leases [Abstract]  
Supplemental operating lease cash flow information [Table Text Block]
Supplemental cash flow information related to operating leases was as follows:
(dollars in millions)Year ended December 31, 2019
Operating cash flows used in the measurement of operating lease liabilities$411 
Operating lease right-of-use assets obtained in exchange for operating lease obligations123 
Balance Sheet Location, Operating Leases [Table Text Block]
Operating lease right-of-use assets and liabilities are reflected on our Consolidated Balance Sheet as follows:
(dollars in millions, except lease term and discount rate)December 31, 2019
Operating lease right-of-use assets$1,252 
Accrued liabilities$(245)
Operating lease liabilities(1,093)
Total operating lease liabilities$(1,338)
Supplemental Balance Sheet Information, Operating Leases [Table Text Block]
Supplemental balance sheet information related to operating leases was as follows:
December 31, 2019
Weighted Average Remaining Lease Term (in years)8.6
Weighted Average Discount Rate3.5 %
Lessee, Operating Lease, Liability, Maturity [Table Text Block]
Undiscounted maturities of operating lease liabilities as of December 31, 2019 are as follows:
(dollars in millions)
2020$298 
2021265 
2022196 
2023147 
2024120 
Thereafter595 
Total undiscounted lease payments1,621 
Less imputed interest(283)
Total discounted lease payments$1,338 
v3.20.2
Summary of Accounting Principles (Details)
€ in Millions, $ in Millions
 12 Months Ended
Apr. 03, 2020
shares
Dec. 31, 2019
USD ($)
Dec. 31, 2018
USD ($)
Dec. 31, 2017
USD ($)
Dec. 31, 2019
EUR (€)
Accounting Policies [Abstract]          
Restricted Cash And Cash Equivalents   $ 24 $ 38    
Unbilled Contracts Receivable   265 439    
Capitalized Contract Cost, Net   1,519 914    
Operating profit impact of contract adjustments   (69) (50) $ (110)  
Revenue, Remaining Performance Obligation, Amount   $ 111,700 $ 93,800    
Revenue, Remaining Performance Obligations, to be recognized within 24 months   37.00%     37.00%
Long-term debt, euro-denominated | €         € 4,200
Collaborators interests existing programs low end   13.00%     13.00%
Collaborators interests existing programs high end   49.00%     49.00%
Partner share individual program maximum   31.00%     31.00%
Carrier [Member]          
Accounting Policies [Abstract]          
Shares of common stock distributed in the Distribution | shares 866,158,910        
Finite-Lived Intangible Assets [Line Items]          
Shares of common stock distributed in the Distribution | shares 866,158,910        
Otis [Member]          
Accounting Policies [Abstract]          
Shares of common stock distributed in the Distribution | shares 433,079,455        
Finite-Lived Intangible Assets [Line Items]          
Shares of common stock distributed in the Distribution | shares 433,079,455        
v3.20.2
Summary of Accounting Principles (Indefinite Lived Intangible Assets) (Details)
 12 Months Ended
Dec. 31, 2019
Collaboration Asset [Member] | Maximum [Member]  
Indefinite-lived Intangible Assets [Line Items]  
Finite-Lived Intangible Asset, Useful Life 30 years
Customer Relationships [Member] | Minimum [Member]  
Indefinite-lived Intangible Assets [Line Items]  
Finite-Lived Intangible Asset, Useful Life 1 year
Customer Relationships [Member] | Maximum [Member]  
Indefinite-lived Intangible Assets [Line Items]  
Finite-Lived Intangible Asset, Useful Life 32 years
Patents & trademarks [Member] | Minimum [Member]  
Indefinite-lived Intangible Assets [Line Items]  
Finite-Lived Intangible Asset, Useful Life 5 years
Patents & trademarks [Member] | Maximum [Member]  
Indefinite-lived Intangible Assets [Line Items]  
Finite-Lived Intangible Asset, Useful Life 30 years
Exclusivity Assets [Member] | Minimum [Member]  
Indefinite-lived Intangible Assets [Line Items]  
Finite-Lived Intangible Asset, Useful Life 5 years
Exclusivity Assets [Member] | Maximum [Member]  
Indefinite-lived Intangible Assets [Line Items]  
Finite-Lived Intangible Asset, Useful Life 25 years
v3.20.2
Summary of Accounting Principles (Collaborative Arrangements) (Details) - USD ($)
$ in Millions
 12 Months Ended
Dec. 31, 2019
Dec. 31, 2018
Dec. 31, 2017
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]      
Collaborators interests existing programs low end 13.00%    
Collaborators interests existing programs high end 49.00%    
Partner share individual program maximum 31.00%    
Cost of Products Sold [Member]      
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]      
Collaborator Share Of Sales $ 2,097 $ 1,688 $ 1,789
Collaborator Share Of Program Costs 190 209 143
Cost of Services Sold [Member]      
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]      
Collaborator Share Of Sales 1,674 1,765 929
Research and Development [Member]      
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]      
Collaborator Share Of Program Costs 219 225 190
Selling General and Administrative [Member]      
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]      
Collaborator Share Of Program Costs $ 101 $ 87 $ 74
v3.20.2
Summary of Accounting Principles Accounting Pronouncements (Details)
 12 Months Ended
Dec. 31, 2019
Accounting Standards Update 2016-13 [Member]  
New Accounting Pronouncements or Change in Accounting Principle [Line Items]  
New Accounting Pronouncement or Change in Accounting Principle, Description In June 2016, the FASB issued Accounting Standards Update (ASU) 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. This ASU and its related amendments modifies the impairment model to utilize an expected loss methodology in place of the incurred loss methodology for financial instruments, including trade receivables, contract assets, long-term receivables and off-balance sheet credit exposures. The amendment requires entities to consider a broader range of information to estimate expected credit losses, including historical information, current conditions and a reasonable forecast period, which may result in earlier recognition of certain losses. The provisions of this ASU are effective for years beginning after December 15, 2019, with early adoption permitted. A modified retrospective approach is required with a cumulative-effect adjustment to retained earnings as of January 1, 2020. We are still quantifying the impact of this ASU and its related amendments on our Consolidated Financial Statements which is not expected to be material.
Accounting Standards Update 2018-13 [Member]  
New Accounting Pronouncements or Change in Accounting Principle [Line Items]  
New Accounting Pronouncement or Change in Accounting Principle, Description In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement. The new standard removes the disclosure requirements for the amount of and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy. This standard did not have a material impact on our financial statement disclosures. We early adopted this standard effective January 1, 2019.
Accounting Standards Update 2018-14 [Member]  
New Accounting Pronouncements or Change in Accounting Principle [Line Items]  
New Accounting Pronouncement or Change in Accounting Principle, Description In August 2018, the FASB issued ASU 2018-14, Compensation—Retirement Benefits—Defined Benefit Plans—General (Subtopic 715-20): Disclosure Framework—Changes to the Disclosure Requirements for Defined Benefit Plans. The new standard includes updates to the disclosure requirements for defined benefit plans including several additions, deletions and modifications to the disclosure requirements. The provisions of this ASU are effective for fiscal years ending after December 15, 2020, with early adoption permitted. We are currently evaluating the impact of this ASU.
Accounting Standards Update 2018-15 [Member]  
New Accounting Pronouncements or Change in Accounting Principle [Line Items]  
New Accounting Pronouncement or Change in Accounting Principle, Description In August 2018, the FASB issued ASU 2018-15, Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract. The new standard provides updated guidance surrounding implementation costs associated with cloud computing arrangements that are service contracts. The provisions of this ASU are effective for years beginning after December 15, 2019, with early adoption permitted. We adopted the new standard prospectively effective January 1, 2020. We do not expect this ASU to have a material impact on the Consolidated Financial Statements.
Accounting Standards Update 2018-17 [Member]  
New Accounting Pronouncements or Change in Accounting Principle [Line Items]  
New Accounting Pronouncement or Change in Accounting Principle, Description In October 2018, the FASB issued ASU 2018-17, Consolidation (Topic 810): Targeted Improvements to Related Party Guidance for Variable Interest Entities. The amendments in this update for determining whether a decision-making fee is a variable interest require reporting entities to consider indirect interests held through related parties under common control on a proportional basis rather than as the equivalent of a direct interest in its entirety (as currently required in generally accepted accounting principles (GAAP)). These amendments also will create alignment between determining whether a decision making fee is a variable interest and determining whether a reporting entity within a related party group is the primary beneficiary of a VIE. This will significantly reduce the risk that decision makers with insignificant direct and indirect interests could be deemed the primary beneficiary of a VIE. The provisions of this ASU are effective for years beginning after December 15, 2019, with early adoption permitted. We adopted the new standard effective January 1, 2020. This ASU did not have an impact on the Consolidated Financial Statements.
Accounting Standards Update 2018-18 [Member]  
New Accounting Pronouncements or Change in Accounting Principle [Line Items]  
New Accounting Pronouncement or Change in Accounting Principle, Description In November 2018, the FASB issued ASU 2018-18, Collaborative Arrangements (Topic 808): Clarifying the Interaction between Topic 808 and Topic 606. The amendments in this update make targeted improvements to GAAP for collaborative arrangements as follows: clarify that certain transactions between collaborative arrangement participants should be accounted for as revenue under Topic 606 when the collaborative arrangement participant is a customer in the context of a unit of account. In those situations, all the guidance in Topic 606 should be applied, including recognition, measurement, presentation, and disclosure requirements; add unit-of-account guidance in Topic 808 to align with the guidance in Topic 606 (that is, a distinct good or service) when an entity is assessing whether the collaborative arrangement or a part of the arrangement is within the scope of Topic 606; and require that in a transaction with a collaborative arrangement participant that is not directly related to sales to third parties, presenting the transaction together with revenue recognized under Topic 606 is precluded if the collaborative arrangement participant is not a customer. The provisions of this ASU are effective for years beginning after December 15, 2019, with early adoption permitted. We adopted the new standard effective January 1, 2020. This ASU did not have an impact on the Consolidated Financial Statements.
ASU 2019-12 [Member]  
New Accounting Pronouncements or Change in Accounting Principle [Line Items]  
New Accounting Pronouncement or Change in Accounting Principle, Description In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes. The amendments in this update remove certain exceptions of Topic 740 including: exception to the incremental approach for intraperiod tax allocation when there is a loss from continuing operations and income or gain from other items; exception to the requirement to recognize a deferred tax liability for equity method investments when a foreign subsidiary becomes an equity method investment; exception to the ability not to recognize a deferred tax liability for a foreign subsidiary when a foreign equity method investment becomes a subsidiary; exception to the general methodology for calculating income taxes in an interim period when a year-to-date loss exceeds the anticipated loss for the year. There are also additional areas of guidance in regards to: franchise and other taxes partially based on income and the interim recognition of enactment of tax laws and rate changes. The provisions of this ASU are effective for years beginning after December 15, 2020, with early adoption permitted. We are currently evaluating the impact of this ASU on our consolidated financial statements
v3.20.2
Business Combinations (Details) - USD ($)
 3 Months Ended 12 Months Ended
Jan. 20, 2020
Nov. 26, 2018
Dec. 31, 2019
Sep. 30, 2019
Jun. 30, 2019
Mar. 31, 2019
Dec. 31, 2018
Sep. 30, 2018
Jun. 30, 2018
Mar. 31, 2018
Dec. 31, 2019
Dec. 31, 2018
Dec. 31, 2017
Business Acquisition [Line Items]                          
Acquisition Cost Of Acquired Entities and Interest in Affiliates                     $ 9,000,000 $ 30,783,000,000 $ 25,000,000
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Noncurrent Liabilities, Long-term Debt             $ 7,784,000,000         7,784,000,000  
Business Combination, Consideration Transferred, Equity Interests Issued and Issuable                       7,960,000,000  
Proceeds from Issuance of Debt                       11,000,000,000.0  
Proceeds from Debt, Net of Issuance Costs                       10,900,000,000  
Goodwill, Acquired During Period                     75,000,000    
Contractual Obligation     $ 1,408,000,000       1,705,000,000       1,408,000,000 1,705,000,000  
Contractual Obligation, Consumed in Current Year                     345,000,000 252,000,000  
Contractual Obligation, Due in Next Fiscal Year     263,000,000               263,000,000    
Contractual Obligation, Due in Second Year     189,000,000               189,000,000    
Contractual Obligation, Due in Third Year     148,000,000               148,000,000    
Contractual Obligation, Due in Fourth Year     118,000,000               118,000,000    
Contractual Obligation, Due in Fifth Year     127,000,000               127,000,000    
Operating profit                     4,914,000,000 2,877,000,000 2,989,000,000
Revenues     11,694,000,000 $ 11,373,000,000 $ 11,329,000,000 $ 10,953,000,000 10,121,000,000 $ 8,412,000,000 $ 8,333,000,000 $ 7,836,000,000 45,349,000,000 34,701,000,000 29,713,000,000
Assets held for sale             175,000,000         175,000,000  
Dispositions of businesses                     134,000,000 74,000,000 19,000,000
Liabilities held for sale     0       40,000,000       0 40,000,000  
BAE Systems sale of assets agreement $ 1,930,000,000                        
Goodwill     36,609,000,000       36,590,000,000       36,609,000,000 36,590,000,000  
Goodwill, Translation and Purchase Accounting Adjustments                     (56,000,000)    
Finite-Lived Intangible Assets, Gross     25,935,000,000       24,864,000,000       25,935,000,000 24,864,000,000  
Finite-Lived Intangible Assets, Accumulated Amortization     (4,838,000,000)       (3,594,000,000)       (4,838,000,000) (3,594,000,000)  
Indefinite-lived Intangible Assets (Excluding Goodwill)     3,376,000,000       3,372,000,000       3,376,000,000 3,372,000,000  
Intangible Assets, Gross (Excluding Goodwill)     29,311,000,000       28,236,000,000       29,311,000,000 28,236,000,000  
Amortization of Intangible Assets                     1,244,000,000 736,000,000 587,000,000
Finite-Lived Intangible Assets, Amortization Expense, Next Twelve Months     1,248,000,000               1,248,000,000    
Finite-Lived Intangible Assets, Amortization Expense, Year Two     1,249,000,000               1,249,000,000    
Finite-Lived Intangible Assets, Amortization Expense, Year Three     1,283,000,000               1,283,000,000    
Finite-Lived Intangible Assets, Amortization Expense, Year Four     1,290,000,000               1,290,000,000    
Finite-Lived Intangible Assets, Amortization Expense, Year Five     1,277,000,000               1,277,000,000    
Business Combination, Acquisition Related Costs                     40,000,000 112,000,000 39,000,000
Pratt and Whitney [Member]                          
Business Acquisition [Line Items]                          
Goodwill, Acquired During Period                     0    
Operating profit                     1,668,000,000 1,269,000,000 1,300,000,000
Revenues                     20,892,000,000 19,397,000,000 16,160,000,000
Goodwill     1,563,000,000       1,567,000,000       1,563,000,000 1,567,000,000  
Goodwill, Translation and Purchase Accounting Adjustments                     (4,000,000)    
Collins Aerospace Systems [Member]                          
Business Acquisition [Line Items]                          
Goodwill, Acquired During Period                     75,000,000    
Operating profit                     4,100,000,000 2,303,000,000 2,191,000,000
Revenues                     26,028,000,000 16,634,000,000 14,691,000,000
Goodwill     35,025,000,000       35,002,000,000       35,025,000,000 35,002,000,000  
Goodwill, Translation and Purchase Accounting Adjustments                     (52,000,000)    
Goodwill, Purchase Accounting Adjustments                     475,000,000    
Total Segments [Member]                          
Business Acquisition [Line Items]                          
Goodwill, Acquired During Period                     75,000,000    
Operating profit                     5,768,000,000 3,572,000,000 3,491,000,000
Revenues                     46,920,000,000 36,031,000,000 30,851,000,000
Goodwill     36,588,000,000       36,569,000,000       36,588,000,000 36,569,000,000  
Goodwill, Translation and Purchase Accounting Adjustments                     (56,000,000)    
Eliminations and other [Member]                          
Business Acquisition [Line Items]                          
Goodwill, Acquired During Period                     0    
Operating profit                     (339,000,000) (220,000,000) (63,000,000)
Revenues                     (1,571,000,000) (1,330,000,000) (1,138,000,000)
Goodwill     21,000,000       21,000,000       21,000,000 21,000,000  
Goodwill, Translation and Purchase Accounting Adjustments                     0    
Property, Plant and Equipment [Member]                          
Business Acquisition [Line Items]                          
Assets held for sale             37,000,000         37,000,000  
Inventories [Member]                          
Business Acquisition [Line Items]                          
Assets held for sale             51,000,000         51,000,000  
Customer Relationships [Member]                          
Business Acquisition [Line Items]                          
Goodwill, Purchase Accounting Adjustments                     400,000,000    
Finite-Lived Intangible Assets, Gross     21,026,000,000       20,308,000,000       21,026,000,000 20,308,000,000  
Finite-Lived Intangible Assets, Accumulated Amortization     (3,884,000,000)       (2,913,000,000)       $ (3,884,000,000) (2,913,000,000)  
Customer Relationships [Member] | Maximum [Member]                          
Business Acquisition [Line Items]                          
Finite-Lived Intangible Asset, Useful Life                     32 years    
Customer Relationships [Member] | Minimum [Member]                          
Business Acquisition [Line Items]                          
Finite-Lived Intangible Asset, Useful Life                     1 year    
Patents & trademarks [Member]                          
Business Acquisition [Line Items]                          
Finite-Lived Intangible Assets, Gross     47,000,000       47,000,000       $ 47,000,000 47,000,000  
Finite-Lived Intangible Assets, Accumulated Amortization     (34,000,000)       (32,000,000)       $ (34,000,000) (32,000,000)  
Patents & trademarks [Member] | Maximum [Member]                          
Business Acquisition [Line Items]                          
Finite-Lived Intangible Asset, Useful Life                     30 years    
Patents & trademarks [Member] | Minimum [Member]                          
Business Acquisition [Line Items]                          
Finite-Lived Intangible Asset, Useful Life                     5 years    
Collaboration [Member]                          
Business Acquisition [Line Items]                          
Finite-Lived Intangible Assets, Gross     4,862,000,000       4,509,000,000       $ 4,862,000,000 4,509,000,000  
Finite-Lived Intangible Assets, Accumulated Amortization     (920,000,000)       $ (649,000,000)       (920,000,000) (649,000,000)  
Rockwell Collins [Member]                          
Business Acquisition [Line Items]                          
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Noncurrent Liabilities, Long-term Debt   $ 5,530,000,000                      
Business Acquisition Cash Paid Per Share                       93.33  
Business Acquisition UTC stock payable                       0.37525  
Payments to Acquire Businesses, Gross   15,500,000,000                   15,533,000,000  
Payments to Acquire Businesses, Net of Cash Acquired   $ 14.9                      
Stock Issued During Period, Shares, Acquisitions   62,200,000                      
Noncash or Part Noncash Acquisition, Debt Assumed   $ 7,800,000,000                      
Noncash or Part Noncash Acquisition, Value of Assets Acquired   30,600,000,000                      
Stock Issued During Period, Value, Acquisitions                       7,960,000,000  
Business Combination, Consideration Transferred                       23,493,000,000  
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Cash and Equivalents   640,000,000                      
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Current Assets, Receivables   1,659,000,000                      
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Inventory   1,487,000,000                      
Business combination, recognized identifiable assets acquired and liabilities assumed, contract with customer asset, current   320,000,000                      
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Current Assets, Other   251,000,000                      
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Deferred Tax Assets Noncurrent   38,000,000                      
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Property, Plant, and Equipment   1,542,000,000                      
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Indefinite-Lived Intangible Assets   1,870,000,000                      
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Other Noncurrent Assets   217,000,000                      
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Assets   17,344,000,000                      
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Current Liabilities, Long-term Debt   2,254,000,000                      
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Current Liabilities, Accounts Payable   520,000,000                      
Business combination, recognized identifiable assets acquired and liabilities assumed, accrued liabilities current   1,663,000,000                      
Business combination, recognized identifiable assets acquired and liabilities assumed, contract with customer liabilities, current   299,000,000                      
Business combination, recognized identifiable assets acquired and liabilities assumed, liability, defined benefit plan, noncurrent   502,000,000                      
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Noncurrent Liabilities, Other   3,614,000,000                      
Business combination, recognized identifiable assets acquired and liabilities assumed, noncontrolling interest   6,000,000                      
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Liabilities   14,388,000,000                      
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Net   2,956,000,000                      
Goodwill, Acquired During Period                     20,537,000,000    
Business Combination, Recognized Identifiable Assets Acquired, Goodwill, and Liabilities Assumed, Net   23,493,000,000                      
Fair value adjustment, inventory   282,000,000                      
Fair value adjustment, fixed assets   244,000,000                      
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Intangible Assets, Other than Goodwill   11,190,000,000                      
Contractual Obligation   1,020,000,000.00                      
Contractual Obligation, Consumed in Current Year                     129,000,000    
Contractual Obligation, Due in Next Fiscal Year     104,000,000               104,000,000    
Contractual Obligation, Due in Second Year     104,000,000               104,000,000    
Contractual Obligation, Due in Third Year     112,000,000               112,000,000    
Contractual Obligation, Due in Fourth Year     96,000,000               96,000,000    
Contractual Obligation, Due in Fifth Year     $ 101,000,000               101,000,000    
Operating profit                       11,000,000  
Revenues                     $ 778,000,000    
Business Acquisition, Pro Forma Revenue                       42,336,000,000 37,909,000,000
Business Acquisition, Pro Forma Net Income (Loss)                       $ 2,011,000,000 $ 1,423,000,000
Business Acquisition, Pro Forma Earnings Per Share, Basic                       $ 2.26 $ 1.66
Business Acquisition, Pro Forma Earnings Per Share, Diluted                       $ 2.24 $ 1.65
Pro Forma Nonrecurring Adjustment, Amortization of inventory and fixed asset fair value adjustment                       $ 58,000,000 $ (192,000,000)
Pro Forma Nonrecurring Adjustment, Amortization of acquired Rockwell Collins intangible assets, net                       (193,000,000) (202,000,000)
Pro Forma Nonrecurring Adjustment, Utilization of contractual customer obligation                       16,000,000 116,000,000
Pro Forma Nonrecurring Adjustment, UTC/Rockwell fees for advisory, legal, accounting services                       212,000,000 (212,000,000)
Pro Forma Nonrecurring Adjustment, Interest expense incurred on acquisition financing, net                       (199,000,000) (234,000,000)
Pro Forma Nonrecurring Adjustment, Elimination of capitalized pre-production engineering amortization                       63,000,000 42,000,000
Pro Forma Nonrecurring Adjustment, Adjustment to net periodic pension cost                       42,000,000 34,000,000
Pro Forma Nonrecurring Adjustment, Adjustment to reflect the adoption of ASC 606                       106,000,000 0
Pro Forma Nonrecurring Adjustment, Elimination of entities held for sale                       (47,000,000) (35,000,000)
Pro Forma Nonrecurring Adjustment, to include the results and related adjustments for B/E Aerospace                       0 (51,000,000)
Pro Forma Nonrecurring Adjustments, Net                       $ 58,000,000 $ (734,000,000)
Rockwell Collins [Member] | Customer Relationships [Member]                          
Business Acquisition [Line Items]                          
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Finite-Lived Intangibles   $ 8,720,000,000                      
Rockwell Collins [Member] | Customer Relationships [Member] | Maximum [Member]                          
Business Acquisition [Line Items]                          
Finite-Lived Intangible Asset, Useful Life   23 years                      
Rockwell Collins [Member] | Customer Relationships [Member] | Minimum [Member]                          
Business Acquisition [Line Items]                          
Finite-Lived Intangible Asset, Useful Life   10 years                      
Rockwell Collins [Member] | Technology-Based Intangible Assets [Member]                          
Business Acquisition [Line Items]                          
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Finite-Lived Intangibles   $ 600,000,000                      
Finite-Lived Intangible Asset, Useful Life   15 years                      
Raytheon Company [Member]                          
Business Acquisition [Line Items]                          
Agreed Upon Number Shares of Common Stock of UTC which each share of Raytheon Common Stock will be Converted Into     2.3348               2.3348    
v3.20.2
Discontinued Operations and Disposal Groups (Details) - USD ($)
$ in Millions
 3 Months Ended 12 Months Ended
Dec. 31, 2019
Sep. 30, 2019
Jun. 30, 2019
Mar. 31, 2019
Dec. 31, 2018
Sep. 30, 2018
Jun. 30, 2018
Mar. 31, 2018
Dec. 31, 2019
Dec. 31, 2018
Dec. 31, 2017
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]                      
Net (loss) income from discontinued operations $ 486 $ 190 $ 717 $ 634 $ 926 $ 920 $ 1,507 $ 699 $ 2,027 $ 4,053 $ 3,239
Income from discontinued operations, before income taxes                 4,091 5,776 5,241
Income tax expense                 1,874 1,528 1,789
Income from discontinued operations                 2,217 4,248 3,452
Less: Noncontrolling interest in subsidiaries earnings from discontinued operations                 190 195 213
Net cash provided by operating activities                 3,062 3,652 3,349
Net cash (used in) provided by investing activities                 (416) 286 108
Net cash used in financing activities                 (2,651) (4,244) (3,431)
Cash and cash equivalents 2,441       2,459       2,441 2,459  
Accounts receivable, net 5,627       5,647       5,627 5,647  
Contract assets, current 1,209       1,111       1,209 1,111  
Inventories and contracts in progress, net 1,903       2,003       1,903 2,003  
Other assets, current 434       559       434 559  
Future income tax benefits 725       647       725 647  
Fixed assets, net 2,433       2,390       2,433 2,390  
Operating lease right-of-use assets 1,347               1,347    
Goodwill 11,454       11,523       11,454 11,523  
Intangible assets, net 1,573       1,783       1,573 1,783  
Other assets 2,677       2,618       2,677 2,618  
Total assets related to discontinued operations 31,823       30,740       31,823 30,740  
Short-term borrowings 71       41       71 41  
Accounts payable 3,003       3,244       3,003 3,244  
Accrued liabilities 4,540       3,538       4,540 3,538  
Contract liabilities, current 2,899       2,971       2,899 2,971  
Long-term debt, currently due 238       154       238 154  
Long-term debt 87       150       87 150  
Future pension and postretirement benefit obligations 1,015       968       1,015 968  
Operating lease liabilities 1,051               1,051    
Other long-term liabilities (1) 1,539       1,562       1,539 1,562  
Total liabilities related to discontinued operations 14,443       12,628       14,443 12,628  
Disposal Group, Including Discontinued Operation, Deferred Tax Liabilities 145               145    
Otis [Member]                      
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]                      
Net (loss) income from discontinued operations                 1,033 1,213 1,123
Selling, general and administrative expense                 1,906 1,636 1,583
Disposal Group, Including Discontinued Operation, Other Expense                 (40) 26 37
Income from discontinued operations, before income taxes                 1,709 1,935 2,000
Income tax expense                 525 561 704
Income from discontinued operations                 1,184 1,374 1,296
Less: Noncontrolling interest in subsidiaries earnings from discontinued operations                 151 161 173
Cash and cash equivalents 1,446       1,329       1,446 1,329  
Accounts receivable, net 2,899       2,764       2,899 2,764  
Contract assets, current 530       661       530 661  
Inventories and contracts in progress, net 571       640       571 640  
Other assets, current 213       264       213 264  
Future income tax benefits 355       304       355 304  
Fixed assets, net 747       709       747 709  
Operating lease right-of-use assets 529               529    
Goodwill 1,647       1,688       1,647 1,688  
Intangible assets, net 490       569       490 569  
Other assets 220       169       220 169  
Total assets related to discontinued operations 9,647       9,097       9,647 9,097  
Short-term borrowings 33       27       33 27  
Accounts payable 1,321       1,334       1,321 1,334  
Accrued liabilities 1,651       1,462       1,651 1,462  
Contract liabilities, current 2,288       2,359       2,288 2,359  
Long-term debt, currently due 1       1       1 1  
Long-term debt 5       4       5 4  
Future pension and postretirement benefit obligations 560       542       560 542  
Operating lease liabilities 383               383    
Other long-term liabilities (1) 514       469       514 469  
Total liabilities related to discontinued operations 6,756       6,198       6,756 6,198  
Otis [Member] | Research and Development [Member]                      
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]                      
Research and development                 163 185 187
Otis [Member] | Nonoperating Income (Expense)                      
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]                      
Disposal Group, Including Discontinued Operation, Other Expense                 (4) 18 4
Otis [Member] | Product [Member]                      
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]                      
Sales                 5,669 5,636 5,498
Costs of Goods Sold                 4,656 4,624 4,392
Otis [Member] | Service [Member]                      
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]                      
Sales                 7,444 7,268 6,843
Costs of Goods Sold                 4,635 4,568 4,220
Carrier [Member]                      
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]                      
Net (loss) income from discontinued operations                 1,698 2,840 2,116
Selling, general and administrative expense                 2,888 2,566 2,459
Disposal Group, Including Discontinued Operation, Other Expense                 246 1,156 794
Income from discontinued operations, before income taxes                 2,409 3,841 3,241
Income tax expense                 672 967 1,085
Income from discontinued operations                 1,737 2,874 2,156
Less: Noncontrolling interest in subsidiaries earnings from discontinued operations                 39 34 40
Cash and cash equivalents 995       1,130       995 1,130  
Accounts receivable, net 2,728       2,883       2,728 2,883  
Contract assets, current 679       450       679 450  
Inventories and contracts in progress, net 1,332       1,363       1,332 1,363  
Other assets, current 221       295       221 295  
Future income tax benefits 370       343       370 343  
Fixed assets, net 1,686       1,681       1,686 1,681  
Operating lease right-of-use assets 818               818    
Goodwill 9,807       9,835       9,807 9,835  
Intangible assets, net 1,083       1,214       1,083 1,214  
Other assets 2,457       2,449       2,457 2,449  
Total assets related to discontinued operations 22,176       21,643       22,176 21,643  
Short-term borrowings 38       14       38 14  
Accounts payable 1,682       1,910       1,682 1,910  
Accrued liabilities 2,889       2,076       2,889 2,076  
Contract liabilities, current 611       612       611 612  
Long-term debt, currently due 237       153       237 153  
Long-term debt 82       146       82 146  
Future pension and postretirement benefit obligations 455       426       455 426  
Operating lease liabilities 668               668    
Other long-term liabilities (1) 1,025       1,093       1,025 1,093  
Total liabilities related to discontinued operations $ 7,687       $ 6,430       7,687 6,430  
Carrier [Member] | Research and Development [Member]                      
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]                      
Research and development                 400 399 364
Carrier [Member] | Nonoperating Income (Expense)                      
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]                      
Disposal Group, Including Discontinued Operation, Other Expense                 43 82 88
Carrier [Member] | Product [Member]                      
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]                      
Sales                 15,337 15,657 14,744
Costs of Goods Sold                 10,878 11,047 10,447
Carrier [Member] | Service [Member]                      
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]                      
Sales                 3,247 3,239 3,039
Costs of Goods Sold                 2,298 2,281 2,154
Separation Related Transactions [Member]                      
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]                      
Net (loss) income from discontinued operations                 (704) 0 0
Selling, general and administrative expense                 16 0 0
Income from discontinued operations, before income taxes                 (27) 0 0
Income tax expense                 $ 677 $ 0 $ 0
v3.20.2
Earnings Per Share (Details) - USD ($)
$ / shares in Units, $ in Millions
 3 Months Ended 12 Months Ended
Dec. 31, 2019
Sep. 30, 2019
Jun. 30, 2019
Mar. 31, 2019
Dec. 31, 2018
Sep. 30, 2018
Jun. 30, 2018
Mar. 31, 2018
Dec. 31, 2019
Dec. 31, 2018
Dec. 31, 2017
Earnings Per Share [Abstract]                      
Antidilutive securities excluded from computation of earnings per share amount                 8,300,000 5,100,000 5,900,000
Net Income (Loss) Attributable to Common Shareowners                      
Net income from continuing operations $ 657 $ 958 $ 1,183 $ 712 $ (240) $ 318 $ 541 $ 598 $ 3,510 $ 1,216 $ 1,313
Net (loss) income from discontinued operations 486 190 717 634 926 920 1,507 699 2,027 4,053 3,239
Net income attributable to common shareowners $ 1,143 $ 1,148 $ 1,900 $ 1,346 $ 686 $ 1,238 $ 2,048 $ 1,297 $ 5,537 $ 5,269 $ 4,552
Basic weighted average number of shares outstanding                 854,800,000 800,400,000 790,000,000.0
Stock Awards                 9,100,000 9,700,000 9,100,000
Diluted weighted average number of shares outstanding                 863,900,000 810,100,000 799,100,000
Earnings Per Share of Common Stock - Basic                      
Net income from continuing operations $ 0.77 $ 1.12 $ 1.38 $ 0.84 $ (0.29) $ 0.40 $ 0.68 $ 0.76 $ 4.11 $ 1.52 $ 1.66
Net (loss) income from discontinued operations 0.56 0.22 0.84 0.74 1.12 1.16 1.91 0.88 2.37 5.06 4.10
Net income attributable to common shareowners 1.33 1.34 2.22 1.58 0.83 1.56 2.59 1.64 6.48 6.58 5.76
Earnings Per Share of Common Stock - Diluted                      
Net income from continuing operations 0.76 1.11 1.37 0.83 (0.29) 0.39 0.68 0.75 4.06 1.50 1.64
Net (loss) income from discontinued operations 0.56 0.22 0.83 0.73 1.12 1.15 1.88 0.87 2.35 5.00 4.06
Net income attributable to common shareowners $ 1.32 $ 1.33 $ 2.20 $ 1.56 $ 0.83 $ 1.54 $ 2.56 $ 1.62 $ 6.41 $ 6.50 $ 5.70
v3.20.2
Commercial Aerospace Industry Assets and Commitments (Details) - USD ($)
$ in Millions
 12 Months Ended
Dec. 31, 2019
Dec. 31, 2018
Nov. 26, 2018
Jul. 26, 2012
Accounts Notes And Loans Receivable [Line Items]        
Contract with Customer, Asset, after Allowance for Credit Loss $ 4,462 $ 3,666    
Contractual Obligation 1,408 1,705    
Contractual Obligation, Consumed in Current Year 345 252    
Contractual Obligation, Due in Next Fiscal Year 263      
Contractual Obligation, Due in Second Year 189      
Contractual Obligation, Due in Third Year 148      
Contractual Obligation, Due in Fourth Year 118      
Contractual Obligation, Due in Fifth Year 127      
Contractual Obligation, Due after Fifth Year 563      
Commercial Aerospace [Member]        
Accounts Notes And Loans Receivable [Line Items]        
Guarantee Obligations Maximum Exposure 333 348    
Partner Share of Guarantor Obligations, Maximum Exposure, Undiscounted 142      
Commercial Aerospace [Member]        
Accounts Notes And Loans Receivable [Line Items]        
Accounts, Notes, Loans and Financing Receivable, gross 11,293 11,695    
Products Under Lease 3,185 2,736    
Notes and leases receivable, total committed 308 299    
Commercial Aerospace financing and other contractual commitments 15,000      
Notes and leases receivable within one year 30      
Notes and leases receivable within two years 23      
Notes and leases receivable within three years 14      
Notes and leases receivable within four years 22      
Notes and leases receivable within five years 38      
Notes and leases receivable after five years 181      
Commercial aerospace financing commitments, total committed 3,937      
Commercial aerospace financing commitments within one year 911      
Commercial aerospace financing commitments within two years 1,119      
Commercial aerospace financing commitments within three years 974      
Commercial aerospace financing commitments within four years 819      
Commercial aerospace financing commitments within five years 44      
Commercial aerospace financing commitments after five years 70      
Other commercial aerospace commitments, total committed 11,055      
Other commercial aerospace commitments within one year 702      
Other commercial aerospace commitments within two years 736      
Other commercial aerospace commitments within three years 717      
Other commercial aerospace commitments within four years 668      
Other commercial aerospace commitments within five years 627      
Other commercial aerospace commitments after five years 7,605      
Collaboration partners' share, total committed 5,284      
Collaboration partners' share within one year 508      
Collaboration partners' share within two years 623      
Collaboration partners' share within three years 571      
Collaboration partners' share within four years 538      
Collaboration partners' share within five years 193      
Collaboration partners' share after five years 2,851      
Total commercial commitments, total committed 9,708      
Total commercial commitments within one year 1,105      
Total commercial commitments within two years 1,232      
Total commercial commitments within three years 1,120      
Total commercial commitments within four years 949      
Total commercial commitments within five years 478      
Total commercial commitments after five years 4,824      
Contract with Customer, Asset, after Allowance for Credit Loss 2,741 2,247    
Allowance for Receivables and Other Financing Assets 248 245    
Financing Commitments and Guarantees Reserve 7 $ 15    
Goodrich Corporation [Member]        
Accounts Notes And Loans Receivable [Line Items]        
Contractual Obligation       $ 2,200
Rockwell Collins [Member]        
Accounts Notes And Loans Receivable [Line Items]        
Contractual Obligation     $ 1,020  
Contractual Obligation, Consumed in Current Year 129      
Contractual Obligation, Due in Next Fiscal Year 104      
Contractual Obligation, Due in Second Year 104      
Contractual Obligation, Due in Third Year 112      
Contractual Obligation, Due in Fourth Year 96      
Contractual Obligation, Due in Fifth Year $ 101      
v3.20.2
Inventory, Net (Details) - USD ($)
$ in Millions
Dec. 31, 2019
Dec. 31, 2018
Inventory Disclosure [Abstract]    
Raw materials $ 2,984 $ 2,624
Work-in-process 2,586 2,538
Finished goods 3,477 2,919
Inventory, net 9,047 8,081
Inventory Valuation Reserves $ 1,122 $ 1,036
v3.20.2
Contract with Customer, Asset and Liability (Details) - USD ($)
$ in Millions
 12 Months Ended
Dec. 31, 2019
Dec. 31, 2018
Revenue from Contract with Customer [Abstract]    
Contract with Customer, Asset, after Allowance for Credit Loss $ 4,462 $ 3,666
Contract with Customer, Liability 9,014 7,818
Contract with Customer, Net (4,552) $ (4,152)
Contract with Customer, Asset, Change 796  
Contract with Customer, Liability, Change (1,196)  
Contract with Customer, Liability, Revenue Recognized $ 2,900  
v3.20.2
Fixed Assets (Details) - USD ($)
$ in Millions
 12 Months Ended
Dec. 31, 2019
Dec. 31, 2018
Dec. 31, 2017
Property Plant And Equipment [Line Items]      
Land $ 292 $ 266  
Buildings and improvements 4,978 4,768  
Machinery, tools and equipment 12,936 11,951  
Other, including assets under construction 1,871 1,735  
Fixed assets 20,077 18,720  
Accumulated depreciation 9,755 8,814  
Fixed assets, net 10,322 9,906  
Depreciation $ 1,191 $ 945 $ 869
Land Buildings And Improvements [Member] | Maximum [Member]      
Property Plant And Equipment [Line Items]      
Property, Plant and Equipment, Useful Life 40 years    
Land Buildings And Improvements [Member] | Minimum [Member]      
Property Plant And Equipment [Line Items]      
Property, Plant and Equipment, Useful Life 12 years    
Machinery And Equipment [Member] | Maximum [Member]      
Property Plant And Equipment [Line Items]      
Property, Plant and Equipment, Useful Life 20 years    
Machinery And Equipment [Member] | Minimum [Member]      
Property Plant And Equipment [Line Items]      
Property, Plant and Equipment, Useful Life 3 years    
v3.20.2
Accrued Liabilities (Details) - USD ($)
$ in Millions
Dec. 31, 2019
Dec. 31, 2018
Accrued Liabilities [Abstract]    
Accrued salaries, wages and employee benefits $ 1,353 $ 1,063
Contractual Obligation 1,408 1,705
Service and warranty accruals 1,033 929
Interest payable 472 468
Litigation and contract matters 405 324
Income taxes payable 106 313
Accrued property, sales and use taxes 140 94
Canadian government settlement - current portion 0 34
Accrued restructuring costs 123 159
Accrued workers compensation 91 80
Liabilities held for sale 0 40
Operating Lease, Liability, Current 245 0
Other 4,394 4,186
Accrued liabilities $ 9,770 $ 9,395
v3.20.2
Borrowings and Lines of Credit (Short-Term Borrowings) (Details) - USD ($)
$ in Millions
Dec. 31, 2019
Dec. 31, 2018
Short-term Debt [Line Items]    
Commercial Paper $ 0 $ 1,257
Other borrowings 2,293 171
Total short-term borrowings $ 2,293 $ 1,428
v3.20.2
Borrowings and Lines of Credit (ST Borrowings Narrative) (Details) - USD ($)
$ in Millions
Dec. 31, 2019
Dec. 31, 2018
Debt Disclosure [Abstract]    
Maximum Commercial Paper Borrowing Authority $ 6,350  
Short Term Line of Credit Facilities Remaining Borrowing Capacities $ 2,300  
Short Term Debt Weighted Average Interest Rate, Avg Outstanding 1.70% 1.30%
Total Debt Weighted Average Interest Rate, Avg Outstanding 3.60% 3.50%
Short Term Debt Weighted Average Interest Rate, Outstanding 2.30% 1.90%
Total Debt Weighted Average Interest Rate, Outstanding 3.60% 3.50%
Line of Credit Facility [Line Items]    
Aggregate Line of Credit Facility Maximum Borrowing Capacity $ 10,350  
Multicurrency Revolving Credit Agreement [Member] | Matures August 2021 [Member]    
Line of Credit Facility [Line Items]    
Line of Credit Facility, Maximum Borrowing Capacity 2,150  
Revolving Credit Agreement [Member] | Matures August 2021 [Member]    
Line of Credit Facility [Line Items]    
Line of Credit Facility, Maximum Borrowing Capacity 2,200  
Revolving Credit Agreement [Member] | Matures March 15 2021 [Member]    
Line of Credit Facility [Line Items]    
Line of Credit Facility, Maximum Borrowing Capacity 2,000  
Term Credit Facility [Member] | Matures March 15 2021 [Member]    
Line of Credit Facility [Line Items]    
Line of Credit Facility, Maximum Borrowing Capacity 4,000  
Borrowings under Long-term Lines of Credit $ 2,100  
v3.20.2
Borrowings and Lines of Credit (Long-Term Debt) (Details)
€ in Millions, $ in Millions
 12 Months Ended
Dec. 31, 2019
USD ($)
Dec. 31, 2019
EUR (€)
Dec. 31, 2018
USD ($)
Debt Instrument [Line Items]      
Proceeds from Issuance of Debt     $ 11,000
Total principal long-term debt $ 41,274   44,111
Other debt (including capitalized leases) 315   269
Other (fair market value adjustments, discounts and debt issuance costs) (315)   (348)
Total long-term debt 40,959   43,763
Less: current portion 3,258   2,722
Long-term debt, net of current portion 37,701   41,041
Long Term Debt Maturities Repayments Of Principal In Next Twelve Months 3,258    
Long Term Debt Maturities Repayments Of Principal In Year Two 4,091    
Long Term Debt Maturities Repayments Of Principal In Year Three 3,904    
Long Term Debt Maturities Repayments Of Principal In Year Four 3,490    
Long Term Debt Maturities Repayments Of Principal In Year Five 2,592    
Long Term Debt Maturities Repayments Of Principal After Year Five 23,939    
LIBOR plus 0.350% floating rate notes due 2019 [Member]      
Debt Instrument [Line Items]      
Debt Instrument, Carrying Amount [1] $ 0   350
Debt Instrument, Interest Rate, Stated Percentage 0.35%    
Debt Instrument, Maturity Year Date Libor plus 0.350% floating rate notes due 2019 (3) Libor plus 0.350% floating rate notes due 2019 (3)  
Notes 1.500% Due 2019 [Member]      
Debt Instrument [Line Items]      
Debt Instrument, Carrying Amount [2] $ 0   650
Debt Instrument, Interest Rate, Stated Percentage 1.50%    
Debt Instrument, Maturity Year Date 2019 2019  
Notes 1.950% Due 2019 [Member]      
Debt Instrument [Line Items]      
Debt Instrument, Carrying Amount [3] $ 0   300
Debt Instrument, Interest Rate, Stated Percentage 1.95%    
Debt Instrument, Maturity Year Date 2019 2019  
EURIBOR plus 0.15% floating rate notes due 2019 [Member]      
Debt Instrument [Line Items]      
Debt Instrument, Carrying Amount [4] $ 0   858
Debt Instrument, Interest Rate, Stated Percentage 0.15%    
Debt Instrument, Maturity Year Date 2019 2019  
Repayment of Debt, Date Nov. 13, 2019 Nov. 13, 2019  
Notes 5.250% Due 2019 [Member]      
Debt Instrument [Line Items]      
Debt Instrument, Carrying Amount [3] $ 0   300
Debt Instrument, Interest Rate, Stated Percentage 5.25%    
Debt Instrument, Maturity Year Date 2019 2019  
Notes 8.875% Due 2019 [Member]      
Debt Instrument [Line Items]      
Debt Instrument, Carrying Amount $ 0   271
Debt Instrument, Interest Rate, Stated Percentage 8.875%    
Debt Instrument, Maturity Year Date 2019 2019  
Repayment of Debt, Date Nov. 15, 2019 Nov. 15, 2019  
Notes 4.875% Due 2020 [Member]      
Debt Instrument [Line Items]      
Debt Instrument, Carrying Amount [2] $ 171   171
Debt Instrument, Interest Rate, Stated Percentage 4.875%    
Debt Instrument, Maturity Year Date 2020 2020  
Notes 4.500% Due 2020 [Member]      
Debt Instrument [Line Items]      
Debt Instrument, Carrying Amount [2] $ 1,250   1,250
Debt Instrument, Interest Rate, Stated Percentage 4.50%    
Debt Instrument, Maturity Year Date 2020 2020  
Notes 1.900% Due 2020 [Member]      
Debt Instrument [Line Items]      
Debt Instrument, Carrying Amount [2] $ 1,000   1,000
Debt Instrument, Interest Rate, Stated Percentage 1.90%    
Debt Instrument, Maturity Year Date 2020 2020  
EURIBOR plus 0.20% floating rate notes due 2020 [Member]      
Debt Instrument [Line Items]      
Proceeds from Issuance of Debt | € [5]   € 750  
Debt Instrument, Carrying Amount [4] $ 831   858
Debt Instrument, Interest Rate, Stated Percentage 0.20%    
Debt Instrument, Maturity Year Date 2020 2020  
Notes 8.750% Due 2021 [Member]      
Debt Instrument [Line Items]      
Debt Instrument, Carrying Amount $ 250   250
Debt Instrument, Interest Rate, Stated Percentage 8.75%    
Debt Instrument, Maturity Year Date 2021 2021  
Notes 3.100% Due 2021 [Member]      
Debt Instrument [Line Items]      
Debt Instrument, Carrying Amount [3] $ 250   250
Debt Instrument, Interest Rate, Stated Percentage 3.10%    
Debt Instrument, Maturity Year Date 2021 2021  
Notes 3.350% due 2021 [Member]      
Debt Instrument [Line Items]      
Proceeds from Issuance of Debt [6] $ 1,000    
Debt Instrument, Carrying Amount [2] $ 1,000   1,000
Debt Instrument, Interest Rate, Stated Percentage 3.35%    
Debt Instrument, Maturity Year Date 2021 2021  
LIBOR plus 0.650% floating rate notes due 2021 [Member]      
Debt Instrument [Line Items]      
Proceeds from Issuance of Debt [6] $ 750    
Debt Instrument, Carrying Amount [2] $ 750 [1]   750 [7]
Debt Instrument, Interest Rate, Stated Percentage 0.65%    
Debt Instrument, Maturity Year Date 2021 2021  
Notes 1.950% Due 2021 [Member]      
Debt Instrument [Line Items]      
Debt Instrument, Carrying Amount [2] $ 750   750
Debt Instrument, Interest Rate, Stated Percentage 1.95%    
Debt Instrument, Maturity Year Date 2021 2021  
Notes 1.125% Due 2021 [Member]      
Debt Instrument [Line Items]      
Debt Instrument, Carrying Amount [2] $ 1,053   1,088
Debt Instrument, Interest Rate, Stated Percentage 1.125%    
Debt Instrument, Maturity Year Date 2021 2021  
Notes 2.300% Due 2022 [Member]      
Debt Instrument [Line Items]      
Debt Instrument, Carrying Amount [2] $ 500   500
Debt Instrument, Interest Rate, Stated Percentage 2.30%    
Debt Instrument, Maturity Year Date 2022 2022  
Notes 2.800% Due 2022 [Member]      
Debt Instrument [Line Items]      
Debt Instrument, Carrying Amount [3] $ 1,100   1,100
Debt Instrument, Interest Rate, Stated Percentage 2.80%    
Debt Instrument, Maturity Year Date 2022 2022  
Notes 3.100% Due 2022 [Member]      
Debt Instrument [Line Items]      
Debt Instrument, Carrying Amount [2] $ 2,300   2,300
Debt Instrument, Interest Rate, Stated Percentage 3.10%    
Debt Instrument, Maturity Year Date 2022 2022  
Notes 1.250% due 2023 [Member]      
Debt Instrument [Line Items]      
Debt Instrument, Carrying Amount [2] $ 831   858
Debt Instrument, Interest Rate, Stated Percentage 1.25%    
Debt Instrument, Maturity Year Date 2023 2023  
Notes 3.650% Due 2023 [Member]      
Debt Instrument [Line Items]      
Proceeds from Issuance of Debt [6] $ 2,250    
Debt Instrument, Carrying Amount [2] $ 2,250   2,250
Debt Instrument, Interest Rate, Stated Percentage 3.65%    
Debt Instrument, Maturity Year Date 2023 2023  
Notes 3.700% Due 2023 [Member]      
Debt Instrument [Line Items]      
Debt Instrument, Carrying Amount [3] $ 400   400
Debt Instrument, Interest Rate, Stated Percentage 3.70%    
Debt Instrument, Maturity Year Date 2023 2023  
Notes 2.800% Due 2024 [Member]      
Debt Instrument [Line Items]      
Debt Instrument, Carrying Amount [2] $ 800   800
Debt Instrument, Interest Rate, Stated Percentage 2.80%    
Debt Instrument, Maturity Year Date 2024 2024  
Notes 3.200% Due 2024 [Member]      
Debt Instrument [Line Items]      
Debt Instrument, Carrying Amount $ 950 [3]   950
Debt Instrument, Interest Rate, Stated Percentage 3.20%    
Debt Instrument, Maturity Year Date 2024 2024  
Notes 1.150% Due 2024 [Member]      
Debt Instrument [Line Items]      
Proceeds from Issuance of Debt | € [5]   € 750  
Debt Instrument, Carrying Amount [2] $ 831   858
Debt Instrument, Interest Rate, Stated Percentage 1.15%    
Debt Instrument, Maturity Year Date 2024 2024  
Notes 3.950% Due 2025 [Member]      
Debt Instrument [Line Items]      
Proceeds from Issuance of Debt [6] $ 1,500    
Debt Instrument, Carrying Amount [2] $ 1,500   1,500
Debt Instrument, Interest Rate, Stated Percentage 3.95%    
Debt Instrument, Maturity Year Date 2025 2025  
Notes 1.875% Due 2026 [Member]      
Debt Instrument [Line Items]      
Debt Instrument, Carrying Amount [2] $ 554   573
Debt Instrument, Interest Rate, Stated Percentage 1.875%    
Debt Instrument, Maturity Year Date 2026 2026  
Notes 2.650% Due 2026 [Member]      
Debt Instrument [Line Items]      
Debt Instrument, Carrying Amount [2] $ 1,150   1,150
Debt Instrument, Interest Rate, Stated Percentage 2.65%    
Debt Instrument, Maturity Year Date 2026 2026  
Notes 3.125% Due 2027 [Member]      
Debt Instrument [Line Items]      
Debt Instrument, Carrying Amount [2] $ 1,100   1,100
Debt Instrument, Interest Rate, Stated Percentage 3.125%    
Debt Instrument, Maturity Year Date 2027 2027  
Notes 3.500% Due 2027 [Member]      
Debt Instrument [Line Items]      
Debt Instrument, Carrying Amount [3] $ 1,300   1,300
Debt Instrument, Interest Rate, Stated Percentage 3.50%    
Debt Instrument, Maturity Year Date 2027 2027  
Notes 7.100% Due 2027 [Member]      
Debt Instrument [Line Items]      
Debt Instrument, Carrying Amount $ 141   141
Debt Instrument, Interest Rate, Stated Percentage 7.10%    
Debt Instrument, Maturity Year Date 2027 2027  
Notes 6.700% Due 2028 [Member]      
Debt Instrument [Line Items]      
Debt Instrument, Carrying Amount $ 400   400
Debt Instrument, Interest Rate, Stated Percentage 6.70%    
Debt Instrument, Maturity Year Date 2028 2028  
Notes 4.125% Due 2028 [Member]      
Debt Instrument [Line Items]      
Proceeds from Issuance of Debt [6] $ 3,000    
Debt Instrument, Carrying Amount [2] $ 3,000   3,000
Debt Instrument, Interest Rate, Stated Percentage 4.125%    
Debt Instrument, Maturity Year Date 2028 2028  
Notes 7.500% Due 2029 [Member]      
Debt Instrument [Line Items]      
Debt Instrument, Carrying Amount [2] $ 550   550
Debt Instrument, Interest Rate, Stated Percentage 7.50%    
Debt Instrument, Maturity Year Date 2029 2029  
Notes 2.150% Due 2030 [Member]      
Debt Instrument [Line Items]      
Proceeds from Issuance of Debt | € [5]   € 500  
Debt Instrument, Carrying Amount [2] $ 554   573
Debt Instrument, Interest Rate, Stated Percentage 2.15%    
Debt Instrument, Maturity Year Date 2030 2030  
Notes 5.400% Due 2035 [Member]      
Debt Instrument [Line Items]      
Debt Instrument, Carrying Amount [2] $ 600   600
Debt Instrument, Interest Rate, Stated Percentage 5.40%    
Debt Instrument, Maturity Year Date 2035 2035  
Notes 6.050% Due 2036 [Member]      
Debt Instrument [Line Items]      
Debt Instrument, Carrying Amount [2] $ 600   600
Debt Instrument, Interest Rate, Stated Percentage 6.05%    
Debt Instrument, Maturity Year Date 2036 2036  
Notes 6.800% Due 2036 [Member]      
Debt Instrument [Line Items]      
Debt Instrument, Carrying Amount [2] $ 134   134
Debt Instrument, Interest Rate, Stated Percentage 6.80%    
Debt Instrument, Maturity Year Date 2036 2036  
Notes 7.000% Due 2038 [Member]      
Debt Instrument [Line Items]      
Debt Instrument, Carrying Amount $ 159   159
Debt Instrument, Interest Rate, Stated Percentage 7.00%    
Debt Instrument, Maturity Year Date 2038 2038  
Notes 6.125% Due 2038 [Member]      
Debt Instrument [Line Items]      
Debt Instrument, Carrying Amount [2] $ 1,000   1,000
Debt Instrument, Interest Rate, Stated Percentage 6.125%    
Debt Instrument, Maturity Year Date 2038 2038  
Notes 4.450% Due 2038 [Member]      
Debt Instrument [Line Items]      
Proceeds from Issuance of Debt [6] $ 750    
Debt Instrument, Carrying Amount [2] $ 750   750
Debt Instrument, Interest Rate, Stated Percentage 4.45%    
Debt Instrument, Maturity Year Date 2038 2038  
Notes 5.700% Due 2040 [Member]      
Debt Instrument [Line Items]      
Debt Instrument, Carrying Amount [2] $ 1,000   1,000
Debt Instrument, Interest Rate, Stated Percentage 5.70%    
Debt Instrument, Maturity Year Date 2040 2040  
Notes 4.500% Due 2042 [Member]      
Debt Instrument [Line Items]      
Debt Instrument, Carrying Amount [2] $ 3,500   3,500
Debt Instrument, Interest Rate, Stated Percentage 4.50%    
Debt Instrument, Maturity Year Date 2042 2042  
Notes 4.800% Due 2043 [Member]      
Debt Instrument [Line Items]      
Debt Instrument, Carrying Amount [3] $ 400   400
Debt Instrument, Interest Rate, Stated Percentage 4.80%    
Debt Instrument, Maturity Year Date 2043 2043  
Notes 4.150% Due 2045 [Member]      
Debt Instrument [Line Items]      
Debt Instrument, Carrying Amount [2] $ 850   850
Debt Instrument, Interest Rate, Stated Percentage 4.15%    
Debt Instrument, Maturity Year Date 2045 2045  
Notes 3.750% Due 2046 [Member]      
Debt Instrument [Line Items]      
Debt Instrument, Carrying Amount [2] $ 1,100   1,100
Debt Instrument, Interest Rate, Stated Percentage 3.75%    
Debt Instrument, Maturity Year Date 2046 2046  
Notes 4.050% Due 2047 [Member]      
Debt Instrument [Line Items]      
Debt Instrument, Carrying Amount [2] $ 600   600
Debt Instrument, Interest Rate, Stated Percentage 4.05%    
Debt Instrument, Maturity Year Date 2047 2047  
Notes 4.350% Due 2047 [Member]      
Debt Instrument [Line Items]      
Debt Instrument, Carrying Amount [3] $ 1,000   1,000
Debt Instrument, Interest Rate, Stated Percentage 4.35%    
Debt Instrument, Maturity Year Date 2047 2047  
Notes 4.625% Due 2048 [Member]      
Debt Instrument [Line Items]      
Proceeds from Issuance of Debt [8] $ 1,750    
Debt Instrument, Carrying Amount [2] $ 1,750   $ 1,750
Debt Instrument, Interest Rate, Stated Percentage 4.625%    
Debt Instrument, Maturity Year Date 2048 2048  
[1] The three-month LIBOR rate as of December 31, 2019 was approximately 1.908%.
[2] We may redeem these notes at our option pursuant to their terms.
[3] Rockwell Collins debt which remained outstanding following the Rockwell Acquisition.
[4] The three-month EURIBOR rate as of December 31, 2019 was approximately (0.383)%. 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.
[5] (3)    The net proceeds received from these debt issuances were used for general corporate purposes.
[6] (1)    The net proceeds received from these debt issuances were used to partially finance the cash consideration portion of the purchase price for Rockwell Collins and fees, expenses and other amounts related to the acquisition of Rockwell Collins.
[7] The three-month LIBOR rate as of December 31, 2019 was approximately 1.908%.
[8] (2)    The net proceeds from these debt issuances were used to fund the repayment of commercial paper and for other general corporate purposes.
v3.20.2
Borrowings and Lines of Credit Borrowings and Lines of Credit (LT Debt Narrative) (Details)
€ in Millions, $ in Millions
 12 Months Ended
Dec. 31, 2019
USD ($)
Dec. 31, 2019
EUR (€)
Dec. 31, 2018
USD ($)
Debt Instrument [Line Items]      
Proceeds from Issuance of Debt     $ 11,000
Debt Percentage Bearing Variable Interest Rate 9.00% 9.00% 10.00%
Average Years of Maturity of Long Term Debt 10 years 10 years  
Notes 3.350% due 2021 [Member]      
Debt Instrument [Line Items]      
Proceeds from Issuance of Debt $ 1,000 [1]    
Debt Instrument, Maturity Year Date 2021 2021  
Debt Instrument, Interest Rate, Stated Percentage 3.35% 3.35%  
Notes 3.650% Due 2023 [Member]      
Debt Instrument [Line Items]      
Proceeds from Issuance of Debt $ 2,250 [1]    
Debt Instrument, Maturity Year Date 2023 2023  
Debt Instrument, Interest Rate, Stated Percentage 3.65% 3.65%  
Notes 3.950% Due 2025 [Member]      
Debt Instrument [Line Items]      
Proceeds from Issuance of Debt $ 1,500 [1]    
Debt Instrument, Maturity Year Date 2025 2025  
Debt Instrument, Interest Rate, Stated Percentage 3.95% 3.95%  
Notes 4.125% Due 2028 [Member]      
Debt Instrument [Line Items]      
Proceeds from Issuance of Debt $ 3,000 [1]    
Debt Instrument, Maturity Year Date 2028 2028  
Debt Instrument, Interest Rate, Stated Percentage 4.125% 4.125%  
Notes 4.450% Due 2038 [Member]      
Debt Instrument [Line Items]      
Proceeds from Issuance of Debt $ 750 [1]    
Debt Instrument, Maturity Year Date 2038 2038  
Debt Instrument, Interest Rate, Stated Percentage 4.45% 4.45%  
Notes 4.625% Due 2048 [Member]      
Debt Instrument [Line Items]      
Proceeds from Issuance of Debt $ 1,750 [2]    
Debt Instrument, Maturity Year Date 2048 2048  
Debt Instrument, Interest Rate, Stated Percentage 4.625% 4.625%  
LIBOR plus 0.650% floating rate notes due 2021 [Member]      
Debt Instrument [Line Items]      
Proceeds from Issuance of Debt $ 750 [1]    
Debt Instrument, Maturity Year Date 2021 2021  
Debt Instrument, Interest Rate, Stated Percentage 0.65% 0.65%  
Notes 1.150% Due 2024 [Member]      
Debt Instrument [Line Items]      
Proceeds from Issuance of Debt | €   € 750 [3]  
Debt Instrument, Maturity Year Date 2024 2024  
Debt Instrument, Interest Rate, Stated Percentage 1.15% 1.15%  
Notes 2.150% Due 2030 [Member]      
Debt Instrument [Line Items]      
Proceeds from Issuance of Debt | €   € 500 [3]  
Debt Instrument, Maturity Year Date 2030 2030  
Debt Instrument, Interest Rate, Stated Percentage 2.15% 2.15%  
EURIBOR plus 0.20% floating rate notes due 2020 [Member]      
Debt Instrument [Line Items]      
Proceeds from Issuance of Debt | €   € 750 [3]  
Debt Instrument, Maturity Year Date 2020 2020  
Debt Instrument, Interest Rate, Stated Percentage 0.20% 0.20%  
Notes 8.875% Due 2019 [Member]      
Debt Instrument [Line Items]      
Repayment of Debt, Date Nov. 15, 2019 Nov. 15, 2019  
Repayments of Debt $ 271    
Debt Instrument, Maturity Year Date 2019 2019  
Debt Instrument, Interest Rate, Stated Percentage 8.875% 8.875%  
EURIBOR plus 0.15% floating rate notes due 2019 [Member]      
Debt Instrument [Line Items]      
Repayment of Debt, Date Nov. 13, 2019 Nov. 13, 2019  
Repayments of Debt | €   € 750  
Debt Instrument, Maturity Year Date 2019 2019  
Debt Instrument, Interest Rate, Stated Percentage 0.15% 0.15%  
LIBOR plus 0.350% floating rate notes due 2019 [Member]      
Debt Instrument [Line Items]      
Repayments of Debt $ 350    
Debt Instrument, Maturity Year Date Libor plus 0.350% floating rate notes due 2019 (3) Libor plus 0.350% floating rate notes due 2019 (3)  
Debt Instrument, Interest Rate, Stated Percentage 0.35% 0.35%  
Notes 1.500% Due 2019 [Member]      
Debt Instrument [Line Items]      
Repayments of Debt $ 650    
Debt Instrument, Maturity Year Date 2019 2019  
Debt Instrument, Interest Rate, Stated Percentage 1.50% 1.50%  
Notes 1.950% Due 2019 [Member]      
Debt Instrument [Line Items]      
Repayments of Debt $ 300 [4]    
Debt Instrument, Maturity Year Date 2019 2019  
Debt Instrument, Interest Rate, Stated Percentage 1.95% 1.95%  
Notes 5.250% Due 2019 [Member]      
Debt Instrument [Line Items]      
Repayments of Debt $ 300 [4]    
Debt Instrument, Maturity Year Date 2019 2019  
Debt Instrument, Interest Rate, Stated Percentage 5.25% 5.25%  
Variable-rate term loan due 2020 (1 month LIBOR plus 1.25%) [Member]      
Debt Instrument [Line Items]      
Repayment of Debt, Date Dec. 14, 2018 Dec. 14, 2018  
Repayments of Debt $ 482 [4]    
Junior subordinated notes 1.778% due 2018 [Member]      
Debt Instrument [Line Items]      
Repayment of Debt, Date May 04, 2018 May 04, 2018  
Repayments of Debt $ 1,100    
EURIBOR plus 0.800% floating rate notes due 2018 [Member]      
Debt Instrument [Line Items]      
Repayment of Debt, Date Feb. 22, 2018 Feb. 22, 2018  
Repayments of Debt | €   € 750  
Notes 6.800% Due 2018 [Member]      
Debt Instrument [Line Items]      
Repayment of Debt, Date Feb. 01, 2018 Feb. 01, 2018  
Repayments of Debt $ 99    
[1] (1)    The net proceeds received from these debt issuances were used to partially finance the cash consideration portion of the purchase price for Rockwell Collins and fees, expenses and other amounts related to the acquisition of Rockwell Collins.
[2] (2)    The net proceeds from these debt issuances were used to fund the repayment of commercial paper and for other general corporate purposes.
[3] (3)    The net proceeds received from these debt issuances were used for general corporate purposes.
[4] These notes and term loan were assumed in connection with the Rockwell Collins acquisition and subsequently repaid.
v3.20.2
Summary of Changes in AOCI (Details) - USD ($)
$ in Millions
 12 Months Ended
Dec. 31, 2019
Dec. 31, 2018
Dec. 31, 2017
Accumulated Other Comprehensive Income (Loss) [Line Items]      
Accumulated Other Comprehensive Income (Loss), Net of Tax $ (10,149) $ (9,333) $ (7,525)
Other comprehensive (loss) income, net - Foreign Currency Translation 266 (516) 620
Amounts reclassified, pretax - Foreign Currency Translation (2) 2 10
Tax (benefit) expense reclassified - Foreign Currency Translation 43 4  
Other Comprehensive Income (Loss), ASU 2016-01 adoption impact on foreign currency translation Arising During Period   0  
Other comprehensive (loss) income before reclassifications, net - Pension (584) (1,736)  
Amounts reclassified, pretax - Pension 228 344 529
Tax (benefit) expense reclassified - Pension (97) (326)  
Other Comprehensive Income (Loss), ASU 2016-01 adoption impact on Defined Benefit Plan Arising During Period   0  
Other comprehensive (loss) income before reclassifications, net - AFS Securities 0 0  
Amounts reclassified, pretax - AFS Securities 0 0 566
Tax (benefit) expense reclassified - AFS Securities 0 0  
Other Comprehensive Income (Loss), ASU 2016-01 adoption impact on Securities Arising During Period 0 (5) 0
Other comprehensive (loss) income before reclassifications, net - Unrealized Hedging (Losses) Gains (33) (307)  
Amounts reclassified, pretax - Unrealized Hedging (Losses) Gains (51) 16 39
Tax (benefit) expense reclassified - Unrealized Hedging (Losses) Gains 11 (78)  
Other Comprehensive Income (Loss), ASU 2016-01 adoption impact on Derivatives Arising During Period   0  
Other comprehensive (loss) income before reclassifications, net (337) (2,529)  
Amounts reclassified, pretax (223) (326)  
Tax (benefit) expense reclassified (43) (400)  
Reclassification from OCI, current period, ASU 2016-01 adoption impact   (5)  
Other Comprehensive (Income) Loss, Defined Benefit Plan, Reclassification Adjustment from AOCI, before Tax [Abstract]      
Other Comprehensive Income (Loss), Defined Benefit Plan, Gain (Loss), Reclassification Adjustment from AOCI, before Tax 170    
Other Comprehensive Income (Loss), ASU 2018-02 adoption impact on foreign currency translation Arising During Period (8)    
Other Comprehensive Income (Loss), ASU 2018-02 adoption impact on Defined Benefit Plan Arising During Period (737)    
Other Comprehensive Income (Loss), ASU 2018-02 adoption impact on Derivatives Arising During Period 0    
Reclassification from OCI, current period, ASU 2018-02 adoption impact (745) 0 0
Other Comprehensive Income (Loss), ASU 2018-02 adoption impact on Securities Arising During Period 0    
Pension Plan [Member]      
Accumulated Other Comprehensive Income (Loss) [Line Items]      
Amounts reclassified, pretax - Pension 17    
Other Comprehensive (Income) Loss, Defined Benefit Plan, Reclassification Adjustment from AOCI, before Tax [Abstract]      
Net settlement and curtailment gain (loss) 59 (3) (3)
UNITED STATES | Pension Plan [Member]      
Other Comprehensive (Income) Loss, Defined Benefit Plan, Reclassification Adjustment from AOCI, before Tax [Abstract]      
Net settlement and curtailment gain (loss) 98    
Accumulated Foreign Currency Adjustment Attributable to Parent [Member]      
Accumulated Other Comprehensive Income (Loss) [Line Items]      
Accumulated Other Comprehensive Income (Loss), Net of Tax (3,211) (3,442) (2,950)
Accumulated Defined Benefit Plans Adjustment Attributable to Parent [Member]      
Accumulated Other Comprehensive Income (Loss) [Line Items]      
Accumulated Other Comprehensive Income (Loss), Net of Tax (6,772) (5,718) (4,652)
Accumulated Net Unrealized Gain (Loss) on Available-for-Sale Securities [Member]      
Accumulated Other Comprehensive Income (Loss) [Line Items]      
Accumulated Other Comprehensive Income (Loss), Net of Tax 0 0 5
Accumulated Net Gain (Loss) from Cash Flow Hedges Attributable to Parent [Member]      
Accumulated Other Comprehensive Income (Loss) [Line Items]      
Accumulated Other Comprehensive Income (Loss), Net of Tax (166) (173) $ 72
Parent [Member]      
Accumulated Other Comprehensive Income (Loss) [Line Items]      
Other comprehensive (loss) income, net - Foreign Currency Translation $ (280) $ 486  
v3.20.2
Employee Benefit Plans (Employee Savings Plans) (Narrative) (Details) - USD ($)
shares in Millions, $ in Millions
 12 Months Ended
Dec. 31, 2019
Dec. 31, 2018
Dec. 31, 2017
Defined Contribution Plan [Abstract]      
Contributions to employer sponsored defined contribution plans $ 485.0 $ 332.0 $ 286.0
Employee Stock Ownership Plan (ESOP), Plan Description Our non-union domestic employee savings plan uses an Employee Stock Ownership Plan (ESOP) for employer matching contributions. External borrowings were used by the ESOP to fund a portion of its purchase of ESOP stock from us. The external borrowings have been extinguished and only re-amortized loans remain between RTC and the ESOP Trust. As ESOP debt service payments are made, common stock is released from an unreleased shares account. ESOP debt may be prepaid or re-amortized to either increase or decrease the number of shares released so that the value of released shares equals the value of plan benefit. We may also, at our option, contribute additional common stock or cash to the ESOP.    
Employee Stock Ownership Plan (ESOP), Number of Allocated Shares 23.4    
Employee Stock Ownership Plan (ESOP), Number of Suspense Shares 7.9    
Employee Stock Ownership Plan (ESOP), Deferred Shares, Fair Value $ 1,200.0    
Contract with Customer, Liability, Revenue Recognized 2,900.0    
Research and Development Expense [Abstract]      
Research and development 2,452.0 1,878.0 1,876.0
Selling, general and administrative 3,711.0 2,864.0 2,387.0
Non-service pension cost (benefit) (829.0) (659.0) (455.0)
Net periodic pension and other postretirement benefit $ (566.0) (392.0) $ (185.0)
Equity Awards Vested and Expected to Vest, Remaining Term 2 years 10 months 24 days    
Accounting Standards Update 2017-07 [Member]      
Research and Development Expense [Abstract]      
New Accounting Pronouncement or Change in Accounting Principle, Effect of Change on Operating Results   455.0  
Defined Benefit Plan Disclosure [Line Items]      
New Accounting Pronouncement or Change in Accounting Principle, Effect of Change on Operating Results   455.0  
New Accounting Pronouncement or Change in Accounting Principle, Effect of Change on Net Income   0.0  
Accounting Standards Update 2017-07 [Member] | Non-service pension benefit [Member]      
Research and Development Expense [Abstract]      
New Accounting Pronouncement or Change in Accounting Principle, Effect of Change on Operating Results   455.0  
Defined Benefit Plan Disclosure [Line Items]      
New Accounting Pronouncement or Change in Accounting Principle, Effect of Change on Operating Results   $ 455.0  
v3.20.2
Employee Benefit Plans (Pension and Postretirement Plans) (Details) - USD ($)
$ in Millions
 12 Months Ended
Nov. 26, 2018
Dec. 31, 2019
Dec. 31, 2018
Dec. 31, 2017
Dec. 31, 2019
Dec. 31, 2018
Defined Benefit Plan Disclosure [Line Items]            
Other   $ (93) $ 105 $ (116)    
Beginning Balance, Plan Assets   32,150        
Ending Balance, Plan Assets   36,225 32,150      
Noncurrent liability         $ 2,487 $ 3,050
Payment for Pension Benefits   55 79 2,044    
Impact of change in estimation of NPPC   (566) (392) (185)    
Current year actuarial gain (loss)   (543) (1,819) 241    
Current year prior service cost/credit   6 22 (2)    
Amortization of prior service credit   228 344 529    
Other Postretirement Benefits Plan [Member]            
Defined Benefit Plan Disclosure [Line Items]            
Beginning Balance, Benefit Obligation   810 767      
Service Cost   2 2 2    
Interest cost   31 26 29    
Actuarial loss (gain)   (11) (52)      
Total benefits paid   69 70      
Defined Benefit Plan, Benefit Obligation, Business Combination   0 186      
Plan amendments $ (43) 0 (43)      
Other   2 (6)      
Ending Balance, Benefit Obligation   765 810 767    
Beginning Balance, Plan Assets   20 0      
Employer Contributions   69 69      
Benefits Paid   69 70      
Defined Benefit Plan, Plan Assets, Business Combination   0 20      
Other   0 1      
Ending Balance, Plan Assets   20 20 0    
Benefit obligations   810 810 767 765 810
Funded status of plan         (745) (790)
Current liability         47 61
Noncurrent liability         698 729
Net amount recognized         (745) (790)
Net actuarial gain (loss)         181 184
Prior service credit         (4) (47)
Net amount recognized         (185) $ (231)
Expected return on plan assets   (1) 0 0    
Amortization of prior service credit   (42) (6) (1)    
Recognized actuarial net (gain) loss - in net periodic cost   (12) (10) (9)    
Impact of change in estimation of NPPC   (22) $ 12 $ 21    
Current year actuarial gain (loss)   10        
Amortization of actuarial loss (gain)   (12)        
Amortization of prior service credit   (42)        
Other   2        
Total recognized in other comprehensive loss   46        
Net recognized in net periodic pension cost and other comprehensive loss   $ 24        
Net actuarial (loss)/gain         13  
Prior service credit         $ (3)  
Discount rate, benefit obligation         3.00% 4.10%
Discount rate, net cost   4.00% 3.40% 3.80%    
Health care cost trend rate assumed for next year         6.50% 7.00%
Rate that the cost trend rate gradually declines to         5.00% 5.00%
Year that the rate reaches the rate it is assumed to remain at   2026 2026      
Expected return on plan assets, net cost   7.00% 7.00%      
Effect on total service and interest cost - increase   $ 1        
Effect on postretirement benefit obligation - increase   25        
Effect on total service and interest cost - decrease   1        
Effect on postretirement benefit obligation - decrease   22        
Pension Plan [Member]            
Defined Benefit Plan Disclosure [Line Items]            
Beginning Balance, Benefit Obligation   34,344 $ 33,283      
Service Cost   261 265 $ 268    
Interest cost   1,245 1,058 1,043    
Actuarial loss (gain)   4,247 (1,938)      
Total benefits paid   2,016 1,783      
Net settlement, curtailment, and special termination benefits   206 14      
Defined Benefit Plan, Benefit Obligation, Business Combination   (6) 3,694      
Plan amendments   0 56      
Other   124 (317)      
Ending Balance, Benefit Obligation   38,027 34,344 33,283    
Beginning Balance, Plan Assets   32,150 32,205      
Actual return on plan assets   5,873 (1,516)      
Employer Contributions   137 156      
Benefits Paid   2,016 1,783      
Defined Benefit Plan, Plan Assets, Business Combination     3,355      
Settlements   17 16      
Other   108 (251)      
Ending Balance, Plan Assets   36,225 32,150 32,205    
Benefit obligations   38,027 33,283 33,283 $ 38,027 $ 34,344
Funded status of plan         (1,802) (2,194)
Noncurrent assets         19 157
Current liability         51 56
Noncurrent liability         1,770 2,295
Net amount recognized         (1,802) (2,194)
Net actuarial gain (loss)         (8,160) (7,948)
Prior service credit         190 130
Net amount recognized         9,113 $ 8,745
Expected return on plan assets   2,252 2,061 2,033    
Amortization of prior service credit   16 (42) (37)    
Recognized actuarial net (gain) loss - in net periodic cost   245 373 550    
Impact of change in estimation of NPPC   (544) (404) (206)    
Net settlement and curtailment gain (loss)   59 $ (3) $ (3)    
Current year actuarial gain (loss)   (553)        
Amortization of actuarial loss (gain)   265        
Current year prior service cost/credit   6        
Amortization of prior service credit   17        
Net settlement and curtailment loss   57        
Other   34        
Total recognized in other comprehensive loss   368        
Net recognized in net periodic pension cost and other comprehensive loss   $ (135)        
Net actuarial (loss)/gain         (336)  
Prior service credit         49  
Total amount to be amortized from AOCI to NPPC         $ 385  
Salary scale, benefit obligation         4.30% 4.30%
Expected return on plan assets, benefit obligation         0.00% 0.00%
Salary scale, net cost   4.30% 4.30% 4.30%    
Expected return on plan assets, net cost   6.80% 6.90% 7.40%    
Fair value of plan assets         $ 36,120 $ 22,558
Defined Benefit Plan, Pension Plan with Projected Benefit Obligation in Excess of Plan Assets, Projected Benefit Obligation         37,943 27,225
Defined Benefit Plan, Pension Plan with Projected Benefit Obligation in Excess of Plan Assets, Accumulated Benefit Obligation         37,600 26,752
Defined Benefit Plan, Pension Plan with Projected Benefit Obligation in Excess of Plan Assets, Plan Assets         36,122 24,873
Defined Benefit Plan, Plan Assets, Divestiture   $ 10        
Pension Plan [Member] | Discontinued Operations [Member]            
Defined Benefit Plan Disclosure [Line Items]            
Service Cost   34 $ 40      
Net amount recognized         $ 763 $ 667
Current year actuarial gain (loss)   (119)        
Amortization of actuarial loss (gain)   20        
Current year prior service cost/credit   6        
Amortization of prior service credit   1        
Net settlement and curtailment loss   (5)        
Other   (2)        
Total recognized in other comprehensive loss   97        
Net recognized in net periodic pension cost and other comprehensive loss   97        
Pension Plan [Member] | Continuing operations [Member]            
Defined Benefit Plan Disclosure [Line Items]            
Current year actuarial gain (loss)   (434)        
Amortization of actuarial loss (gain)   245        
Current year prior service cost/credit   0        
Amortization of prior service credit   16        
Net settlement and curtailment loss   62        
Other   36        
Total recognized in other comprehensive loss   271        
Net recognized in net periodic pension cost and other comprehensive loss   (232)        
Pension Plan [Member] | UNITED STATES            
Defined Benefit Plan Disclosure [Line Items]            
Actuarial loss (gain)   (425)        
Impact of change in estimation of NPPC   39        
Net settlement and curtailment gain (loss)   $ 98        
PBO [Member] | Pension Plan [Member]            
Defined Benefit Plan Disclosure [Line Items]            
Discount rate, benefit obligation         3.10% 4.00%
Discount rate, net cost   4.00% 3.50% 3.90%    
Interest cost [Member] | Pension Plan [Member]            
Defined Benefit Plan Disclosure [Line Items]            
Discount rate, benefit obligation         0.00% 0.00%
Discount rate, net cost   3.70% 3.10% 3.30%    
Service cost [Member] | Pension Plan [Member]            
Defined Benefit Plan Disclosure [Line Items]            
Discount rate, benefit obligation         0.00% 0.00%
Discount rate, net cost   3.70% 3.40% 3.80%    
Rockwell Collins [Member] | Other Postretirement Benefits Plan [Member]            
Defined Benefit Plan Disclosure [Line Items]            
Business combination, recognized identifiable assets acquired and liabilities assumed, liability, pension projected benefit obligation 186          
Business combination, recognized identifiable assets acquired and liabilities assumed, asset, pension plan assets 20          
Rockwell Collins [Member] | Pension Plan [Member]            
Defined Benefit Plan Disclosure [Line Items]            
Business combination, recognized identifiable assets acquired and liabilities assumed, liability, pension projected benefit obligation 3,700          
Business combination, recognized identifiable assets acquired and liabilities assumed, asset, pension plan assets $ 3,400          
v3.20.2
Employee Benefit Plans (Pension Plans) (Narrative) (Details) - USD ($)
$ in Millions
 12 Months Ended
Dec. 31, 2019
Dec. 31, 2018
Dec. 31, 2017
Nov. 26, 2018
Defined Benefit Plan Disclosure [Line Items]        
Defined Benefit Plan, Accumulated Benefit Obligation $ 37,700 $ 33,800    
Payment for Pension Benefits 55 79 $ 2,044  
Defined Benefit Plan, Benefit Obligation, Increase (Decrease) for Other Change (93) 105 (116)  
Research and development 2,452 1,878 1,876  
Selling, general and administrative 3,711 2,864 2,387  
Other Income 326 383 527  
Non-service pension cost (benefit) (829) (659) (455)  
Net periodic pension and other postretirement benefit (566) (392) (185)  
Net periodic pension and other postretirement benefit (566) (392) (185)  
Product [Member]        
Defined Benefit Plan Disclosure [Line Items]        
Cost of Goods and Services Sold 26,910 21,083 16,385  
Service [Member]        
Defined Benefit Plan Disclosure [Line Items]        
Cost of Goods and Services Sold 7,688 6,382 6,603  
Foreign Plan [Member]        
Defined Benefit Plan Disclosure [Line Items]        
Payment for Pension Benefits 30 $ 79    
Domestic Plan [Member]        
Defined Benefit Plan Disclosure [Line Items]        
Payment for Pension Benefits $ 25   $ 1,900  
Pension Plan [Member]        
Defined Benefit Plan Disclosure [Line Items]        
Percentage Of Projected Benefit Obligation Comprised Of Domestic Plan Benefits 82.00%      
Percentage Of Projected Benefit Obligation Comprised Of Foreign Plan Benefits 17.00%      
Range Of Growth Seeking Assets In Company's Overall Investment Strategy 45% to 50      
Range Of Income Generating Assets In Company's Overall Investment Strategy 50% to 55      
Pecentage Of Interest Rate Sensitivity Of Pension Plan Liabilities Fixed Income Portfolio Designed To Hedge 65% to 70      
Defined Benefit Plan, Assumptions Used Calculating Net Periodic Benefit Cost, Expected Long-term Rate of Return on Plan Assets 6.80% 6.90% 7.40%  
Defined Benefit Plan Common Stock Funded Percentage 1.00%      
Defined Benefit Plan, Benefit Obligation, Increase (Decrease) for Other Change $ 124 $ (317)    
Defined Benefit Plan, Expected Future Employer Contributions, Next Fiscal Year 100      
Defined Benefit Plan, Expected Future Benefit Payment, Next Twelve Months 2,249      
Defined Benefit Plan, Expected Future Benefit Payment, Year Two 2,059      
Defined Benefit Plan, Expected Future Benefit Payment, Year Three 2,087      
Defined Benefit Plan, Expected Future Benefit Payment, Year Four 2,107      
Defined Benefit Plan, Expected Future Benefit Payment, Year Five 2,123      
Defined Benefit Plan, Expected Future Benefit Payment, Five Fiscal Years Thereafter 10,645      
Defined Benefit Plan, Pension Plan with Accumulated Benefit Obligation in Excess of Plan Assets, Projected Benefit Obligation 37,941 24,796    
Defined Benefit Plan, Plan with Accumulated Benefit Obligation in Excess of Plan Assets, Accumulated Benefit Obligation 37,599 24,471    
Actuarial loss (gain) 4,247 (1,938)    
Net settlement and curtailment gain (loss) 59 (3) $ (3)  
Net periodic pension and other postretirement benefit (544) (404) (206)  
Actuarial loss (gain) 4,247 (1,938)    
Net settlement and curtailment gain (loss) 59 (3) (3)  
Net periodic pension and other postretirement benefit $ (544) $ (404) $ (206)  
Pension Plan [Member] | Domestic Plan [Member]        
Defined Benefit Plan Disclosure [Line Items]        
Defined Benefit Plan, Assumptions Used Calculating Net Periodic Benefit Cost, Expected Long-term Rate of Return on Plan Assets 6.50% 7.00%    
Pension Plan [Member] | UNITED STATES        
Defined Benefit Plan Disclosure [Line Items]        
Actuarial loss (gain) $ (425)      
Net settlement and curtailment gain (loss) 98      
Net periodic pension and other postretirement benefit 39      
Defined Benefit Plan Actuarial Gain 180      
Actuarial loss (gain) (425)      
Net settlement and curtailment gain (loss) 98      
Net periodic pension and other postretirement benefit 39      
Pension Plan [Member] | UNITED STATES | Remeasurement loss [Member]        
Defined Benefit Plan Disclosure [Line Items]        
Actuarial loss (gain) (605)      
Actuarial loss (gain) $ (605)      
Rockwell Collins [Member] | Pension Plan [Member]        
Defined Benefit Plan Disclosure [Line Items]        
Business combination, recognized identifiable assets acquired and liabilities assumed, liability, pension projected benefit obligation       $ 3,700
Business combination, recognized identifiable assets acquired and liabilities assumed, asset, pension plan assets       $ 3,400
v3.20.2
Employee Benefit Plans (Pension Plans) (Fair Value Tables) (Details) - USD ($)
$ in Millions
 12 Months Ended
Dec. 31, 2019
Dec. 31, 2018
Defined Benefit Plan Disclosure [Line Items]    
Beginning Balance, Plan Assets $ 32,150  
Ending Balance, Plan Assets 36,225 $ 32,150
Not Subject to Leveling [Member]    
Defined Benefit Plan Disclosure [Line Items]    
Beginning Balance, Plan Assets 12,864  
Ending Balance, Plan Assets 14,553 12,864
Quoted price in active markets (Level 1) [Member]    
Defined Benefit Plan Disclosure [Line Items]    
Beginning Balance, Plan Assets 4,970  
Ending Balance, Plan Assets 4,880 4,970
Significant other observable inputs (Level 2) [Member]    
Defined Benefit Plan Disclosure [Line Items]    
Beginning Balance, Plan Assets 13,011  
Ending Balance, Plan Assets 15,489 13,011
Significant Unobservable Inputs (Level 3) [Member]    
Defined Benefit Plan Disclosure [Line Items]    
Beginning Balance, Plan Assets 1,538 1,492
Defined Benefit Plan, Plan Assets, Business Combination   33
Realized gains (losses) (2) 9
Unrealized gains (losses) relating to instruments still held in the reporting period 59 40
Purchases, sales and settlements, net 76 (36)
Ending Balance, Plan Assets 1,671 1,538
Global Equities [Member]    
Defined Benefit Plan Disclosure [Line Items]    
Beginning Balance, Plan Assets 2,921  
Ending Balance, Plan Assets 3,593 2,921
Global Equities [Member] | Not Subject to Leveling [Member]    
Defined Benefit Plan Disclosure [Line Items]    
Beginning Balance, Plan Assets 0  
Ending Balance, Plan Assets 0 0
Global Equities [Member] | Quoted price in active markets (Level 1) [Member]    
Defined Benefit Plan Disclosure [Line Items]    
Beginning Balance, Plan Assets 2,917  
Ending Balance, Plan Assets 3,588 2,917
Global Equities [Member] | Significant other observable inputs (Level 2) [Member]    
Defined Benefit Plan Disclosure [Line Items]    
Beginning Balance, Plan Assets 4  
Ending Balance, Plan Assets 5 4
Global Equities [Member] | Significant Unobservable Inputs (Level 3) [Member]    
Defined Benefit Plan Disclosure [Line Items]    
Beginning Balance, Plan Assets 0  
Ending Balance, Plan Assets 0 0
Global Equity Commingled Funds [Member]    
Defined Benefit Plan Disclosure [Line Items]    
Beginning Balance, Plan Assets [1] 404  
Ending Balance, Plan Assets [1] 1,496 404
Global Equity Commingled Funds [Member] | Not Subject to Leveling [Member]    
Defined Benefit Plan Disclosure [Line Items]    
Beginning Balance, Plan Assets [1] 0  
Ending Balance, Plan Assets [1] 0 0
Global Equity Commingled Funds [Member] | Quoted price in active markets (Level 1) [Member]    
Defined Benefit Plan Disclosure [Line Items]    
Beginning Balance, Plan Assets [1] 185  
Ending Balance, Plan Assets 0 185 [1]
Global Equity Commingled Funds [Member] | Significant other observable inputs (Level 2) [Member]    
Defined Benefit Plan Disclosure [Line Items]    
Beginning Balance, Plan Assets [1] 219  
Ending Balance, Plan Assets [1] 1,496 219
Global Equity Commingled Funds [Member] | Significant Unobservable Inputs (Level 3) [Member]    
Defined Benefit Plan Disclosure [Line Items]    
Beginning Balance, Plan Assets [1] 0  
Ending Balance, Plan Assets [1] 0 0
Enhanced Global Equities [Member]    
Defined Benefit Plan Disclosure [Line Items]    
Beginning Balance, Plan Assets [2] 684  
Ending Balance, Plan Assets [2] 715 684
Enhanced Global Equities [Member] | Not Subject to Leveling [Member]    
Defined Benefit Plan Disclosure [Line Items]    
Beginning Balance, Plan Assets [2] 0  
Ending Balance, Plan Assets 0 0 [2]
Enhanced Global Equities [Member] | Quoted price in active markets (Level 1) [Member]    
Defined Benefit Plan Disclosure [Line Items]    
Beginning Balance, Plan Assets [2] 79  
Ending Balance, Plan Assets [2] 322 79
Enhanced Global Equities [Member] | Significant other observable inputs (Level 2) [Member]    
Defined Benefit Plan Disclosure [Line Items]    
Beginning Balance, Plan Assets [2] 605  
Ending Balance, Plan Assets [2] 393 605
Enhanced Global Equities [Member] | Significant Unobservable Inputs (Level 3) [Member]    
Defined Benefit Plan Disclosure [Line Items]    
Beginning Balance, Plan Assets [2] 0  
Ending Balance, Plan Assets [2] 0 0
Global Equity Funds at net asset value [Member]    
Defined Benefit Plan Disclosure [Line Items]    
Beginning Balance, Plan Assets [3] 6,539  
Ending Balance, Plan Assets [3] 5,332 6,539
Global Equity Funds at net asset value [Member] | Not Subject to Leveling [Member]    
Defined Benefit Plan Disclosure [Line Items]    
Beginning Balance, Plan Assets [3] 6,539  
Ending Balance, Plan Assets [3] 5,332 6,539
Global Equity Funds at net asset value [Member] | Quoted price in active markets (Level 1) [Member]    
Defined Benefit Plan Disclosure [Line Items]    
Beginning Balance, Plan Assets [3] 0  
Ending Balance, Plan Assets [3] 0 0
Global Equity Funds at net asset value [Member] | Significant other observable inputs (Level 2) [Member]    
Defined Benefit Plan Disclosure [Line Items]    
Beginning Balance, Plan Assets [3] 0  
Ending Balance, Plan Assets [3] 0 0
Global Equity Funds at net asset value [Member] | Significant Unobservable Inputs (Level 3) [Member]    
Defined Benefit Plan Disclosure [Line Items]    
Beginning Balance, Plan Assets [3] 0  
Ending Balance, Plan Assets [3] 0 0
Private Equities    
Defined Benefit Plan Disclosure [Line Items]    
Beginning Balance, Plan Assets 1,327  
Ending Balance, Plan Assets 1,432 [3],[4] 1,327
Private Equities | Not Subject to Leveling [Member]    
Defined Benefit Plan Disclosure [Line Items]    
Beginning Balance, Plan Assets [3],[4] 1,194  
Ending Balance, Plan Assets [3],[4] 1,230 1,194
Private Equities | Quoted price in active markets (Level 1) [Member]    
Defined Benefit Plan Disclosure [Line Items]    
Beginning Balance, Plan Assets [3],[4] 0  
Ending Balance, Plan Assets [3],[4] 0 0
Private Equities | Significant other observable inputs (Level 2) [Member]    
Defined Benefit Plan Disclosure [Line Items]    
Beginning Balance, Plan Assets [3],[4] 0  
Ending Balance, Plan Assets [3],[4] 0 0
Private Equities | Significant Unobservable Inputs (Level 3) [Member]    
Defined Benefit Plan Disclosure [Line Items]    
Beginning Balance, Plan Assets 133 [3],[4] 46
Defined Benefit Plan, Plan Assets, Business Combination   0
Realized gains (losses) 0 0
Unrealized gains (losses) relating to instruments still held in the reporting period 32 0
Purchases, sales and settlements, net 37 87
Ending Balance, Plan Assets 202 133 [3],[4]
Governments [Member]    
Defined Benefit Plan Disclosure [Line Items]    
Beginning Balance, Plan Assets 1,951  
Ending Balance, Plan Assets 1,085 1,951
Governments [Member] | Not Subject to Leveling [Member]    
Defined Benefit Plan Disclosure [Line Items]    
Beginning Balance, Plan Assets 0  
Ending Balance, Plan Assets 0 0
Governments [Member] | Quoted price in active markets (Level 1) [Member]    
Defined Benefit Plan Disclosure [Line Items]    
Beginning Balance, Plan Assets 1,789  
Ending Balance, Plan Assets 969 1,789
Governments [Member] | Significant other observable inputs (Level 2) [Member]    
Defined Benefit Plan Disclosure [Line Items]    
Beginning Balance, Plan Assets 162  
Ending Balance, Plan Assets 116 162
Governments [Member] | Significant Unobservable Inputs (Level 3) [Member]    
Defined Benefit Plan Disclosure [Line Items]    
Beginning Balance, Plan Assets 0  
Ending Balance, Plan Assets 0 0
Corporate Bonds [Member]    
Defined Benefit Plan Disclosure [Line Items]    
Beginning Balance, Plan Assets 11,573  
Ending Balance, Plan Assets 13,065 11,573
Corporate Bonds [Member] | Not Subject to Leveling [Member]    
Defined Benefit Plan Disclosure [Line Items]    
Beginning Balance, Plan Assets 29  
Ending Balance, Plan Assets 0 29
Corporate Bonds [Member] | Quoted price in active markets (Level 1) [Member]    
Defined Benefit Plan Disclosure [Line Items]    
Beginning Balance, Plan Assets 0  
Ending Balance, Plan Assets 1 0
Corporate Bonds [Member] | Significant other observable inputs (Level 2) [Member]    
Defined Benefit Plan Disclosure [Line Items]    
Beginning Balance, Plan Assets 11,526  
Ending Balance, Plan Assets 13,059 11,526
Corporate Bonds [Member] | Significant Unobservable Inputs (Level 3) [Member]    
Defined Benefit Plan Disclosure [Line Items]    
Beginning Balance, Plan Assets 18 0
Defined Benefit Plan, Plan Assets, Business Combination   33
Realized gains (losses) 0 (1)
Unrealized gains (losses) relating to instruments still held in the reporting period 0 2
Purchases, sales and settlements, net (13) (16)
Ending Balance, Plan Assets 5 18
Fixed Income Securities [Member]    
Defined Benefit Plan Disclosure [Line Items]    
Beginning Balance, Plan Assets [3] 2,225  
Ending Balance, Plan Assets [3] 4,755 2,225
Fixed Income Securities [Member] | Not Subject to Leveling [Member]    
Defined Benefit Plan Disclosure [Line Items]    
Beginning Balance, Plan Assets [3] 2,225  
Ending Balance, Plan Assets [3] 4,755 2,225
Fixed Income Securities [Member] | Quoted price in active markets (Level 1) [Member]    
Defined Benefit Plan Disclosure [Line Items]    
Beginning Balance, Plan Assets [3] 0  
Ending Balance, Plan Assets [3] 0 0
Fixed Income Securities [Member] | Significant other observable inputs (Level 2) [Member]    
Defined Benefit Plan Disclosure [Line Items]    
Beginning Balance, Plan Assets [3] 0  
Ending Balance, Plan Assets [3] 0 0
Fixed Income Securities [Member] | Significant Unobservable Inputs (Level 3) [Member]    
Defined Benefit Plan Disclosure [Line Items]    
Beginning Balance, Plan Assets [3] 0  
Ending Balance, Plan Assets [3] 0 0
Real Estate [Member]    
Defined Benefit Plan Disclosure [Line Items]    
Beginning Balance, Plan Assets 1,809  
Ending Balance, Plan Assets 1,843 [3],[5] 1,809
Real Estate [Member] | Not Subject to Leveling [Member]    
Defined Benefit Plan Disclosure [Line Items]    
Beginning Balance, Plan Assets [3],[5] 409  
Ending Balance, Plan Assets [3],[5] 366 409
Real Estate [Member] | Quoted price in active markets (Level 1) [Member]    
Defined Benefit Plan Disclosure [Line Items]    
Beginning Balance, Plan Assets [3],[5] 0  
Ending Balance, Plan Assets 0 0 [3],[5]
Real Estate [Member] | Significant other observable inputs (Level 2) [Member]    
Defined Benefit Plan Disclosure [Line Items]    
Beginning Balance, Plan Assets [3],[5] 13  
Ending Balance, Plan Assets 13 13 [3],[5]
Real Estate [Member] | Significant Unobservable Inputs (Level 3) [Member]    
Defined Benefit Plan Disclosure [Line Items]    
Beginning Balance, Plan Assets 1,387 [3],[5] 1,446
Defined Benefit Plan, Plan Assets, Business Combination   0
Realized gains (losses) (2) 10
Unrealized gains (losses) relating to instruments still held in the reporting period 27 38
Purchases, sales and settlements, net 52 (107)
Ending Balance, Plan Assets [3],[5] 1,464 1,387
Other [Member]    
Defined Benefit Plan Disclosure [Line Items]    
Beginning Balance, Plan Assets [3],[6] 2,630  
Ending Balance, Plan Assets [3],[6] 3,177 2,630
Other [Member] | Not Subject to Leveling [Member]    
Defined Benefit Plan Disclosure [Line Items]    
Beginning Balance, Plan Assets [3],[6] 2,368  
Ending Balance, Plan Assets [3],[6] 2,834 2,368
Other [Member] | Quoted price in active markets (Level 1) [Member]    
Defined Benefit Plan Disclosure [Line Items]    
Beginning Balance, Plan Assets 0  
Ending Balance, Plan Assets 0 0
Other [Member] | Significant other observable inputs (Level 2) [Member]    
Defined Benefit Plan Disclosure [Line Items]    
Beginning Balance, Plan Assets [3],[6] 262  
Ending Balance, Plan Assets [3],[6] 343 262
Other [Member] | Significant Unobservable Inputs (Level 3) [Member]    
Defined Benefit Plan Disclosure [Line Items]    
Beginning Balance, Plan Assets [3],[6] 0  
Ending Balance, Plan Assets [3],[6] 0 0
Cash & Cash Equivalents [Member]    
Defined Benefit Plan Disclosure [Line Items]    
Beginning Balance, Plan Assets [3],[7] 320  
Ending Balance, Plan Assets [3],[7] 83 320
Cash & Cash Equivalents [Member] | Not Subject to Leveling [Member]    
Defined Benefit Plan Disclosure [Line Items]    
Beginning Balance, Plan Assets [3],[7] 100  
Ending Balance, Plan Assets [3],[7] 36 100
Cash & Cash Equivalents [Member] | Quoted price in active markets (Level 1) [Member]    
Defined Benefit Plan Disclosure [Line Items]    
Beginning Balance, Plan Assets 0  
Ending Balance, Plan Assets 0 0
Cash & Cash Equivalents [Member] | Significant other observable inputs (Level 2) [Member]    
Defined Benefit Plan Disclosure [Line Items]    
Beginning Balance, Plan Assets [3],[7] 220  
Ending Balance, Plan Assets [3],[7] 47 220
Cash & Cash Equivalents [Member] | Significant Unobservable Inputs (Level 3) [Member]    
Defined Benefit Plan Disclosure [Line Items]    
Beginning Balance, Plan Assets [3],[7] 0  
Ending Balance, Plan Assets [3],[7] 0 0
Subtotal [Member]    
Defined Benefit Plan Disclosure [Line Items]    
Beginning Balance, Plan Assets 32,383  
Ending Balance, Plan Assets 36,593 32,383
Other Assets & Liabilities [Member]    
Defined Benefit Plan Disclosure [Line Items]    
Beginning Balance, Plan Assets [8] (233)  
Ending Balance, Plan Assets (368) $ (233) [8]
Structured Products    
Defined Benefit Plan Disclosure [Line Items]    
Ending Balance, Plan Assets 17  
Structured Products | Not Subject to Leveling [Member]    
Defined Benefit Plan Disclosure [Line Items]    
Ending Balance, Plan Assets 0  
Structured Products | Quoted price in active markets (Level 1) [Member]    
Defined Benefit Plan Disclosure [Line Items]    
Ending Balance, Plan Assets 0  
Structured Products | Significant other observable inputs (Level 2) [Member]    
Defined Benefit Plan Disclosure [Line Items]    
Ending Balance, Plan Assets 17  
Structured Products | Significant Unobservable Inputs (Level 3) [Member]    
Defined Benefit Plan Disclosure [Line Items]    
Ending Balance, Plan Assets $ 0  
[1] Represents commingled funds that invest primarily in common stocks.
[2] Represents enhanced equity separate account and commingled fund portfolios. A portion of the portfolio may include long-short market neutral and relative value strategies that invest in publicly traded, equity and fixed income securities, as well as derivatives of equity and fixed income securities and foreign currency.
[3] In accordance with ASU 2015-07, Fair Value Measurement (Topic 820), certain investments that are measured at fair value using the net asset value per share (or its equivalent) practical expedient have not been classified in the fair value hierarchy. The fair value amounts presented in this table are intended to permit reconciliation of the fair value hierarchy to the amounts presented for the total pension benefits plan assets.
[4] Represents limited partner investments with general partners that primarily invest in debt and equity.
[5] Represents investments in real estate including commingled funds and directly held properties.
[6] Represents insurance contracts and global balanced risk commingled funds consisting mainly of equity, bonds and some commodities.
[7] Represents short-term commercial paper, bonds and other cash or cash-like instruments.
[8] Represents trust receivables and payables that are not leveled.
v3.20.2
Employee Benefit Plans (Postretirement Benefit Plans) (Narrative) (Details) - Other Postretirement Benefits Plan [Member]
$ in Millions
Dec. 31, 2019
USD ($)
Defined Benefit Plan Disclosure [Line Items]  
Percentage Of Projected Benefit Obligation Comprised Of Domestic Plan Benefits 84.00%
Future Amortization of Gain $ 13
Future amortization of prior service credit (3)
Defined Benefit Plan, Expected Future Benefit Payment, Next Twelve Months 67
Defined Benefit Plan, Expected Future Benefit Payment, Year Two 64
Defined Benefit Plan, Expected Future Benefit Payment, Year Three 60
Defined Benefit Plan, Expected Future Benefit Payment, Year Four 56
Defined Benefit Plan, Expected Future Benefit Payment, Year Five 53
Defined Benefit Plan, Expected Future Benefit Payment, Five Fiscal Years Thereafter $ 210
v3.20.2
Employee Benefit Plans (Stock Based Compensation) (Details) - USD ($)
$ / shares in Units, shares in Thousands, $ in Millions
 12 Months Ended
Dec. 31, 2019
Dec. 31, 2018
Dec. 31, 2017
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]      
Cost of Share Based Payments $ 268 $ 169 $ 129
Equity Awards Vested and Expected to Vest, Remaining Term 2 years 10 months 24 days    
Expected Volatility     19.00%
Expected Volatility, Minimum 18.80% 17.50%  
Expected Volatility, Maximum 19.70% 21.10%  
Expected term (in years)     6 years 6 months
Weighted-average volatility 20.00% 18.00% 19.00%
Expected dividend yield 2.40% 2.20% 2.40%
Risk-free rate, minimum 2.30% 1.30% 0.50%
Risk-free rate, maximum 2.70% 2.70% 2.50%
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Authorized 184,000    
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Available for Grant 42,000    
Expected Range Of Shares Awarded Annually Under Long Term Incentive Plan 1.0% to 1.5%    
Minimum [Member]      
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]      
Expected term (in years) 6 years 6 months 6 years 6 months  
Maximum [Member]      
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]      
Expected term (in years) 6 years 7 months 6 days 6 years 7 months 6 days  
Stock Options [Member]      
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]      
Period Start, Shares 1,603    
Granted, Shares 339    
Exercised/earned, Shares 317    
Cancelled, Shares 57    
Period End, Shares 1,568 1,603  
Period Start, Average Price [1] $ 99.89    
Granted, Average Price [1] 124.72    
Exercised/Earned, Average Price [1] 88.61    
Cancelled, Average Price [1] 121.69    
Period End, Average Price [1] $ 106.75 $ 99.89  
Share-based Compensation Arrangement by Share-based Payment Award, Ancillary 0    
Share-based Compensation Arrangement by Share-based Payment Award, Ancillary, Average Price $ 0    
Stock Appreciation Rights (SARs) [Member]      
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]      
Period Start, Shares 32,066    
Granted, Shares 8,081    
Exercised/earned, Shares 6,843    
Cancelled, Shares 591    
Period End, Shares 32,713 32,066  
Period Start, Average Price [1] $ 99.95    
Granted, Average Price [1] 123.54    
Exercised/Earned, Average Price [1] 84.44    
Cancelled, Average Price [1] 122.76    
Period End, Average Price [1] $ 108.61 $ 99.95  
Share-based Compensation Arrangement by Share-based Payment Award, Ancillary 0    
Share-based Compensation Arrangement by Share-based Payment Award, Ancillary, Average Price $ 0    
Performance Share Units [Member]      
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]      
Period Start, Shares 1,806    
Granted, Shares 839    
Exercised/earned, Shares 758    
Cancelled, Shares 69    
Period End, Shares 1,919 1,806  
Period Start, Average Price [2] $ 110.41    
Granted, Average Price [2] 121.22    
Exercised/Earned, Average Price [2] 95.28    
Cancelled, Average Price [2] 118.21    
Period End, Average Price [2] $ 120.04 $ 110.41  
Share-based Compensation Arrangement by Share-based Payment Award, Ancillary 101    
Share-based Compensation Arrangement by Share-based Payment Award, Ancillary, Average Price $ 95.28    
Other Incentive Shares/Units [Member]      
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]      
Period Start, Shares 3,047    
Granted, Shares 1,223    
Exercised/earned, Shares 816    
Cancelled, Shares 135    
Period End, Shares 3,319 3,047  
Share-based Compensation Arrangement by Share-based Payment Award, Ancillary 0    
Stock Options/Stock Appreciation Rights SARS [Member]      
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]      
Equity Awards Vested and Expected to Vest, Awards 33,769    
Equity Awards Vested and Expected to Vest, Average Price [3] $ 107.58    
Equity Awards Vested and Expected to Vest, Average Intrinsic Value $ 1,424    
Equity Awards Vested and Expected to Vest, Remaining Term 5 years 10 months 24 days    
Equity Awards That Are Exercisable, Awards 19,285    
Equity Awards That Are Exercisable, Average Price [3] $ 96.56    
Equity Awards That Are Exercisable, Aggregate Intrinsic Value $ 1,026    
Equity Awards That Are Exercisable, Remaining Term 4 years    
Performance Share Units/Other Restricted Stock [Member]      
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]      
Equity Awards Vested and Expected to Vest, Awards 5,514    
Equity Awards Vested and Expected to Vest, Average Price [3] $ 0    
Equity Awards Vested and Expected to Vest, Average Intrinsic Value $ 826    
Equity Awards Vested and Expected to Vest, Remaining Term 2 years 1 month 6 days    
[1] eighted-average grant / exercise price.
[2] ncillary shares earned based on actual performance achieved on the 2016 award.
[3] eighted-average exercise price per share.
v3.20.2
Employee Benefit Plans (Stock Based Compensation) (Narrative) (Details) - USD ($)
$ / shares in Units, shares in Thousands, $ in Millions
 12 Months Ended
Dec. 31, 2019
Dec. 31, 2018
Dec. 31, 2017
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]      
Expected Volatility, Minimum 18.80% 17.50%  
Equity Awards Vested and Expected to Vest, Remaining Term 2 years 10 months 24 days    
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Authorized 184,000    
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Available for Grant 42,000    
Expected Range Of Shares Awarded Annually Under Long Term Incentive Plan 1.0% to 1.5%    
Share-based Payment Arrangement, Expense, Tax Benefit $ 47 $ 31 $ 28
Proceeds from Stock Options Exercised 27 36 29
Share-based Payment Arrangement, Exercise of Option, Tax Benefit 75 59 100
Employee Service Share Based Compensation Tax Benefit Realized From Vesting Of Performance Share Units 36 13 12
Share-based Payment Arrangement, Nonvested Award, Cost Not yet Recognized, Amount 291    
Share Based Compensation Arrangement By Share Based Payment Award Equity Instruments Vested In Period Total Fair Value $ 211 $ 149 $ 138
Stock Options/Stock Appreciation Rights SARS [Member]      
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]      
Equity Awards Vested and Expected to Vest, Awards 33,769    
Equity Awards Vested and Expected to Vest, Average Intrinsic Value $ 1,424    
Equity Awards Vested and Expected to Vest, Remaining Term 5 years 10 months 24 days    
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Weighted Average Grant Date Fair Value $ 20.81 $ 20.24 $ 17.22
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercises in Period, Intrinsic Value $ 383 $ 283 $ 320
Performance Share Units/Other Restricted Stock [Member]      
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]      
Equity Awards Vested and Expected to Vest, Awards 5,514    
Equity Awards Vested and Expected to Vest, Average Intrinsic Value $ 826    
Equity Awards Vested and Expected to Vest, Remaining Term 2 years 1 month 6 days    
Share Based Compensation Arrangement By Share Based Payment Award Options and Other Restricted Awards Exercised In Period Total Intrinsic Value $ 188 $ 74 $ 49
Performance Share Units [Member]      
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]      
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Weighted Average Grant Date Fair Value $ 117.87 $ 131.55 $ 111.00
v3.20.2
Income Taxes (Details) - USD ($)
$ in Millions
 12 Months Ended
Dec. 31, 2019
Dec. 31, 2018
Dec. 31, 2017
Income Tax Contingency [Line Items]      
Income, United States $ 1,594 $ 635 $ 607
Income, Foreign 2,558 1,869 1,915
Income from continuing operations before income taxes 4,152 2,504 2,522
Undistributed Earnings of Foreign Subsidiaries 21,000    
Current Tax Provision, Federal (100) (68) 709
Current Tax Provision, State (58) 1 (42)
Current Tax Provision, Foreign 541 402 284
Current Income Tax Expense Benefit 383 335 951
Future Tax Provision, Federal 121 45 (48)
Future Tax Provision, State 56 58 85
Future Tax Provision, Foreign (139) 660 66
Deferred income tax provision 38 763 103
Income tax expense 421 1,098 1,054
Attributable to items credited (charged) to equity and goodwill $ 40 $ 501 $ (128)
Statutory U.S. federal income tax rate 21.00% 21.00% 35.00%
Tax on international activities (3.10%) (5.10%) (15.30%)
Tax audit settlements (7.00%) 0.00% (2.20%)
Effective Income Tax Rate Reconciliation, Change in Enacted Tax Rate, Percent 0.00% 29.70% 27.40%
Other (0.80%) (1.80%) (3.10%)
Effective income tax rate 10.10% 43.80% 41.80%
Effective Income Tax Rate Reconciliation, Other Reconciling Items, Amount $ 290    
Discontinued Operations [Member]      
Income Tax Contingency [Line Items]      
Deferred Tax Assets, Net $ 442 $ 393  
US TCJA Tax Law Change [Member]      
Income Tax Contingency [Line Items]      
Tax Adjustments Settlements And Unusual Provisions   $ 744 $ 690
v3.20.2
Income Taxes (Tax Carryforwards) (Details) - USD ($)
$ in Millions
Dec. 31, 2019
Dec. 31, 2018
Tax Credit Carryforward [Line Items]    
Insurance and employee benefits $ 1,205 $ 1,154
Other asset basis differences 829 1,013
Other liability basis differences 2,153 1,482
Tax loss carryforwards 622 583
Tax credit carryforwards 1,021 1,050
Valuation allowances 616 605
Future Income Tax Benefits 5,214 4,677
Deferred Tax Liabilities Intangible Assets 4,293 4,462
Other Asset Basis Differences 2,904 2,159
Other items, net 143 123
Future Income Taxes Payable 7,340 $ 6,744
Tax Credit Carryforwards 1,021  
Tax Loss Carryforwards 3,184  
Expiration Period Current To Five Years [Member]    
Tax Credit Carryforward [Line Items]    
Tax Credit Carryforwards 59  
Tax Loss Carryforwards 393  
Expiration Period Six To Ten Years [Member]    
Tax Credit Carryforward [Line Items]    
Tax Credit Carryforwards 27  
Tax Loss Carryforwards 179  
Expiration Period Eleven To Twenty Years [Member]    
Tax Credit Carryforward [Line Items]    
Tax Credit Carryforwards 336  
Tax Loss Carryforwards 394  
Expiration Period Indefinite [Member]    
Tax Credit Carryforward [Line Items]    
Tax Credit Carryforwards 599  
Tax Loss Carryforwards $ 2,218  
v3.20.2
Income Taxes (Unrecognized Tax Benefits) (Details) - USD ($)
$ in Millions
 12 Months Ended
Dec. 31, 2019
Dec. 31, 2018
Dec. 31, 2017
Income Tax Examination [Line Items]      
Unrecognized Tax Benefits that Would Impact Effective Tax Rate $ 1,338    
Balance at January 1 1,619 $ 1,189 $ 1,086
Additions for tax positions related to the current year 131 192 192
Additions for tax positions of prior years 73 344 73
Reductions for tax positions of prior years 101 91 91
Settlements 375 15 71
Balance at December 31 1,347 1,619 1,189
Gross interest expense related to unrecognized tax benefits 57 37 34
Total accrued interest balance at December 31 249 255 215
Discontinued Operations [Member]      
Income Tax Examination [Line Items]      
Deferred Tax Assets, Net 442 $ 393  
Minimum [Member]      
Income Tax Examination [Line Items]      
Decrease in Unrecognized Tax Benefits is Reasonably Possible 50    
Maximum [Member]      
Income Tax Examination [Line Items]      
Decrease in Unrecognized Tax Benefits is Reasonably Possible 650    
IRS audit of 2014, 2015 and 2016 tax years      
Income Tax Examination [Line Items]      
Tax Settlement Gain (Loss) Noncash 307    
IRS audit of 2014, Rockwell Collins subsidiary      
Income Tax Examination [Line Items]      
Tax Settlement Gain (Loss) Noncash 40    
Reversal of indemnity asset      
Income Tax Examination [Line Items]      
Tax Settlement Gain (Loss) Noncash (23)    
Various federal, state and non-US statute of limitations expirations and settlements [Member]      
Income Tax Examination [Line Items]      
Tax Settlement Gain (Loss) Noncash 18    
Closure of IRS audit of UTC Tax Year 2013 [Member]      
Income Tax Examination [Line Items]      
Tax Settlement Gain (Loss) Noncash     64
Tax Settlement Interest Gain (Loss) Noncash     $ 9
Interest Income [Member] | IRS audit of 2014, Rockwell Collins subsidiary      
Income Tax Examination [Line Items]      
Tax Settlement Gain (Loss) Noncash 56    
Interest Income [Member] | Various federal, state and non-US statute of limitations expirations and settlements [Member]      
Income Tax Examination [Line Items]      
Tax Settlement Gain (Loss) Noncash $ 5    
v3.20.2
Restructuring and Other Costs (Details) - USD ($)
$ in Millions
 12 Months Ended
Dec. 31, 2019
Dec. 31, 2018
Restructuring Cost and Reserve [Line Items]    
Net pre-tax restructuring costs (benefit) $ 245  
Cost of Sales [Member]    
Restructuring Cost and Reserve [Line Items]    
Net pre-tax restructuring costs (benefit) 177  
Selling, General and Administrative Expenses [Member]    
Restructuring Cost and Reserve [Line Items]    
Net pre-tax restructuring costs (benefit) 64  
Non-service pension (benefit) [Member]    
Restructuring Cost and Reserve [Line Items]    
Net pre-tax restructuring costs (benefit) 4  
Current Year Actions [Member]    
Restructuring Cost and Reserve [Line Items]    
Net pre-tax restructuring costs (benefit) 162  
Utilization and foreign exchange (104)  
Restructuring Reserve 58  
Expected Costs 255  
Restructuring cost incurred (162)  
Remaining Costs 93  
Current Year Actions [Member] | Cost of Sales [Member]    
Restructuring Cost and Reserve [Line Items]    
Net pre-tax restructuring costs (benefit) 122  
Current Year Actions [Member] | Selling, General and Administrative Expenses [Member]    
Restructuring Cost and Reserve [Line Items]    
Net pre-tax restructuring costs (benefit) 40  
Current Year Actions [Member] | Severance [Member]    
Restructuring Cost and Reserve [Line Items]    
Net pre-tax restructuring costs (benefit) 151  
Utilization and foreign exchange (104)  
Restructuring Reserve 47  
Current Year Actions [Member] | Facility Exit, Lease Termination and Other Costs    
Restructuring Cost and Reserve [Line Items]    
Net pre-tax restructuring costs (benefit) 11  
Utilization and foreign exchange 0  
Restructuring Reserve 11  
Prior Year Actions [Member]    
Restructuring Cost and Reserve [Line Items]    
Net pre-tax restructuring costs (benefit) 23  
Utilization and foreign exchange (98)  
Restructuring Reserve 7 $ 82
Expected Costs 121  
Restructuring cost incurred (23) (95)
Remaining Costs 3  
Prior Year Actions [Member] | Cost of Sales [Member]    
Restructuring Cost and Reserve [Line Items]    
Net pre-tax restructuring costs (benefit) 12  
Prior Year Actions [Member] | Selling, General and Administrative Expenses [Member]    
Restructuring Cost and Reserve [Line Items]    
Net pre-tax restructuring costs (benefit) 11  
Prior Year Actions [Member] | Severance [Member]    
Restructuring Cost and Reserve [Line Items]    
Net pre-tax restructuring costs (benefit) 22  
Utilization and foreign exchange (76)  
Restructuring Reserve 6 60
Prior Year Actions [Member] | Facility Exit, Lease Termination and Other Costs    
Restructuring Cost and Reserve [Line Items]    
Net pre-tax restructuring costs (benefit) 1  
Utilization and foreign exchange (22)  
Restructuring Reserve 1 22
Two Years Prior Actions [Member]    
Restructuring Cost and Reserve [Line Items]    
Net pre-tax restructuring costs (benefit) 60  
Restructuring Reserve 59  
Pratt and Whitney [Member]    
Restructuring Cost and Reserve [Line Items]    
Net pre-tax restructuring costs (benefit) 133  
Pratt and Whitney [Member] | Current Year Actions [Member]    
Restructuring Cost and Reserve [Line Items]    
Expected Costs 133  
Restructuring cost incurred (133)  
Remaining Costs 0  
Pratt and Whitney [Member] | Prior Year Actions [Member]    
Restructuring Cost and Reserve [Line Items]    
Expected Costs 3  
Restructuring cost incurred 0 (3)
Remaining Costs 0  
Collins Aerospace Systems [Member]    
Restructuring Cost and Reserve [Line Items]    
Net pre-tax restructuring costs (benefit) 106  
Collins Aerospace Systems [Member] | Current Year Actions [Member]    
Restructuring Cost and Reserve [Line Items]    
Expected Costs 120  
Restructuring cost incurred (27)  
Remaining Costs 93  
Collins Aerospace Systems [Member] | Prior Year Actions [Member]    
Restructuring Cost and Reserve [Line Items]    
Expected Costs 111  
Restructuring cost incurred (23) (87)
Remaining Costs 1  
Eliminations and other [Member]    
Restructuring Cost and Reserve [Line Items]    
Net pre-tax restructuring costs (benefit) 6  
Eliminations and other [Member] | Current Year Actions [Member]    
Restructuring Cost and Reserve [Line Items]    
Expected Costs 2  
Restructuring cost incurred (2)  
Remaining Costs 0  
Eliminations and other [Member] | Prior Year Actions [Member]    
Restructuring Cost and Reserve [Line Items]    
Expected Costs 7  
Restructuring cost incurred 0 $ (5)
Remaining Costs $ 2  
v3.20.2
Financial Instruments (Details)
€ in Millions, $ in Millions
 12 Months Ended
Dec. 31, 2019
USD ($)
Dec. 31, 2018
USD ($)
Dec. 31, 2019
EUR (€)
Derivatives, Fair Value [Line Items]      
Four Quarter Rolling Average Of Notional Amount Of Foreign Exchange Contracts Hedging Foreign Currency Transactions $ 17,800 $ 20,100  
Gain (loss) recorded in Accumulated other comprehensive loss (33) (307)  
(Gain) loss reclassified from Accumulated other comprehensive loss into Product sales (effective portion) $ 51 (16)  
Description of Net Investment Hedge Activity We have approximately €4.2 billion of euro-denominated long-term debt, which qualifies as a net investment hedge against our investments in European businesses. As of December 31, 2019, the net investment hedge is deemed to be effective.    
Long-term debt, euro-denominated | €     € 4,200
Foreign Currency Cash Flow Hedge Gain (Loss) to be Reclassified During Next 12 Months $ (33)    
Gain recognized in Other income, net $ 91 127  
Maximum Length of Time, Foreign Currency Cash Flow Hedge 4 years 20 days    
Other Current Assets [Member]      
Derivatives, Fair Value [Line Items]      
Derivatives designated as hedging instruments - assets $ 23 22  
Derivatives not designated as hedging instruments - assets 23 27  
Accrued Liabilities [Member]      
Derivatives, Fair Value [Line Items]      
Derivatives designated as hedging instruments - liabilities (166) (194)  
Derivatives not designated as hedging instruments - liabilities $ (116) $ (89)  
v3.20.2
Fair Value Measurements (Fair Value Hierarchy) (Details) - USD ($)
$ in Millions
Dec. 31, 2019
Dec. 31, 2018
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]    
Available-for-sale securities $ 53 $ 48
Derivative Assets 46 49
Derivative liabilities 282 283
Level 1 | Fair Value [Member]    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]    
Available-for-sale securities 53 48
Derivative Assets 0 0
Derivative liabilities 0 0
Level 2 | Fair Value [Member]    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]    
Available-for-sale securities 0 0
Derivative Assets 46 49
Derivative liabilities 282 283
Level 3 | Fair Value [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
v3.20.2
Fair Value Measurements (Fair Value Techniques) (Details) - USD ($)
$ in Millions
Dec. 31, 2019
Dec. 31, 2018
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]    
Short-term Debt $ 2,293 $ 1,428
Carrying Amount [Member]    
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]    
Customer Financing Notes Receivable 220 226
Short-term Debt 2,293 1,428
Long-term debt (excluding capitalized leases) 40,883 43,703
Long-term liabilities 334 505
Fair Value [Member]    
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]    
Customer Financing Notes Receivable 220 219
Short-term Debt 2,293 1,428
Long-term debt (excluding capitalized leases) 45,887 43,710
Long-term liabilities 320 464
Level 1 | Fair Value [Member]    
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]    
Customer Financing Notes Receivable 0 0
Short-term Debt 0 0
Long-term debt (excluding capitalized leases) 0 0
Long-term liabilities 0 0
Level 2 | Fair Value [Member]    
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]    
Customer Financing Notes Receivable 220 219
Short-term Debt 0 1,258
Long-term debt (excluding capitalized leases) 45,802 43,620
Long-term liabilities 320 464
Level 3 | Fair Value [Member]    
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]    
Customer Financing Notes Receivable 0 0
Short-term Debt 2,293 170
Long-term debt (excluding capitalized leases) 85 90
Long-term liabilities $ 0 $ 0
v3.20.2
Variable Interest Entities (Details) - USD ($)
$ in Millions
 12 Months Ended
Dec. 31, 2019
Dec. 31, 2018
Variable Interest Entity [Line Items]    
Variable Interest Entity, Consolidated, Carrying Amount, Assets, Total $ 6,342 $ 6,332
Variable Interest Entity, Consolidated, Carrying Amount, Liabilities, Total 7,065 6,844
Current Assets [Member]    
Variable Interest Entity [Line Items]    
Variable Interest Entity, Consolidated, Carrying Amount, Assets, Total 5,448 5,622
Noncurrent Assets [Member]    
Variable Interest Entity [Line Items]    
Variable Interest Entity, Consolidated, Carrying Amount, Assets, Total 894 710
Current Liabilities [Member]    
Variable Interest Entity [Line Items]    
Variable Interest Entity, Consolidated, Carrying Amount, Liabilities, Total 6,971 6,742
Noncurrent Liabilities [Member]    
Variable Interest Entity [Line Items]    
Variable Interest Entity, Consolidated, Carrying Amount, Liabilities, Total $ 94 $ 102
International Aero Engines AG [Member]    
Variable Interest Entity [Line Items]    
Variable Interest Entity, Methodology Pratt & Whitney holds a 61% program share interest in the 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 engine program through involvement with the collaborators.  
Noncurrent assets 49.50%  
International Aero Engines LLC [Member]    
Variable Interest Entity [Line Items]    
Variable Interest Entity, Methodology 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% program share 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.  
Noncurrent assets 59.00%  
v3.20.2
Guarantees (Details) - USD ($)
$ in Millions
 12 Months Ended
Dec. 31, 2019
Dec. 31, 2018
Guarantee Obligations [Line Items]    
Environmental, health and safety, tax and employment matters $ 166 $ 175
Balance as of January 1 929 [1] 591
Warranties and performance guarantees issued   421
Settlements made 330 284
Other (10) 201
Balance as of December 31 1,033 929 [1]
Standard Product Warranty Accrual, Increase for Warranties Issued 444  
Commercial aerospace financing arrangements (see Note 5)    
Guarantee Obligations [Line Items]    
Maximum Potential Payment 333 348
Carrying Amount of Liability 7 9
Credit Facilities And Debt Obligations (expire 2019 to 2028)    
Guarantee Obligations [Line Items]    
Maximum Potential Payment 0 15
Carrying Amount of Liability 0 0
Performance Guarantees    
Guarantee Obligations [Line Items]    
Maximum Potential Payment 48 55
Carrying Amount of Liability $ 0 $ 5
[1] 1)    
v3.20.2
Contingent Liabilities (Details) - USD ($)
$ in Millions
 12 Months Ended
Dec. 31, 2019
Dec. 31, 2018
Commitments and Contingencies Disclosure [Abstract]    
Accrual For Environmental Loss Contingencies $ 725 $ 662
U.S. Defense Contract Management Agency Claim Against Pratt & Whitney [Member]    
Loss Contingencies [Line Items]    
Loss Contingency Damages Sought 177 million  
U.S. Defense Contract Management Claim against Pratt & Whitney    
Loss Contingencies [Line Items]    
Loss Contingency Lawsuit Filing Date December 2013  
Loss Contingency Allegations As previously disclosed, in December 2013, a DCMA DACO asserted a claim against Pratt & Whitney to recover overpayments of approximately $177 million plus interest (approximately $98.4 million through December 31, 2019). 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. In 2014, Pratt & Whitney filed an appeal to the ASBCA. An evidentiary hearing was held and completed in June 2019. The parties are now engaged in post-hearing briefing, and a decision from the ASBCA will follow. We continue to believe that the claim is without merit.  
Loss Contingency Actions Taken By Defendant In December 2018, a DCMA DACO issued a second claim against Pratt & Whitney that similarly alleges that its method of determining the cost of collaborator parts does not comply with the cost accounting standards for calendar years 2013 through 2017. This second claim demands payment of $269 million plus interest (approximately $56.2 million through December 31, 2019), which we also believe is without merit and which Pratt & Whitney appealed to the ASBCA in January 2019.  
Loss Contingency, Interest 98.4 million  
U.S. Defense Contract Management Second Claim against Pratt and Whitney [Member]    
Loss Contingencies [Line Items]    
Loss Contingency Lawsuit Filing Date December 2018  
Loss Contingency, Interest 56.2 million  
Loss Contingency Damages Sought 269 million  
v3.20.2
Segment Financial Data (By Segment) (Details) - USD ($)
$ in Millions
 3 Months Ended 12 Months Ended
Dec. 31, 2019
Sep. 30, 2019
Jun. 30, 2019
Mar. 31, 2019
Dec. 31, 2018
Sep. 30, 2018
Jun. 30, 2018
Mar. 31, 2018
Dec. 31, 2019
Dec. 31, 2018
Dec. 31, 2017
Segment Reporting Information [Line Items]                      
Revenues $ 11,694 $ 11,373 $ 11,329 $ 10,953 $ 10,121 $ 8,412 $ 8,333 $ 7,836 $ 45,349 $ 34,701 $ 29,713
Operating Income (Loss)                 4,914 2,877 2,989
Total Assets 139,615       134,211       139,615 134,211 96,920
Capital Expenditures                 1,868 1,467 1,556
Depreciation & Amortization                 2,708 1,896 1,580
Major Customers, U.S. Government Sales                 10,428 7,278 5,658
Major Customers, Airbus Sales                 $ 9,879 10,025 8,908
Segment Financial Data                 SEGMENT FINANCIAL DATA
Our operations for the periods presented herein are classified into two principal segments. The segments are generally determined 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.
Pratt & Whitney products include commercial, military, business jet and general aviation aircraft engines, parts and services sold to a diversified customer base, including international and domestic commercial airlines and aircraft leasing companies, aircraft manufacturers, and U.S. and foreign governments. Pratt & Whitney also provides product support and a full range of overhaul, repair and fleet management services.
Collins Aerospace Systems provides technologically advanced aerospace products and aftermarket service solutions for aircraft manufacturers, airlines, regional, business and general aviation markets, military and space operations. Products include electric power generation, power management and distribution systems, air data and aircraft sensing systems, engine control systems, intelligence, surveillance and reconnaissance systems, engine components, environmental control systems, fire and ice detection and protection systems, propeller systems, engine nacelle systems, including thrust reversers and mounting pylons, interior and exterior aircraft lighting, aircraft seating and cargo systems, actuation systems, landing systems, including landing gear, wheels and brakes, and space products and subsystems, integrated avionics systems, precision targeting, electronic warfare and range and training systems, flight controls, communications systems, navigation systems, oxygen systems, simulation and training systems, food and beverage preparation, storage and galley systems, lavatory and wastewater management systems. Aftermarket services include spare parts, overhaul and repair, engineering and technical support, training and fleet management solutions, and information management services.
We have reported our financial and operational results for the periods presented herein under the two principal segments noted above, consistent with how we have reviewed our business operations for decision-making purposes, resource allocation and performance assessment during 2019.
Segment Information. Total sales by segment include intersegment sales, which are generally made at prices approximating those that the selling entity is able to obtain on external sales. Segment information for the years ended December 31 is as follows:
 Net SalesOperating Profits
(dollars in millions)201920182017201920182017
Pratt & Whitney20,892 19,397 16,160 1,668 1,269 1,300 
Collins Aerospace Systems26,028 16,634 14,691 4,100 2,303 2,191 
Total segment46,920 36,031 30,851 5,768 3,572 3,491 
Eliminations and other(1,571)(1,330)(1,138)(339)(220)(63)
General corporate expenses— — — (515)(475)(439)
Consolidated$45,349 $34,701 $29,713 $4,914 $2,877 $2,989 

 Total AssetsCapital ExpendituresDepreciation & Amortization
(dollars in millions)201920182017201920182017201920182017
Pratt & Whitney31,271 29,341 26,768 822 866 923 980 852 672 
Collins Aerospace Systems74,049 73,115 34,567 959 515 527 1,749 883 823 
Total segment105,320 102,456 61,335 1,781 1,381 1,450 2,729 1,735 1,495 
Eliminations and other2,472 1,015 4,659 87 86 106 (21)161 85 
Assets related to discontinued operations$31,823 $30,740 $30,926 
Consolidated$139,615 $134,211 $96,920 $1,868 $1,467 $1,556 $2,708 $1,896 $1,580 
Geographic External Sales and Operating Profit. Geographic external sales and operating profits are attributed to the geographic regions based on their location of origin. U.S. external sales include export sales to commercial customers outside the U.S. and sales to the U.S. Government, commercial and affiliated customers, which are known to be for resale to customers outside the U.S. Long-lived assets are net fixed assets attributed to the specific geographic regions. 
 External Net SalesOperating ProfitsLong-Lived Assets
(dollars in millions)201920182017201920182017201920182017
United States Operations$35,125 $26,646 $21,975 $3,287 $1,790 $1,603 $6,507 $6,165 $4,424 
International Operations
Europe4,419 3,092 2,747 1,480 1,027 826 1,268 1,272 1,147 
Asia Pacific1,989 1,645 1,779 444 365 351 917 905 685 
Other5,387 4,648 4,350 557 390 711 1,089 1,064 1,082 
Eliminations and other(1,571)(1,330)(1,138)(854)(695)(502)541 500 469 
Consolidated$45,349 $34,701 $29,713 $4,914 $2,877 $2,989 $10,322 $9,906 $7,807 
Sales from U.S. operations include export sales as follows: 
(dollars in millions)201920182017
Europe$7,078 $6,217 $5,197 
Asia Pacific6,411 5,355 3,526 
Other3,295 1,966 1,675 
Total$16,784 $13,538 $10,398 
Sales by primary geographical market for the year ended December 31, 2019 is as follows:
(dollars in millions)Pratt & WhitneyCollins Aerospace SystemsTotal
Primary Geographical Markets
United States $16,148 $18,977 $35,125 
Europe498 3,921 4,419 
Asia Pacific1,164 825 1,989 
Other*3,082 2,305 5,387 
Total segment$20,892 $26,028 $46,920 
Eliminations and other(1,571)
Consolidated$45,349 
Sales by primary geographical market for the year ended December 31, 2018 is as follows:
(dollars in millions)Pratt & WhitneyCollins Aerospace SystemsTotal
Primary Geographical Markets
United States $14,852 $11,794 $26,646 
Europe594 2,498 3,092 
Asia Pacific1,277 368 1,645 
Other (1)
2,674 1,974 4,648 
Total segment$19,397 $16,634 $36,031 
Eliminations and other(1,330)
Consolidated$34,701 
(1)    Other includes sales to other regions as well as intersegment sales.
Segment sales disaggregated by product type and product versus service for the year ended December 31, 2019 are as follows:
(dollars in millions)Pratt & WhitneyCollins Aerospace SystemsTotal
Product Type
Commercial and industrial, non aerospace$102 $51 $153 
Commercial aerospace14,516 19,005 33,521 
Military aerospace6,274 6,972 13,246 
Total segment$20,892 $26,028 $46,920 
Eliminations and other(1,571)
Consolidated$45,349 
Sales Type
Product $12,977 $21,440 $34,417 
Service 7,915 4,588 12,503 
Total segment$20,892 $26,028 $46,920 
Eliminations and other(1,571)
Consolidated$45,349 
Segment sales disaggregated by product type and product versus service for the year ended December 31, 2018 are as follows:
(dollars in millions)Pratt & WhitneyCollins Aerospace SystemsTotal
Product Type
Commercial and industrial, non aerospace$55 $60 $115 
Commercial aerospace14,027 12,564 26,591 
Military aerospace5,315 4,010 9,325 
Total segment$19,397 $16,634 $36,031 
Eliminations and other(1,330)
Consolidated$34,701 
Sales Type
Product $11,410 $13,915 $25,325 
Service 7,987 2,719 10,706 
Total segment$19,397 $16,634 $36,031 
Eliminations and other(1,330)
Consolidated$34,701 
Major Customers. Net Sales include sales under prime contracts and subcontracts to the U.S. Government as follows:
(dollars in millions)201920182017
Pratt & Whitney$5,614 $4,489 $3,347 
Collins Aerospace Systems4,802 2,779 2,299 
Other12 10 12 
Total$10,428 $7,278 $5,658 
Sales to Airbus prior to discounts and incentives were approximately $9,879 million, $10,025 million and $8,908 million for the years ended December 31, 2019, 2018 and 2017, respectively.
    
Schedule Of Segment Reporting Information By Segment [Table Text Block]                
 Net SalesOperating Profits
(dollars in millions)201920182017201920182017
Pratt & Whitney20,892 19,397 16,160 1,668 1,269 1,300 
Collins Aerospace Systems26,028 16,634 14,691 4,100 2,303 2,191 
Total segment46,920 36,031 30,851 5,768 3,572 3,491 
Eliminations and other(1,571)(1,330)(1,138)(339)(220)(63)
General corporate expenses— — — (515)(475)(439)
Consolidated$45,349 $34,701 $29,713 $4,914 $2,877 $2,989 

 Total AssetsCapital ExpendituresDepreciation & Amortization
(dollars in millions)201920182017201920182017201920182017
Pratt & Whitney31,271 29,341 26,768 822 866 923 980 852 672 
Collins Aerospace Systems74,049 73,115 34,567 959 515 527 1,749 883 823 
Total segment105,320 102,456 61,335 1,781 1,381 1,450 2,729 1,735 1,495 
Eliminations and other2,472 1,015 4,659 87 86 106 (21)161 85 
Assets related to discontinued operations$31,823 $30,740 $30,926 
Consolidated$139,615 $134,211 $96,920 $1,868 $1,467 $1,556 $2,708 $1,896 $1,580 
    
Schedule of Revenues From External Customers And Long Lived Assets By Geographic Areas [Table Text Block]                
 External Net SalesOperating ProfitsLong-Lived Assets
(dollars in millions)201920182017201920182017201920182017
United States Operations$35,125 $26,646 $21,975 $3,287 $1,790 $1,603 $6,507 $6,165 $4,424 
International Operations
Europe4,419 3,092 2,747 1,480 1,027 826 1,268 1,272 1,147 
Asia Pacific1,989 1,645 1,779 444 365 351 917 905 685 
Other5,387 4,648 4,350 557 390 711 1,089 1,064 1,082 
Eliminations and other(1,571)(1,330)(1,138)(854)(695)(502)541 500 469 
Consolidated$45,349 $34,701 $29,713 $4,914 $2,877 $2,989 $10,322 $9,906 $7,807 
    
Revenue from External Customers by Geographic Areas [Table Text Block]                
(dollars in millions)201920182017
Europe$7,078 $6,217 $5,197 
Asia Pacific6,411 5,355 3,526 
Other3,295 1,966 1,675 
Total$16,784 $13,538 $10,398 
    
Total Segments [Member]                      
Segment Reporting Information [Line Items]                      
Revenues                 $ 46,920 36,031 30,851
Operating Income (Loss)                 5,768 3,572 3,491
Total Assets 105,320       102,456       105,320 102,456 61,335
Capital Expenditures                 1,781 1,381 1,450
Depreciation & Amortization                 2,729 1,735 1,495
Eliminations and other [Member]                      
Segment Reporting Information [Line Items]                      
Revenues                 (1,571) (1,330) (1,138)
Operating Income (Loss)                 (339) (220) (63)
Total Assets 2,472       1,015       2,472 1,015 4,659
Capital Expenditures                 87 86 106
Depreciation & Amortization                 (21) 161 85
General corporate expenses [Member]                      
Segment Reporting Information [Line Items]                      
Revenues                 0 0 0
Operating Income (Loss)                 (515) (475) (439)
Pratt and Whitney [Member]                      
Segment Reporting Information [Line Items]                      
Revenues                 20,892 19,397 16,160
Operating Income (Loss)                 1,668 1,269 1,300
Total Assets 31,271       29,341       31,271 29,341 26,768
Capital Expenditures                 822 866 923
Depreciation & Amortization                 980 852 672
Major Customers, U.S. Government Sales                 5,614 4,489 3,347
Collins Aerospace Systems [Member]                      
Segment Reporting Information [Line Items]                      
Revenues                 26,028 16,634 14,691
Operating Income (Loss)                 4,100 2,303 2,191
Total Assets 74,049       73,115       74,049 73,115 34,567
Capital Expenditures                 959 515 527
Depreciation & Amortization                 1,749 883 823
Major Customers, U.S. Government Sales                 4,802 2,779 2,299
Other [Member]                      
Segment Reporting Information [Line Items]                      
Major Customers, U.S. Government Sales                 12 10 12
Discontinued Operations [Member]                      
Segment Reporting Information [Line Items]                      
Total Assets $ 31,823       $ 30,740       $ 31,823 $ 30,740 $ 30,926
v3.20.2
Segment Financial Data (By Geographic Region) (Details) - USD ($)
$ in Millions
 3 Months Ended 12 Months Ended
Dec. 31, 2019
Sep. 30, 2019
Jun. 30, 2019
Mar. 31, 2019
Dec. 31, 2018
Sep. 30, 2018
Jun. 30, 2018
Mar. 31, 2018
Dec. 31, 2019
Dec. 31, 2018
Dec. 31, 2017
Revenues $ 11,694 $ 11,373 $ 11,329 $ 10,953 $ 10,121 $ 8,412 $ 8,333 $ 7,836 $ 45,349 $ 34,701 $ 29,713
External Net Sales by Geography                 45,349 34,701 29,713
United States Export Sales                 $ 16,784 $ 13,538 $ 10,398
Operating Income (Loss)                 $ 4,914 $ 2,877 $ 2,989
Long-Lived Assets by Geography                 10,322 9,906 7,807
Europe [Member]                      
External Net Sales by Geography                 4,419 3,092 2,747
United States Export Sales                 $ 7,078 $ 6,217 $ 5,197
Operating Income (Loss)                 $ 1,480 $ 1,027 $ 826
Long-Lived Assets by Geography                 1,268 1,272 1,147
Asia Pacific [Member]                      
External Net Sales by Geography                 1,989 1,645 1,779
United States Export Sales                 $ 6,411 $ 5,355 $ 3,526
Operating Income (Loss)                 $ 444 $ 365 $ 351
Long-Lived Assets by Geography                 917 905 685
Other Geographic Regions [Member]                      
External Net Sales by Geography                 5,387 4,648 4,350
United States Export Sales                 $ 3,295 $ 1,966 $ 1,675
Operating Income (Loss)                 $ 557 $ 390 $ 711
Long-Lived Assets by Geography                 1,089 1,064 1,082
UNITED STATES                      
External Net Sales by Geography                 35,125 26,646 21,975
Operating Income (Loss)                 $ 3,287 $ 1,790 $ 1,603
Long-Lived Assets by Geography                 6,507 6,165 4,424
UNITED STATES                      
Revenues                 $ 35,125 $ 26,646  
Other [Member]                      
Revenues                 5,387 4,648  
Asia Pacific [Member]                      
Revenues                 1,989 1,645  
Europe [Member]                      
Revenues                 $ 4,419 $ 3,092  
Eliminations and other                      
External Net Sales by Geography                 (1,571) (1,330) (1,138)
Operating Income (Loss)                 $ (854) $ (695) $ (502)
Long-Lived Assets by Geography                 541 500 469
Total Segments [Member]                      
Revenues                 $ 46,920 $ 36,031 $ 30,851
Operating Income (Loss)                 5,768 3,572 3,491
Collins Aerospace Systems [Member]                      
Revenues                 26,028 16,634 14,691
Operating Income (Loss)                 4,100 2,303 2,191
Collins Aerospace Systems [Member] | UNITED STATES                      
Revenues                 18,977 11,794  
Collins Aerospace Systems [Member] | Other [Member]                      
Revenues                 2,305 1,974  
Collins Aerospace Systems [Member] | Asia Pacific [Member]                      
Revenues                 825 368  
Collins Aerospace Systems [Member] | Europe [Member]                      
Revenues                 3,921 2,498  
Pratt and Whitney [Member]                      
Revenues                 20,892 19,397 16,160
Operating Income (Loss)                 1,668 1,269 1,300
Pratt and Whitney [Member] | UNITED STATES                      
Revenues                 16,148 14,852  
Pratt and Whitney [Member] | Other [Member]                      
Revenues                 3,082 2,674  
Pratt and Whitney [Member] | Asia Pacific [Member]                      
Revenues                 1,164 1,277  
Pratt and Whitney [Member] | Europe [Member]                      
Revenues                 498 594  
Eliminations and other [Member]                      
Revenues                 (1,571) (1,330) (1,138)
Operating Income (Loss)                 $ (339) $ (220) $ (63)
v3.20.2
Segment Financial Data (Disaggregation of Revenue) (Details) - USD ($)
$ in Millions
 3 Months Ended 12 Months Ended
Dec. 31, 2019
Sep. 30, 2019
Jun. 30, 2019
Mar. 31, 2019
Dec. 31, 2018
Sep. 30, 2018
Jun. 30, 2018
Mar. 31, 2018
Dec. 31, 2019
Dec. 31, 2018
Dec. 31, 2017
Revenue from External Customer [Line Items]                      
Revenues $ 11,694 $ 11,373 $ 11,329 $ 10,953 $ 10,121 $ 8,412 $ 8,333 $ 7,836 $ 45,349 $ 34,701 $ 29,713
Product [Member]                      
Revenue from External Customer [Line Items]                      
Revenues                 32,998 24,141 21,119
Service [Member]                      
Revenue from External Customer [Line Items]                      
Revenues                 12,351 10,560 8,594
Eliminations and other [Member]                      
Revenue from External Customer [Line Items]                      
Revenues                 (1,571) (1,330) (1,138)
Pratt and Whitney [Member]                      
Revenue from External Customer [Line Items]                      
Revenues                 20,892 19,397 16,160
Pratt and Whitney [Member] | Product [Member]                      
Revenue from External Customer [Line Items]                      
Revenues                 12,977 11,410  
Pratt and Whitney [Member] | Service [Member]                      
Revenue from External Customer [Line Items]                      
Revenues                 7,915 7,987  
Collins Aerospace Systems [Member]                      
Revenue from External Customer [Line Items]                      
Revenues                 26,028 16,634 14,691
Collins Aerospace Systems [Member] | Product [Member]                      
Revenue from External Customer [Line Items]                      
Revenues                 21,440 13,915  
Collins Aerospace Systems [Member] | Service [Member]                      
Revenue from External Customer [Line Items]                      
Revenues                 4,588 2,719  
Total Segments [Member]                      
Revenue from External Customer [Line Items]                      
Revenues                 46,920 36,031 $ 30,851
Total Segments [Member] | Product [Member]                      
Revenue from External Customer [Line Items]                      
Revenues                 34,417 25,325  
Total Segments [Member] | Service [Member]                      
Revenue from External Customer [Line Items]                      
Revenues                 12,503 10,706  
Commercial Aerospace [Member]                      
Revenue from External Customer [Line Items]                      
Revenues                 33,521    
Commercial Aerospace [Member] | Pratt and Whitney [Member]                      
Revenue from External Customer [Line Items]                      
Revenues                 14,516 14,027  
Commercial Aerospace [Member] | Collins Aerospace Systems [Member]                      
Revenue from External Customer [Line Items]                      
Revenues                 19,005 12,564  
Commercial Aerospace [Member] | Total Segments [Member]                      
Revenue from External Customer [Line Items]                      
Revenues                   26,591  
Commercial and industrial, non aerospace [Member]                      
Revenue from External Customer [Line Items]                      
Revenues                 153    
Commercial and industrial, non aerospace [Member] | Pratt and Whitney [Member]                      
Revenue from External Customer [Line Items]                      
Revenues                 102 55  
Commercial and industrial, non aerospace [Member] | Collins Aerospace Systems [Member]                      
Revenue from External Customer [Line Items]                      
Revenues                 51 60  
Commercial and industrial, non aerospace [Member] | Total Segments [Member]                      
Revenue from External Customer [Line Items]                      
Revenues                   115  
Military aerospace [Member]                      
Revenue from External Customer [Line Items]                      
Revenues                 13,246    
Military aerospace [Member] | Pratt and Whitney [Member]                      
Revenue from External Customer [Line Items]                      
Revenues                 6,274 5,315  
Military aerospace [Member] | Collins Aerospace Systems [Member]                      
Revenue from External Customer [Line Items]                      
Revenues                 $ 6,972 4,010  
Military aerospace [Member] | Total Segments [Member]                      
Revenue from External Customer [Line Items]                      
Revenues                   $ 9,325  
v3.20.2
Subsequent Events (Details)
€ in Millions
 3 Months Ended 6 Months Ended 9 Months Ended 12 Months Ended
Apr. 03, 2020
shares
Sep. 30, 2020
USD ($)
Jun. 30, 2020
USD ($)
Mar. 31, 2020
USD ($)
Jun. 30, 2020
USD ($)
Sep. 30, 2020
USD ($)
Dec. 31, 2019
USD ($)
Dec. 31, 2019
EUR (€)
Dec. 31, 2018
USD ($)
Jun. 30, 2020
EUR (€)
Subsequent Event [Line Items]                    
Net pre-tax restructuring costs (benefit)             $ 245,000,000      
Aggregate Line of Credit Facility Maximum Borrowing Capacity             $ 10,350,000,000      
Proceeds from Issuance of Debt                 $ 11,000,000,000.0  
Forecast [Member]                    
Subsequent Event [Line Items]                    
Net pre-tax restructuring costs (benefit)           $ 685,000,000        
Goodwill, Impairment Loss     $ 3,200,000,000              
Aggregate Line of Credit Facility Maximum Borrowing Capacity     7,000,000,000.0   $ 7,000,000,000.0          
Proceeds from Issuance of Debt         19,300,000,000          
Repayments of Debt         15,174,000,000          
Extinguishment of Debt, Amount           $ 703,000,000        
Debt Exchanged     $ 8,200,000,000   $ 8,200,000,000          
Collins Aerospace Systems [Member] | Forecast [Member]                    
Subsequent Event [Line Items]                    
Proceeds from Divestiture of Businesses   $ 2,300,000,000                
Gain (Loss) on Disposition of Business   580,000,000                
Gain (Loss) on Disposition of Business, Net of Tax   $ 253,000,000                
Otis [Member]                    
Subsequent Event [Line Items]                    
Shares of common stock distributed in the Distribution | shares 433,079,455                  
Otis [Member] | Forecast [Member]                    
Subsequent Event [Line Items]                    
Shares of common stock distributed in the Distribution | shares 433,079,455                  
Carrier [Member] | Forecast [Member]                    
Subsequent Event [Line Items]                    
Shares of common stock distributed in the Distribution | shares 866,158,910                  
Raytheon Company [Member] | Forecast [Member]                    
Subsequent Event [Line Items]                    
Business Acquisition UTC stock payable shares | shares 2.3348                  
Notes 2.250% Due 2030 [Member] | Forecast [Member]                    
Subsequent Event [Line Items]                    
Debt Instrument, Interest Rate, Stated Percentage     2.25%   2.25%         2.25%
Debt Instrument, Maturity Year Date         2030          
Proceeds from Issuance of Debt         $ 1,000,000,000          
Notes 3.125% Due 2050 [Member] | Forecast [Member]                    
Subsequent Event [Line Items]                    
Debt Instrument, Interest Rate, Stated Percentage     3.125%   3.125%         3.125%
Debt Instrument, Maturity Year Date         2050          
Proceeds from Issuance of Debt         $ 1,000,000,000          
Otis 3-Year Term Loan due 2023 [Member] | Forecast [Member]                    
Subsequent Event [Line Items]                    
Debt Instrument, Maturity Year Date         2023          
Proceeds from Issuance of Debt         $ 1,000,000,000          
Carrier 3-Year Term Loan due 2023 [Member] | Forecast [Member]                    
Subsequent Event [Line Items]                    
Debt Instrument, Maturity Year Date         2023          
Proceeds from Issuance of Debt         $ 1,750,000,000          
Notes 1.923% Due 2023 [Member] | Forecast [Member]                    
Subsequent Event [Line Items]                    
Debt Instrument, Interest Rate, Stated Percentage     1.923%   1.923%         1.923%
Debt Instrument, Maturity Year Date         2023          
Proceeds from Issuance of Debt         $ 500,000,000          
Libor plus 0.45% floating rates due 2023 [Member] | Forecast [Member]                    
Subsequent Event [Line Items]                    
Debt Instrument, Interest Rate, Stated Percentage     0.45%   0.45%         0.45%
Debt Instrument, Maturity Year Date         2023          
Proceeds from Issuance of Debt         $ 500,000,000          
Notes 2.056% Due 2025 [Member] | Forecast [Member]                    
Subsequent Event [Line Items]                    
Debt Instrument, Interest Rate, Stated Percentage     2.056%   2.056%         2.056%
Debt Instrument, Maturity Year Date         2025          
Proceeds from Issuance of Debt         $ 1,300,000,000          
Notes 2.242% Due 2025 [Member] | Forecast [Member]                    
Subsequent Event [Line Items]                    
Debt Instrument, Interest Rate, Stated Percentage     2.242%   2.242%         2.242%
Debt Instrument, Maturity Year Date         2025          
Proceeds from Issuance of Debt         $ 2,000,000,000          
Notes 2.293% Due 2027 [Member] | Forecast [Member]                    
Subsequent Event [Line Items]                    
Debt Instrument, Interest Rate, Stated Percentage     2.293%   2.293%         2.293%
Debt Instrument, Maturity Year Date         2027          
Proceeds from Issuance of Debt         $ 500,000,000          
Notes 2.493% Due 2027 [Member] | Forecast [Member]                    
Subsequent Event [Line Items]                    
Debt Instrument, Interest Rate, Stated Percentage     2.493%   2.493%         2.493%
Debt Instrument, Maturity Year Date         2027          
Proceeds from Issuance of Debt         $ 1,250,000,000          
Notes 2.565% Due 2030 [Member] | Forecast [Member]                    
Subsequent Event [Line Items]                    
Debt Instrument, Interest Rate, Stated Percentage     2.565%   2.565%         2.565%
Debt Instrument, Maturity Year Date         2030          
Proceeds from Issuance of Debt         $ 1,500,000,000          
Notes 2.722% Due 2030 [Member] | Forecast [Member]                    
Subsequent Event [Line Items]                    
Debt Instrument, Interest Rate, Stated Percentage     2.722%   2.722%         2.722%
Debt Instrument, Maturity Year Date         2030          
Proceeds from Issuance of Debt         $ 2,000,000,000          
Notes 3.112% Due 2040 [Member] | Forecast [Member]                    
Subsequent Event [Line Items]                    
Debt Instrument, Interest Rate, Stated Percentage     3.112%   3.112%         3.112%
Debt Instrument, Maturity Year Date         2040          
Proceeds from Issuance of Debt         $ 750,000,000          
Notes 3.377% Due 2040 [Member] | Forecast [Member]                    
Subsequent Event [Line Items]                    
Debt Instrument, Interest Rate, Stated Percentage     3.377%   3.377%         3.377%
Debt Instrument, Maturity Year Date         2040          
Proceeds from Issuance of Debt         $ 1,500,000,000          
Notes 3.362% Due 2050 [Member] | Forecast [Member]                    
Subsequent Event [Line Items]                    
Debt Instrument, Interest Rate, Stated Percentage     3.362%   3.362%         3.362%
Debt Instrument, Maturity Year Date         2050          
Proceeds from Issuance of Debt         $ 750,000,000          
Notes 3.577% Due 2050 [Member] | Forecast [Member]                    
Subsequent Event [Line Items]                    
Debt Instrument, Interest Rate, Stated Percentage     3.577%   3.577%         3.577%
Debt Instrument, Maturity Year Date         2050          
Proceeds from Issuance of Debt         $ 2,000,000,000          
Notes 3.650% Due 2023 [Member]                    
Subsequent Event [Line Items]                    
Debt Instrument, Interest Rate, Stated Percentage             3.65%      
Debt Instrument, Maturity Year Date             2023 2023    
Proceeds from Issuance of Debt [1]             $ 2,250,000,000      
Debt Instrument, Carrying Amount [2]             $ 2,250,000,000   2,250,000,000  
Notes 3.650% Due 2023 [Member] | Forecast [Member]                    
Subsequent Event [Line Items]                    
Debt Instrument, Interest Rate, Stated Percentage     3.65%   3.65%         3.65%
Debt Instrument, Maturity Year Date         2023          
Repayments of Debt       $ 1,669,000,000 $ 410,000,000          
EURIBOR plus 0.20% floating rate notes due 2020 [Member]                    
Subsequent Event [Line Items]                    
Debt Instrument, Interest Rate, Stated Percentage             0.20%      
Debt Instrument, Maturity Year Date             2020 2020    
Proceeds from Issuance of Debt | € [3]               € 750    
Debt Instrument, Carrying Amount [4]             $ 831,000,000   858,000,000  
EURIBOR plus 0.20% floating rate notes due 2020 [Member] | Forecast [Member]                    
Subsequent Event [Line Items]                    
Debt Instrument, Interest Rate, Stated Percentage     0.20%   0.20%         0.20%
Debt Instrument, Maturity Year Date         2020          
Debt Instrument, Carrying Amount | €                   € 750
Repayments of Debt         $ 817,000,000          
Notes 4.500% Due 2020 [Member]                    
Subsequent Event [Line Items]                    
Debt Instrument, Interest Rate, Stated Percentage             4.50%      
Debt Instrument, Maturity Year Date             2020 2020    
Debt Instrument, Carrying Amount [2]             $ 1,250,000,000   1,250,000,000  
Notes 4.500% Due 2020 [Member] | Forecast [Member]                    
Subsequent Event [Line Items]                    
Debt Instrument, Interest Rate, Stated Percentage     4.50%   4.50%         4.50%
Debt Instrument, Maturity Year Date         2020          
Repayments of Debt         $ 1,250,000,000          
Notes 1.125% Due 2021 [Member]                    
Subsequent Event [Line Items]                    
Debt Instrument, Interest Rate, Stated Percentage             1.125%      
Debt Instrument, Maturity Year Date             2021 2021    
Debt Instrument, Carrying Amount [2]             $ 1,053,000,000   1,088,000,000  
Notes 1.125% Due 2021 [Member] | Forecast [Member]                    
Subsequent Event [Line Items]                    
Debt Instrument, Interest Rate, Stated Percentage     1.125%   1.125%         1.125%
Debt Instrument, Maturity Year Date         2021          
Debt Instrument, Carrying Amount | €                   € 950
Repayments of Debt         $ 1,082,000,000          
Notes 1.250% due 2023 [Member]                    
Subsequent Event [Line Items]                    
Debt Instrument, Interest Rate, Stated Percentage             1.25%      
Debt Instrument, Maturity Year Date             2023 2023    
Debt Instrument, Carrying Amount [2]             $ 831,000,000   858,000,000  
Notes 1.250% due 2023 [Member] | Forecast [Member]                    
Subsequent Event [Line Items]                    
Debt Instrument, Interest Rate, Stated Percentage     1.25%   1.25%         1.25%
Debt Instrument, Maturity Year Date         2023          
Debt Instrument, Carrying Amount | €                   € 750
Repayments of Debt         $ 836,000,000          
Notes 1.150% Due 2024 [Member]                    
Subsequent Event [Line Items]                    
Debt Instrument, Interest Rate, Stated Percentage             1.15%      
Debt Instrument, Maturity Year Date             2024 2024    
Proceeds from Issuance of Debt | € [3]               € 750    
Debt Instrument, Carrying Amount [2]             $ 831,000,000   858,000,000  
Notes 1.150% Due 2024 [Member] | Forecast [Member]                    
Subsequent Event [Line Items]                    
Debt Instrument, Interest Rate, Stated Percentage     1.15%   1.15%         1.15%
Debt Instrument, Maturity Year Date         2024          
Debt Instrument, Carrying Amount | €                   € 750
Repayments of Debt         $ 841,000,000          
Notes 1.875% Due 2026 [Member]                    
Subsequent Event [Line Items]                    
Debt Instrument, Interest Rate, Stated Percentage             1.875%      
Debt Instrument, Maturity Year Date             2026 2026    
Debt Instrument, Carrying Amount [2]             $ 554,000,000   573,000,000  
Notes 1.875% Due 2026 [Member] | Forecast [Member]                    
Subsequent Event [Line Items]                    
Debt Instrument, Interest Rate, Stated Percentage     1.875%   1.875%         1.875%
Debt Instrument, Maturity Year Date         2026          
Debt Instrument, Carrying Amount | €                   € 500
Repayments of Debt         $ 567,000,000          
Notes 1.900% Due 2020 [Member]                    
Subsequent Event [Line Items]                    
Debt Instrument, Interest Rate, Stated Percentage             1.90%      
Debt Instrument, Maturity Year Date             2020 2020    
Debt Instrument, Carrying Amount [2]             $ 1,000,000,000   1,000,000,000  
Notes 1.900% Due 2020 [Member] | Forecast [Member]                    
Subsequent Event [Line Items]                    
Debt Instrument, Interest Rate, Stated Percentage     1.90%   1.90%         1.90%
Debt Instrument, Maturity Year Date         2020          
Repayments of Debt         $ 1,000,000,000          
Notes 3.350% due 2021 [Member]                    
Subsequent Event [Line Items]                    
Debt Instrument, Interest Rate, Stated Percentage             3.35%      
Debt Instrument, Maturity Year Date             2021 2021    
Proceeds from Issuance of Debt [1]             $ 1,000,000,000      
Debt Instrument, Carrying Amount [2]             $ 1,000,000,000   1,000,000,000  
Notes 3.350% due 2021 [Member] | Forecast [Member]                    
Subsequent Event [Line Items]                    
Debt Instrument, Interest Rate, Stated Percentage     3.35%   3.35%         3.35%
Debt Instrument, Maturity Year Date         2021          
Repayments of Debt         $ 1,000,000,000          
LIBOR plus 0.650% floating rate notes due 2021 [Member]                    
Subsequent Event [Line Items]                    
Debt Instrument, Interest Rate, Stated Percentage             0.65%      
Debt Instrument, Maturity Year Date             2021 2021    
Proceeds from Issuance of Debt [1]             $ 750,000,000      
Debt Instrument, Carrying Amount [2]             $ 750,000,000 [5]   750,000,000 [6]  
LIBOR plus 0.650% floating rate notes due 2021 [Member] | Forecast [Member]                    
Subsequent Event [Line Items]                    
Debt Instrument, Interest Rate, Stated Percentage     0.65%   0.65%         0.65%
Debt Instrument, Maturity Year Date         2021          
Repayments of Debt         $ 750,000,000          
Notes 1.950% Due 2021 [Member]                    
Subsequent Event [Line Items]                    
Debt Instrument, Interest Rate, Stated Percentage             1.95%      
Debt Instrument, Maturity Year Date             2021 2021    
Debt Instrument, Carrying Amount [2]             $ 750,000,000   750,000,000  
Notes 1.950% Due 2021 [Member] | Forecast [Member]                    
Subsequent Event [Line Items]                    
Debt Instrument, Interest Rate, Stated Percentage     1.95%   1.95%         1.95%
Debt Instrument, Maturity Year Date         2021          
Repayments of Debt         $ 750,000,000          
Notes 2.300% Due 2022 [Member]                    
Subsequent Event [Line Items]                    
Debt Instrument, Interest Rate, Stated Percentage             2.30%      
Debt Instrument, Maturity Year Date             2022 2022    
Debt Instrument, Carrying Amount [2]             $ 500,000,000   500,000,000  
Notes 2.300% Due 2022 [Member] | Forecast [Member]                    
Subsequent Event [Line Items]                    
Debt Instrument, Interest Rate, Stated Percentage     2.30%   2.30%         2.30%
Debt Instrument, Maturity Year Date         2022          
Repayments of Debt         $ 500,000,000          
Notes 3.100% Due 2022 [Member]                    
Subsequent Event [Line Items]                    
Debt Instrument, Interest Rate, Stated Percentage             3.10%      
Debt Instrument, Maturity Year Date             2022 2022    
Debt Instrument, Carrying Amount [2]             $ 2,300,000,000   2,300,000,000  
Notes 3.100% Due 2022 [Member] | Forecast [Member]                    
Subsequent Event [Line Items]                    
Debt Instrument, Interest Rate, Stated Percentage     3.10%   3.10%         3.10%
Debt Instrument, Maturity Year Date         2022          
Repayments of Debt         $ 2,300,000,000          
Notes 2.800% Due 2024 [Member]                    
Subsequent Event [Line Items]                    
Debt Instrument, Interest Rate, Stated Percentage             2.80%      
Debt Instrument, Maturity Year Date             2024 2024    
Debt Instrument, Carrying Amount [2]             $ 800,000,000   800,000,000  
Notes 2.800% Due 2024 [Member] | Forecast [Member]                    
Subsequent Event [Line Items]                    
Debt Instrument, Interest Rate, Stated Percentage     2.80%   2.80%         2.80%
Debt Instrument, Maturity Year Date         2024          
Repayments of Debt         $ 800,000,000          
Notes 4.875% Due 2020 [Member]                    
Subsequent Event [Line Items]                    
Debt Instrument, Interest Rate, Stated Percentage             4.875%      
Debt Instrument, Maturity Year Date             2020 2020    
Debt Instrument, Carrying Amount [2]             $ 171,000,000   171,000,000  
Notes 4.875% Due 2020 [Member] | Forecast [Member]                    
Subsequent Event [Line Items]                    
Debt Instrument, Interest Rate, Stated Percentage     4.875%   4.875%         4.875%
Debt Instrument, Maturity Year Date         2020          
Repayments of Debt         $ 171,000,000          
Notes 2.650% Due 2026 [Member]                    
Subsequent Event [Line Items]                    
Debt Instrument, Interest Rate, Stated Percentage             2.65%      
Debt Instrument, Maturity Year Date             2026 2026    
Debt Instrument, Carrying Amount [2]             $ 1,150,000,000   $ 1,150,000,000  
Notes 2.650% Due 2026 [Member] | Forecast [Member]                    
Subsequent Event [Line Items]                    
Debt Instrument, Interest Rate, Stated Percentage     2.65%   2.65%         2.65%
Debt Instrument, Maturity Year Date         2026          
Repayments of Debt         $ 431,000,000          
Line of Credit [Member]                    
Subsequent Event [Line Items]                    
Termination of Credit Agreement             4,000,000,000.0      
$2.0B revolving credit agreement [Member] | Forecast [Member]                    
Subsequent Event [Line Items]                    
Termination of Credit Agreement             $ 2,000,000,000.0      
Line of Credit Facility, Maximum Borrowing Capacity     $ 2,000,000,000.0   2,000,000,000.0          
1.75B Credit Agreement - Carrier [Member] | Forecast [Member]                    
Subsequent Event [Line Items]                    
Termination of Credit Agreement     1,750,000,000   1,750,000,000          
Line of Credit - Otis [Member] | Forecast [Member]                    
Subsequent Event [Line Items]                    
Termination of Credit Agreement     1,000,000,000.0   1,000,000,000.0          
Borrowings [Member] | Forecast [Member]                    
Subsequent Event [Line Items]                    
Line of Credit Facility, Maximum Borrowing Capacity     2,100,000,000   2,100,000,000          
Revolving Credit Agreement, Current [Member] | Forecast [Member]                    
Subsequent Event [Line Items]                    
Termination of Credit Agreement     2,200,000,000   2,200,000,000          
Multicurrency Revolving Credit Agreement [Member] | Forecast [Member]                    
Subsequent Event [Line Items]                    
Termination of Credit Agreement     2,150,000,000   2,150,000,000          
$500M Term Loan Credit Agreement [Member] | Forecast [Member]                    
Subsequent Event [Line Items]                    
Termination of Credit Agreement     500,000,000   500,000,000          
1.0B Credit Agreement [Member] | Forecast [Member]                    
Subsequent Event [Line Items]                    
Line of Credit Facility, Maximum Borrowing Capacity     1,000,000,000.0   1,000,000,000.0          
Revolving Credit Agreement [Member] | Forecast [Member]                    
Subsequent Event [Line Items]                    
Line of Credit Facility, Maximum Borrowing Capacity     $ 5,000,000,000.0   $ 5,000,000,000.0          
[1] (1)    The net proceeds received from these debt issuances were used to partially finance the cash consideration portion of the purchase price for Rockwell Collins and fees, expenses and other amounts related to the acquisition of Rockwell Collins.
[2] We may redeem these notes at our option pursuant to their terms.
[3] (3)    The net proceeds received from these debt issuances were used for general corporate purposes.
[4] The three-month EURIBOR rate as of December 31, 2019 was approximately (0.383)%. 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.
[5] The three-month LIBOR rate as of December 31, 2019 was approximately 1.908%.
[6] The three-month LIBOR rate as of December 31, 2019 was approximately 1.908%.
v3.20.2
Selected Quarterly Financial Data - Unaudited (Details) - USD ($)
$ / shares in Units, $ in Millions
 3 Months Ended 12 Months Ended
Dec. 31, 2019
Sep. 30, 2019
Jun. 30, 2019
Mar. 31, 2019
Dec. 31, 2018
Sep. 30, 2018
Jun. 30, 2018
Mar. 31, 2018
Dec. 31, 2019
Dec. 31, 2018
Dec. 31, 2017
Selected Quarterly Financial Information [Abstract]                      
Revenues $ 11,694 $ 11,373 $ 11,329 $ 10,953 $ 10,121 $ 8,412 $ 8,333 $ 7,836 $ 45,349 $ 34,701 $ 29,713
Gross margin 2,578 2,864 2,775 2,534 2,041 1,586 1,819 1,791      
Income (Loss) from Continuing Operations, Net of Tax, Attributable to Parent 657 958 1,183 712 (240) 318 541 598 3,510 1,216 1,313
Net (loss) income from discontinued operations 486 190 717 634 926 920 1,507 699 2,027 4,053 3,239
Net income attributable to common shareowners $ 1,143 $ 1,148 $ 1,900 $ 1,346 $ 686 $ 1,238 $ 2,048 $ 1,297 $ 5,537 $ 5,269 $ 4,552
Net income from continuing operations attributable to common shareowners $ 0.77 $ 1.12 $ 1.38 $ 0.84 $ (0.29) $ 0.40 $ 0.68 $ 0.76 $ 4.11 $ 1.52 $ 1.66
Net (loss) income from discontinued operations 0.56 0.22 0.84 0.74 1.12 1.16 1.91 0.88 2.37 5.06 4.10
Earnings Per Share of Common Stock - Basic and Diluted:                      
Basic - net income 1.33 1.34 2.22 1.58 0.83 1.56 2.59 1.64 6.48 6.58 5.76
Net income from continuing operations attributable to common shareowners 0.76 1.11 1.37 0.83 (0.29) 0.39 0.68 0.75 4.06 1.50 1.64
Net (loss) income from discontinued operations 0.56 0.22 0.83 0.73 1.12 1.15 1.88 0.87 2.35 5.00 4.06
Diluted - net income $ 1.32 $ 1.33 $ 2.20 $ 1.56 $ 0.83 $ 1.54 $ 2.56 $ 1.62 $ 6.41 $ 6.50 $ 5.70
v3.20.2
Performance Graph - Unaudited (Details) - USD ($)
 12 Months Ended
Dec. 31, 2019
Dec. 31, 2018
Dec. 31, 2017
Dec. 31, 2016
Dec. 31, 2015
Dec. 31, 2014
United Technologies Corporation            
Performance Graph [Line Items]            
December, Graph Details $ 105.03 $ 123.08 $ 103.37 $ 88.32 $ 103.19 $ 100
S&P 500 Index            
Performance Graph [Line Items]            
December, Graph Details 150.33 157.22 129.05 115.26 113.69 100
Dow Jones Industrial Average            
Performance Graph [Line Items]            
December, Graph Details $ 158.85 $ 164.58 $ 128.47 $ 110.28 $ 110.04 $ 100
v3.20.2
Leases (Details) - USD ($)
$ in Millions
 12 Months Ended
Dec. 31, 2019
Jan. 01, 2019
Dec. 31, 2018
Lessee, Lease, Description [Line Items]      
Operating Lease, Expense $ 323    
Right-of-Use Asset Obtained in Exchange for Operating Lease Liability 123    
Operating Lease, Right-of-Use Asset 1,252 $ 1,700 $ 0
Operating Lease, Liability, Current 245   0
Operating Lease, Liability, Noncurrent $ 1,093   $ 0
Operating Lease, Weighted Average Remaining Lease Term 8 years 7 months 6 days    
Operating Lease, Weighted Average Discount Rate, Percent 3.50%    
Lessee, Operating Lease, Liability, Payments, Remainder of Fiscal Year $ 298    
Lessee, Operating Lease, Liability, Payments, Due Year Two 265    
Lessee, Operating Lease, Liability, Payments, Due Year Three 196    
Lessee, Operating Lease, Liability, Payments, Due Year Four 147    
Lessee, Operating Lease, Liability, Payments, Due Year Five 120    
Lessee, Operating Lease, Liability, Payments, Due after Year Five 595    
Lessee, Operating Lease, Liability, Payments, Due 1,621    
Lessee, Operating Lease, Liability, Undiscounted Excess Amount 283    
Operating Lease, Liability 1,338 $ 1,700  
Operating Lease, Payments 411    
Accrued Liabilities [Member]      
Lessee, Lease, Description [Line Items]      
Operating Lease, Liability, Current $ 245