Cover Page
Cover Page - shares | 3 Months Ended | |
Mar. 31, 2020 | Apr. 30, 2020 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Mar. 31, 2020 | |
Document Transition Report | false | |
Entity File Number | 001-39220 | |
Entity Registrant Name | CARRIER GLOBAL CORPORATION | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 83-4051582 | |
Entity Address, Address Line One | 13995 Pasteur Boulevard | |
Entity Address, City or Town | Palm Beach Gardens | |
Entity Address, State or Province | FL | |
Entity Address, Postal Zip Code | 33418 | |
City Area Code | (561) | |
Local Phone Number | 365-2000 | |
Title of 12(b) Security | Common Stock ($0.01 par value) | |
Trading Symbol | CARR | |
Security Exchange Name | NYSE | |
Entity Current Reporting Status | No | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 866,158,910 | |
Amendment Flag | false | |
Document Fiscal Year Focus | 2020 | |
Document Fiscal Period Focus | Q1 | |
Entity Central Index Key | 0001783180 | |
Current Fiscal Year End Date | --12-31 |
CONDENSED COMBINED STATEMENT OF
CONDENSED COMBINED STATEMENT OF OPERATIONS - USD ($) shares in Millions, $ in Millions | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Net sales | ||
Net Sales | $ 3,888 | $ 4,323 |
Costs and expenses | ||
Research and development | 98 | 97 |
Selling, general and administrative | 692 | 684 |
Total costs and expenses | 3,556 | 3,878 |
Equity method investment net earnings | 29 | 40 |
Other (expense) income, net | (46) | 15 |
Operating profit | 315 | 500 |
Non-service pension benefit | 17 | 39 |
Interest (expense) income, net | (37) | 4 |
Income from operations before income taxes | 295 | 543 |
Income tax expense | 193 | 140 |
Net income from operations | 102 | 403 |
Less: Non-controlling interest subsidiaries' earnings | 6 | 3 |
Net income attributable to common shareowners | $ 96 | $ 400 |
Earnings per share | ||
Basic (in dollars per share) | $ 0.11 | $ 0.46 |
Diluted (in dollars per share) | $ 0.11 | $ 0.46 |
Weighted average number of shares outstanding | ||
Basic (in shares) | 866 | 866 |
Diluted (in shares) | 866 | 866 |
Product | ||
Net sales | ||
Net Sales | $ 3,147 | $ 3,566 |
Costs and expenses | ||
Cost of products and services sold | 2,237 | 2,565 |
Service | ||
Net sales | ||
Net Sales | 741 | 757 |
Costs and expenses | ||
Cost of products and services sold | $ 529 | $ 532 |
CONDENSED COMBINED STATEMENT _2
CONDENSED COMBINED STATEMENT OF COMPREHENSIVE INCOME (LOSS) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Statement of Comprehensive Income [Abstract] | ||
Net income | $ 102 | $ 403 |
Other comprehensive (loss) income, net of tax | ||
Foreign currency translation adjustments arising during period | (490) | 96 |
Pension and post-retirement benefit plan adjustments | 5 | 5 |
Other comprehensive (loss) income, net of tax | (485) | 101 |
Comprehensive (loss) income | (383) | 504 |
Less: Comprehensive income attributable to non-controlling interest | (4) | (8) |
Comprehensive (loss) income attributable to common shareowners | $ (387) | $ 496 |
CONDENSED COMBINED BALANCE SHEE
CONDENSED COMBINED BALANCE SHEET - USD ($) $ in Millions | Mar. 31, 2020 | Dec. 31, 2019 |
Current assets: | ||
Cash and cash equivalents | $ 768 | $ 952 |
Accounts receivable, net (Note 5 and Note 6) | 2,674 | 2,726 |
Contract assets, current | 651 | 622 |
Inventories, net | 1,556 | 1,332 |
Other assets, current | 319 | 327 |
Total current assets | 5,968 | 5,959 |
Future income tax benefits | 454 | 500 |
Fixed assets, net | 1,638 | 1,663 |
Operating lease right-of-use assets | 865 | 832 |
Intangible assets, net | 1,014 | 1,083 |
Goodwill | 9,648 | 9,884 |
Pension and post-retirement assets | 473 | 490 |
Equity method investments | 1,664 | 1,739 |
Other assets | 277 | 256 |
Total Assets | 22,001 | 22,406 |
Current liabilities: | ||
Accounts payable (Note 5) | 1,776 | 1,701 |
Accrued liabilities | 1,972 | 2,088 |
Contract liabilities, current | 485 | 443 |
Current portion of long-term debt | 218 | 237 |
Total current liabilities | 4,451 | 4,469 |
Long-term debt | 11,029 | 82 |
Future pension and post-retirement obligations | 456 | 456 |
Future income tax obligations | 1,161 | 1,099 |
Operating lease liabilities | 708 | 682 |
Other long-term liabilities | 1,170 | 1,183 |
Total Liabilities | 18,975 | 7,971 |
Commitments and contingent liabilities (Note 17) | ||
UTC Net investment | ||
UTC Net investment | 4,433 | 15,355 |
Accumulated other comprehensive loss | (1,736) | (1,253) |
Total UTC Net investment | 2,697 | 14,102 |
Non-controlling interest | 329 | 333 |
Total Equity | 3,026 | 14,435 |
Total Liabilities and Equity | $ 22,001 | $ 22,406 |
CONDENSED COMBINED STATEMENT _3
CONDENSED COMBINED STATEMENT OF CASH FLOWS - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Operating Activities | ||
Net income from operations | $ 102 | $ 403 |
Adjustments to reconcile net income from operations to net cash flows provided by (used in) operating activities, net of acquisitions and dispositions | ||
Depreciation and amortization | 81 | 85 |
Deferred income tax provision | 135 | 15 |
Stock compensation costs | 13 | 8 |
Equity method investment net earnings | (29) | (40) |
Distributions from equity method investments | 10 | 5 |
Impairment charge on minority owned joint venture investment | 71 | 0 |
Changes in operating assets and liabilities | ||
Accounts receivable, net | (19) | (148) |
Contract assets, current | (39) | (51) |
Inventories, net | (264) | (230) |
Other assets, current | (10) | 8 |
Accounts payable and accrued liabilities | (24) | (227) |
Contract liabilities, current | 51 | 27 |
Pension contributions | (25) | (22) |
Other operating activities, net | (6) | (16) |
Net cash flows provided by (used in) operating activities | 47 | (183) |
Investing Activities | ||
Capital expenditures | (48) | (41) |
Dispositions of businesses (Note 9) | 0 | 1 |
Other investing activities, net | (80) | (3) |
Net cash flows used in investing activities | (128) | (43) |
Financing Activities | ||
(Decrease) increase in short-term borrowings, net | (44) | 6 |
Issuance of long-term debt | 10,961 | 52 |
Repayment of long-term debt | (34) | (1) |
Dividends paid to non-controlling interest | (8) | (2) |
Net transfers to UTC | (10,948) | (89) |
Other financing activities, net | (3) | (23) |
Net cash flows used in financing activities | (76) | (57) |
Effect of Exchange Rate on Cash and Cash Equivalents [Abstract] | ||
Effect of foreign exchange rate changes on cash and cash equivalents | (28) | 16 |
Net decrease in cash and cash equivalents and restricted cash | (185) | (267) |
Cash, cash equivalents and restricted cash, beginning of period | 957 | 1,134 |
Cash, cash equivalents and restricted cash, end of period | 772 | 867 |
Less: restricted cash | 4 | 4 |
Cash and cash equivalents, end of period | $ 768 | $ 863 |
CONDENSED COMBINED STATEMENT _4
CONDENSED COMBINED STATEMENT OF CHANGES IN EQUITY - USD ($) $ in Millions | Total | UTC Net Investment | Accumulated Other Comprehensive Loss | Noncontrolling Interest |
Balance as of beginning of period at Dec. 31, 2018 | $ 14,269 | $ 15,132 | $ (1,215) | $ 352 |
Net income | 403 | 400 | 3 | |
Net transfers to UTC | (81) | |||
Other comprehensive (loss) income, net of tax | 504 | 96 | 5 | |
Dividends attributable to noncontrolling interest | (2) | |||
Balance as of end of period at Mar. 31, 2019 | 14,690 | 15,460 | (1,128) | 358 |
Balance as of beginning of period at Dec. 31, 2019 | 14,435 | 15,355 | (1,253) | 333 |
Net income | 102 | 96 | 6 | |
Net transfers to UTC | (11,014) | |||
Other comprehensive (loss) income, net of tax | (383) | (483) | (2) | |
Dividends attributable to noncontrolling interest | (8) | |||
Balance as of end of period at Mar. 31, 2020 | $ 3,026 | $ 4,433 | $ (1,736) | $ 329 |
DESCRIPTION OF BUSINESS
DESCRIPTION OF BUSINESS | 3 Months Ended |
Mar. 31, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
DESCRIPTION OF BUSINESS | The Condensed Combined Financial Statements as of March 31, 2020 and for the quarters ended March 31, 2020 and 2019 are unaudited, and include all adjustments which consist of normal recurring adjustments considered necessary by management to fairly state our results of operations, financial position and cash flows. The results reported in the Unaudited Condensed Combined Financial Statements are not necessarily indicative of results that may be expected for any other interim period or the entire year. The financial information included herein should be read in conjunction with the financial statements and notes in the Company's information statement, dated March 16, 2020, which was included as Exhibit 99.1 in our Current Report on Form 8-K filed with the Securities and Exchange Commission ("SEC") on March 16, 2020 (the "Information Statement"). Impact of the COVID-19 pandemic on first quarter results and forward looking impacts A novel strain of coronavirus ("COVID-19") surfaced in Wuhan, China in late 2019 and has since spread throughout the rest of the world. In March 2020, 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 economies, disrupted global supply chains and financial markets, and resulted in significant travel restrictions, including mandated facility closures and shelter-in-place orders. Carrier is taking all prudent measures to protect the health and safety of our employees and has implemented work from home requirements, where possible, social distancing where working from home is not feasible including in our manufacturing facilities, deep cleaning protocols at all of our facilities and travel restrictions, among other measures. We have also taken appropriate measures to work with our customers to minimize potential disruption and to support the communities that we serve to address the challenges posed by the pandemic. The full extent of the impact of the COVID-19 pandemic on the Company's operational and financial performance will depend on future developments, including the duration and spread of the pandemic and related containment and mitigation actions taken by the U.S. Government, state and local government officials and international governments to prevent disease spread. The extent of the pandemic's impact on Carrier will also depend upon our employees' ability to work safely in our facilities, our customers’ ability to continue to operate or receive our products, the ability of our suppliers to continue to operate, and the level of activity and demand for the ultimate product and services of our customers or their customers. As a result of the COVID-19 pandemic, the Company has experienced varied impacts across the business. We temporarily closed or reduced production at manufacturing facilities in North America, Asia and Europe for safety reasons and in response to lower demand for our products but most of those facilities are now fully operational. We considered the outbreak and subsequent impacts to be a trigger to reassess our goodwill and intangible asset valuations. We also assessed whether or not COVID-19 impacts our significant assumptions regarding future income from our underlying assets or potentially changes our liabilities. In order to evaluate these impacts, we made forecast assumptions regarding future business activity that are subject to a wide range of uncertainties, including those noted in the prior paragraph. Because of the dynamic environment, in future periods, we will continue to evaluate whether these assumptions are reasonable. Based upon qualitative and, in certain cases, quantitative analyses, we determined that our goodwill and intangibles are not impaired. However, the fair value of one reporting unit exceeded its underlying carrying value by 20% and if future economic conditions are worse than our forecasted assumptions, we may need to re-assess the reporting unit’s goodwill for impairment. We are focused on navigating the challenges presented by COVID-19 by preserving our liquidity and managing our cash flows through preemptive actions to enhance our ability to meet our liquidity needs over the next twelve months. Such actions include, but are not limited to, reducing our discretionary spending, our capital investments and general and administrative costs by implementing pay freezes and cuts, employee furloughs and the suspension of non-critical hiring, and assessing the timing and amount of dividends on our common stock. We believe we have sufficient liquidity to withstand the expected impact of COVID-19. We are assessing the impact and availability of recently enacted global COVID-19 relief measures on our results of operations and liquidity, including the Coronavirus Aid, Relief, and Economic Security ("CARES") Act, which provides for payroll tax deferrals and credits, income tax estimate deferrals, and an increase to the income tax interest deduction limitation. DESCRIPTION OF THE BUSINESS Carrier Global Corporation is a leading global provider of heating, ventilating, air conditioning ("HVAC"), refrigeration, and fire and security solutions. Carrier also provides a broad array of related building services, including audit, design, installation, system integration, repair, maintenance and monitoring. Carrier’s operations are classified into three segments: HVAC, Refrigeration, and Fire & Security. The HVAC and Refrigeration segments sell their products and solutions directly, including to building contractors and owners, transportation companies and retail stores, or indirectly through joint venture and other minority owned investments, independent sales representatives, distributors, wholesalers, dealers and retail outlets. These products and services are sold under the Carrier name and other brand names including Automated Logic, Bryant, CIAT, Day & Night, Heil, NORESCO, Riello, Carrier Commercial Refrigeration, Carrier Transicold, Sensitech and others. The Fire & Security segment, sells its products directly to customers, or indirectly through manufacturers’ representatives, distributors, dealers, value-added resellers and retailers. Fire & Security’s products and services are used by governments, financial institutions, architects, building owners and developers, security and fire consultants, homeowners and other end-users requiring a high level of security and fire protection for their businesses and residences. These products and services are sold under brand names including Autronica, Chubb, Det-Tronics, Edwards, Fireye, GST, Interlogix, Kidde, LenelS2, Marioff, Onity, Supra and others. On November 26, 2018, United Technologies Corporation, since renamed Raytheon Technologies Corporation ("UTC") announced its intention to spin off Carrier, one of UTC's reportable segments, into a separate publicly traded company (the "Separation"). On April 3, 2020, UTC completed the Separation through a pro-rata distribution (the "Distribution") of all of the outstanding common stock of the Company 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 Distribution. UTC distributed 866,158,910 shares of Carrier common stock in the Distribution, which was effective at 12:01 a.m., Eastern Time, on April 3, 2020 (the "Effective Time"). As a result of the Distribution, Carrier became an independent public company and our common stock is listed under the symbol "CARR" on the New York Stock Exchange. In connection with the Separation, Carrier issued an aggregate principal balance of $11.0 billion of debt and transferred approximately $10.9 billion of cash to UTC on February 27, 2020 and March 27, 2020. See Note 10 – Borrowings and Lines of Credit and Note 3 – Earnings Per Share for additional information. |
BASIS OF PRESENTATION
BASIS OF PRESENTATION | 3 Months Ended |
Mar. 31, 2020 | |
Accounting Policies [Abstract] | |
BASIS OF PRESENTATION | BASIS OF PRESENTATION The Unaudited Condensed Combined Financial Statements reflect the financial position, results of operations and cash flows of the Company for the periods presented as historically managed within UTC. The Unaudited Condensed Combined Financial Statements are derived from the consolidated financial statements and accounting records of UTC. They have been prepared in accordance with generally accepted accounting principles in the United States of America ("GAAP") for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. They do not include all of the information and notes required by GAAP for complete financial statements. The Unaudited Condensed Combined Financial Statements reflect periods prior to the Separation and thus are prepared on a "carve-out" basis, as described below. The Unaudited Condensed Combined Statement of Operations include all revenues and costs directly attributable to Carrier, including costs for facilities, functions and services used by Carrier. Costs for certain functions and services performed by UTC are directly charged to Carrier based on specific identification when possible or based on a reasonable allocation driver such as net sales, headcount, proportionate usage or other allocation methods. The results of operations include allocations of costs for administrative functions and services performed on behalf of Carrier by centralized groups within UTC and certain pension and other post-retirement benefit costs (see Note 5 – Related Parties for a description of the allocation methodologies). All charges and allocations for facilities, functions and services performed by UTC have been deemed settled in cash by Carrier to UTC in the period in which the cost was recorded in the Unaudited Condensed Combined Statement of Operations. Current and deferred income taxes have been determined based on Carrier's stand-alone results. However, because the Company has historically filed tax returns as part of UTC in certain jurisdictions, the Company’s actual tax balances may differ from those reported. The Company’s portion of income taxes for domestic and certain jurisdictions outside the United States are deemed settled in the period the related tax expense was recorded. We entered into a transition services agreement ("TSA") with UTC and Otis Worldwide Corporation ("Otis") in connection with the Separation pursuant to which UTC provides us with certain services and we provide certain services to UTC for a limited time to help ensure an orderly transition following the Separation. The services we receive include, but are not limited to, information technology services, technical and engineering support, application support for operations, legal, payroll, finance, tax and accounting, general administrative services and other support services. Because costs for these services historically were included in our operating results through expense allocations from UTC, we do not expect the costs associated with the TSA to be materially different and, therefore, we do not expect such costs to materially affect our results of operations or cash flows after becoming an independent publicly traded company. UTC used a centralized approach to cash management and financing its operations. Accordingly, none of the cash, third party debt or related interest expense of UTC has been allocated to Carrier in the Unaudited Condensed Combined Financial Statements. However, cash balances primarily associated with certain foreign entities that do not participate in UTC’s cash management program have been included in the Unaudited Condensed Combined Financial Statements. Transactions between UTC and Carrier are deemed settled immediately through UTC’s Net investment, other than those transactions which have historically been cash-settled and which are reflected in the Unaudited Condensed Combined Balance Sheet within Accounts receivable and Accounts payable. The net effect of the deemed settled transactions is reflected in the Unaudited Condensed Combined Statement of Cash Flows as Net transfers to UTC within financing activities and in the Unaudited Condensed Combined Balance Sheet as UTC’s Net investment (see Note 5 – Related Parties for additional information). All significant intra-company accounts and transactions have been eliminated in the preparation of the Unaudited Condensed Combined Financial Statements. The Unaudited Condensed Combined Financial Statements of the Company include assets and liabilities that have been determined to be specifically identifiable or otherwise attributable to the Company. All of the allocations and estimates in the Unaudited Condensed Combined Financial Statements are based on assumptions that management believes are reasonable. However, the Unaudited Condensed Combined Financial Statements included herein may not be indicative of the financial position, results of operations and cash flows of the Company in the future, or if the Company had been a separate, stand-alone entity during the periods presented. Non-controlling interest represents the non-controlling investors’ interests in the results of subsidiaries that we control and combine. Certain immaterial amounts presented in the Information Statement have been reclassified to conform to the current period presentation. Included in these presentation changes, we reclassified the Current portion of long-term debt from Accrued liabilities for 2019 on the accompanying Unaudited Condensed Combined Balance Sheet. Recently Adopted Accounting Pronouncements In June 2016, the Financial Accounting Standards Board ("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 (collectively, the "Credit Loss Standard") modifies the credit loss model to utilize an expected loss methodology in place of an incurred loss methodology for financial instruments, including trade receivables, contract assets, long term receivables and off-balance sheet credit exposures. The Credit Loss Standard requires consideration of a broader range of information to estimate expected credit losses, including historical information, current conditions and a reasonable forecast period. This ASU requires that the statement of operations reflect the measurement of credit losses for newly recognized financial assets as well as the expected increase or decrease of expected credit losses that have taken place during the period, which may result in earlier recognition. The Company adopted the Credit Loss Standard effective January 1, 2020 utilizing a modified retrospective approach and adoption did not have a significant impact on the Company's Unaudited Condensed Combined Financial Statements. In January 2017, the FASB issued ASU 2017-04, Intangibles – Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment . This ASU simplifies how an entity is required to test goodwill for impairment by eliminating Step 2 from the goodwill impairment test. Under the amendments in this ASU, a goodwill impairment is calculated as the difference between the carrying amount of the reporting unit and its fair value, but not to exceed the carrying amount of the goodwill allocated to that reporting unit. Additionally, this ASU requires the same impairment testing methodology for all reporting units, even those with a zero or negative carrying amount of net assets and requires an entity to disclose the amount of goodwill allocated to each reporting unit with a zero or negative carrying amount. The Company adopted this ASU effective January 1, 2020 and the adoption did not have a significant impact on the Company's Unaudited Condensed Combined Financial Statements. 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 ASU removes the disclosure requirements for the amount of and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy. The Company adopted this ASU effective January 1, 2020 and the adoption of this ASU did not have a significant impact on the Company's Unaudited Condensed Combined Financial Statements. |
EARNINGS PER SHARE
EARNINGS PER SHARE | 3 Months Ended |
Mar. 31, 2020 | |
Earnings Per Share [Abstract] | |
EARNINGS PER SHARE | EARNINGS PER SHARE On April 3, 2020, the date of the Separation, 866,158,910 shares of the Company’s common stock, par value $0.01 per share, were distributed to UTC shareowners of record as of March 19, 2020. This share amount is utilized for the calculation of basic and diluted earnings per share for all periods presented prior to the Separation. For the quarters ended March 31, 2020 and 2019, these shares are treated as issued and outstanding from January 1, 2020 and 2019, respectively, for purposes of calculating historical earnings per share. For periods prior to the Separation it is assumed that there are no dilutive equity instruments as there were no equity awards of Carrier outstanding prior to the Separation. (dollars in millions, except per share amounts; shares in millions) March 31, 2020 March 31, 2019 Net income attributable to common shareowners $ 96 $ 400 Basic weighted average number of shares outstanding 866 866 Diluted weighted average number of shares outstanding 866 866 Earnings Per Share Basic $ 0.11 $ 0.46 Diluted $ 0.11 $ 0.46 |
REVENUE RECOGNITION
REVENUE RECOGNITION | 3 Months Ended |
Mar. 31, 2020 | |
Revenue from Contract with Customer [Abstract] | |
REVENUE RECOGNITION | REVENUE RECOGNITION Contract Assets and Liabilities. Total contract assets and liabilities as of March 31, 2020 and December 31, 2019 are as follows: (dollars in millions) March 31, 2020 December 31, 2019 Contract assets, current $ 651 $ 622 Contract assets, non-current (included within Other assets) 90 57 Total contract assets 741 679 Contract liabilities, current (485) (443) Contract liabilities, non-current (included within Other long-term liabilities) (168) (168) Total contract liabilities (653) (611) Net contract assets $ 88 $ 68 Contract assets increased $62 million for the quarter ended March 31, 2020, primarily due to the timing of billings on customer contracts and contract completions. Contract liabilities increased $42 million for the quarter ended March 31, 2020, primarily due to customer billings in excess of revenue earned. For the quarters ended March 31, 2020 and 2019, we recognized revenue of $144 million and $178 million, respectively, related to contract liabilities as of January 1, 2020 and 2019. Remaining Performance Obligations ("RPO"). As of March 31, 2020, our total RPO was approximately $5.1 billion compared with $4.7 billion as of December 31, 2019. Of the total RPO as of March 31, 2020, we expect approximately 66% will be recognized as sales over the following 12 months. See Note 18 – Segment Financial Data which provides incremental disclosures required by Accounting Standard Codification ("ASC") 606 – Revenue from Contracts with Customers . |
RELATED PARTIES
RELATED PARTIES | 3 Months Ended |
Mar. 31, 2020 | |
Related Party Transactions [Abstract] | |
RELATED PARTIES | RELATED PARTIES Historically, Carrier has been managed and operated in the normal course of business with other affiliates of UTC. Accordingly, certain shared costs have been allocated to the Company and are reflected as expenses in the Unaudited Condensed Combined Financial Statements. Related Party Sales. During the historical periods presented, the Company sold products and services to UTC and its other affiliates. Product sales in the Unaudited Condensed Combined Statement of Operations include sales to UTC and affiliates of UTC other than Carrier of $3 million and $6 million for the quarters ended March 31, 2020 and 2019, respectively. Allocated Centralized Costs. UTC incurred corporate costs for services provided to the Company as well as to other UTC businesses. These services included treasury, tax, accounting, human resources, internal audit, legal, purchasing, information technology and other services. The costs associated with these services generally included all payroll and benefit costs as well as related overhead costs. UTC also allocated costs associated with corporate insurance coverage and medical, pension, post-retirement and other health plan costs for employees participating in UTC sponsored plans. UTC corporate costs were either specifically attributed and charged to Carrier, when possible, or allocated to the Company. Allocations were based on direct usage where identifiable and on a number of other utilization measures including headcount, proportionate usage and net sales. All such amounts were deemed incurred and settled by the Company in the period in which the costs were recorded and are included in the UTC Net investment. The allocated centralized costs for the quarters ended March 31, 2020 and 2019 were $43 million and $54 million, respectively, and are primarily included in Selling, general and administrative in the Unaudited Condensed Combined Statement of Operations. The expense and cost allocations have been determined on a basis considered to be a reasonable reflection of the utilization of services provided to or for the benefit received by the Company for the quarters ended March 31, 2020 and 2019. The amounts that would have been, or will be incurred, on a stand-alone basis could differ from the amounts allocated due to economies of scale, differences in management approach, a need for more or fewer employees or other factors. In addition, the Company's future results of operations, financial position and cash flows could differ materially from the historical results presented herein. Separation Costs. In connection with the Separation, we have incurred pre-Separation costs of approximately $45 million for the quarter ended March 31, 2020, primarily recorded in Selling, general and administrative in the Unaudited Condensed Combined Statement of Operations, which primarily consist of employee-related costs, costs to establish certain stand-alone functions and information technology systems, professional services fees and other transaction-related costs resulting from Carrier’s transition to becoming an independent publicly traded company. Carrier did not incur costs in connection with the Separation for the quarter ended March 31, 2019. Cash Management and Financing. The Company participated in UTC’s centralized cash management and financing programs. Cash receipts and disbursements were executed through centralized systems, which were operated by UTC. As cash was received and disbursed by UTC, it was accounted for by the Company through UTC Net investment. The majority of external debt was financed by UTC, and financing decisions for wholly and majority owned subsidiaries were determined by UTC. See Note 1 – Description of the Business for additional information. The Company’s cash that was excluded from UTC's centralized cash management and financing programs is classified as Cash and cash equivalents in the Unaudited Condensed Combined Balance Sheet. During the quarter ended March 31, 2020, net liabilities of $79 million were contributed to the Company by UTC which primarily consisted of deferred tax assets and liabilities and fixed assets. These non-cash contributions are recorded as Net transfers to UTC on the Unaudited Condensed Combined Statement of Changes in Equity through UTC Net investment. Accounts Receivable and Payable. Certain related party transactions between the Company and UTC were included within UTC Net investment in the Unaudited Condensed Combined Balance Sheet in the periods presented when the related party transactions were not settled in cash. The UTC Net investment includes related party receivables due from UTC and its affiliates of $3 million and $16 billion as of March 31, 2020 and December 31, 2019, respectively. The UTC Net investment includes related party payables due to UTC and its affiliates of $258 million and $3 billion as of March 31, 2020 and December 31, 2019, respectively. Interest income and expense related to activity with UTC that was historically included in Carrier’s results is presented on a net basis in the Unaudited Condensed Combined Statement of Operations. There was $0 million and $28 million of interest income on activity with UTC for the quarters ended March 31, 2020 and 2019, respectively. Interest expense on activity with UTC was $0 million and $16 million for the quarters ended March 31, 2020 and 2019, respectively. The effect of the settlement of these related party transactions is included in financing activity in the Unaudited Condensed Combined Statement of Cash Flows. Additionally, certain transactions between Carrier and UTC and its affiliates were cash-settled and are reflected in the Unaudited Condensed Combined Balance Sheet within Accounts receivable and were $1 million and $6 million as of March 31, 2020 and December 31, 2019, respectively. Accounts payable includes $0 million and $4 million at March 31, 2020 and December 31, 2019, respectively, related to such transactions. Equity Method Investments. Carrier sells products to and purchases products from uncombined entities accounted for under the equity method, which are considered related parties. During the quarters ended March 31, 2020 and 2019, Product sales in the Unaudited Condensed Combined Statement of Operations included sales to equity method investees of $344 million and $394 million, respectively. During the quarters ended March 31, 2020 and 2019, Cost of products sold in the Unaudited Condensed Combined Statement of Operations included purchases from equity method investees of $77 million and $77 million, respectively. Carrier had receivables from equity method investees of $191 million and $137 million at March 31, 2020 and December 31, 2019, respectively. Carrier also had payables to equity method investees of $38 million and $55 million at March 31, 2020 and December 31, 2019, respectively. The receivables and payables are included in Accounts receivable, net and Accounts payable on the Unaudited Condensed Combined Balance Sheet. The Company periodically reviews the carrying value of its equity method investments to determine if there has been an other-than-temporary decline in fair value. A variety of factors are considered when determining if a decline in carrying value is other-than-temporary, including, among other factors, the financial condition and business prospects of the investee, as well as the Company's intent with regard to the investment. During the quarter ended March 31, 2020, we determined that indicators of impairment existed for a minority owned joint venture investment in the portfolio. We performed a valuation of this investment, based on the income approach using the discounted cash flow method, and determined that the loss in value was other-than-temporary, due to a reduction in sales and earnings driven by deterioration in the oil and gas industry, the joint venture's primary market, and the impact of the COVID-19 pandemic, among other factors. As a result, we recorded a non-cash other-than-temporary impairment charge of $71 million on this investment during the quarter ended March 31, 2020 which is included in Other (expense) income, net on the accompanying Unaudited Condensed Combined Statement of Operations. |
ACCOUNTS RECEIVABLE, NET
ACCOUNTS RECEIVABLE, NET | 3 Months Ended |
Mar. 31, 2020 | |
Receivables [Abstract] | |
ACCOUNTS RECEIVABLE, NET | ACCOUNTS RECEIVABLE, NET The Company is exposed to credit losses primarily through the sales of products and services to commercial customers, which are recorded as Trade receivables. We evaluate a customer’s ability to pay by assessing creditworthiness, historical experience and current conditions. We determine credit ratings for each customer in our portfolio based upon public information and information obtained directly from our customers. We evaluate the reasonableness of the allowance for credit losses on a quarterly basis or when events and circumstances warrant. In addition to credit quality indicators, factors considered in our evaluation of collectability include the underlying value of any collateral or security interests, past due balances, historical losses, and existing economic conditions including country and political risk. In certain circumstances, we may require collateral or prepayment to mitigate credit risk. We determine receivables are impaired when, based on historical experience, current information and events and a reasonable forecast period, we may be unable to collect amounts due according to the contractual terms of an agreement. Estimated credit losses are written off in the period in which an accounts receivable is determined to be no longer collectible. Accounts receivable, net consisted of the following: (dollars in millions) March 31, 2020 December 31, 2019 Trade receivables $ 2,377 $ 2,444 Receivables from affiliates 191 143 Other receivables 169 184 Accounts receivable 2,737 2,771 Less: Allowance for expected credit losses (63) (45) Accounts receivable, net $ 2,674 $ 2,726 The changes in the allowance for expected credit losses related to Accounts receivable are as follows: (dollars in millions) Balance at January 1, 2020 $ 45 Current period provision for expected credit losses 12 Other (including impact of adoption of ASU 2016-13) 6 Balance at March 31, 2020 $ 63 |
FIXED ASSETS, NET
FIXED ASSETS, NET | 3 Months Ended |
Mar. 31, 2020 | |
Property, Plant and Equipment [Abstract] | |
FIXED ASSETS, NET | FIXED ASSETS, NET Fixed assets are recorded at cost and are depreciated on a straight-line basis over their estimated useful lives. (dollars in millions) Estimated Useful Lives (Years) March 31, 2020 December 31, 2019 Land $ 106 $ 113 Buildings and improvements 40 1,099 1,138 Machinery, tools and equipment 3 to 25 1,924 1,924 Rental assets 3 to 12 389 395 Other, including assets under construction 194 188 Fixed assets, gross 3,712 3,758 Accumulated depreciation (2,074) (2,095) Fixed assets, net $ 1,638 $ 1,663 Depreciation expense was $56 million and $54 million for the quarters ended March 31, 2020 and 2019, respectively. |
BUSINESS ACQUISITIONS, DISPOSIT
BUSINESS ACQUISITIONS, DISPOSITIONS, GOODWILL AND INTANGIBLE ASSETS | 3 Months Ended |
Mar. 31, 2020 | |
Business Combinations [Abstract] | |
BUSINESS ACQUISITIONS, DISPOSITIONS, GOODWILL AND INTANGIBLE ASSETS | BUSINESS ACQUISITIONS, DISPOSITIONS, GOODWILL AND INTANGIBLE ASSETS Business Acquisitions and Dispositions. There were no significant acquisitions o r divestitures during the quarters ended March 31, 2020 and 2019. Goodwill. The changes in the carrying amount of goodwill are as follows: (dollars in millions) HVAC Refrigeration Fire & Security Total Balance as of January 1, 2020 $ 5,351 $ 1,228 $ 3,305 $ 9,884 Foreign currency translation (204) (50) 18 (236) Balance at March 31, 2020 $ 5,147 $ 1,178 $ 3,323 $ 9,648 Intangible Assets, net. Identifiable intangible assets are comprised of the following: March 31, 2020 December 31, 2019 (dollars in millions) Gross Amount Accumulated Amortization Gross Amount Accumulated Amortization Amortized: Customer relationships $ 1,448 $ (1,142) $ 1,479 $ (1,154) Patents and trademarks 284 (201) 287 (201) Monitoring lines 62 (49) 67 (52) Service portfolios and other 624 (509) 629 (506) 2,418 (1,901) 2,462 (1,913) Unamortized: Trademarks and other 497 — 534 — Intangible assets, net $ 2,915 $ (1,901) $ 2,996 $ (1,913) |
INVENTORIES, NET
INVENTORIES, NET | 3 Months Ended |
Mar. 31, 2020 | |
Inventory Disclosure [Abstract] | |
INVENTORIES, NET | INVENTORIES, NET (dollars in millions) March 31, 2020 December 31, 2019 Raw materials $ 335 $ 290 Work-in-process 147 120 Finished goods 1,074 922 Inventories, net $ 1,556 $ 1,332 |
BORROWINGS AND LINES OF CREDIT
BORROWINGS AND LINES OF CREDIT | 3 Months Ended |
Mar. 31, 2020 | |
Debt Disclosure [Abstract] | |
BORROWINGS AND LINES OF CREDIT | BORROWINGS AND LINES OF CREDIT As of March 31, 2020, we had entered into, but not utilized, a $2.0 billion unsecured, unsubordinated commercial paper program. We plan to use our commercial paper borrowings for general corporate purposes, including the funding of working capital and potential acquisitions. On February 10, 2020, we entered into a revolving credit agreement with various banks permitting aggregate borrowings of up to $2.0 billion pursuant to an unsecured, unsubordinated revolving credit facility that matures on April 3, 2025 (the "revolving credit facility"). The revolving credit facility was not available to Carrier or its subsidiaries until after the Separation . The revolving credit facility will support our commercial paper program and support our cash requirements. A commitment fee of 0.125% is charged on the unused commitments. Borrowings under t he revolving credit facility are available in U.S. Dollars, Euros and Pounds Sterling and bear interest at a variable interest rate based on LIBOR plus a ratings-based margin, which was 125 basis points as of March 31, 2020. On February 10, 2020, we entered into a $1.75 billion term loan credit agreement that provides an unsecured, unsubordinated credit facility which expires on February 10, 2023 (the "term loan credit facility"). Borrowings under the term loan credit facility are subject to a variable interest rate based on LIBOR plus a ratings-based margin, which was 112.5 basis points as of March 31, 2020. On February 27, 2020, Carrier issued $9.25 billion of unsecured, unsubordinated long-term notes in six series with maturity dates ranging from 2023 through 2050. The notes were issued pursuant to an indenture between the Company and The Bank of New York Mellon Trust Company, N.A., as trustee. The revolving credit agreement, term loan credit agreement and indenture contain affirmative and negative covenants customary to financings of this type, that among other things, limit Carrier and its subsidiaries' ability to incur additional liens, to make certain fundamental changes and to enter into sale and leaseback transactions. In addition, the revolving credit agreement and term loan credit agreement contain a financial covenant that requires us to not exceed a maximum consolidated total net leverage ratio that will be tested beginning with the fiscal quarter ending on September 30, 2020. On March 27, 2020, Carrier drew $1.75 billion on the term loan credit facility. The proceeds from the notes and the term loan credit facility were used to distribute $10.9 billion to UTC in connection with the Separation. Long-term debt, all of which was issued during the quarter ended March 31, 2020 except for Other long-term debt, consisted of the following: (dollars in millions) Debt Description Interest Rate Due Date March 31, 2020 December 31, 2019 3-Year Term Loan Credit Facility 2.195 % 1 February 10, 2023 $ 1,750 2 $ — 3-Year Fixed Rate Notes 1.923 % February 15, 2023 500 2 — 5-Year Fixed Rate Notes 2.242 % February 15, 2025 2,000 2 — 7-Year Fixed Rate Notes 2.493 % February 15, 2027 1,250 2 — 10-Year Fixed Rate Notes 2.722 % February 15, 2030 2,000 2 — 20-Year Fixed Rate Notes 3.377 % April 05, 2040 1,500 2 — 30-Year Fixed Rate Notes 3.577 % April 05, 2050 2,000 2 — Other (including project financing obligations and finance leases) 326 319 Total principal long-term debt 11,326 319 Other (discounts and debt issuance costs) (79) 2 — Total debt 11,247 319 Less: current portion of long-term debt 218 237 Long-term debt, net of current portion $ 11,029 $ 82 1 The interest rate on the term loan is variable based on six month LIBOR of 1.07% plus 112.5 basis points. 2 The net proceeds of the financing arrangements were used to distribute cash to UTC. We issued $40 million and $52 million of debt during the quarters ended March 31, 2020 and 2019, respectively, relating to project financing arrangements. Long-term debt repayments during the quarters ended March 31, 2020 and 2019 were $34 million and $1 million, respectively. Scheduled maturities of long-term debt, excluding amortization of discount, are as follows: (dollars in millions) 2020 $ 218 2021 $ 70 2022 $ 28 2023 $ 2,260 2024 $ — Thereafter $ 8,750 The average maturity of our long-term debt at March 31, 2020 is approximate ly 11 years and the average interest rate on our total borrowings for the quarter ended March 31, 2020 is approximately 2.7%. Interest expense associated with long-term debt for the quarter ended March 31, 2020 was $31 million. Included in interest expense on the accompanying Unaudited Condensed Combined Statement of Operations is accrued interest of $25 million, debt issuance costs of $5 million and amortization of debt issuance costs of $0.7 million. |
EMPLOYEE BENEFIT PLANS
EMPLOYEE BENEFIT PLANS | 3 Months Ended |
Mar. 31, 2020 | |
Retirement Benefits [Abstract] | |
EMPLOYEE BENEFIT PLANS | EMPLOYEE BENEFIT PLANS Pension Plans. The Company sponsors both funded and unfunded domestic and international defined pension and other post-retirement benefit plans, and defined contribution plans. Additionally, the Company contributes to various domestic and international multi-employer defined pension and other post-retirement benefit plans. Contributions to the plans were as follows: For the Quarters Ended March 31, (dollars in millions) 2020 2019 Defined benefit plans $ 25 $ 22 Defined contribution plans $ 30 $ 25 Multi-employer pension plans $ 5 $ 5 The following table illustrates the components of net periodic pension benefits for our defined pension and post-retirement benefit plans: For the Quarters Ended March 31, (dollars in millions) 2020 2019 Service cost $ 8 $ 8 Interest cost 13 17 Expected return on plan assets (35) (39) Amortization of prior service credit 1 1 Recognized actuarial net loss 5 2 Net settlement, curtailment and special termination benefit loss 1 — Net periodic pension benefit $ (7) $ (11) UTC Sponsored Defined Benefit Plans. Defined benefit pension and post-retirement benefit plans sponsored by UTC have been accounted for as multi-employer plans in the Unaudited Condensed Combined Financial Statements, in accordance with ASC Topic 715-30 : Defined Benefit Plans – Pension and ASC Topic 715-60: Defined Benefit Plans – Other Post-retirement . ASC Topic 715: Compensation-Retirement Benefits, which provides that an employer that participates in a multi-employer defined benefit plan is not required to report a liability beyond the contributions currently due and unpaid to the plan. Therefore, no assets or liabilities related to these plans have been included in the Unaudited Condensed Combined Balance Sheet. The pension and post-retirement expenses associated with the UTC plans were allocated to the Company and reported in Cost of products, Cost of services sold, Selling, general and administrative and Non-service pension benefit on the accompanying Unaudited Condensed Combined Statement of Operations. The pension and post-retirement expenses were as follows: For the Quarters Ended March 31, (dollars in millions) 2020 2019 Service cost $ — $ 4 Non-service pension benefit (2) (20) Total net periodic benefit $ (2) $ (16) |
ACCUMULATED OTHER COMPREHENSIVE
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) | 3 Months Ended |
Mar. 31, 2020 | |
Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract] | |
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) | ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) A summary of the changes in each component of Accumulated other comprehensive (loss), net of tax for the quarters ended March 31, 2020 and 2019 were as follows: (dollars in millions) Foreign Currency Translation Defined Benefit Pension and Post-retirement Plans Accumulated Other Comprehensive (Loss) Balance as of January 1, 2020 $ (780) $ (473) $ (1,253) Other comprehensive loss before reclassifications, net (488) — (488) Amounts reclassified, pre-tax — 6 6 Tax benefit reclassified — (1) (1) Balance as of March 31, 2020 $ (1,268) $ (468) $ (1,736) (dollars in millions) Foreign Currency Translation Defined Benefit Pension and Post-retirement Plans Accumulated Other Comprehensive (Loss) Balance as of January 1, 2019 $ (834) $ (381) $ (1,215) Other comprehensive income before reclassifications, net 91 2 93 Amounts reclassified, pre-tax — 3 3 ASU 2018-02 adoption impact — (9) (9) Balance as of March 31, 2019 $ (743) $ (385) $ (1,128) Amounts reclassified related to defined benefit pension and post-retirement plans include amortization of prior service costs and recognized actuarial net losses. These costs are recorded as components of net periodic pension cost for each period presented (see Note 11 – Employee Benefit Plans for additional details). |
INCOME TAXES
INCOME TAXES | 3 Months Ended |
Mar. 31, 2020 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | INCOME TAXES The effective tax rate for the quarter ended March 31, 2020 was 65.4% compared with 25.8% for the quarter ended March 31, 2019. This increase is primarily the result of a $51 million charge related to a valuation allowance recorded against a United Kingdom tax loss and credit carryforward as a result of separation-related activities, a charge of $46 million resulting from Carrier's decision to no longer permanently reinvest certain pre-2018 unremitted non-U.S. earnings, and the impact of a non-deductible impairment charge of $71 million on a minority owned joint venture investment. The Company assesses the realizability of its deferred tax assets on a quarterly basis through an analysis of potential sources of future taxable income, including prior year taxable income available to absorb a carryback of tax losses, reversals of existing taxable temporary differences, tax planning strategies and forecasts of taxable income. The Company considers all negative and positive evidence, including the weight of the evidence, to determine if valuation allowances against deferred tax assets are required. The Company maintains valuation allowances against certain non-U.S. deferred tax assets. We will continue to evaluate the impact that COVID-19 may have on the future realizability of a portion of the remaining non-US deferred tax assets. Carrier conducts business globally and, as a result, files income tax returns in U.S. federal and various state and foreign jurisdictions. In certain jurisdictions, Carrier's operations are included in the combined tax returns with UTC for the period up through the Separation. In the normal course of business, the Company is subject to examination by taxing authorities throughout the world, including Australia, Belgium, Canada, China, Czech Republic, France, Germany, Hong Kong, India, Italy, Mexico, Netherlands, Singapore, the United Kingdom and the United States. With few exceptions, Carrier is no longer subject to U.S. federal, state and local and non-U.S. income tax examinations for tax years before 2010. |
RESTRUCTURING COSTS
RESTRUCTURING COSTS | 3 Months Ended |
Mar. 31, 2020 | |
Restructuring and Related Activities [Abstract] | |
RESTRUCTURING COSTS | RESTRUCTURING COSTS During the quarters ended March 31, 2020 and 2019, we recorded net pre-tax restructuring costs totaling $5 million and $33 million, respectively, for new and ongoing restructuring actions in our segments as follows: For the Quarters Ended March 31, (dollars in millions) 2020 2019 HVAC $ 2 $ 17 Refrigeration — 3 Fire & Security 3 13 Total restructuring costs $ 5 $ 33 Restructuring charges incurred during the quarters ended March 31, 2020 and 2019 primarily relate to actions initiated during 2020 and 2019, and are recorded as follows: For the Quarters Ended March 31, (dollars in millions) 2020 2019 Cost of sales $ 1 $ 5 Selling, general and administrative 4 28 Total restructuring costs $ 5 $ 33 2020 Actions. During the quarter ended March 31, 2020, we recorded net pre-tax restructuring costs of $2 million for restructuring actions initiated in 2020, consisting of $1 million in Cost of sales and $1 million in Selling, general and administrative. The 2020 actions relate t o ongoing cost reduction efforts, including workforce reductions and the consolidation of field operations. We are targeting to complete the majority of the remaining actions in 2021. The following table summarizes the accrual balance and utilization for the 2020 restructuring actions: (dollars in millions) Severance Facility Exit, Total Restructuring accruals as of January 1, 2020 $ — $ — $ — Net pre-tax restructuring costs 2 — 2 Utilization, foreign exchange and other costs — — — Balance as of March 31, 2020 $ 2 $ — $ 2 The following table summarizes expected, incurred and remaining costs for the 2020 restructuring actions by segment: (dollars in millions) Expected Costs Costs Incurred - Quarter Ended March 31, 2020 Remaining Costs at March 31, 2020 HVAC $ 3 $ (1) $ 2 Refrigeration — — — Fire & Security 1 (1) — Eliminations and other — — — Total $ 4 $ (2) $ 2 2019 Actions. During the quarters ended March 31, 2020 and 2019, we recorded net pre-tax restructuring costs totaling $3 million and $25 million, respectively, for restructuring actions initiated in 2019, consisting of $0 million and $2 million in Cost of products and Cost of services sold and $3 million and $23 million in Selling, general and administrative, respectively. The 2019 actions relate to ongoing cost reduction efforts, including workforce reductions and consolidation of field operations. The following table summarizes the accrual balances and utilization for the 2019 restructuring actions: (dollars in millions) Severance Facility Exit, Total Restructuring accruals as of January 1, 2020 $ 43 $ 1 $ 44 Net pre-tax restructuring costs 3 — 3 Utilization, foreign exchange and other costs (14) (1) (15) Balance as of March 31, 2020 $ 32 $ — $ 32 The following table summarizes expected, incurred and remaining costs for the 2019 restructuring actions by segment: (dollars in millions) Expected Costs Incurred in 2019 Costs Incurred - Quarter Ended March 31, 2020 Remaining Costs at March 31, 2020 HVAC $ 53 $ (51) $ (1) $ 1 Refrigeration 16 (14) — 2 Fire & Security 49 (43) (2) 4 Eliminations and other 2 (2) — — Total $ 120 $ (110) $ (3) $ 7 2018 and Prior Actions. During the quarters ended March 31, 2020 and 2019, we recorded net pre-tax restructuring costs totaling $0 million and $8 million, respectively, for restructuring actions initiated in 2018 and prior. As of March 31, 2020 and 2019, we had approximately $13 million and $47 million, respectively, of accrual balances remaining related to 2018 and prior actions. |
GUARANTEES
GUARANTEES | 3 Months Ended |
Mar. 31, 2020 | |
Guarantees [Abstract] | |
GUARANTEES | GUARANTEES The Company provides service and warranty coverage on its products and extends performance and operating cost guarantees beyond normal service and warranty coverage on some of its products. In addition, the Company incurs discretionary costs to service its 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 recorded to accruals based on claims data and historical experience. The changes in the carrying amount of service and product warranties and product performance guarantees, included in Accrued liabilities on the accompanying Unaudited Condensed Combined Balance Sheet, for the quarters ended March 31, 2020 and 2019 are as follows: For the Quarters Ended March 31, (dollars in millions) 2020 2019 Balance as of January 1 $ 488 $ 473 Warranties and performance guarantees issued 35 40 Settlements made (39) (36) Other (3) — Balance as of March 31 $ 481 $ 477 |
FAIR VALUE MEASUREMENTS
FAIR VALUE MEASUREMENTS | 3 Months Ended |
Mar. 31, 2020 | |
Fair Value Disclosures [Abstract] | |
FAIR VALUE MEASUREMENTS | 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 recorded at fair value and measured on a recurring basis in our Unaudited Condensed Combined Balance Sheet: March 31, 2020 (dollars in millions) Total Level 1 Level 2 Level 3 Recurring fair value measurement: Derivative assets $ 23 1 $ — $ 23 $ — Derivative liabilities $ (10) 2 $ — $ (10) $ — 1 Included in Other assets, current on the accompanying Unaudited Condensed Combined Balance Sheet 2 Included in Accrued liabilities on the accompanying Unaudited Condensed Combined Balance Sheet Valuation Techniques. Our derivative assets and liabilities are measured at fair value using internal models based on observable market inputs, such as forward, interest, contract and discount rates. The following table provides the carrying amounts and fair values of financial instruments that are not recorded at fair value in our Unaudited Condensed Combined Balance Sheet: March 31, 2020 December 31, 2019 (dollars in millions) Carrying Fair Carrying Fair Current and long-term debt (excluding finance leases) $ 11,241 $ 10,634 $ 313 $ 313 The following table provides the valuation hierarchy classification of assets and liabilities that are not carried at fair value in our Unaudited Condensed Combined Balance Sheet: March 31, 2020 (dollars in millions) Total Level 1 Level 2 Level 3 Current and long-term debt (excluding finance leases) $ 10,634 $ 8,565 $ — $ 2,069 December 31, 2019 (dollars in millions) Total Level 1 Level 2 Level 3 Current and long-term debt (excluding finance leases) $ 313 $ — $ — $ 313 Valuation Techniques. Based on the information available as of March 31, 2020, the fair value of the term loan credit facility was estimated on the basis of the present value of the expected future cash flows contractually due in accordance with the terms of the term loan credit agreement, a Level 3 measurement. The cash flows were discounted using the LIBOR rate at the valuation date based on the terms of the term loan credit agreement, adjusted for any change in credit risk premium. At March 31, 2020, the project financing obligations included in Long-term debt approximate their fair value. Du ring the quarters ended March 31, 2020 and 2019, there were no significant transfers in or out of levels 1, 2, or 3. The following tables present changes during the quarters ended March 31, 2020 and 2019 in Level 3 liabilities not measured at fair value on a recurring basis: For the Quarters Ended March 31, (dollars in millions) 2020 2019 Fair value as of January 1 $ 313 $ 291 Issuances 1,790 52 Settlements (34) (1) Fair value as of March 31 $ 2,069 $ 342 |
CONTINGENT LIABILITIES
CONTINGENT LIABILITIES | 3 Months Ended |
Mar. 31, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
CONTINGENT LIABILITIES | CONTINGENT LIABILITIES Except as otherwise noted, the Company is unable to predict the final outcome of these matters based on the information currently available; however, the Company does not believe that the resolution of any of these matters will have a material adverse effect upon our competitive position, results of operations, cash flows, or financial condition. Environmental. The Company’s operations are subject to environmental regulation by various authorities. 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. Management believes that the likelihood of incurring losses materially in excess of the amounts accrued is remote. As of March 31, 2020 and December 31, 2019, the outstanding liability for environmental obligations was $218 million and $217 million, respectively, of which $13 million and $14 million, respectively, is included in Accrued liabilities and $205 million and $203 million, respectively, is included in Other long-term liabilities on the accompanying Unaudited Condensed Combined Balance Sheet. Legal Proceedings. Asbestos Matters – The Company and its combined subsidiaries have been named as defendants in lawsuits alleging personal injury as a result of exposure to asbestos allegedly integrated into certain of Carrier’s products or business premises. While the Company has never manufactured asbestos and no longer incorporates it in to any currently-manufactured products, certain products that Carrier no longer manufactures contained components incorporating asbestos. A substantial majority of these asbestos-related claims have been dismissed without payment, or were covered in full or in part by insurance or other forms of indemnity. Additional cases were litigated and settled without any insurance reimbursement. The amounts involved in asbestos related claims were not material individually or in the aggregate in any period. The amounts recorded for asbestos-related liabilities are based on currently available information and assumptions that we believe are reasonable and are made with input from outside actuarial experts. As of March 31, 2020, the estimated range of liability to resolve all pending and unasserted potential future asbestos claims through 2059 is approximately $255 million to $290 million. Where no amount within a range of estimates is more likely, the minimum is accrued. We have recorded the minimum amount of $255 million, which is principally recorded in Other long-term liabilities on the Unaudited Condensed Combined Balance Sheet as of March 31, 2020. This amount is undiscounted and excludes the Company’s legal fees to defend the asbestos claims, which will continue to be expensed as incurred. In addition, the Company has an insurance recovery receivable for probable asbestos related recoveries of approximately $104 million, which is included primarily in Other assets on the Unaudited Condensed Combined Balance Sheet as of both March 31, 2020 and December 31, 2019. Other. As described in Note 15 – Guarantees , the Company extends performance and operating cost guarantees beyond the normal warranty and service policies for extended periods on some of its products. The Company typically accrues its estimate of the liability that may result under these guarantees and for service costs that are probable and can be reasonably estimated. The Company has other commitments and contingent liabilities related to legal proceedings, self-insurance programs and matters arising in the ordinary course of business. The Company accrues for contingencies generally based upon a range of possible outcomes. If no amount within the range is a better estimate than any other, the Company accrues the minimum amount. In the ordinary course of business, Carrier is routinely a defendant in, party to or otherwise subject to pending and threatened legal actions, claims, disputes and proceedings. These matters are often based on alleged violations of contract, |
SEGMENT FINANCIAL DATA
SEGMENT FINANCIAL DATA | 3 Months Ended |
Mar. 31, 2020 | |
Segment Reporting [Abstract] | |
SEGMENT FINANCIAL DATA | SEGMENT FINANCIAL DATA Carrier’s operations are classified into three principal segments: HVAC, Refrigeration, and Fire & Security. HVAC provides products, controls, services and solutions to meet the heating and cooling needs of residential and commercial customers, while enhancing building performance, energy efficiency and sustainability. Refrigeration is comprised of transport refrigeration and commercial refrigeration products and solutions. Transport refrigeration products and services include refrigeration and monitoring systems for trucks, trailers, shipping containers, intermodal and rail. Fire & Security includes a wide range of residential and building systems, including fire, flame, gas, smoke and carbon monoxide detection; portable fire extinguishers; fire suppression systems; intruder alarms; access control systems and video management systems. Other fire and security service offerings include audit, design, installation and system integration, as well as aftermarket maintenance and repair and monitoring services. Segment Information. Segment information for the periods presented are as follows: Net Sales Operating Profit For the Quarters Ended March 31, For the Quarters Ended March 31, (dollars in millions) 2020 2019 2020 2019 HVAC $ 1,959 $ 2,168 $ 167 $ 293 Refrigeration 808 962 99 127 Fire & Security 1,206 1,290 120 132 Total segment 3,973 4,420 386 552 Eliminations and other (85) (97) (35) (17) General corporate expenses — — (36) (35) Combined $ 3,888 $ 4,323 $ 315 $ 500 Geographic External Sales. Geographic external sales and operating profits are attributed to the geographic regions based on their location of origin. With the exception of the U.S. presented in the table below, there were no individually significant countries with sales exceeding 10% of total sales during the quarters ended March 31, 2020 and 2019. For the Quarters Ended March 31, (dollars in millions) 2020 2019 United States Operations $ 2,011 $ 2,219 International Operations Europe 1,179 1,292 Asia Pacific 519 612 Other 179 200 Combined $ 3,888 $ 4,323 Segment sales disaggregated by product and service are as follows: For the Quarters Ended March 31, (dollars in millions) 2020 2019 Sales Type Product $ 1,657 $ 1,861 Service 302 307 HVAC sales 1,959 2,168 Product 713 867 Service 95 95 Refrigeration sales 808 962 Product 860 935 Service 346 355 Fire & Security sales 1,206 1,290 Total segment sales 3,973 4,420 Eliminations and other (85) (97) Combined $ 3,888 $ 4,323 |
SUBSEQUENT EVENT
SUBSEQUENT EVENT | 3 Months Ended |
Mar. 31, 2020 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENT | SUBSEQUENT EVENTS Distribution from UTC. On April 3, 2020, the Separation was completed through the Distribution of all of the outstanding common stock of Carrier 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 Distribution. UTC distributed 866,158,910 shares of the Company’s common stock, par value $0.01 per share in the Distribution. As a result of the Distribution, which was effective at the Effective Time, UTC shareowners of record received one share of the Company’s common stock for every one share of UTC common stock. As a result of the Distribution, Carrier became an independent, publicly traded company and our common stock is listed under the symbol "CARR" on the New York Stock Exchange. In connection with the Separation, the Business entered into several agreements with UTC and Otis, including a separation and distribution agreement that sets forth certain agreements with UTC and Otis regarding the principal actions to be taken in connection with the Separation, including identifying the assets transferred, the liabilities assumed and the contracts transferred to each of UTC, Otis and Carrier as part of the Separation, and when and how these transfers and assumptions occurred. Other agreements that we entered into that govern aspects of our relationship with UTC and Otis following the Separation include: Transition Services Agreement . We entered into a TSA with UTC and Otis in connection with the Separation pursuant to which UTC provides us with certain services and we provide certain services to UTC for a limited time to help ensure an orderly transition following the Separation. The services we receive include, but are not limited to, information technology services, technical and engineering support, application support for operations, legal, payroll, finance, tax and accounting, general administrative services and other support services. Tax Matters Agreement. We entered into a tax matters agreement (the "TMA") with UTC and Otis that governs the parties’ respective rights, responsibilities and obligations with respect to tax matters (including responsibility for taxes, entitlement to refunds, allocation of tax attributes, preparation of tax returns, control of tax contests and other tax matters). Subject to certain exceptions set forth in the TMA, Carrier generally is responsible for federal, state and foreign taxes imposed on a separate return basis upon Carrier (or any of its subsidiaries) with respect to taxable periods (or portions thereof) that ended on or prior to the date of the Distribution. The TMA provides special rules that allocate responsibility for tax liabilities arising from a failure of the Separation transactions to qualify for tax-free treatment based on the reasons for such failure. The |
BASIS OF PRESENTATION (Policies
BASIS OF PRESENTATION (Policies) | 3 Months Ended |
Mar. 31, 2020 | |
Accounting Policies [Abstract] | |
Consolidation | The Unaudited Condensed Combined Financial Statements reflect the financial position, results of operations and cash flows of the Company for the periods presented as historically managed within UTC. The Unaudited Condensed Combined Financial Statements are derived from the consolidated financial statements and accounting records of UTC. |
Basis of Accounting | They have been prepared in accordance with generally accepted accounting principles in the United States of America ("GAAP") for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. They do not include all of the information and notes required by GAAP for complete financial statements. The Unaudited Condensed Combined Financial Statements reflect periods prior to the Separation and thus are prepared on a "carve-out" basis, as described below. |
New Accounting Pronouncements | In June 2016, the Financial Accounting Standards Board ("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 (collectively, the "Credit Loss Standard") modifies the credit loss model to utilize an expected loss methodology in place of an incurred loss methodology for financial instruments, including trade receivables, contract assets, long term receivables and off-balance sheet credit exposures. The Credit Loss Standard requires consideration of a broader range of information to estimate expected credit losses, including historical information, current conditions and a reasonable forecast period. This ASU requires that the statement of operations reflect the measurement of credit losses for newly recognized financial assets as well as the expected increase or decrease of expected credit losses that have taken place during the period, which may result in earlier recognition. The Company adopted the Credit Loss Standard effective January 1, 2020 utilizing a modified retrospective approach and adoption did not have a significant impact on the Company's Unaudited Condensed Combined Financial Statements. In January 2017, the FASB issued ASU 2017-04, Intangibles – Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment . This ASU simplifies how an entity is required to test goodwill for impairment by eliminating Step 2 from the goodwill impairment test. Under the amendments in this ASU, a goodwill impairment is calculated as the difference between the carrying amount of the reporting unit and its fair value, but not to exceed the carrying amount of the goodwill allocated to that reporting unit. Additionally, this ASU requires the same impairment testing methodology for all reporting units, even those with a zero or negative carrying amount of net assets and requires an entity to disclose the amount of goodwill allocated to each reporting unit with a zero or negative carrying amount. The Company adopted this ASU effective January 1, 2020 and the adoption did not have a significant impact on the Company's Unaudited Condensed Combined Financial Statements. 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 ASU removes the disclosure requirements for the amount of and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy. The Company adopted this ASU effective January 1, 2020 and the adoption of this ASU did not have a significant impact on the Company's Unaudited Condensed Combined Financial Statements. |
EARNINGS PER SHARE (Tables)
EARNINGS PER SHARE (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Earnings Per Share [Abstract] | |
Schedule of Earnings Per Share, Basic and Diluted | (dollars in millions, except per share amounts; shares in millions) March 31, 2020 March 31, 2019 Net income attributable to common shareowners $ 96 $ 400 Basic weighted average number of shares outstanding 866 866 Diluted weighted average number of shares outstanding 866 866 Earnings Per Share Basic $ 0.11 $ 0.46 Diluted $ 0.11 $ 0.46 |
REVENUE RECOGNITION (Tables)
REVENUE RECOGNITION (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Revenue from Contract with Customer [Abstract] | |
Contract with Customer, Asset and Liability | Total contract assets and liabilities as of March 31, 2020 and December 31, 2019 are as follows: (dollars in millions) March 31, 2020 December 31, 2019 Contract assets, current $ 651 $ 622 Contract assets, non-current (included within Other assets) 90 57 Total contract assets 741 679 Contract liabilities, current (485) (443) Contract liabilities, non-current (included within Other long-term liabilities) (168) (168) Total contract liabilities (653) (611) Net contract assets $ 88 $ 68 |
ACCOUNTS RECEIVABLE, NET (Table
ACCOUNTS RECEIVABLE, NET (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Receivables [Abstract] | |
Schedule of Accounts, Notes, Loans and Financing Receivable | Accounts receivable, net consisted of the following: (dollars in millions) March 31, 2020 December 31, 2019 Trade receivables $ 2,377 $ 2,444 Receivables from affiliates 191 143 Other receivables 169 184 Accounts receivable 2,737 2,771 Less: Allowance for expected credit losses (63) (45) Accounts receivable, net $ 2,674 $ 2,726 |
Accounts Receivable, Allowance for Credit Loss | The changes in the allowance for expected credit losses related to Accounts receivable are as follows: (dollars in millions) Balance at January 1, 2020 $ 45 Current period provision for expected credit losses 12 Other (including impact of adoption of ASU 2016-13) 6 Balance at March 31, 2020 $ 63 |
FIXED ASSETS, NET (Tables)
FIXED ASSETS, NET (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Property, Plant and Equipment [Abstract] | |
Property, Plant and Equipment | (dollars in millions) Estimated Useful Lives (Years) March 31, 2020 December 31, 2019 Land $ 106 $ 113 Buildings and improvements 40 1,099 1,138 Machinery, tools and equipment 3 to 25 1,924 1,924 Rental assets 3 to 12 389 395 Other, including assets under construction 194 188 Fixed assets, gross 3,712 3,758 Accumulated depreciation (2,074) (2,095) Fixed assets, net $ 1,638 $ 1,663 |
BUSINESS ACQUISITIONS, DISPOS_2
BUSINESS ACQUISITIONS, DISPOSITIONS, GOODWILL AND INTANGIBLE ASSETS (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Business Combinations [Abstract] | |
Schedule of Goodwill | The changes in the carrying amount of goodwill are as follows: (dollars in millions) HVAC Refrigeration Fire & Security Total Balance as of January 1, 2020 $ 5,351 $ 1,228 $ 3,305 $ 9,884 Foreign currency translation (204) (50) 18 (236) Balance at March 31, 2020 $ 5,147 $ 1,178 $ 3,323 $ 9,648 |
Intangible Assets Disclosure | Identifiable intangible assets are comprised of the following: March 31, 2020 December 31, 2019 (dollars in millions) Gross Amount Accumulated Amortization Gross Amount Accumulated Amortization Amortized: Customer relationships $ 1,448 $ (1,142) $ 1,479 $ (1,154) Patents and trademarks 284 (201) 287 (201) Monitoring lines 62 (49) 67 (52) Service portfolios and other 624 (509) 629 (506) 2,418 (1,901) 2,462 (1,913) Unamortized: Trademarks and other 497 — 534 — Intangible assets, net $ 2,915 $ (1,901) $ 2,996 $ (1,913) |
Schedule of Indefinite-Lived Intangible Assets | Identifiable intangible assets are comprised of the following: March 31, 2020 December 31, 2019 (dollars in millions) Gross Amount Accumulated Amortization Gross Amount Accumulated Amortization Amortized: Customer relationships $ 1,448 $ (1,142) $ 1,479 $ (1,154) Patents and trademarks 284 (201) 287 (201) Monitoring lines 62 (49) 67 (52) Service portfolios and other 624 (509) 629 (506) 2,418 (1,901) 2,462 (1,913) Unamortized: Trademarks and other 497 — 534 — Intangible assets, net $ 2,915 $ (1,901) $ 2,996 $ (1,913) |
INVENTORIES, NET (Tables)
INVENTORIES, NET (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Inventory Disclosure [Abstract] | |
Schedule of Inventory, Current | (dollars in millions) March 31, 2020 December 31, 2019 Raw materials $ 335 $ 290 Work-in-process 147 120 Finished goods 1,074 922 Inventories, net $ 1,556 $ 1,332 |
BORROWINGS AND LINES OF CREDIT
BORROWINGS AND LINES OF CREDIT (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Debt Disclosure [Abstract] | |
Schedule of Long-term Debt | Long-term debt, all of which was issued during the quarter ended March 31, 2020 except for Other long-term debt, consisted of the following: (dollars in millions) Debt Description Interest Rate Due Date March 31, 2020 December 31, 2019 3-Year Term Loan Credit Facility 2.195 % 1 February 10, 2023 $ 1,750 2 $ — 3-Year Fixed Rate Notes 1.923 % February 15, 2023 500 2 — 5-Year Fixed Rate Notes 2.242 % February 15, 2025 2,000 2 — 7-Year Fixed Rate Notes 2.493 % February 15, 2027 1,250 2 — 10-Year Fixed Rate Notes 2.722 % February 15, 2030 2,000 2 — 20-Year Fixed Rate Notes 3.377 % April 05, 2040 1,500 2 — 30-Year Fixed Rate Notes 3.577 % April 05, 2050 2,000 2 — Other (including project financing obligations and finance leases) 326 319 Total principal long-term debt 11,326 319 Other (discounts and debt issuance costs) (79) 2 — Total debt 11,247 319 Less: current portion of long-term debt 218 237 Long-term debt, net of current portion $ 11,029 $ 82 1 The interest rate on the term loan is variable based on six month LIBOR of 1.07% plus 112.5 basis points. 2 The net proceeds of the financing arrangements were used to distribute cash to UTC. |
Schedule of Maturities of Long-term Debt | Scheduled maturities of long-term debt, excluding amortization of discount, are as follows: (dollars in millions) 2020 $ 218 2021 $ 70 2022 $ 28 2023 $ 2,260 2024 $ — Thereafter $ 8,750 |
EMPLOYEE BENEFIT PLANS (Tables)
EMPLOYEE BENEFIT PLANS (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Retirement Benefits [Abstract] | |
Schedule of Employer Contributions to Plans | Contributions to the plans were as follows: For the Quarters Ended March 31, (dollars in millions) 2020 2019 Defined benefit plans $ 25 $ 22 Defined contribution plans $ 30 $ 25 Multi-employer pension plans $ 5 $ 5 |
Schedule of Defined Benefit Plans Disclosures | The following table illustrates the components of net periodic pension benefits for our defined pension and post-retirement benefit plans: For the Quarters Ended March 31, (dollars in millions) 2020 2019 Service cost $ 8 $ 8 Interest cost 13 17 Expected return on plan assets (35) (39) Amortization of prior service credit 1 1 Recognized actuarial net loss 5 2 Net settlement, curtailment and special termination benefit loss 1 — Net periodic pension benefit $ (7) $ (11) |
Schedule of Multiemployer Plans | The pension and post-retirement expenses were as follows: For the Quarters Ended March 31, (dollars in millions) 2020 2019 Service cost $ — $ 4 Non-service pension benefit (2) (20) Total net periodic benefit $ (2) $ (16) |
ACCUMULATED OTHER COMPREHENSI_2
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract] | |
Schedule of Accumulated Other Comprehensive Income (Loss) | A summary of the changes in each component of Accumulated other comprehensive (loss), net of tax for the quarters ended March 31, 2020 and 2019 were as follows: (dollars in millions) Foreign Currency Translation Defined Benefit Pension and Post-retirement Plans Accumulated Other Comprehensive (Loss) Balance as of January 1, 2020 $ (780) $ (473) $ (1,253) Other comprehensive loss before reclassifications, net (488) — (488) Amounts reclassified, pre-tax — 6 6 Tax benefit reclassified — (1) (1) Balance as of March 31, 2020 $ (1,268) $ (468) $ (1,736) (dollars in millions) Foreign Currency Translation Defined Benefit Pension and Post-retirement Plans Accumulated Other Comprehensive (Loss) Balance as of January 1, 2019 $ (834) $ (381) $ (1,215) Other comprehensive income before reclassifications, net 91 2 93 Amounts reclassified, pre-tax — 3 3 ASU 2018-02 adoption impact — (9) (9) Balance as of March 31, 2019 $ (743) $ (385) $ (1,128) |
RESTRUCTURING COSTS (Tables)
RESTRUCTURING COSTS (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Restructuring and Related Activities [Abstract] | |
Schedule of Restructuring and Related Costs | During the quarters ended March 31, 2020 and 2019, we recorded net pre-tax restructuring costs totaling $5 million and $33 million, respectively, for new and ongoing restructuring actions in our segments as follows: For the Quarters Ended March 31, (dollars in millions) 2020 2019 HVAC $ 2 $ 17 Refrigeration — 3 Fire & Security 3 13 Total restructuring costs $ 5 $ 33 Restructuring charges incurred during the quarters ended March 31, 2020 and 2019 primarily relate to actions initiated during 2020 and 2019, and are recorded as follows: For the Quarters Ended March 31, (dollars in millions) 2020 2019 Cost of sales $ 1 $ 5 Selling, general and administrative 4 28 Total restructuring costs $ 5 $ 33 The following table summarizes expected, incurred and remaining costs for the 2019 restructuring actions by segment: (dollars in millions) Expected Costs Incurred in 2019 Costs Incurred - Quarter Ended March 31, 2020 Remaining Costs at March 31, 2020 HVAC $ 53 $ (51) $ (1) $ 1 Refrigeration 16 (14) — 2 Fire & Security 49 (43) (2) 4 Eliminations and other 2 (2) — — Total $ 120 $ (110) $ (3) $ 7 |
Schedule of Restructuring Reserve by Type of Cost | The following table summarizes the accrual balance and utilization for the 2020 restructuring actions: (dollars in millions) Severance Facility Exit, Total Restructuring accruals as of January 1, 2020 $ — $ — $ — Net pre-tax restructuring costs 2 — 2 Utilization, foreign exchange and other costs — — — Balance as of March 31, 2020 $ 2 $ — $ 2 The following table summarizes expected, incurred and remaining costs for the 2020 restructuring actions by segment: (dollars in millions) Expected Costs Costs Incurred - Quarter Ended March 31, 2020 Remaining Costs at March 31, 2020 HVAC $ 3 $ (1) $ 2 Refrigeration — — — Fire & Security 1 (1) — Eliminations and other — — — Total $ 4 $ (2) $ 2 (dollars in millions) Severance Facility Exit, Total Restructuring accruals as of January 1, 2020 $ 43 $ 1 $ 44 Net pre-tax restructuring costs 3 — 3 Utilization, foreign exchange and other costs (14) (1) (15) Balance as of March 31, 2020 $ 32 $ — $ 32 |
GUARANTEES (Tables)
GUARANTEES (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Guarantees [Abstract] | |
Schedule of Product Warranty Liability | The changes in the carrying amount of service and product warranties and product performance guarantees, included in Accrued liabilities on the accompanying Unaudited Condensed Combined Balance Sheet, for the quarters ended March 31, 2020 and 2019 are as follows: For the Quarters Ended March 31, (dollars in millions) 2020 2019 Balance as of January 1 $ 488 $ 473 Warranties and performance guarantees issued 35 40 Settlements made (39) (36) Other (3) — Balance as of March 31 $ 481 $ 477 |
FAIR VALUE MEASUREMENTS (Tables
FAIR VALUE MEASUREMENTS (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements, Recurring and Nonrecurring | In accordance with the provisions of ASC 820, the following tables provide the valuation hierarchy classification of assets and liabilities that are recorded at fair value and measured on a recurring basis in our Unaudited Condensed Combined Balance Sheet: March 31, 2020 (dollars in millions) Total Level 1 Level 2 Level 3 Recurring fair value measurement: Derivative assets $ 23 1 $ — $ 23 $ — Derivative liabilities $ (10) 2 $ — $ (10) $ — 1 Included in Other assets, current on the accompanying Unaudited Condensed Combined Balance Sheet 2 Included in Accrued liabilities on the accompanying Unaudited Condensed Combined Balance Sheet The following table provides the carrying amounts and fair values of financial instruments that are not recorded at fair value in our Unaudited Condensed Combined Balance Sheet: March 31, 2020 December 31, 2019 (dollars in millions) Carrying Fair Carrying Fair Current and long-term debt (excluding finance leases) $ 11,241 $ 10,634 $ 313 $ 313 The following table provides the valuation hierarchy classification of assets and liabilities that are not carried at fair value in our Unaudited Condensed Combined Balance Sheet: March 31, 2020 (dollars in millions) Total Level 1 Level 2 Level 3 Current and long-term debt (excluding finance leases) $ 10,634 $ 8,565 $ — $ 2,069 December 31, 2019 (dollars in millions) Total Level 1 Level 2 Level 3 Current and long-term debt (excluding finance leases) $ 313 $ — $ — $ 313 |
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation | The following tables present changes during the quarters ended March 31, 2020 and 2019 in Level 3 liabilities not measured at fair value on a recurring basis: For the Quarters Ended March 31, (dollars in millions) 2020 2019 Fair value as of January 1 $ 313 $ 291 Issuances 1,790 52 Settlements (34) (1) Fair value as of March 31 $ 2,069 $ 342 |
SEGMENT FINANCIAL DATA (Tables)
SEGMENT FINANCIAL DATA (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Segment Reporting [Abstract] | |
Schedule of Segment Reporting Information, by Segment | Segment information for the periods presented are as follows: Net Sales Operating Profit For the Quarters Ended March 31, For the Quarters Ended March 31, (dollars in millions) 2020 2019 2020 2019 HVAC $ 1,959 $ 2,168 $ 167 $ 293 Refrigeration 808 962 99 127 Fire & Security 1,206 1,290 120 132 Total segment 3,973 4,420 386 552 Eliminations and other (85) (97) (35) (17) General corporate expenses — — (36) (35) Combined $ 3,888 $ 4,323 $ 315 $ 500 |
Sales by Product vs. Service | For the Quarters Ended March 31, (dollars in millions) 2020 2019 United States Operations $ 2,011 $ 2,219 International Operations Europe 1,179 1,292 Asia Pacific 519 612 Other 179 200 Combined $ 3,888 $ 4,323 Segment sales disaggregated by product and service are as follows: For the Quarters Ended March 31, (dollars in millions) 2020 2019 Sales Type Product $ 1,657 $ 1,861 Service 302 307 HVAC sales 1,959 2,168 Product 713 867 Service 95 95 Refrigeration sales 808 962 Product 860 935 Service 346 355 Fire & Security sales 1,206 1,290 Total segment sales 3,973 4,420 Eliminations and other (85) (97) Combined $ 3,888 $ 4,323 |
DESCRIPTION OF BUSINESS (Detail
DESCRIPTION OF BUSINESS (Details) | 1 Months Ended | 3 Months Ended | |
Mar. 27, 2020USD ($) | Mar. 31, 2020USD ($)segment | Mar. 31, 2019USD ($) | |
Subsequent Event [Line Items] | |||
Reporting unit, percentage of fair value in excess of carrying value (less than) | 20.00% | ||
Number of reportable segments | segment | 3 | ||
Aggregate principal balance | $ 11,000,000,000 | ||
Net transfers to UTC | $ 10,900,000,000 | $ 10,948,000,000 | $ 89,000,000 |
EARNINGS PER SHARE - Narrative
EARNINGS PER SHARE - Narrative (Details) - Subsequent Event | Apr. 03, 2020$ / sharesshares |
Subsequent Event [Line Items] | |
Common stock, shares, issued (in shares) | shares | 866,158,910 |
Common stock, par or stated value per share (in dollars per share) | $ / shares | $ 0.01 |
EARNINGS PER SHARE (Details)
EARNINGS PER SHARE (Details) - USD ($) $ / shares in Units, shares in Millions, $ in Millions | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Earnings Per Share [Abstract] | ||
Net income attributable to common shareowners | $ 96 | $ 400 |
Basic weighted average number of shares outstanding (in shares) | 866 | 866 |
Diluted weighted average number of shares outstanding (in shares) | 866 | 866 |
Basic (in dollars per share) | $ 0.11 | $ 0.46 |
Diluted (in dollars per share) | $ 0.11 | $ 0.46 |
REVENUE RECOGNITION - Contract
REVENUE RECOGNITION - Contract Assets and Liabilities (Details) - USD ($) $ in Millions | Mar. 31, 2020 | Dec. 31, 2019 |
Revenue from Contract with Customer [Abstract] | ||
Contract assets, current | $ 651 | $ 622 |
Contract assets, non-current (included within Other assets) | 90 | 57 |
Total contract assets | 741 | 679 |
Contract liabilities, current | (485) | (443) |
Contract liabilities, non-current (included within Other long-term liabilities) | (168) | (168) |
Total contract liabilities | (653) | (611) |
Net contract assets | $ 88 | $ 68 |
REVENUE RECOGNITION - Narrative
REVENUE RECOGNITION - Narrative (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Revenue from Contract with Customer [Abstract] | ||
Contract with customer, asset, change | $ 62 | |
Contract with customer, liability, change | 42 | |
Contract with customer, liability, revenue recognized | $ 144 | $ 178 |
REVENUE RECOGNITION - Remaining
REVENUE RECOGNITION - Remaining Performance Obligations (Details) - USD ($) $ in Billions | Mar. 31, 2020 | Dec. 31, 2019 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | ||
Revenue, remaining performance obligation, amount | $ 5.1 | $ 4.7 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2020-04-01 | ||
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | ||
Revenue, remaining performance obligation, percentage | 66.00% | |
Revenue, remaining performance obligation, period | 12 months |
RELATED PARTIES - Narrative (De
RELATED PARTIES - Narrative (Details) - USD ($) $ in Millions | 3 Months Ended | ||
Mar. 31, 2020 | Mar. 31, 2019 | Dec. 31, 2019 | |
Related Party Transaction [Line Items] | |||
Contributions of assets and (liabilities) from parent, net | $ 79 | ||
Impairment charge on minority owned joint venture investment | 71 | $ 0 | |
Spinoff | |||
Related Party Transaction [Line Items] | |||
Separation costs | 45 | 0 | |
UTC | |||
Related Party Transaction [Line Items] | |||
Revenue from related parties | 3 | 6 | |
Related party transaction, selling, general and administrative expenses from transactions with related party | 43 | 54 | |
Accounts receivable, related parties | 3 | $ 16,000 | |
Accounts payable, related parties | 258 | 3,000 | |
Interest income, related party | 0 | 28 | |
Interest expense, related party | 0 | 16 | |
Accounts receivable, related parties, current | 1 | 6 | |
Accounts payable, related parties, current | 0 | 4 | |
Equity Method Investee | |||
Related Party Transaction [Line Items] | |||
Revenue from related parties | 344 | 394 | |
Accounts receivable, related parties | 191 | 137 | |
Accounts payable, related parties | 38 | $ 55 | |
Related party costs | 77 | $ 77 | |
Impairment charge on minority owned joint venture investment | $ 71 |
ACCOUNTS RECEIVABLE, NET (Detai
ACCOUNTS RECEIVABLE, NET (Details) - USD ($) $ in Millions | Mar. 31, 2020 | Dec. 31, 2019 |
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Accounts receivable | $ 2,737 | $ 2,771 |
Less: Allowance for expected credit losses | (63) | (45) |
Accounts receivable, net | 2,674 | 2,726 |
Trade receivables | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Accounts receivable | 2,377 | 2,444 |
Receivables from affiliates | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Accounts receivable | 191 | 143 |
Other receivables | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Accounts receivable | $ 169 | $ 184 |
ACCOUNTS RECEIVABLE, NET - Acco
ACCOUNTS RECEIVABLE, NET - Accounts Receivable Rollforward (Details) $ in Millions | 3 Months Ended |
Mar. 31, 2020USD ($) | |
Accounts Receivable, Allowance for Credit Loss [Roll Forward] | |
Beginning balance | $ 45 |
Current period provision for expected credit losses | 12 |
Ending balance | 63 |
Cumulative Effect, Period Of Adoption, Adjustment | |
Accounts Receivable, Allowance for Credit Loss [Roll Forward] | |
Beginning balance | $ 6 |
FIXED ASSETS, NET (Details)
FIXED ASSETS, NET (Details) - USD ($) $ in Millions | 3 Months Ended | ||
Mar. 31, 2020 | Mar. 31, 2019 | Dec. 31, 2019 | |
Property, Plant and Equipment [Line Items] | |||
Fixed assets, gross | $ 3,712 | $ 3,758 | |
Accumulated depreciation | (2,074) | (2,095) | |
Fixed assets, net | 1,638 | 1,663 | |
Depreciation | 56 | $ 54 | |
Land | |||
Property, Plant and Equipment [Line Items] | |||
Fixed assets, gross | $ 106 | 113 | |
Buildings and improvements | |||
Property, Plant and Equipment [Line Items] | |||
Property, plant and equipment, estimated useful life | 40 years | ||
Fixed assets, gross | $ 1,099 | 1,138 | |
Machinery, tools and equipment | |||
Property, Plant and Equipment [Line Items] | |||
Fixed assets, gross | 1,924 | 1,924 | |
Rental assets | |||
Property, Plant and Equipment [Line Items] | |||
Fixed assets, gross | 389 | 395 | |
Other, including assets under construction | |||
Property, Plant and Equipment [Line Items] | |||
Fixed assets, gross | $ 194 | $ 188 | |
Minimum | Machinery, tools and equipment | |||
Property, Plant and Equipment [Line Items] | |||
Property, plant and equipment, estimated useful life | 3 years | ||
Minimum | Rental assets | |||
Property, Plant and Equipment [Line Items] | |||
Property, plant and equipment, estimated useful life | 3 years | ||
Maximum | Machinery, tools and equipment | |||
Property, Plant and Equipment [Line Items] | |||
Property, plant and equipment, estimated useful life | 25 years | ||
Maximum | Rental assets | |||
Property, Plant and Equipment [Line Items] | |||
Property, plant and equipment, estimated useful life | 12 years |
BUSINESS ACQUISITIONS, DISPOS_3
BUSINESS ACQUISITIONS, DISPOSITIONS, GOODWILL AND INTANGIBLE ASSETS - Goodwill (Details) $ in Millions | 3 Months Ended |
Mar. 31, 2020USD ($) | |
Goodwill [Roll Forward] | |
Goodwill - Beginning Balance | $ 9,884 |
Foreign currency translation | (236) |
Goodwill - Ending Balance | 9,648 |
Operating Segments | HVAC | |
Goodwill [Roll Forward] | |
Goodwill - Beginning Balance | 5,351 |
Foreign currency translation | (204) |
Goodwill - Ending Balance | 5,147 |
Operating Segments | Refrigeration | |
Goodwill [Roll Forward] | |
Goodwill - Beginning Balance | 1,228 |
Foreign currency translation | (50) |
Goodwill - Ending Balance | 1,178 |
Operating Segments | Fire & Security | |
Goodwill [Roll Forward] | |
Goodwill - Beginning Balance | 3,305 |
Foreign currency translation | 18 |
Goodwill - Ending Balance | $ 3,323 |
BUSINESS ACQUISITIONS, DISPOS_4
BUSINESS ACQUISITIONS, DISPOSITIONS, GOODWILL AND INTANGIBLE ASSETS - Finite and Indefinite-lived Intangible Assets (Details) - USD ($) $ in Millions | Mar. 31, 2020 | Dec. 31, 2019 |
Finite-Lived Intangible Assets [Line Items] | ||
Gross Amount | $ 2,418 | $ 2,462 |
Accumulated Amortization | (1,901) | (1,913) |
Indefinite-lived Intangible Assets [Line Items] | ||
Total intangible assets, gross (excluding goodwill) | 2,915 | 2,996 |
Trademarks and other | ||
Indefinite-lived Intangible Assets [Line Items] | ||
Indefinite-lived intangible assets (excluding goodwill) | 497 | 534 |
Customer relationships | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Amount | 1,448 | 1,479 |
Accumulated Amortization | (1,142) | (1,154) |
Patents and trademarks | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Amount | 284 | 287 |
Accumulated Amortization | (201) | (201) |
Monitoring lines | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Amount | 62 | 67 |
Accumulated Amortization | (49) | (52) |
Service portfolios and other | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Amount | 624 | 629 |
Accumulated Amortization | $ (509) | $ (506) |
BUSINESS ACQUISITIONS, DISPOS_5
BUSINESS ACQUISITIONS, DISPOSITIONS, GOODWILL AND INTANGIBLE ASSETS - Future Amortization of Intangible Assets (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Business Combinations [Abstract] | ||
Amortization of intangible assets | $ 25 | $ 31 |
INVENTORIES, NET (Details)
INVENTORIES, NET (Details) - USD ($) $ in Millions | Mar. 31, 2020 | Dec. 31, 2019 |
Inventory Disclosure [Abstract] | ||
Raw materials | $ 335 | $ 290 |
Work-in-process | 147 | 120 |
Finished goods | 1,074 | 922 |
Inventories, net | 1,556 | 1,332 |
Inventory valuation reserves | $ 153 | $ 152 |
BORROWINGS AND LINES OF CREDI_2
BORROWINGS AND LINES OF CREDIT - Narrative (Details) | Mar. 27, 2020USD ($) | Feb. 10, 2020USD ($) | Mar. 27, 2020USD ($) | Mar. 31, 2020USD ($) | Mar. 31, 2019USD ($) | Feb. 27, 2020USD ($)debt_series |
Debt Instrument [Line Items] | ||||||
Aggregate principal balance | $ 11,000,000,000 | |||||
Issuance of long-term debt | 10,961,000,000 | $ 52,000,000 | ||||
Net transfers to UTC | $ 10,900,000,000 | 10,948,000,000 | 89,000,000 | |||
Repayment of long-term debt | $ 34,000,000 | 1,000,000 | ||||
Weighted average interest rate | 2.70% | |||||
Interest expense, debt | $ 31,000,000 | |||||
Interest payable | 25,000,000 | |||||
Debt issuance costs, net | 5,000,000 | |||||
Accumulated amortization, debt issuance costs | $ 700,000 | |||||
Weighted Average | ||||||
Debt Instrument [Line Items] | ||||||
Average maturity of long-term debt | 11 years | |||||
Term Loan | ||||||
Debt Instrument [Line Items] | ||||||
Maximum borrowing capacity | $ 1,750,000,000 | |||||
Issuance of long-term debt | $ 1,750,000,000 | |||||
Unsecured Debt | ||||||
Debt Instrument [Line Items] | ||||||
Aggregate principal balance | $ 9,250,000,000 | |||||
Series of notes issuance | debt_series | 6 | |||||
Other Debt | Project Financing Arrangements | ||||||
Debt Instrument [Line Items] | ||||||
Aggregate principal balance | $ 40,000,000 | $ 52,000,000 | ||||
Commercial Paper | ||||||
Debt Instrument [Line Items] | ||||||
Aggregate principal balance | $ 2,000,000,000 | |||||
London Interbank Offered Rate (LIBOR) | Term Loan | ||||||
Debt Instrument [Line Items] | ||||||
Basis spread on variable rate | 1.125% | 1.125% | ||||
Revolving Credit Facility | Line of Credit | ||||||
Debt Instrument [Line Items] | ||||||
Maximum borrowing capacity | $ 2,000,000,000 | |||||
Commitment fee percentage | 0.125% | |||||
Revolving Credit Facility | London Interbank Offered Rate (LIBOR) | Line of Credit | ||||||
Debt Instrument [Line Items] | ||||||
Basis spread on variable rate | 1.25% |
BORROWINGS AND LINES OF CREDI_3
BORROWINGS AND LINES OF CREDIT - Long-term Debt (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2020 | Dec. 31, 2019 | |
Debt Instrument [Line Items] | ||
Long-term debt, gross | $ 11,326 | $ 319 |
Other (discounts and debt issuance costs) | (79) | 0 |
Total debt | 11,247 | 319 |
Current portion of long-term debt | 218 | 237 |
Long-term debt, net of current portion | $ 11,029 | 82 |
Term Loan | ||
Debt Instrument [Line Items] | ||
Interest Rate | 2.195% | |
Long-term debt, gross | $ 1,750 | 0 |
Debt instrument, basis rate | 1.07% | |
Other Debt | ||
Debt Instrument [Line Items] | ||
Long-term debt, gross | $ 326 | 319 |
3-Year Fixed Rate Notes | Unsecured Debt | ||
Debt Instrument [Line Items] | ||
Interest Rate | 1.923% | |
Long-term debt, gross | $ 500 | 0 |
5-Year Fixed Rate Notes | Unsecured Debt | ||
Debt Instrument [Line Items] | ||
Interest Rate | 2.242% | |
Long-term debt, gross | $ 2,000 | 0 |
7-Year Fixed Rate Notes | Unsecured Debt | ||
Debt Instrument [Line Items] | ||
Interest Rate | 2.493% | |
Long-term debt, gross | $ 1,250 | 0 |
10-Year Fixed Rate Notes | Unsecured Debt | ||
Debt Instrument [Line Items] | ||
Interest Rate | 2.722% | |
Long-term debt, gross | $ 2,000 | 0 |
20-Year Fixed Rate Notes | Unsecured Debt | ||
Debt Instrument [Line Items] | ||
Interest Rate | 3.377% | |
Long-term debt, gross | $ 1,500 | 0 |
30-Year Fixed Rate Notes | Unsecured Debt | ||
Debt Instrument [Line Items] | ||
Interest Rate | 3.577% | |
Long-term debt, gross | $ 2,000 | $ 0 |
BORROWINGS AND LINES OF CREDI_4
BORROWINGS AND LINES OF CREDIT - Long-term Debt Maturity (Details) $ in Millions | Mar. 31, 2020USD ($) |
Debt Disclosure [Abstract] | |
2020 | $ 218 |
2021 | 70 |
2022 | 28 |
2023 | 2,260 |
2024 | 0 |
Thereafter | $ 8,750 |
EMPLOYEE BENEFIT PLANS (Details
EMPLOYEE BENEFIT PLANS (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Retirement Benefits [Abstract] | ||
Defined benefit plans | $ 25 | $ 22 |
Defined contribution plans | 30 | 25 |
Multi-employer pension plans | $ 5 | $ 5 |
EMPLOYEE BENEFIT PLANS - Pensio
EMPLOYEE BENEFIT PLANS - Pension Plan (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Retirement Benefits [Abstract] | ||
Service cost | $ 8 | $ 8 |
Interest cost | 13 | 17 |
Expected return on plan assets | (35) | (39) |
Amortization of prior service credit | 1 | 1 |
Recognized actuarial net loss | 5 | 2 |
Net settlement, curtailment and special termination benefit loss | 1 | 0 |
Total net periodic benefit (income) cost | $ (7) | $ (11) |
EMPLOYEE BENEFIT PLANS - Pens_2
EMPLOYEE BENEFIT PLANS - Pension and Retirements Expenses (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Multiemployer Plans [Line Items] | ||
Service cost | $ 8 | $ 8 |
Non-service pension benefit | (17) | (39) |
Total net periodic benefit (income) cost | (7) | (11) |
UTC Sponsored Defined Benefit Plans | ||
Multiemployer Plans [Line Items] | ||
Service cost | 0 | 4 |
Non-service pension benefit | (2) | (20) |
Total net periodic benefit (income) cost | $ (2) | $ (16) |
ACCUMULATED OTHER COMPREHENSI_3
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) - Summary of Changes in AOCI (Details) - USD ($) $ in Millions | 3 Months Ended | ||
Mar. 31, 2020 | Mar. 31, 2019 | Jan. 01, 2019 | |
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward] | |||
Balance as of beginning of period | $ 14,435 | $ 14,269 | |
Balance as of end of period | 3,026 | 14,690 | |
Total | |||
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward] | |||
Balance as of beginning of period | (1,253) | (1,215) | |
Other comprehensive income before reclassifications, net | (488) | 93 | |
Amounts reclassified, pre-tax | 6 | 3 | |
Tax expense (benefit) reclassified | (1) | ||
ASU 2018-02 adoption impact | $ (9) | ||
Balance as of end of period | (1,736) | (1,128) | |
Foreign Currency Translation | |||
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward] | |||
Balance as of beginning of period | (780) | (834) | |
Other comprehensive income before reclassifications, net | (488) | 91 | |
Amounts reclassified, pre-tax | 0 | 0 | |
Tax expense (benefit) reclassified | 0 | ||
ASU 2018-02 adoption impact | 0 | ||
Balance as of end of period | (1,268) | (743) | |
Defined Benefit Pension and Post-retirement Plans | |||
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward] | |||
Balance as of beginning of period | (473) | (381) | |
Other comprehensive income before reclassifications, net | 0 | 2 | |
Amounts reclassified, pre-tax | 6 | 3 | |
Tax expense (benefit) reclassified | (1) | ||
ASU 2018-02 adoption impact | $ (9) | ||
Balance as of end of period | $ (468) | $ (385) |
INCOME TAXES - Narrative (Detai
INCOME TAXES - Narrative (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Significant Change In Unrecognized Tax Benefits Is Reasonably Possible [Line Items] | ||
Effective income tax rate reconciliation, percent | 65.40% | 25.80% |
Effective income tax rate reconciliation, change in deferred tax assets valuation allowance | $ 51 | |
Effective income tax rate reconciliation, repatriation of foreign earnings, amount | 46 | |
Effective income tax rate reconciliation, nondeductible expense, impairment losses | 71 | |
Minimum | ||
Significant Change In Unrecognized Tax Benefits Is Reasonably Possible [Line Items] | ||
Decrease in unrecognized tax benefits is reasonably possible | 15 | |
Maximum | ||
Significant Change In Unrecognized Tax Benefits Is Reasonably Possible [Line Items] | ||
Decrease in unrecognized tax benefits is reasonably possible | $ 30 |
RESTRUCTURING COSTS - Schedules
RESTRUCTURING COSTS - Schedules (Details) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | Dec. 31, 2019 | |
Restructuring Reserve [Roll Forward] | |||
Net pre-tax restructuring costs | $ 5 | $ 33 | |
Cost of sales | |||
Restructuring Reserve [Roll Forward] | |||
Net pre-tax restructuring costs | 1 | 5 | |
Selling, general and administrative | |||
Restructuring Reserve [Roll Forward] | |||
Net pre-tax restructuring costs | 4 | 28 | |
2020 Actions | |||
Restructuring Reserve [Roll Forward] | |||
Beginning balance | 0 | ||
Net pre-tax restructuring costs | 2 | ||
Utilization, foreign exchange and other costs | 0 | ||
Ending balance | 2 | $ 0 | |
Restructuring and Related Cost, Expected Cost [Abstract] | |||
Expected Costs | 4 | ||
Costs Incurred | (2) | ||
Remaining Costs | 2 | ||
2020 Actions | Severance | |||
Restructuring Reserve [Roll Forward] | |||
Beginning balance | 0 | ||
Net pre-tax restructuring costs | 2 | ||
Utilization, foreign exchange and other costs | 0 | ||
Ending balance | 2 | 0 | |
2020 Actions | Facility Exit, Lease Termination and Other Costs | |||
Restructuring Reserve [Roll Forward] | |||
Beginning balance | 0 | ||
Net pre-tax restructuring costs | 0 | ||
Utilization, foreign exchange and other costs | 0 | ||
Ending balance | 0 | 0 | |
2020 Actions | Cost of sales | |||
Restructuring Reserve [Roll Forward] | |||
Net pre-tax restructuring costs | 1 | ||
2020 Actions | Selling, general and administrative | |||
Restructuring Reserve [Roll Forward] | |||
Net pre-tax restructuring costs | 1 | ||
2019 Actions | |||
Restructuring Reserve [Roll Forward] | |||
Beginning balance | 44 | ||
Net pre-tax restructuring costs | 3 | 25 | |
Utilization, foreign exchange and other costs | (15) | ||
Ending balance | 32 | 44 | |
Restructuring and Related Cost, Expected Cost [Abstract] | |||
Expected Costs | 120 | ||
Costs Incurred | (3) | (110) | |
Remaining Costs | 7 | ||
2019 Actions | Severance | |||
Restructuring Reserve [Roll Forward] | |||
Beginning balance | 43 | ||
Net pre-tax restructuring costs | 3 | ||
Utilization, foreign exchange and other costs | (14) | ||
Ending balance | 32 | 43 | |
2019 Actions | Facility Exit, Lease Termination and Other Costs | |||
Restructuring Reserve [Roll Forward] | |||
Beginning balance | 1 | ||
Net pre-tax restructuring costs | 0 | ||
Utilization, foreign exchange and other costs | (1) | ||
Ending balance | 0 | 1 | |
2019 Actions | Cost of sales | |||
Restructuring Reserve [Roll Forward] | |||
Net pre-tax restructuring costs | 0 | 2 | |
2019 Actions | Selling, general and administrative | |||
Restructuring Reserve [Roll Forward] | |||
Net pre-tax restructuring costs | 3 | 23 | |
Operating Segments | HVAC | |||
Restructuring Reserve [Roll Forward] | |||
Net pre-tax restructuring costs | 2 | 17 | |
Operating Segments | Refrigeration | |||
Restructuring Reserve [Roll Forward] | |||
Net pre-tax restructuring costs | 0 | 3 | |
Operating Segments | Fire & Security | |||
Restructuring Reserve [Roll Forward] | |||
Net pre-tax restructuring costs | 3 | 13 | |
Operating Segments | 2020 Actions | HVAC | |||
Restructuring and Related Cost, Expected Cost [Abstract] | |||
Expected Costs | 3 | ||
Costs Incurred | (1) | ||
Remaining Costs | 2 | ||
Operating Segments | 2020 Actions | Refrigeration | |||
Restructuring and Related Cost, Expected Cost [Abstract] | |||
Expected Costs | 0 | ||
Costs Incurred | 0 | ||
Remaining Costs | 0 | ||
Operating Segments | 2020 Actions | Fire & Security | |||
Restructuring and Related Cost, Expected Cost [Abstract] | |||
Expected Costs | 1 | ||
Costs Incurred | (1) | ||
Remaining Costs | 0 | ||
Operating Segments | 2019 Actions | HVAC | |||
Restructuring and Related Cost, Expected Cost [Abstract] | |||
Expected Costs | 53 | ||
Costs Incurred | (1) | (51) | |
Remaining Costs | 1 | ||
Operating Segments | 2019 Actions | Refrigeration | |||
Restructuring and Related Cost, Expected Cost [Abstract] | |||
Expected Costs | 16 | ||
Costs Incurred | 0 | (14) | |
Remaining Costs | 2 | ||
Operating Segments | 2019 Actions | Fire & Security | |||
Restructuring and Related Cost, Expected Cost [Abstract] | |||
Expected Costs | 49 | ||
Costs Incurred | (2) | (43) | |
Remaining Costs | 4 | ||
Eliminations and other | 2020 Actions | |||
Restructuring and Related Cost, Expected Cost [Abstract] | |||
Expected Costs | 0 | ||
Costs Incurred | 0 | ||
Remaining Costs | $ 0 | ||
Eliminations and other | 2019 Actions | |||
Restructuring and Related Cost, Expected Cost [Abstract] | |||
Expected Costs | 2 | ||
Costs Incurred | 0 | $ (2) | |
Remaining Costs | $ 0 |
RESTRUCTURING COSTS - Narrative
RESTRUCTURING COSTS - Narrative (Details) - USD ($) $ in Millions | 3 Months Ended | ||
Mar. 31, 2020 | Mar. 31, 2019 | Dec. 31, 2019 | |
Restructuring Cost and Reserve [Line Items] | |||
Net pre-tax restructuring costs | $ 5 | $ 33 | |
2020 Actions | |||
Restructuring Cost and Reserve [Line Items] | |||
Net pre-tax restructuring costs | 2 | ||
Restructuring reserve | 2 | $ 0 | |
2019 Actions | |||
Restructuring Cost and Reserve [Line Items] | |||
Net pre-tax restructuring costs | 3 | 25 | |
Restructuring reserve | 32 | $ 44 | |
2018 and Prior Actions | |||
Restructuring Cost and Reserve [Line Items] | |||
Net pre-tax restructuring costs | 0 | 8 | |
Restructuring reserve | 13 | 47 | |
Cost of sales | |||
Restructuring Cost and Reserve [Line Items] | |||
Net pre-tax restructuring costs | 1 | 5 | |
Cost of sales | 2020 Actions | |||
Restructuring Cost and Reserve [Line Items] | |||
Net pre-tax restructuring costs | 1 | ||
Cost of sales | 2019 Actions | |||
Restructuring Cost and Reserve [Line Items] | |||
Net pre-tax restructuring costs | 0 | 2 | |
Selling, general and administrative | |||
Restructuring Cost and Reserve [Line Items] | |||
Net pre-tax restructuring costs | 4 | 28 | |
Selling, general and administrative | 2020 Actions | |||
Restructuring Cost and Reserve [Line Items] | |||
Net pre-tax restructuring costs | 1 | ||
Selling, general and administrative | 2019 Actions | |||
Restructuring Cost and Reserve [Line Items] | |||
Net pre-tax restructuring costs | $ 3 | $ 23 |
GUARANTEES (Details)
GUARANTEES (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Movement in Standard and Extended Product Warranty Accrual, Increase (Decrease) [Roll Forward] | ||
Beginning balance | $ 488 | $ 473 |
Warranties and performance guarantees issued | 35 | 40 |
Settlements made | (39) | (36) |
Other | (3) | 0 |
Ending balance | $ 481 | $ 477 |
FAIR VALUE MEASUREMENTS - Fair
FAIR VALUE MEASUREMENTS - Fair Value and Carrying Amounts Measured on a Recurring Basis (Details) - Fair Value, Recurring $ in Millions | Mar. 31, 2020USD ($) |
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | |
Derivative assets | $ 23 |
Derivative liabilities | (10) |
Level 1 | |
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | |
Derivative assets | 0 |
Derivative liabilities | 0 |
Level 2 | |
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | |
Derivative assets | 23 |
Derivative liabilities | (10) |
Level 3 | |
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | |
Derivative assets | 0 |
Derivative liabilities | $ 0 |
FAIR VALUES MEASUREMENTS - Carr
FAIR VALUES MEASUREMENTS - Carrying Amounts and Fair Values of Financial Instruments (Details) - USD ($) $ in Millions | Mar. 31, 2020 | Dec. 31, 2019 |
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Current and long-term debt (excluding finance leases), carrying amount | $ 11,247 | $ 319 |
Carrying Amount | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Current and long-term debt (excluding finance leases), carrying amount | 11,241 | 313 |
Fair Value | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Current and long-term debt (excluding finance leases), fair value | 10,634 | 313 |
Fair Value | Level 1 | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Current and long-term debt (excluding finance leases), fair value | 8,565 | 0 |
Fair Value | Level 2 | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Current and long-term debt (excluding finance leases), fair value | 0 | 0 |
Fair Value | Level 3 | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Current and long-term debt (excluding finance leases), fair value | $ 2,069 | $ 313 |
FAIR VALUE MEASUREMENTS - Chang
FAIR VALUE MEASUREMENTS - Changes in Level 3 Liabilities (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | ||
Fair value as of January 1 | $ 313 | $ 291 |
Issuances | 1,790 | 52 |
Settlements | (34) | (1) |
Fair value as of March 31 | $ 2,069 | $ 342 |
CONTINGENT LIABILITIES (Details
CONTINGENT LIABILITIES (Details) - USD ($) $ in Millions | Mar. 31, 2020 | Dec. 31, 2019 |
Other Commitments [Line Items] | ||
Accrual for environmental loss contingencies | $ 218 | $ 217 |
Accrued environmental loss contingencies, current | 13 | 14 |
Accrued environmental loss contingencies, noncurrent | 205 | 203 |
Loss contingency, receivable | 104 | $ 104 |
Minimum | ||
Other Commitments [Line Items] | ||
Loss contingency accrual | 255 | |
Maximum | ||
Other Commitments [Line Items] | ||
Loss contingency accrual | $ 290 |
SEGMENT FINANCIAL DATA (Details
SEGMENT FINANCIAL DATA (Details) $ in Millions | 3 Months Ended | |
Mar. 31, 2020USD ($)segment | Mar. 31, 2019USD ($) | |
Segment Reporting Information [Line Items] | ||
Number of reportable segments | segment | 3 | |
Net Sales | $ 3,888 | $ 4,323 |
Operating profit | 315 | 500 |
Product | ||
Segment Reporting Information [Line Items] | ||
Net Sales | 3,147 | 3,566 |
Service | ||
Segment Reporting Information [Line Items] | ||
Net Sales | 741 | 757 |
United States Operations | ||
Segment Reporting Information [Line Items] | ||
Net Sales | 2,011 | 2,219 |
Europe | ||
Segment Reporting Information [Line Items] | ||
Net Sales | 1,179 | 1,292 |
Asia Pacific | ||
Segment Reporting Information [Line Items] | ||
Net Sales | 519 | 612 |
Other | ||
Segment Reporting Information [Line Items] | ||
Net Sales | 179 | 200 |
Operating Segments | ||
Segment Reporting Information [Line Items] | ||
Net Sales | 3,973 | 4,420 |
Operating profit | 386 | 552 |
Operating Segments | HVAC | ||
Segment Reporting Information [Line Items] | ||
Net Sales | 1,959 | 2,168 |
Operating profit | 167 | 293 |
Operating Segments | HVAC | Product | ||
Segment Reporting Information [Line Items] | ||
Net Sales | 1,657 | 1,861 |
Operating Segments | HVAC | Service | ||
Segment Reporting Information [Line Items] | ||
Net Sales | 302 | 307 |
Operating Segments | Refrigeration | ||
Segment Reporting Information [Line Items] | ||
Net Sales | 808 | 962 |
Operating profit | 99 | 127 |
Operating Segments | Refrigeration | Product | ||
Segment Reporting Information [Line Items] | ||
Net Sales | 713 | 867 |
Operating Segments | Refrigeration | Service | ||
Segment Reporting Information [Line Items] | ||
Net Sales | 95 | 95 |
Operating Segments | Fire & Security | ||
Segment Reporting Information [Line Items] | ||
Net Sales | 1,206 | 1,290 |
Operating profit | 120 | 132 |
Operating Segments | Fire & Security | Product | ||
Segment Reporting Information [Line Items] | ||
Net Sales | 860 | 935 |
Operating Segments | Fire & Security | Service | ||
Segment Reporting Information [Line Items] | ||
Net Sales | 346 | 355 |
Eliminations and other | ||
Segment Reporting Information [Line Items] | ||
Net Sales | (85) | (97) |
Operating profit | (35) | (17) |
General corporate expenses | ||
Segment Reporting Information [Line Items] | ||
Net Sales | 0 | 0 |
Operating profit | $ (36) | $ (35) |
SUBSEQUENT EVENT (Details)
SUBSEQUENT EVENT (Details) - Subsequent Event | Apr. 03, 2020$ / sharesshares |
Subsequent Event [Line Items] | |
Common stock, shares, issued (in shares) | 866,158,910 |
Common stock, par or stated value per share (in dollars per share) | $ / shares | $ 0.01 |
Spinoff transaction, equity interests issued, shares, per one hundred ordinary predecessor shares (in shares) | 1 |
Uncategorized Items - carr-2020
Label | Element | Value |
Accounting Standards Update 2018-02 [Member] | UTC Net Investment [Member] | ||
Cumulative Effect of New Accounting Principle in Period of Adoption | us-gaap_CumulativeEffectOfNewAccountingPrincipleInPeriodOfAdoption | $ 9,000,000 |
Accounting Standards Update 2018-02 [Member] | AOCI Attributable to Parent [Member] | ||
Cumulative Effect of New Accounting Principle in Period of Adoption | us-gaap_CumulativeEffectOfNewAccountingPrincipleInPeriodOfAdoption | (9,000,000) |
Accounting Standards Update 2014-09 [Member] | UTC Net Investment [Member] | ||
Cumulative Effect of New Accounting Principle in Period of Adoption | us-gaap_CumulativeEffectOfNewAccountingPrincipleInPeriodOfAdoption | $ (4,000,000) |