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Discontinued Operations and Disposal Groups (Tables) | 9 Months Ended
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Sep. 30, 2020
Discontinued Operations and Disposal Groups [Abstract] |
Schedule of income (loss) from discontinued operations | Carrier and Otis are presented as discontinued operations and, as such, have been excluded from both continuing operations and segment results for all periods presented. Income (loss) from discontinued operations is as follows:
| Quarter Ended September 30, |  |  |  | Nine Months Ended September 30, |  |
(dollars, in millions) | 2020 |  | 2019 |  | 2020 |  | 2019
Otis | $ | — |  |  | $ | 277 |  |  | $ | 187 |  |  | $ | 799 |
Carrier | — |  |  | 418 |  |  | 196 |  | 1,334 |
Separation related transactions (1) | 113 |  |  | (505) |  |  | (782) |  |  | (592) |
Income (loss) from discontinued operations | $ | 113 |  |  | $ | 190 |  |  | $ | (399) |  |  | $ | 1,541 |
(1) Reflects debt extinguishment costs related to the Company’s paydown of debt to not exceed the maximum applicable net indebtedness under the Raytheon Merger Agreement, and unallocable transaction costs incurred by the Company primarily related to professional services costs pertaining to the Separation Transactions and the establishment of Otis and Carrier as stand-alone public companies, facility relocation costs, costs to separate information systems, costs of retention bonuses and tax charges and benefits related to separation activities. The following summarized financial information related to discontinued operations has been reclassified from Income from continuing operations and included in Income (loss) from discontinued operations:
| Quarter Ended September 30, |  |  |  | Nine Months Ended September 30, |  |
(dollars, in millions) | 2020 |  | 2019 |  | 2020 |  | 2019
Otis |  |  |  |  |  |  |
Product sales | $ | — |  |  | $ | 1,449 |  |  | $ | 1,123 |  |  | $ | 4,240 |
Service sales | — |  |  | 1,858 |  |  | 1,843 |  |  | 5,511 |
Cost of products sold | — |  |  | 1,185 |  |  | 913 |  |  | 3,471 |
Cost of services sold | — |  |  | 1,146 |  |  | 1,157 |  |  | 3,430 |
Research and development | — |  |  | 39 |  |  | 38 |  |  | 118 |
Selling, general and administrative expense | — |  |  | 468 |  |  | 450 |  |  | 1,381 |
Other income (expense), net | — |  |  | (11) |  |  | (65) |  |  | (36) |
Non-operating (income) expense, net | — |  |  | (3) |  |  | 3 |  |  | 5 |
Income from discontinued operations, before income taxes | — |  |  | 461 |  |  | 340 |  |  | 1,310 |
Income tax expense | — |  |  | 140 |  |  | 116 |  |  | 396 |
Income from discontinued operations | — |  |  | 321 |  |  | 224 |  |  | 914 |
Less: Noncontrolling interest in subsidiaries earnings from discontinued operations | — |  |  | 44 |  |  | 37 |  |  | 115 |
Income from discontinued operations attributable to common shareowners | $ | — |  |  | $ | 277 |  |  | $ | 187 |  |  | $ | 799 |
Carrier |  |  |  |  |  |  |
Product sales | $ | — |  |  | $ | 3,991 |  |  | $ | 3,143 |  |  | $ | 11,684 |
Service sales | — |  |  | 825 |  |  | 741 |  |  | 2,405 |
Cost of products sold | — |  |  | 2,778 |  |  | 2,239 |  |  | 8,242 |
Cost of services sold | — |  |  | 593 |  |  | 527 |  |  | 1,706 |
Research and development | — |  |  | 101 |  |  | 98 |  |  | 301 |
Selling, general and administrative expense | — |  |  | 731 |  |  | 669 |  |  | 2,151 |
Other income (expense), net | — |  |  | (12) |  |  | (30) |  |  | 156 |
Non-operating (income) expense, net | — |  |  | (12) |  |  | 17 |  |  | (33) |
Income from discontinued operations, before income taxes | — |  |  | 613 |  |  | 304 |  |  | 1,878 |
Income tax expense | — |  |  | 183 |  |  | 102 |  |  | 519 |
Income from discontinued operations | — |  |  | 430 |  |  | 202 |  |  | 1,359 |
Less: Noncontrolling interest in subsidiaries earnings from discontinued operations | — |  |  | 12 |  |  | 6 |  |  | 25 |
Income from discontinued operations attributable to common shareowners | $ | — |  |  | $ | 418 |  |  | $ | 196 |  |  | $ | 1,334 |
Separation related transactions (1) |  |  |  |  |  |  |
Selling, general and administrative expense | $ | (13) |  |  | $ | 3 |  |  | 154 |  |  | $ | 3 |
Non-operating expense, net | — |  |  | — |  |  | 709 |  |  | — |
Income (loss) from discontinued operations, before income taxes | 13 |  |  | (3) |  |  | (863) |  |  | (3) |
Income tax (benefit) expense | (100) |  |  | 502 |  |  | (81) |  |  | 589 |
Income (loss) from discontinued operations, net of tax | 113 |  |  | (505) |  |  | (782) |  |  | (592) |
Total Income (loss) from discontinued operations attributable to common shareowners | $ | 113 |  |  | $ | 190 |  |  | $ | (399) |  |  | $ | 1,541 |
(1) Reflects debt extinguishment costs related to the Company’s paydown of debt to not exceed the maximum applicable net indebtedness under the Raytheon Merger Agreement, and unallocable transaction costs incurred by the Company primarily related to professional services costs pertaining to the Separation Transactions and the establishment of Otis and Carrier as stand-alone public companies, facility relocation costs, costs to separate information systems, costs of retention bonuses and tax charges and benefits related to separation activities.
Schedule of cash flows from discontinued operations | Selected financial information related to cash flows from discontinued operations is as follows:
| Nine Months Ended September 30, |  |
(dollars, in millions) | 2020 |  | 2019
Net cash (used in) provided by operating activities | $ | (693) |  |  | $ | 1,605 |
Net cash used in investing activities | (241) |  |  | (241) |
Net cash used in financing activities | (1,449) |  |  | (1,410) |
Major components of assets and liabilities related to discontinued operations | The major components of assets and liabilities related to discontinued operations at December 31, 2019 are provided below:
(dollars, in millions) | Otis | Carrier | Total
Assets |  |  |
Cash and cash equivalents | $ | 1,446 |  | $ | 995 |  | $ | 2,441 |
Accounts receivable, net | 2,899 |  | 2,728 |  | 5,627 |
Contract assets | 530 |  | 679 |  | 1,209 |
Inventory, net | 571 |  | 1,332 |  | 1,903 |
Other assets, current | 213 |  | 221 |  | 434 |
Future income tax benefits | 355 |  | 370 |  | 725 |
Fixed assets, net | 747 |  | 1,686 |  | 2,433 |
Operating lease right-of-use assets | 529 |  | 818 |  | 1,347 |
Goodwill | 1,647 |  | 9,807 |  | 11,454 |
Intangible assets, net | 490 |  | 1,083 |  | 1,573 |
Other assets | 220 |  | 2,457 |  | 2,677 |
Total assets related to discontinued operations | $ | 9,647 |  | $ | 22,176 |  | $ | 31,823 |
Liabilities and Redeemable Noncontrolling Interest |  |  |
Short-term borrowings | $ | 33 |  | $ | 38 |  | $ | 71 |
Accounts payable | 1,321 |  | 1,682 |  | 3,003 |
Accrued liabilities | 1,651 |  | 2,889 |  | 4,540 |
Contract liabilities | 2,288 |  | 611 |  | 2,899 |
Long-term debt currently due | 1 |  | 237 |  | 238 |
Long-term debt | 5 |  | 82 |  | 87 |
Future pension and postretirement benefit obligations | 560 |  | 455 |  | 1,015 |
Operating lease liabilities | 383 |  | 668 |  | 1,051 |
Other long-term liabilities(1) | 514 |  | 1,025 |  | 1,539 |
Total liabilities related to discontinued operations | $ | 6,756 |  | $ | 7,687 |  | $ | 14,443 |
(1) Amounts include a deferred tax jurisdictional netting adjustment of $145 million.

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