01 - Condensed Consolidated Sta
01 - Condensed Consolidated Statement Of Operations (USD $) | ||||
In Millions, except Per Share data | 3 Months Ended
Jun. 30, 2009 | 3 Months Ended
Jun. 30, 2008 | 6 Months Ended
Jun. 30, 2009 | 6 Months Ended
Jun. 30, 2008 |
Revenues: | ||||
Product sales | $9,327 | $11,657 | $17,989 | $21,602 |
Service sales | 3,733 | 4,155 | 7,270 | 8,044 |
Other income, net | 136 | 132 | 186 | 256 |
Revenues | 13,196 | 15,944 | 25,445 | 29,902 |
Costs and Expenses: | ||||
Cost of products sold | 7,111 | 8,829 | 13,867 | 16,430 |
Cost of services sold | 2,490 | 2,807 | 4,841 | 5,444 |
Research and development | 384 | 434 | 793 | 845 |
Selling, general and administrative | 1,574 | 1,775 | 3,057 | 3,410 |
Operating profit | 1,637 | 2,099 | 2,887 | 3,773 |
Interest | 177 | 176 | 352 | 341 |
Income before income taxes | 1,460 | 1,923 | 2,535 | 3,432 |
Income tax expense | 394 | 548 | 670 | 978 |
Net income | 1,066 | 1,375 | 1,865 | 2,454 |
Less: Noncontrolling interest in subsidiaries' earnings | 90 | 100 | 167 | 179 |
Net income attributable to common shareowners | $976 | $1,275 | $1,698 | $2,275 |
Earnings Per Share of Common Stock: | ||||
Basic (in dollars per share) | 1.06 | 1.35 | 1.85 | 2.4 |
Diluted (in dollars per share) | 1.05 | 1.32 | 1.83 | 2.34 |
Dividends per share of Common Stock (in dollars per share) | 0.39 | 0.32 | 0.77 | 0.64 |
Average number of shares outstanding: | ||||
Basic (in millions of shares) | 919 | 944 | 919 | 948 |
Diluted (in millions of shares) | 929 | 966 | 927 | 971 |
02 - Condensed Consolidated Bal
02 - Condensed Consolidated Balance Sheet (USD $) | ||
In Millions | Jun. 30, 2009
| Dec. 31, 2008
|
Assets | ||
Cash and cash equivalents | $4,016 | $4,327 |
Accounts receivable, net | 8,522 | 9,480 |
Inventories and contracts in progress, net | 8,539 | 8,340 |
Future income tax benefits | 1,593 | 1,551 |
Other current assets | 966 | 769 |
Total Current Assets | 23,636 | 24,467 |
Customer financing assets | 1,029 | 1,002 |
Future income tax benefits | 3,451 | 3,633 |
Fixed assets | 15,077 | 15,106 |
Less: Accumulated depreciation | (8,898) | (8,758) |
Net Fixed Assets | 6,179 | 6,348 |
Goodwill | 15,754 | 15,363 |
Intangible assets | 3,456 | 3,443 |
Other assets | 3,040 | 2,581 |
Total Assets | 56,545 | 56,837 |
Liabilities and Equity | ||
Short-term borrowings | 1,242 | 1,023 |
Accounts payable | 4,599 | 5,594 |
Accrued liabilities | 11,877 | 12,069 |
Long-term debt currently due | 853 | 1,116 |
Total Current Liabilities | 18,571 | 19,802 |
Long-term debt | 8,721 | 9,337 |
Future pension and postretirement benefit obligations | 6,589 | 6,574 |
Other long-term liabilities | 4,258 | 4,198 |
Total Liabilities | 38,139 | 39,911 |
Shareowners' Equity: | ||
Common Stock | 11,369 | 11,179 |
Treasury Stock | (14,661) | (14,316) |
Retained earnings | 26,133 | 25,159 |
Unearned ESOP shares | (187) | (200) |
Accumulated other non-shareowners' changes in equity | (5,275) | (5,905) |
Total Shareowners' Equity | 17,379 | 15,917 |
Noncontrolling interest | 1,027 | 1,009 |
Total Equity | 18,406 | 16,926 |
Total Liabilities and Equity | $56,545 | $56,837 |
03 - Condensed Consolidated Sta
03 - Condensed Consolidated Statement Of Cash Flows (USD $) | ||
In Millions | 6 Months Ended
Jun. 30, 2009 | 6 Months Ended
Jun. 30, 2008 |
Operating Activities: | ||
Net income attributable to common shareowners | $1,698 | $2,275 |
Noncontrolling interest in subsidiaries' earnings | 167 | 179 |
Net Income | 1,865 | 2,454 |
Adjustments to reconcile net income to net cash flows provided by operating activities | ||
Depreciation and amortization | 609 | 645 |
Deferred income tax provision (benefit) | 23 | (133) |
Stock compensation cost | 78 | 110 |
Change in: | ||
Accounts receivable | 821 | (936) |
Inventories and contracts in progress | (320) | (822) |
Other current assets | (75) | (16) |
Accounts payable and accrued liabilities | (622) | 1,035 |
Domestic pension contributions | (401) | 0 |
Other, net | 47 | (31) |
Net cash flows provided by operating activities | 2,025 | 2,306 |
Investing Activities: | ||
Capital expenditures | (340) | (542) |
Investments in businesses | (197) | (546) |
Dispositions of businesses | 44 | 85 |
Increase in customer financing assets, net | (38) | (92) |
Other, net | 4 | (136) |
Net cash flows used in investing activities | (527) | (1,231) |
Financing Activities: | ||
(Repayment) issuance of long-term debt, net | (876) | 994 |
Increase in short-term borrowings, net | 248 | 586 |
Common Stock issued under employee stock plans | 101 | 102 |
Dividends paid on Common Stock | (679) | (583) |
Repurchase of Common Stock | (350) | (1,520) |
Other, net | (229) | (191) |
Net cash flows used in financing activities | (1,785) | (612) |
Effect of foreign exchange rate changes on cash and cash equivalents | (24) | 75 |
Net (decrease) increase in cash and cash equivalents | (311) | 538 |
Cash and cash equivalents, beginning of year | 4,327 | 2,904 |
Cash and cash equivalents, end of period | $4,016 | $3,442 |
04 - Notes to Condensed Consoli
04 - Notes to Condensed Consolidated Financial Statements | |
6 Months Ended
Jun. 30, 2009 USD / shares | |
Notes to Condensed Consolidated Financial Statements | |
Introduction of Notes to Condensed Consolidated Financial Statements | The Condensed Consolidated Financial Statements at June 30, 2009 and for the quarters and six months ended June 30, 2009 and 2008 are unaudited, but in the opinion of management include all adjustments (consisting only of normal recurring adjustments) necessary for a fair presentation of the results for the interim periods. We have adopted Statement of Financial Accounting Standards (SFAS) No. 165, Subsequent Events (SFAS 165) effective beginning the quarter ended June 30, 2009 and have evaluated for disclosure subsequent events that have occurred up to July 24, 2009, the date of issuance of our financial statements. The results reported in these Condensed Consolidated Financial Statements should not necessarily be taken as indicative of results that may be expected for the entire year. The financial information included herein should be read in conjunction with the financial statements and notes in our Annual Report to Shareowners (2008 Annual Report) incorporated by reference to our Annual Report on Form 10-K for calendar year 2008 (2008 Form 10-K). Certain reclassifications have been made herein to 2008 amounts to conform to the current year presentation. These include the adoption of SFAS No. 160, Noncontrolling Interests in Consolidated Financial Statements (SFAS 160) and Emerging Issues Task Force (EITF) Issue No. 07-1, Accounting for Collaborative Arrangements (EITF 07-1). See discussion in Notes 9 and 11, respectively, to the Condensed Consolidated Financial Statements. |
Acquisitions, Dispositions, Goodwill and Other Intangible Assets | Note 1: Acquisitions, Dispositions, Goodwill and Other Intangible Assets Business Acquisitions. Effective January 1, 2009, we adopted the provisions of SFAS 141(R), Business Combinations (revised 2007) (SFAS 141(R)). SFAS 141(R) retains the underlying concepts of SFAS 141, Business Combinations (SFAS 141) in that all business combinations are still required to be accounted for at fair value under the acquisition method of accounting, but changes the method of applying the acquisition method in a number of significant aspects. Acquisition costs will generally be expensed as incurred; noncontrolling interests will be valued at fair value at the acquisition date; in-process research and development will be recorded at fair value as an indefinite-lived intangible asset at the acquisition date; restructuring costs associated with a business combination will generally be expensed subsequent to the acquisition date; and changes in deferred tax asset valuation allowances and income tax uncertainties after the acquisition date generally will affect income tax expense. SFAS 141(R) is effective on a prospective basis for all of our business combinations for which the acquisition date is on or after January 1, 2009, with the exception of the accounting for valuation allowances on deferred taxes and acquired tax contingencies. SFAS 141(R) amends SFAS No.109, Accounting for Income Taxes (SFAS 109) such that adjustments made to valuation allowances on deferred taxes and acquired tax contingencies associated with acquisitions that closed prior to the effective date of SFAS 141(R) would also apply the provisions of SFAS 141(R). During the first six months of 2009, our investment in businesses was approximately $197 million, and consisted primarily of a number of small acquisitions in both our commercial and aerospace businesses. The assets and liabilities of acquired businesses are recorded at fair value at the date of acquisition under the acquisition method. The final purchase price allocation of all acquired businesses is subject to the completion of the valuation of certain assets and liabilities, as well as plans for consolidation of facilities, relocation or reduction of employees and other restructuring activities. For acquisitions subject to SFAS 141(R), during the measurement period, we will recognize additional assets or liabilities if new information is obtained about facts and circumstances that existed as of the acquisition date that, if known, would have resulted in the recognition of those assets and liabilities as of that date. The measurement period shall not exceed one year from the acquisition date. Further, any associated restructuring activities will be expensed in future periods and not recorded through purchase accounting as previously done under SFAS 141. There was no significant impact from the effects of the SFAS 141(R) changes on our acquisition activity in the first six months of 2009. During the second quarter of 2009, Otis recorded a $52 million non-cash, non-taxable gain recognized on the remeasurement to fair value of a previously held equity interest in a joint venture as a result of the purchase of a controlling intere |
Earnings Per Share | Note 2: Earnings Per Share Quarter Ended June 30, Six Months Ended June 30, (in millions of dollars, except per share amounts) 2009 2008 2009 2008 Net income attributable to common shareowners $ 976 $ 1,275 $ 1,698 $ 2,275 Average shares: Basic 919 944 919 948 Stock awards 10 22 8 23 Diluted 929 966 927 971 Earnings per share of Common Stock: Basic $ 1.06 $ 1.35 $ 1.85 $ 2.40 Diluted $ 1.05 $ 1.32 $ 1.83 $ 2.34 The computation of diluted earnings per share excludes the effect of the potential exercise of stock awards, including stock appreciation rights (SARs) and stock options when the average market price of the common stock is lower than the exercise price of the related SARs and options during the period. These outstanding stock awards are not included in the computation of diluted earnings per share because the effect would have been antidilutive. For the quarter and six months ended June 30, 2009, the number of stock awards excluded from the computation was 37.5 million and 38.8 million, respectively. For the quarter and six months ended June 30, 2008, the number of stock awards excluded from the computation was 8.7 million and 6.0 million, respectively. |
Inventories and Contracts in Progress | Note 3: Inventories and Contracts in Progress (in millions of dollars) June 30, 2009 December 31, 2008 Raw materials $ 1,244 $ 1,271 Work-in-process 3,548 3,295 Finished goods 3,591 3,634 Contracts in progress 6,480 6,113 14,863 14,313 Less: Progress payments, secured by lien, on U.S. Government contracts (381) (476) Billings on contracts in progress (5,943) (5,497) $ 8,539 $ 8,340 As of June 30, 2009 and December 31, 2008, inventory also includes capitalized research and development costs of $887 million and $833 million, respectively, related to certain aerospace programs. These capitalized costs will be liquidated as production units are delivered to the customer. The capitalized contract research and development costs within inventory principally relate to capitalized costs on Sikorskys CH-148 contract with the Canadian government. The CH-148 is a derivative of the H-92, a military variant of the S-92. Certain reclassifications have been made to the 2008 inventory components presented above in order to conform to the current year presentation. |
Borrowings and Lines of Credit | Note 4: Borrowings and Lines of Credit At June 30, 2009, we had committed credit agreements from banks permitting aggregate borrowings of up to $2.5 billion under a $1.5 billion revolving credit agreement and a $1.0 billion multicurrency revolving credit agreement, both of which are available for general funding purposes, including acquisitions. As of June 30, 2009, there were no borrowings under either of these revolving credit agreements, which expire in October 2011 and November 2011, respectively. The undrawn portions under both of these agreements are also available to serve as backup facilities for the issuance of commercial paper. We generally use our commercial paper borrowings for general corporate purposes, including the funding of potential acquisitions and repurchases of our common stock. We had $856 million of commercial paper outstanding at June 30, 2009, all of which was scheduled to mature in less than one month. In February 2009, we redeemed the entire $500 million outstanding principal amount of our Floating Rate Notes Due 2009 that were due June 1, 2009 at a redemption price in U.S. dollars equal to 100% of the principal amount, plus interest accrued. On June 1, 2009, we repaid our $400 million of 6% Notes Due 2009 which matured on the same date. We have an existing universal shelf registration statement filed with the Securities and Exchange Commission (SEC) for an indeterminate amount of securities for future issuance, subject to our internal limitations on the amount of debt to be issued under this shelf registration statement. |
Income Taxes | Note 5: Income Taxes We conduct business globally and, as a result, UTC or one or more of our subsidiaries files income tax returns in the U.S. federal jurisdiction and various state and foreign jurisdictions. In the normal course of business we are subject to examination by taxing authorities throughout the world, including such major jurisdictions as Australia, Canada, China, France, Germany, Hong Kong, Italy, Japan, South Korea, Singapore, Spain, the United Kingdom and the United States. With few exceptions, we are no longer subject to U.S. federal, state and local, or non-U.S. income tax examinations for years before 1998. We assess uncertain tax positions in accordance with Financial Accounting Standards Board Interpretation No. 48 Accounting for Uncertainty in Income Taxes an interpretation of FASB Statement No. 109. We recognize interest accrued related to unrecognized tax benefits in interest expense. Penalties, if incurred, would be recognized as a component of income tax expense. There were no material changes to unrecognized tax benefits or to related accrued interest in the quarter. It is reasonably possible that over the next twelve months the amount of unrecognized tax benefits may change within a range of a net decrease of $125 million to a net increase of $50 million resulting from additional worldwide uncertain tax positions, from the reevaluation of current uncertain tax positions arising from developments in examinations, in appeals, or in the courts, or from the closure of tax statutes. Not included in the range is 182 million (approximately $255 million) of tax benefits that we have claimed related to a 1998 German reorganization. These tax benefits are currently being reviewed by the German Tax Office in the course of an audit of tax years 1999 to 2000. In 2008 the German Federal Tax Court denied benefits to another taxpayer in a case involving a German tax law relevant to our reorganization. The determination of the German Federal Tax Court on this other matter has been appealed to the European Court of Justice (ECJ) to determine if the underlying German tax law is violative of European Union (EU) principles. It is our position that it is more likely than not that the relevant German tax law is violative of EU principles and we have not accrued tax expense for this matter. As developments in the pending ECJ case warrant, it may become necessary for us to accrue for this matter, and related interest. In 2009, we expect to complete the examination phase of the Internal Revenue Service (IRS) review of tax years 2004 and 2005 and that the IRS review of tax years 2006 and 2007 will commence. The effective tax rate for the quarter ended June 30, 2009 has decreased as compared to the same period of 2008 as a result of the non-taxability of a gain recognized in the quarter ended June 30, 2009 on the remeasurement to fair value of a previously held equity interest in an Otis joint venture due to the purchase of a controlling interest in the venture. The effective tax rate for the six months ended June 30, 2009 decreased as compared to the same period of 2008 as a result of the favorable tax impact of approximately $25 |
Employee Benefit Plans | Note 6: Employee Benefit Plans Pension and Postretirement Plans. We sponsor both funded and unfunded domestic and foreign defined pension and postretirement plans. Contributions to these plans during the quarters and six months ended June 30, 2009 and 2008 were as follows: Quarter Ended Six Months Ended June 30, June 30, (in millions of dollars) 2009 2008 2009 2008 Defined Benefit Plans $ 428 $ 17 $ 451 $ 45 Defined Contribution Plans $ 48 $ 63 $ 101 $ 118 In the first six months of 2009, we contributed $401 million in cash to our domestic defined benefit pension plans, all of which was contributed in the second quarter of 2009. There were no contributions to our domestic defined benefit pension plans in the first six months of 2008. The following table illustrates the components of net periodic benefit cost for our pension and other postretirement benefits: Pension Benefits Other Postretirement Benefits Quarter Ended Quarter Ended June 30, June 30, (in millions of dollars) 2009 2008 2009 2008 Service cost $ 108 $ 114 $ 1 $ 1 Interest cost 319 320 13 14 Expected return on plan assets (403) (421) - (1) Amortization 14 12 (1) (2) Recognized actuarial net loss (gain) 56 31 (1) - 94 56 12 12 Net settlement and curtailment loss 4 - - - Total net periodic benefit cost $ 98 $ 56 $ 12 $ 12 Pension Benefits Other Postretirement Benefits Six Months Ended Six Months Ended June 30, June 30, (in millions of dollars) 2009 2008 2009 2008 Service cost $ 214 $ 227 $ 2 $ 2 Interest cost 635 640 25 27 Expected return on plan assets (802) (841) - (1) Amortization 28 25 (2) (4) Recognized actuarial net loss (gain) 112 61 (2) - 187 112 23 24 Net settlement and curtailment loss (gain) 17 (2) - - Total net periodic benefit cost $ 204 $ 110 $ 23 $ 24 |
Restructuring and Related Costs | Note 7: Restructuring and Related Costs During the first six months of 2009, we recorded net pre-tax restructuring and related charges in our business segments totaling $464 million for new and ongoing restructuring actions as follows: (in millions of dollars) Otis $ 79 Carrier 96 UTC Fire & Security 100 Pratt & Whitney 120 Hamilton Sundstrand 56 Sikorsky 7 Eliminations & Other 3 General corporate expenses 3 Total $ 464 The net charges included $192 million in cost of sales, $254 million in selling, general and administrative expenses and $18 million in other income and, as described below, primarily relate to actions initiated during 2009 and 2008. 2009 Actions. During the first six months of 2009, we initiated restructuring actions relating to ongoing cost reduction efforts, including workforce reductions and the consolidation of administrative offices. We recorded net pre-tax restructuring and related charges totaling $434 million, including $167 million in cost of sales, $249 million in selling, general and administrative expenses and $18 million in other income. We expect the 2009 actions that were initiated in the first six months to result in net workforce reductions of approximately 10,600 hourly and salaried employees, the exiting of approximately 2 million net square feet of facilities and the disposal of assets associated with the exited facilities. As of June 30, 2009, net workforce reductions of approximately 7,000 employees have been completed. The majority of the remaining workforce and all facility related cost reduction actions are targeted for completion during 2009 and 2010. No specific plans for significant other actions have been finalized at this time. The following table summarizes the accrual balances and utilization by cost type for the 2009 restructuring actions: (in millions of dollars) Severance Asset Write-downs Facility Exit and Lease Termination Costs Total Restructuring accruals at March 31, 2009 $ 99 $ - $ 5 $ 104 Net pre-tax restructuring charges 255 14 14 283 Utilization (104) (14) (12) (130) Balance at June 30, 2009 $ 250 $ - $ 7 $ 257 The following table summarizes expected, incurred and remaining costs for the 2009 restructuring actions by type: (in millions of dollars) Severance Asset Write-Downs Facility Exit and Lease Termination Costs Total Expected costs $ 423 $ 20 $ 55 $ 498 Costs incurred - quarter ended March 31, 2009 (140) (6) (5) (151) Costs incurred - quarter ended June 30, 2009 (255) (14) (14) (283) Remaining costs at June 30, 2009 $ 28 $ - $ 36 $ 64 The following table summarizes expected, incurred and remaining costs for the 2009 restructuring actions by segment: Costs Incurred - Costs Incurred - Remaining Quarter Ended Quarter Ended Costs at (in millions of dollars) Expected Costs March 31, 2009 June 30, 2009 June 30, 2009 Otis $ 90 $ (21) $ (57) $ 12 Carrier 113 (35) (53) 25 UTC Fire & Security 108 (13) (83) 12 Pratt & Whitney 112 (59) (43) 10 Hamilton |
Financial Instruments | Note 8: Financial Instruments In March of 2008, the FASB issued SFAS No. 161, Disclosures about Derivative Instruments and Hedging Activities, an amendment of FASB Statement No. 133 (SFAS 161). SFAS 161 requires entities to provide enhanced disclosure about how and why the entity uses derivative instruments, how the instruments and related hedged items are accounted for under SFAS No. 133, Accounting for Derivative Instruments and Hedging Activities, (SFAS 133) and how the instruments and related hedged items affect the financial position, results of operations, and cash flows of the entity. We adopted SFAS 161 during the quarter ended March 31, 2009. We enter into derivative instruments for risk management purposes only, including derivatives designated as hedging instruments under SFAS 133 and those utilized as economic hedges. We operate internationally and, in the normal course of business, are exposed to fluctuations in interest rates, foreign exchange rates and commodity prices. These fluctuations can increase the costs of financing, investing and operating the business. We have used derivative instruments, including swaps, forward contracts and options to manage certain foreign currency, interest rate and commodity price exposures. By nature, all financial instruments involve market and credit risks. We enter into derivative and other financial instruments with major investment grade financial institutions and have policies to monitor the credit risk of those counterparties. We limit counterparty exposure and concentration of risk by diversifying counterparties. While there can be no assurance, we do not anticipate any material non-performance by any of these counterparties. Foreign Currency Forward Contracts. We manage our foreign currency transaction risks to acceptable limits through the use of derivatives to hedge forecasted cash flows associated with foreign currency transaction exposures which are accounted for as cash flow hedges, as deemed appropriate. To the extent these derivatives are effective in offsetting the variability of the hedged cash flows, and otherwise meet the hedge accounting criteria of SFAS 133, changes in the derivatives fair value are not included in current earnings but are included in Accumulated Other Non-Shareowners Changes in Equity. These changes in fair value will subsequently be reclassified into earnings as a component of product sales or expenses, as applicable, when the forecasted transaction occurs. To the extent that a previously designated hedging transaction is no longer an effective hedge, any ineffectiveness measured in the hedging relationship is recorded currently in earnings in the period it occurs. To the extent the hedge accounting criteria of SFAS 133 are not met, the foreign currency forward contracts are utilized as economic hedges and changes in the fair value of these contracts are recorded currently in earnings in the period in which they occur. These include hedges that are used to reduce exchange rate risks arising from the change in fair value of certain foreign currency denominated assets and liabilities (i.e. payables, receivables) and other economic hedges where t |
Equity | Note 9: Equity A summary of the changes in equity for the quarters and six months ended June 30, 2009 and 2008 is provided below: Quarter Ended June 30, (in millions of dollars) 2009 2008 Shareowners' Equity Noncontrolling Interest Total Equity Shareowners' Equity Noncontrolling Interest Total Equity Equity, beginning of period $ 15,813 $ 973 $ 16,786 $ 21,586 $ 984 $ 22,570 Common Stock issued under employee plans 149 149 160 160 Common Stock repurchased (150) (150) (747) (747) Dividends paid on Common Stock (340) (340) (290) (290) Dividends paid on ESOP Common Stock (15) (15) (13) (13) Dividends attributable to noncontrolling interest - (108) (108) - (87) (87) Purchase of subsidiary shares from noncontrolling interest - - - - (51) (51) Acquired noncontrolling interest - 61 61 - 16 16 Non-shareowners Changes in Equity: Net income 976 90 1,066 1,275 100 1,375 Foreign currency translation, net 747 11 758 (51) (5) (56) Increases (decreases) in unrealized gains from available-for-sale investments, net 49 - 49 (21) - (21) Cash flow hedging gains (losses) 124 - 124 (9) - (9) Change in pension and post-retirement benefit plans, net 26 - 26 22 - 22 Equity, end of period $ 17,379 $ 1,027 $ 18,406 $ 21,912 $ 957 $ 22,869 Six Months Ended June 30, (in millions of dollars) 2009 2008 Shareowners' Equity Noncontrolling Interest Total Equity Shareowners' Equity Noncontrolling Interest Total Equity Equity, beginning of period $ 15,917 $ 1,009 $ 16,926 $ 21,355 $ 912 $ 22,267 Common Stock issued under employee plans 220 220 295 295 Common Stock repurchased (350) (350) (1,567) (1,567) Dividends paid on Common Stock (679) (679) (583) (583) Dividends paid on ESOP Common Stock (30) (30) (25) (25) Dividends attributable to noncontrolling interest - (200) (200) - (189) (189) Purchase of subsidiary shares from noncontrolling interest (27) (10) (37) - (51) (51) Sale of subsidiary shares in noncontrolling interest - - - - 40 40 Acquired noncontrolling interest - 75 75 - 34 34 Non-shareowners Changes in Equity: Net income 1,698 167 1,865 2,275 179 2,454 Foreign currency translation, net 452 (14) 438 165 32 197 Increases (decreases) in unrealized gains from available-for-sale investments, net 30 - 30 (15) - (15) Cash flow hedging gains (losses) 72 - 72 (35) - (35) Change in pension and post-retirement benefit plans, net 76 - 76 47 - 47 Equity, end of period $ 17,379 $ 1,027 $ 18,406 $ 21,912 $ 957 $ 22,869 Effective January 1, 2009, we adopted the provisions of SFAS 160. Certain provisions of this statement are required to be adopted retrospectively for all periods presented. Such provisions in |
Guarantees | Note 10: Guarantees We extend a variety of financial, market value and product performance guarantees to third parties. There have been no material changes to guarantees outstanding since December 31, 2008. The changes in the carrying amount of service and product warranties and product performance guarantees for the six months ended June 30, 2009 and 2008 are as follows: (in millions of dollars) 2009 2008 Balance as of January 1 $ 1,136 $ 1,252 Warranties and performance guarantees issued 170 285 Settlements made (202) (318) Other (26) 18 Balance as of June 30 $ 1,078 $ 1,237 |
Collaborative Arrangements | Note 11: Collaborative Arrangements In view of the risks and costs associated with developing new engines, Pratt& Whitney has entered into certain collaboration arrangements in which costs, revenues and risks are shared. Revenues generated from engine programs, spare parts sales, and aftermarket business under collaboration arrangements are recorded as earned in our financial statements. Amounts attributable to our collaborative partners for their share of revenues are recorded as an expense in our financial statements based upon the terms and nature of the arrangement. Costs associated with engine programs under collaborative arrangements are expensed as incurred. Under these arrangements, collaborators contribute their program share of engine parts, incur their own production costs and make certain payments to Pratt & Whitney for shared or joint program costs. The reimbursement of the collaborators share of program costs is recorded as a reduction of the related expense item at that time. As of June 30, 2009, the collaborators interests in existing engine production programs ranged from 1 percent to 29 percent. Pratt & Whitney directs those programs and is the principal participant in all existing collaborative arrangements. There are no individually significant collaborative arrangements and none of the partners exceed 25 percent share in an individual program. The following table illustrates the income statement classification and amounts attributable to transactions arising from the collaborative arrangements between participants for each period presented: Quarter Ended June 30, Six Months Ended June 30, (in millions of dollars) 2009 2008 2009 2008 Collaborator share of revenues: Cost of products sold $ 187 $ 273 $ 400 $ 527 Cost of services sold 7 4 14 7 Collaborator share of program costs (reimbursement of expenses incurred): Cost of products sold (14) (21) (33) (43) Research and development (20) (15) (32) (23) Selling, general and administrative (1) (2) (3) (5) In November 2007, the EITF issued EITF 07-1. This Issue is effective for financial statements issued for fiscal years beginning after December15, 2008, and interim periods within those fiscal years, and must be applied retrospectively to all prior periods presented for all collaborative arrangements existing as of the effective date. This Issue requires that participants in a collaborative arrangement report costs incurred and revenues generated from these transactions on a gross basis and in the appropriate line items in each companys financial statements pursuant to the guidance in EITF Issue No.99-19, Reporting Revenue Gross as a Principal versus Net as an Agent. This Issue also requires disclosure of the nature and purpose of the participants collaborative arrangements, the participants rights and obligations under these arrangements, the accounting policy for collaborative arrangements, the income statement classification and amounts attributable to transactions arising from collaboration arrangements between participants, and the disclosure related to individually si |
Contingent Liabilities | Note 12: Contingent Liabilities Summarized below are the matters previously described in Note 15 of the Notes to the Consolidated Financial Statements in our 2008 Annual Report, incorporated by reference in our 2008 Form 10-K. Environmental. Our operations are subject to environmental regulation by federal, state and local authorities in the United States and regulatory authorities with jurisdiction over our foreign operations. We accrue for environmental investigatory, remediation, operating and maintenance costs when it is probable that a liability has been incurred and the amount can be reasonably estimated. The most likely cost to be incurred is accrued based on an evaluation of currently available facts with respect to each individual site, including existing technology, current laws and regulations and prior remediation experience. Where no amount within a range of estimates is more likely, we accrue the minimum. For sites with multiple responsible parties, we consider our likely proportionate share of the anticipated remediation costs and the ability of the other parties to fulfill their obligations in establishing a provision for those costs. We discount liabilities with fixed or reliably determinable future cash payments. We do not reduce accrued environmental liabilities by potential insurance reimbursements. We periodically reassess these accrued amounts. We believe that the likelihood of incurring losses materially in excess of amounts accrued is remote. Government. We are now, and believe that in light of the current U.S. government contracting environment we will continue to be, the subject of one or more U.S. government investigations. If we or one of our business units were charged with wrongdoing as a result of any of these investigations or other government investigations (including violations of certain environmental or export laws) the U.S. government could suspend us from bidding on or receiving awards of new U.S. government contracts pending the completion of legal proceedings. If convicted or found liable, the U.S. government could fine and debar us from new U.S. government contracting for a period generally not to exceed three years. The U.S. government could void any contracts found to be tainted by fraud. Our contracts with the U.S. government are also subject to audits. Like many defense contractors, we have received audit reports, which recommend that certain contract prices should be reduced to comply with various government regulations. Some of these audit reports involve substantial amounts. We have made voluntary refunds in those cases we believe appropriate and continue to litigate certain other cases. In addition, we accrue for liabilities associated with those matters that are probable and can be reasonably estimated. The most likely settlement amount to be incurred is accrued based upon a range of estimates. Where no amount within a range of estimates is more likely, then we accrue the minimum amount. As previously disclosed, the Department of Justice (DOJ) sued us in 1999 in the U.S. District Court for the Southern District of Ohio, claiming that Pratt& Whitney violated the civil False Claims |
Segment Financial Data | Note 13: Segment Financial Data Our operations are classified into six principal segments: Otis, Carrier, UTC Fire& Security, Pratt& Whitney, Hamilton Sundstrand and Sikorsky. The segments are generally based on the management structure of the businesses and the grouping of similar operating companies, where each management organization has general operating autonomy over diversified products and services. As discussed more fully in Note 11 to the Condensed Consolidated Financial Statements, we adopted EITF 07-1 as of January 1, 2009. As a result, the collaborators share of revenues, which were previously reported on a net basis, are now reported on a gross basis. Prior period amounts include retrospective application of EITF 07-1. Results for the quarters and six months ended June 30, 2009 and 2008 are as follows: Quarter Ended June 30, Revenues Operating Profits Operating Profit Margins (in millions of dollars) 2009 2008 2009 2008 2009 2008 Otis $ 2,952 $ 3,404 $ 631 $ 671 21.4% 19.7% Carrier 3,100 4,356 260 487 8.4% 11.2% UTC Fire & Security 1,330 1,738 55 126 4.1% 7.2% Pratt & Whitney 3,111 3,569 467 546 15.0% 15.3% Hamilton Sundstrand 1,402 1,650 187 280 13.3% 17.0% Sikorsky 1,389 1,307 133 111 9.6% 8.5% Total segments 13,284 16,024 1,733 2,221 13.0% 13.9% Eliminations and other (88) (80) (7) (13) General corporate expenses - - (89) (109) Consolidated $ 13,196 $ 15,944 $ 1,637 $ 2,099 12.4% 13.2% Six Months Ended June 30, Revenues Operating Profits Operating Profit Margins (in millions of dollars) 2009 2008 2009 2008 2009 2008 Otis $ 5,617 $ 6,461 $ 1,137 $ 1,251 20.2% 19.4% Carrier 5,587 7,765 282 735 5.0% 9.5% UTC Fire & Security 2,616 3,336 148 241 5.7% 7.2% Pratt & Whitney 6,291 7,033 903 1,072 14.4% 15.2% Hamilton Sundstrand 2,783 3,111 379 509 13.6% 16.4% Sikorsky 2,723 2,330 249 193 9.1% 8.3% Total segments 25,617 30,036 3,098 4,001 12.1% 13.3% Eliminations and other (172) (134) (44) (22) General corporate expenses - - (167) (206) Consolidated $ 25,445 $ 29,902 $ 2,887 $ 3,773 11.3% 12.6% See Note 7 to the Condensed Consolidated Financial Statements for a discussion of restructuring charges included in segment operating results. |
Accounting Pronouncements | Note 14: Accounting Pronouncements In December 2008, the FASB issued FSP FAS 132(R)-1, Employers Disclosures about Postretirement Benefit Plan Assets. This FSP amends SFAS No. 132 (revised 2003), Employers Disclosures about Pensions and Other Postretirement Benefits, to provide guidance on an employers disclosures about plan assets of a defined benefit pension or other postretirement plan on investment policies and strategies, major categories of plan assets, inputs and valuation techniques used to measure the fair value of plan assets and significant concentrations of risk within plan assets. This FSP will be effective for fiscal years ending after December 15, 2009, with earlier application permitted. Upon initial application, the provisions of this FSP are not required for earlier periods that are presented for comparative purposes. We are currently evaluating the disclosure requirements of this new FSP. In June 2009, the FASB issued SFAS No. 166, Accounting for Transfers of Financial Assets an amendment of FASB Statement No. 140 (SFAS 166). SFAS 166 removes the concept of a qualifying special-purpose entity from SFAS 140, Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities, establishes a new participating interest definition that must be met for transfers of portions of financial assets to be eligible for sale accounting, clarifies and amends the derecognition criteria for a transfer to be accounted for as a sale, and changes the amount that can be recognized as a gain or loss on a transfer accounted for as a sale when beneficial interests are received by the transferor. Enhanced disclosures are also required to provide information about transfers of financial assets and a transferors continuing involvement with transferred financial assets. This statement must be applied as of the beginning of an entitys first annual reporting period that begins after November 15, 2009, for interim periods within that first annual reporting period, and for interim and annual reporting periods thereafter. Earlier application is prohibited. We are currently evaluating this new statement. In June 2009, the FASB issued SFAS No. 167, Amendments to FASB Interpretation No. 46(R) (SFAS 167). SFAS 167 amends FASB Interpretation No. 46 (revised December 2003), Consolidation of Variable Interest Entities (FIN 46(R)) to require an enterprise to qualitatively assess the determination of the primary beneficiary of a variable interest entity (VIE) based on whether the entity (1) has the power to direct the activities of a VIE that most significantly impact the entitys economic performance and (2) has the obligation to absorb losses of the entity or the right to receive benefits from the entity that could potentially be significant to the VIE. Also, SFAS 167 requires an ongoing reconsideration of the primary beneficiary, and amends the events that trigger a reassessment of whether an entity is a VIE. Enhanced disclosures are also required to provide information about an enterprises involvement in a VIE. This statement shall be effective as of the beginning of each reporting entitys first annual reporting period that begi |
05 - Entity Information
05 - Entity Information (USD $) | ||
6 Months Ended
Jun. 30, 2009 | Jun. 30, 2008
| |
Entity Information | ||
Entity Registrant Name | UNITED TECHNOLOGIES CORP /DE/ | |
Entity Central Index Key | 0000101829 | |
Current Fiscal Year End Date | --12-31 | |
Entity Well-known Seasoned Issuer | Yes | |
Entity Voluntary Filers | No | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Tax Identification Number | 060570975 | |
Entity Public Float | $59,346,468,617 | |
Entity Common Stock, Shares Outstanding | 941,273,401 |
06 - Document Information
06 - Document Information | |
6 Months Ended
Jun. 30, 2009 USD / shares | |
Document Information | |
Document Type | 10-Q |
Document Period End Date | 2009-06-30 |
Amendment Flag | false |
Amendment Description | Not Applicable |