United Technologies 2008 Annual Report Download - page 75

Our sales contracts in many cases are long-term contracts expected to be performed over
periods exceeding twelve months. At December 31, 2008 and 2007, approximately 66% and
63%, respectively, of total inventories and contracts in progress have been acquired or
manufactured under such long-term contracts, a portion of which is not scheduled for delivery
within the next twelve months.
Note 6. Fixed Assets
(in millions of dollars)
Estimated
Useful Lives 2008 2007
Land $ 334 $ 351
Buildings and improvements 20-40 years 4,681 4,561
Machinery, tools and equipment 3-20 years 9,486 9,394
Other, including under construction 605 571
15,106 14,877
Accumulated depreciation (8,758) (8,581)
$ 6,348 $ 6,296
Depreciation expense was $865 million in 2008, $770 million in 2007 and $724 million in 2006.
Note 7. Accrued Liabilities
(in millions of dollars) 2008 2007
Advances on sales contracts and service billings $ 5,248 $ 4,934
Accrued salaries, wages and employee benefits 1,877 1,858
Litigation and contract matters 436 538
Service and warranty 526 573
Income taxes payable 307 450
Interest payable 296 265
Accrued property, sales and use taxes 207 209
Accrued restructuring costs 213 88
Accrued workers compensation 177 168
Other 2,782 2,194
$12,069 $11,277
Note 8. Borrowings and Lines of Credit
Short-term borrowings consist of the following:
(in millions of dollars) 2008 2007
Domestic borrowings $1 $1
Foreign bank borrowings 872 1,084
Commercial paper 150 —
$1,023 $1,085
The weighted-average interest rates applicable to short-term borrowings outstanding at
December 31, 2008 and 2007 were 5.3% and 7.2%, respectively. At December 31, 2008,
approximately $2.0 billion was available under short-term lines of credit with local banks at
our various domestic and international subsidiaries.
At December 31, 2008, we had two committed credit agreements from banks permitting
aggregate borrowings of up to $2.5 billion. One credit commitment is a $1.5 billion revolving
credit agreement. As of December 31, 2008, there were no borrowings under this revolving
credit agreement, which expires in October 2011. We also have a $1.0 billion multicurrency
revolving credit agreement that is available for general funding purposes, including
acquisitions. As of December 31, 2008, approximately $460 million had been borrowed under
this revolving credit agreement. This agreement expires in November 2011. As of
December 31, 2008, the undrawn portions of both the $1.5 billion revolving credit agreement
and $1.0 billion multicurrency revolving credit agreement were available to serve as backup
facilities for the issuance of commercial paper. In December 2008, we increased our maximum
commercial paper borrowing authority from $1.5 billion to $2.5 billion. We generally use our
commercial paper borrowings for general corporate purposes, including the funding of
potential acquisitions and repurchases of our stock.
In December 2008, we issued $1.25 billion of long-term debt, the proceeds of which were used
primarily to repay commercial paper borrowings maturing between December 15, 2008 and
January 21, 2009. A portion of the net proceeds from the offering was also used to repay
approximately $180 million of the outstanding borrowings under our multicurrency revolving
credit facility. The remainder of the net proceeds will be used for general corporate purposes.
Pending use, we have invested the remaining available net proceeds in short-term interest
bearing obligations. The terms of the long-term debt issued in December 2008 were as follows:
Principal (in millions of dollars) Rate Maturity
$1,250 6.125% February 1, 2019
2008 Annual Report 73