United Technologies 2011 Annual Report Download - page 68

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
impairment charges consist of an approximately $58 million
charge associated with Carrier’s ongoing portfolio
transformation to a higher returns business and an
approximately $28 million charge at Hamilton Sundstrand
related to the disposition of an aerospace business as part of
Hamilton Sundstrand’s efforts to implement low cost sourcing
initiatives.
In August 2009, we completed the acquisition of the
remaining 71% interest in GST Holdings Limited (GST), a fire
alarm provider in China, for approximately $250 million
bringing our total investment in GST to approximately $360
million. We recorded over $200 million of goodwill and
approximately $100 million of identified intangible assets in
connection with GST. With the acquisition of the remaining
71% of GST, UTC Fire & Security further strengthened its
presence in the Chinese fire safety industry.
In July 2009, Carrier and Watsco, Inc. (Watsco) formed
Carrier Enterprise, LLC, a joint venture to distribute Carrier,
Bryant, Payne and Totaline residential and light commercial
HVAC products in the U.S. sunbelt region and selected
territories in the Caribbean and Latin America. As part of the
transaction, Carrier contributed its distribution businesses
located in these regions into the new venture. In
consideration of its contribution, Carrier received
approximately 3 million shares of common stock of Watsco
and a 40% non-controlling interest in the new venture, which
included a business contributed by Watsco. Watsco owns a
60% interest in the venture with options to purchase an
additional 20% interest from Carrier in future years. Carrier
recognized a gain of approximately $60 million in 2009 as a
result of its contribution of the majority of its U.S. residential
sales and distribution businesses in this new venture.
The assets and liabilities of acquired businesses are accounted
for under the purchase method of accounting and recorded at
their fair values at the dates of acquisition. The excess of the
purchase price over the estimated fair values of the net assets
acquired was recorded as an increase in goodwill of $432
million in 2011, $1.7 billion in 2010, and $630 million in 2009.
The results of operations of acquired businesses have been
included in the Consolidated Statement of Operations
beginning as of the effective date of acquisition.
Goodwill. The changes in the carrying amount of goodwill, by
segment, are as follows:
(Dollars in millions)
Balance as of
January 1,
2011
Goodwill
resulting from
business
combinations
Foreign
currency
translation
and other
Balance as of
December 31,
2011
Otis $ 1,470 $ 62 $ (16) $ 1,516
Carrier 3,171 52 (121) 3,102
UTC Fire & Security 6,646 58 (48) 6,656
Pratt & Whitney 1,224 — (1) 1,223
Hamilton Sundstrand 4,491 (8) (8) 4,475
Sikorsky 330 24 (6) 348
Total Segments 17,332 188 (200) 17,320
Eliminations and other 389 244 (10) 623
Total $ 17,721 $432 $ (210) $17,943
For 2011, we recorded an additional $244 million of goodwill,
reflected within “Eliminations and other” in the above table,
related to the finalization of purchase accounting associated
with the December 2010 acquisition of Clipper.
Intangible Assets. Identifiable intangible assets are comprised
of the following:
2011 2010
(Dollars in millions)
Gross
Amount
Accumulated
Amortization
Gross
Amount
Accumulated
Amortization
Amortized:
Service portfolios $2,036 $(1,060) $1,950 $ (942)
Patents and trademarks 463 (183) 441 (153)
Other, principally customer
relationships 3,329 (1,429) 3,229 (1,222)
5,828 (2,672) 5,620 (2,317)
Unamortized:
Trademarks and other 762 — 757 —
Total $6,590 $(2,672) $ 6,377 $(2,317)
Amortization of intangible assets in 2011 and 2010 was $398
million and $387 million, respectively. Amortization of these
intangible assets for 2012 through 2016 is expected to
approximate $325 million per year.
NOTE 3: EARNINGS PER SHARE
(Dollars in millions, except per share amounts; shares in millions) 2011 2010 2009
Net income attributable to common
shareowners $4,979 $4,373 $3,829
Basic weighted average shares outstanding 892.3 907.9 917.4
Stock awards 14.5 14.8 11.4
Diluted weighted average shares outstanding 906.8 922.7 928.8
Earnings Per Share of Common Stock:
Basic $ 5.58 $ 4.82 $ 4.17
Diluted $ 5.49 $ 4.74 $ 4.12
The computation of diluted earnings per share excludes the
effect of the potential exercise of stock awards, including
stock appreciation rights and stock options when the average
market price of the common stock is lower than the exercise
price of the related stock awards during the period. These
outstanding stock awards are not included in the
computation of diluted earnings per share because the effect
would have been anti-dilutive. For 2011, there were no anti-
dilutive stock awards excluded from the computation. For
2010 and 2009, the number of stock awards excluded from
the computation was 11.4 million and 20.2 million,
respectively.
NOTE 4: COMMERCIAL AEROSPACE INDUSTRY ASSETS AND
COMMITMENTS
We have receivables and other financing assets with
commercial aerospace industry customers totaling $3,736
million and $3,384 million at December 31, 2011 and 2010,
respectively. Customer financing assets related to
66 UNITED TECHNOLOGIES CORPORATION