United Technologies 2012 Annual Report Download - page 35

Management’s Discussion and Analysis 2012 ANNUAL REPORT 33
continue to closely monitor the economic environment and may
undertake further restructuring actions to keep our cost structure
aligned with the demands of the prevailing market conditions.
2012 Actions. During 2012, we initiated restructuring
actions relating to ongoing cost reduction efforts, including work-
force reductions and consolidation of manufacturing operations.
We recorded net pre-tax restructuring charges totaling $576 million
as follows:
(DOLLARS IN MILLIONS) 2012
Otis $ 146
UTC Climate, Controls & Security 123
Pratt & Whitney 94
UTC Aerospace Systems 121
Sikorsky 47
Eliminations and other 19
Restructuring costs recorded within continuing operations 550
Restructuring costs recorded within discontinued operations 26
Total $ 576
The following table summarizes the charges associated
with the 2012 restructuring actions:
(DOLLARS IN MILLIONS) 2012
Cost of sales $ 313
Selling, general and administrative 236
Other income, net 1
Restructuring costs recorded within continuing operations 550
Restructuring costs recorded within discontinued operations 26
Total $ 576
The following table summarizes the charges associated
with the 2012 restructuring actions by cost type:
(DOLLARS IN MILLIONS) 2012
Severance $ 426
Asset write-downs 14
Facility exit, lease termination and other costs 110
Restructuring costs recorded within continuing operations 550
Restructuring costs recorded within discontinued operations 26
Total $ 576
We expect the actions initiated in 2012, once fully com-
plete, to result in net workforce reductions of approximately 7,000
hourly and salaried employees, the exiting of approximately
2.6 million net square feet of facilities and the disposal of assets
associated with the exited facilities. As of December 31, 2012, with
respect to the actions initiated in 2012, we have completed net
workforce reductions of approximately 4,000 employees, and
750,000 net square feet of facilities have been exited. We are
targeting to complete in 2013 the majority of the remaining work-
force and facility related cost reduction actions initiated in 2012.
Approximately 80% of the total pre-tax charge will require cash
payments, which we have and expect to continue to fund with cash
generated from operations. During 2012, we had cash outflows of
approximately $199 million related to the 2012 actions. We expect
to incur additional restructuring and other charges of $105 million to
complete these actions. We expect recurring pre-tax savings to
increase over the two-year period subsequent to initiating the
actions to approximately $560 million annually, of which, approx-
imately $125 million was realized in 2012.
2011 Actions. During 2012 and 2011, we recorded net
pre-tax restructuring charges of $53 million and $286 million,
respectively, for actions initiated in 2011. The 2011 actions relate to
ongoing cost reduction efforts, including workforce reductions and
the consolidation of field operations. We recorded net pre-tax
restructuring charges in 2012 and 2011 as follows:
(DOLLARS IN MILLIONS) 2012 2011
Otis $19 $76
UTC Climate, Controls & Security 25 93
Pratt & Whitney 337
UTC Aerospace Systems –8
Sikorsky 551
Restructuring costs recorded within continuing operations 52 265
Restructuring costs recorded within discontinued operations 121
Total $53 $ 286
The following table summarizes the charges associated
with the 2011 restructuring actions:
(DOLLARS IN MILLIONS) 2012 2011
Cost of sales $33 $ 120
Selling, general and administrative 19 142
Other income, net –3
Restructuring costs recorded within continuing operations 52 265
Restructuring costs recorded within discontinued operations 121
Total $53 $ 286
The following table summarizes the 2012 and 2011
charges associated with the 2011 restructuring actions by cost
type:
(DOLLARS IN MILLIONS) 2012 2011
Severance $30 $ 242
Asset write-downs 14
Facility exit, lease termination and other costs 21 19
Restructuring costs recorded within continuing operations 52 265
Restructuring costs recorded within discontinued operations 121
Total $53 $ 286
We expect the actions initiated in 2011, once fully com-
pleted, to result in net workforce reductions of approximately 4,900