United Technologies 2012 Annual Report Download - page 76

74 UNITED TECHNOLOGIES CORPORATION
NOTE 7: FIXED ASSETS
(DOLLARS IN MILLIONS)
Estimated
Useful Lives 2012 2011
Land $ 433 $ 335
Buildings and improvements 12-40 years 5,436 4,885
Machinery, tools and equipment 3-20 years 10,880 9,994
Other, including assets
under construction 1,316 766
18,065 15,980
Accumulated depreciation (9,547) (9,779)
$ 8,518 $ 6,201
Depreciation expense was $920 million in 2012, $823 million in
2011 and $863 million in 2010.
NOTE 8: ACCRUED LIABILITIES
(DOLLARS IN MILLIONS) 2012 2011
Advances on sales contracts and service billings $ 5,936 $ 5,028
Accrued salaries, wages and employee benefits 2,176 1,910
Income taxes payable 1,143 547
Litigation and contract matters 563 535
Interest payable 494 325
Service and warranty accruals 479 702
Accrued restructuring costs 389 248
Accrued workers compensation 233 215
Accrued property, sales and use taxes 291 197
Other 3,606 2,580
$ 15,310 $ 12,287
NOTE 9: BORROWINGS AND LINES OF CREDIT
(DOLLARS IN MILLIONS) 2012 2011
Short-term borrowings:
Commercial paper $ 320 $ 455
Other borrowings 183 175
Total short-term borrowings $ 503 $ 630
At December 31, 2012, we had revolving credit agree-
ments with various banks permitting aggregate borrowings of up to
$4 billion pursuant to a $2 billion revolving credit agreement and a
$2 billion multicurrency revolving credit agreement, both of which
expire in November 2016. As of December 31, 2012, there were no
borrowings under either of these revolving credit agreements. The
undrawn portions of these revolving credit agreements are also
available to serve as backup facilities for the issuance of commer-
cial paper. As of December 31, 2012, our maximum commercial
paper borrowing authority as set by our Board of Directors was $4
billion. We generally use our commercial paper borrowings for
general corporate purposes, including the funding of potential
acquisitions and repurchases of our common stock.
The weighted-average interest rates applicable to short-
term borrowings outstanding at December 31, 2012 and 2011
were 0.9% and 1.5%, respectively. At December 31, 2012, approx-
imately $1.7 billion was available under short-term lines of credit
with local banks at our various domestic and international
subsidiaries.
On April 24, 2012, we entered into a term loan credit agree
ment with various financial institutions that provides for a $2 billion
unsecured term loan facility due December 31, 2012. On July 26,
2012 we borrowed the full $2 billion available under this facility to
partially finance the cash consideration of the Goodrich acquisition
and pay related fees, expenses and other amounts due and pay-
able by UTC as a result of the acquisition. The outstanding principal
balance under this term loan credit agreement was prepaid in two
equal payments on November 5 and December 5, 2012.
On June 1, 2012, we issued a total of $9.8 billion of long-
term debt, which is comprised of $1.0 billion aggregate principal
amount of 1.200% notes due 2015, $1.5 billion aggregate principal
amount of 1.800% notes due 2017, $2.3 billion aggregate principal
amount of 3.100% notes due 2022, $3.5 billion aggregate principal
amount of 4.500% notes due 2042, $1.0 billion aggregate principal
amount of three-month LIBOR plus 0.270% floating rate notes due
2013, and $0.5 billion aggregate principal amount of three-month
LIBOR plus 0.500% floating rate notes due 2015. We utilized the
net proceeds of these notes of approximately $9.6 billion to partially
finance the cash consideration of the Goodrich acquisition and pay
related fees, expenses and other amounts due and payable by UTC
as a result of the acquisition. The three-month LIBOR rate as of
December 31, 2012 was approximately 0.3%.
On June 18, 2012, we issued 22,000,000 equity units and
received approximately $1.1 billion in net proceeds. Each equity
unit has a stated amount of $50 and initially is in the form of a
corporate unit consisting of (a) a freestanding stock purchase con-
tract under which the holder will purchase from us on August 1,
2015, a number of shares of our common stock determined pur-
suant to the terms of the agreement and (b) a 1/20, or 5.0%,
undivided beneficial ownership interest in $1,000 principal amount
on our 1.55% junior subordinated notes due 2022. Holders of the
equity units are entitled to receive quarterly contract adjustment
payments at a rate of 5.95% per year of the stated amount of $50
per equity unit, subject to our right to defer such payments. We
used the net proceeds of the equity units to partially finance the
cash consideration of the Goodrich acquisition and pay related
fees, expenses and other amounts due and payable by UTC as a
result of the acquisition.
The net proceeds from the sale of the equity units were
allocated between the purchase contracts and the notes in our
financial statements based on the underlying fair value of each
instrument at the time of issuance taking into consideration the
contract adjustment payments. The fair value of the purchase con-
tracts is expected to approximate the present value of the contract