United Technologies 2012 Annual Report Download - page 77

Notes to Consolidated Financial Statements 2012 ANNUAL REPORT 75
adjustment payments and was recorded as a reduction to Common
Stock, with an offsetting credit to liabilities. This liability will be
accreted over three years through interest charges to the statement
of operations based on a constant rate calculation. The purchase
contracts are reflected in our diluted earnings per share calculations
using the treasury stock method.
To finance the remainder of the cash consideration of the
Goodrich acquisition and pay related fees, expenses and other
amounts due and payable, we utilized $3.2 billion from the issuance
of commercial paper and approximately $0.5 billion of cash and
cash equivalents generated from operating activities. In addition, as
a result of the Goodrich acquisition, we assumed $3.0 billion of
debt, including an adjustment of $600 million to increase the value
of long-term debt assumed to its fair market value. Details of the
debt assumed are included in the long-term debt table below.
On July 26, 2012, upon completing the Goodrich acquis-
ition, we terminated the bridge credit agreement, initially entered
into as of November 8, 2011, with various financial institutions that
had provided for a $15 billion unsecured bridge loan facility which
was available to partially fund the cash consideration of the Good-
rich acquisition and pay related fees, expenses and other amounts
due and payable by UTC as a result of the acquisition. See Note 2
for further details regarding the completion of the Goodrich acquis-
ition.
On December 6, 2012, we announced that we had com-
menced cash tender offers for six series of outstanding notes
issued by Goodrich. These offers expired on January 7, 2013.
Holders validly tendering their notes by December 19, 2012
received consideration determined by reference to a fixed spread
over the yield to maturity (or, in the case of one series, yield to call)
of the applicable U.S. Treasury security with the same maturity, plus
an early tender payment of $30 per $1,000 principal amount of
notes accepted for purchase. Holders validly tendering their notes
after December 19, 2012 but prior to January 8, 2013 received
consideration determined by reference to a fixed spread over the
yield to maturity (or, in the case of one series, yield to call) of the
applicable U.S. Treasury security with the same maturity. A total of
$635 million principal amount of all notes subject to the tender offer
and $126 million of the fair value adjustment were repaid, including
approximately $30.6 million principal amount of the 2018 notes,
approximately $129 million principal amount of the 2020 notes,
approximately $305.2 million principal amount of the 2021 notes,
approximately $9.1 million principal amount of the 2027 notes,
approximately $120.2 million principal amount of the 2036 notes,
and approximately $40.8 million principal amount of the 2038
notes. The effective interest rate on these notes was between 3.6%
and 7.1%. The extinguishment loss was approximately $26 million
and was recognized within Interest expense, net in the accompany-
ing Consolidated Statement of Operations.
Long-term debt consisted of the following:
(DOLLARS IN MILLIONS) 2012 2011
LIBOR plus 0.270% floating rate notes due 2013 $ 1,000 $–
LIBOR plus 0.500% floating rate notes due 2015 500 –
1.200% notes due 2015* 1,000 –
4.875% notes due 2015* 1,200 1,200
6.290% notes due 2016*** 291 –
5.375% notes due 2017* 1,000 1,000
1.800% notes due 2017* 1,500 –
6.800% notes due 2018*** 99 –
6.125% notes due 2019*** 300 –
6.125% notes due 2019* 1,250 1,250
8.875% notes due 2019 272 272
4.500% notes due 2020* 1,250 1,250
4.875% notes due 2020*** 171 –
3.600% notes due 2021*** 295 –
8.750% notes due 2021 250 250
3.100% notes due 2022* 2,300 –
1.550% junior subordinated notes due 2022** 1,100 –
7.100% notes due 2027*** 141 –
6.700% notes due 2028 400 400
7.500% notes due 2029* 550 550
5.400% notes due 2035* 600 600
6.050% notes due 2036* 600 600
6.800% notes due 2036*** 134 –
7.000% notes due 2038*** 159 –
6.125% notes due 2038* 1,000 1,000
5.700% notes due 2040* 1,000 1,000
4.500% notes due 2042* 3,500 –
Project financing obligations 100 127
Other debt (including capitalized leases)*** 403 131
Total principal long-term debt 22,365 9,630
Other (fair market value adjustments)*** 353 –
Total long-term debt 22,718 9,630
Less current portion (1,121) (129)
Long-term portion $ 21,597 $ 9,501
* We may redeem the above notes, in whole or in part, at our option at any time at a
redemption price in U.S. Dollars equal to the greater of 100% of the principal
amount of the notes to be redeemed or the sum of the present values of the
remaining scheduled payments of principal and interest on the notes to be
redeemed, discounted to the redemption date on a semiannual basis at the
adjusted treasury rate plus 10-50 basis points. The redemption price will also
include interest accrued to the date of redemption on the principal balance of the
notes being redeemed.
** The junior subordinated notes are redeemable at our option, in whole or in part, on
a date not earlier than August 1, 2017. The redemption price will be the principal
amount, plus accrued and unpaid interest, if any, up to but excluding the
redemption date. We may extend or eliminate the optional redemption date as part
of a remarketing of the junior subordinated notes which could occur between
April 29, 2015 and July 15, 2015 or between July 23, 2015 and July 29, 2015.
*** Includes notes and remaining fair market value adjustments that were assumed as
a part of the Goodrich acquisition on July 26, 2012.