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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
| x | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
| For the fiscal year ended December 31, 2009 |
Commission file number 1-812
UNITED TECHNOLOGIES CORPORATION
(Exact name of registrant as specified in its charter)
| DELAWARE | 06 0570975 | |
| (State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) |
| One Financial Plaza, Hartford, Connecticut | 06103 | |
| (Address of principal executive offices) | (Zip Code) |
Registrant’s telephone number, including area code: (860) 728-7000
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class |
Name of each exchange on which registered | |
| Common Stock ($1 par value) | New York Stock Exchange | |
| (CUSIP 913017 10 9) |
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes x. No ¨.
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ¨. No x.
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x. No ¨.
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x. No ¨.
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. x
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act (Check one):
| Large accelerated filer | x | Accelerated filer | ¨ | |||
| Non-accelerated filer | ¨ (Do not check if a smaller reporting company) | Smaller reporting company | ¨ | |||
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ¨ No x.
The aggregate market value of the voting Common Stock held by non-affiliates at June 30, 2009 was approximately $48,749,457,537, based on the New York Stock Exchange closing price for such shares on that date. For purposes of this calculation, the Registrant has assumed that its directors and executive officers are affiliates.
At January 31, 2010, there were 937,400,008 shares of Common Stock outstanding.
List hereunder documents incorporated by reference and the Part of the Form 10-K into which the document is incorporated: (1) portions of the United Technologies Corporation 2009 Annual Report to Shareowners are incorporated by reference in Parts I, II and IV hereof; and (2) portions of the United Technologies Corporation Proxy Statement for the 2010 Annual Meeting of Shareowners are incorporated by reference in Part III hereof.
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UNITED TECHNOLOGIES CORPORATION
AND SUBSIDIARIES
on Form 10-K for
Year Ended December 31, 2009
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UNITED TECHNOLOGIES CORPORATION
Annual Report on Form 10-K for
Year Ended December 31, 2009
Whenever reference is made in this Form 10-K to specific sections of UTC’s 2009 Annual Report to Shareowners (2009 Annual Report), those sections are incorporated herein by reference. United Technologies Corporation and its subsidiaries’ names, abbreviations thereof, logos, and product and service designators are all either the registered or unregistered trademarks or tradenames of United Technologies Corporation and its subsidiaries. Names, abbreviations of names, logos, and product and service designators of other companies are either the registered or unregistered trademarks or tradenames of their respective owners. As used herein, the terms “we,” “us,” “our” or “UTC,” unless the context otherwise requires, mean United Technologies Corporation and its subsidiaries.
| Item 1. | Business |
General
United Technologies Corporation was incorporated in Delaware in 1934. UTC provides high technology products and services to the building systems and aerospace industries worldwide. Growth is attributable to acquisitions and the internal development of our existing businesses. The following description of our business should be read in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our 2009 Annual Report, especially the information contained therein under the heading “Business Overview.”
Our operating units include businesses with operations throughout the world. Otis, Carrier and UTC Fire & Security (collectively referred to as the commercial businesses) serve customers in the commercial and residential property industries worldwide. Carrier also serves commercial, industrial, transport refrigeration and food service equipment customers. Pratt & Whitney, Hamilton Sundstrand and Sikorsky (collectively referred to as the aerospace businesses) primarily serve commercial and government customers in both the original equipment and aftermarket parts and services markets of the aerospace industry. Hamilton Sundstrand and Pratt & Whitney also serve customers in certain industrial markets. For 2009, our commercial and industrial revenues (generated principally by our commercial businesses) were approximately 58 percent of our consolidated revenues, and commercial aerospace and military aerospace revenues were approximately 21 percent and 21 percent, respectively, of our consolidated revenues. Revenues for 2009 from outside the United States, including U.S. export sales, were 59 percent of our total segment revenues.
This Form 10-K and our quarterly reports on Form 10-Q, current reports on Form 8-K and all amendments to those reports are available free of charge through the Investor Relations section of our Internet website (http://www.utc.com) under the heading “SEC Filings” as soon as reasonably practicable after these reports are electronically filed with, or furnished to, the Securities and Exchange Commission (SEC). Our SEC filings are also available for reading and copying at the SEC’s Public Reference Room at 100 F Street, NE, Washington, D.C. 20549. Information on the operation of the Public Reference Room may be obtained by calling the SEC at 1-800-SEC-0330. In addition, the SEC maintains an Internet site (http://www.sec.gov) containing reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC.
Description of Business by Segment
We conduct our business through six principal segments: Otis, Carrier, UTC Fire & Security, Pratt & Whitney, Hamilton Sundstrand and Sikorsky. Each segment groups similar operating companies and the management organization of each segment has general operating autonomy over a range of products and services. The principal products and services of each segment are as follows:
Otis —elevators, escalators, moving walkways and service.
Carrier—heating, ventilating, air conditioning (HVAC) and refrigeration systems, controls, services and energy efficient products for residential, commercial, industrial and transportation applications.
UTC Fire & Security—fire and special hazard detection and suppression systems and firefighting equipment, security, monitoring and rapid response systems and service and security personnel services.
Pratt & Whitney —commercial, military, business jet and general aviation aircraft engines, parts and services, industrial gas turbines, geothermal power systems and space propulsion.
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Hamilton Sundstrand—aerospace products and aftermarket services, including power generation, management and distribution systems, flight systems, engine control systems, environmental control systems, fire protection and detection systems, auxiliary power units, propeller systems and industrial products, including air compressors, metering pumps and fluid handling equipment.
Sikorsky—military and commercial helicopters, aftermarket helicopter and aircraft parts and services.
Segment financial data for the years 2007 through 2009, including financial information about foreign and domestic operations and export sales, appears in Note 17 to the Consolidated Financial Statements in our 2009 Annual Report. Segment revenues as discussed below include intercompany sales, which are ultimately eliminated within the “Eliminations and other” category as reflected in the segment financial data in Note 17 to the Consolidated Financial Statements in our 2009 Annual Report.
Otis
Otis is the world’s largest elevator and escalator manufacturing, installation and service company. Otis designs, manufactures, sells and installs a wide range of passenger and freight elevators for low-, medium- and high-speed applications, as well as a broad line of escalators and moving walkways. In addition to new equipment, Otis provides modernization products to upgrade elevators and escalators as well as maintenance services for both its products and those of other manufacturers. Otis serves customers in the commercial and residential property industries around the world. Otis sells directly to the end customer and, to a limited extent, through sales representatives and distributors.
Revenues generated by Otis’ international operations were 80 percent of total Otis segment revenues in 2009 and 2008. At December 31, 2009, Otis’ backlog was $14,550 million as compared to $15,025 million at December 31, 2008. Of the total Otis backlog at December 31, 2009, approximately $8,036 million is expected to be realized as sales in 2010.
Carrier
Carrier is the world’s largest provider of HVAC and refrigeration solutions, including controls for residential, commercial, industrial and transportation applications. Carrier also provides installation, retrofit and aftermarket services for the products it sells and those of other manufacturers in the HVAC and refrigeration industries. In 2009, as part of its business transformation strategy, Carrier completed divestitures of several lower-margin businesses, acquired several higher-margin service businesses, and formed ventures with other partners in the U.S., Europe, the Middle East and Australia. This included the acquisition of StrionAir, a leading air purification technology company, Logical Automation, a leading building automation controls company, and the formation of Carrier Enterprise, LLC, a venture with Watsco, Inc., 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. Carrier also integrated into its operations UTC Power’s micro-turbine-based combined cooling, heating and power systems business. Carrier’s products and services are sold under Carrier and other brand names to building contractors and owners, homeowners, transportation companies, retail stores and food service companies. Carrier sells directly to the end customer and through manufacturers’ representatives, distributors, wholesalers, dealers and retail outlets. Certain of Carrier’s HVAC businesses are seasonal and can be impacted by weather. Carrier customarily offers its customers incentives to purchase products to ensure an adequate supply of its products in the distribution channels.
Revenues generated by Carrier’s international operations, including U.S. export sales, were 55 percent and 60 percent of total Carrier segment revenues in 2009 and 2008, respectively. At December 31, 2009, Carrier’s business backlog was $2,199 million as compared to $1,996 million at December 31, 2008. Substantially all the business backlog at December 31, 2009 is expected to be realized as sales in 2010.
UTC Fire & Security
UTC Fire & Security is a global provider of security and fire safety products and services. We created the UTC Fire & Security segment in the second quarter of 2005 upon acquiring Kidde and adding the Kidde industrial, retail and commercial fire safety businesses to the former Chubb segment. UTC Fire & Security provides electronic security products such as intruder alarms, access control systems and video surveillance systems and designs and manufactures a wide range of fire safety products including specialty hazard detection and fixed suppression products, portable fire extinguishers and other firefighting equipment. Services provided to the electronic security and fire safety industries include systems integration, installation, maintenance and inspection services. UTC Fire & Security also provides monitoring, response and security personnel services, including cash-in-transit security, to complement its electronic security and fire safety businesses. In November 2009, we entered into an agreement with General Electric Company (GE) to purchase the GE Security business. Subject to regulatory approvals and the satisfaction of customary closing conditions, the closing is anticipated to take place early in the second quarter of 2010. GE Security, part of GE Technology Infrastructure, supplies security and fire safety technologies for commercial and residential applications through a broad product portfolio that includes fire detection and life safety systems, intrusion alarms, video surveillance and access control systems. We intend to incorporate the GE Security business within the UTC Fire & Security segment, which will significantly enhance UTC Fire &
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Security’s geographic diversity with GE Security’s strong North American presence and increased product and technology offerings. UTC Fire & Security products and services are used by governments, financial institutions, architects, building owners and developers, security and fire consultants and other end-users requiring a high level of security and fire protection for their businesses and residences. In 2009, we also completed the acquisition of GST Holdings Limited (GST), a fire alarm provider in China. With the acquisition of the remaining 71% of the outstanding shares of GST, UTC Fire & Security further strengthened its presence in the Chinese fire safety industry.
UTC Fire & Security provides its products and services under Chubb, Kidde and other brand names and sells directly to the customer as well as through manufacturer representatives, distributors, dealers and U.S. retail distribution. Revenues generated by UTC Fire & Security’s international operations were 82 percent and 83 percent of total UTC Fire & Security segment revenues in 2009 and 2008, respectively. At December 31, 2009, UTC Fire & Security’s business backlog was $898 million as compared to $1,064 million at December 31, 2008. Substantially all the business backlog at December 31, 2009 is expected to be realized as sales in 2010.
Pratt & Whitney
Pratt & Whitney is among the world’s leading suppliers of aircraft engines for the commercial, military, business jet and general aviation markets. Pratt & Whitney Global Services provides maintenance, repair and overhaul services, including the sale of spare parts, as well as fleet management services for large commercial engines. Pratt & Whitney produces families of engines for wide and narrow body aircraft in the commercial and military markets. Pratt & Whitney Power Systems also sells engines for industrial applications. In 2009, UTC completed the transition of UTC Power’s geothermal power systems business to Pratt & Whitney Power Systems. Pratt & Whitney Canada (P&WC) is a world leader in the production of engines powering business, regional, light jet, utility and military aircraft and helicopters. Pratt & Whitney Rocketdyne (PWR) is a leader in the design, development and manufacture of sophisticated aerospace propulsion systems for military and commercial applications, including the U.S. space shuttle program.
In view of the risks and costs associated with developing new engines, Pratt & Whitney has entered into collaboration arrangements in which revenues, costs and risks are shared. At December 31, 2009, the interests of participants in Pratt & Whitney-directed commercial jet engine programs ranged from 14 percent to 48 percent. In addition, Pratt & Whitney has interests in other engine programs, including a 33 percent interest in the International Aero Engines (IAE) collaboration, which sells and supports V2500 engines for the Airbus A320 family of aircraft. At December 31, 2009, a portion of Pratt & Whitney’s interests in IAE (equivalent to 4 percent of the overall IAE collaboration) were held by Pratt & Whitney sub-partners. Pratt & Whitney also has a 50 percent interest in the Engine Alliance (EA), a joint venture with GE Aviation, which markets and manufactures the GP7000 engine for the Airbus A380 aircraft. At December 31, 2009, 40 percent of Pratt & Whitney’s 50 percent interest in the EA was held by other participants. Pratt & Whitney is also pursuing additional collaboration partners.
In terms of engine development programs, Pratt & Whitney is under contract with the U.S. Air Force to develop the F135 engine, a derivative of Pratt & Whitney’s F119 engine, to power the single-engine F-35 Lightning II aircraft being developed by Lockheed Martin. In addition, Pratt & Whitney is currently developing technology intended to enable it to power proposed and future aircraft, including testing of the PurePower PW1000G Geared TurboFan engine. Ground and flight testing for the PurePower PW1000G demonstrator engine was successfully completed in 2009. PurePower PW1000G models have been selected by Bombardier to power the new CSeries passenger aircraft and by Mitsubishi Heavy Industries to power the new Mitsubishi Regional Jet, both scheduled to enter into service in 2013. The PurePower PW1000G targets a significant reduction in fuel burn and noise levels with lower environmental emissions and operating costs than current production engines. In December 2009, the Irkut Corporation of Russia also selected the PurePower PW1000G engine to power the proposed new Irkut MC-21 passenger aircraft, which is planned to enter into service in 2016. Pratt & Whitney has also received Federal Aviation Authority (FAA) and European Aviation Safety Agency (EASA) certification for the Advantage70 upgrade to its PW4000 engine for Airbus A330 aircraft. The Advantage70 upgrade is intended to reduce maintenance and fuel costs and increase thrust. PWR is developing a liquid fuel J-2X engine to support NASA’s vision for space exploration. PWR is also upgrading the performance of the RS68 engine to support U.S. Air Force launch requirements and NASA requirements. P&WC has received FAA and EASA certifications for its PW600 engine series developed for the very light jet market. PW600 engine models have been selected by aircraft manufacturers such as Cessna Aircraft and Embraer. P&WC is also developing the PW210 engine for Sikorsky’s S-76D helicopter and the PurePower PW800 engine for the new generation of long-range business jets. Pratt & Whitney’s Global Material Solutions is in the process of engineering, certifying, manufacturing and selling new parts, including life limited parts, for CFM56-3 engines.1 Pratt & Whitney continues to enhance its programs through performance improvement measures and product base expansion.
| 1 | CFM56 is a trademark of CFM International. |
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Pratt & Whitney’s products are sold principally to aircraft manufacturers, airlines and other aircraft operators, aircraft leasing companies, space launch vehicle providers and the U.S. and foreign governments. Pratt & Whitney’s products and services must adhere to strict regulatory and market-driven safety and performance standards. The frequently changing nature of these standards, along with the long duration of aircraft engine programs, creates uncertainty regarding engine program profitability. The vast majority of sales are made directly to the end customer and, to a limited extent, through independent distributors and foreign sales representatives. Sales to Airbus were 11 percent of total Pratt & Whitney revenues in 2009, before taking into account discounts or financial incentives offered to customers. Sales to the U.S. government were 31 percent of total Pratt & Whitney segment revenues in 2009, as compared with 27 percent in 2008.
Revenues from Pratt & Whitney’s international operations, including U.S. exports, were 51 percent and 54 percent of total Pratt & Whitney segment revenues in 2009 and 2008, respectively. At December 31, 2009, Pratt & Whitney’s business backlog was $22,614 million, including $4,577 million of U.S. government-funded contracts and subcontracts, as compared to $25,982 million and $5,892 million, respectively, at December 31, 2008. Of the total Pratt & Whitney backlog at December 31, 2009, approximately $7,113 million is expected to be realized as sales in 2010. Pratt & Whitney’s backlog includes certain contracts for which actual costs may ultimately exceed total revenues from these contracts. See Note 1 to the Consolidated Financial Statements in our 2009 Annual Report for a description of our accounting for long-term contracts.
Effective January 1, 2009, we adopted the provisions of the Collaborative Arrangements Topic of the Financial Accounting Standards Board Accounting Standards Codification (FASB ASC). This topic requires that participants in a collaborative arrangement report costs incurred and revenues generated from such transactions on a gross basis and in the appropriate line items in each company’s financial statements. As required, we have applied the provisions of the Collaborative Arrangements Topic retrospectively for all periods presented. As a result, the collaborators’ share of revenues, including its impact on business backlog (approximately $2.4 billion), which was previously reported on a net basis, is now reported on a gross basis. Prior to the adoption of the provisions of the Collaborative Arrangements Topic of the FASB ASC, Pratt & Whitney’s business backlog as of December 31, 2008 was $23,570 million, including $5,871 million of U.S. government-funded contracts and subcontracts.
Hamilton Sundstrand
Hamilton Sundstrand is among the world’s leading suppliers of technologically advanced aerospace and industrial products and aftermarket services for diversified industries worldwide. Hamilton Sundstrand’s aerospace products, such as power generation, management and distribution systems, flight systems, engine control systems, environmental control systems, fire protection and detection systems, auxiliary power units and propeller systems, serve commercial, military, regional, business and general aviation, as well as military ground vehicle, space and undersea applications. In 2009, UTC completed the transition of the program management of UTC Power’s space and defense fuel cell power plant business to Hamilton Sundstrand’s energy, space and defense business. Aftermarket services include spare parts, overhaul and repair, engineering and technical support and fleet maintenance programs. Hamilton Sundstrand sells aerospace products to airframe manufacturers, the U.S. and foreign governments, aircraft operators and independent distributors. Sales to the U.S. government were 26 percent of total Hamilton Sundstrand segment revenues in 2009, as compared with 20 percent in 2008.
Hamilton Sundstrand is engaged in development programs for the Boeing 787 aircraft, the new Bombardier CSeries aircraft, the new Mitsubishi Regional Jet, the Airbus A350 aircraft, the Lockheed Martin F-35 Lightning II military aircraft and the Airbus A400M military aircraft. Hamilton Sundstrand is also the prime contractor for NASA’s space suit/life support system and produces environmental monitoring and control, life support, mechanical systems and thermal control systems for the U.S. space shuttle program, the international space station and the Orion crew exploration vehicle.
Hamilton Sundstrand’s principal industrial products, such as air compressors, metering pumps and fluid handling equipment, serve industries involved with chemical and hydrocarbon processing, oil and gas production, water and wastewater treatment and construction. Hamilton Sundstrand sells these products under the Sullair, Sundyne, Milton Roy and other brand names directly to end users, and through manufacturer representatives and distributors.
Revenues generated by Hamilton Sundstrand’s international operations, including U.S. export sales, were 50 percent and 51 percent of total Hamilton Sundstrand segment revenues in 2009 and 2008, respectively. At December 31, 2009, Hamilton Sundstrand’s business backlog was $5,077 million, including $835 million under U.S. government-funded contracts and subcontracts, as compared to $5,226 million and $913 million, respectively, at December 31, 2008. Of the total Hamilton Sundstrand backlog at December 31, 2009, approximately $2,245 million is expected to be realized as sales in 2010.
Sikorsky
Sikorsky is one of the world’s largest manufacturers of military and commercial helicopters and also provides aftermarket helicopter and aircraft parts and services.
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Current major production programs at Sikorsky include the UH-60M Black Hawk medium-transport helicopters and HH-60M Medevac helicopters for the U.S. and foreign governments, the S-70 Black Hawk for foreign governments, the MH-60S and MH-60R helicopters for the U.S. Navy, the International Naval Hawk for multiple naval missions, and the S-76 and S-92 helicopters for commercial operations. The UH-60M helicopter is the latest and most modern in a series of Black Hawk variants that Sikorsky has been delivering to the U.S. Army since 1978 and requires significant additional assembly hours relative to the previous variants. In December 2007, the U.S. government and Sikorsky signed a five-year multi-service contract for 537 H-60 helicopters to be delivered to the U.S. Army and U.S. Navy, which include the UH-60M, HH-60M, MH-60S and MH-60R. The contract includes options for an additional 263 aircraft, spares, and kits, potentially making it the largest contract in UTC and Sikorsky history. Actual production quantities will be determined year-by-year over the life of the program based on funding allocations set by Congress and Pentagon acquisition priorities. The deliveries of the aircraft are scheduled to be made through 2012. Sikorsky is also developing the CH-53K next generation heavy lift helicopter for the U.S. Marine Corps and the CH-148 derivative of the H-92 helicopter, a military variant of the S-92 helicopter, for the Canadian government. The latter is being developed under a fixed-price contract that provides for the development, production, and 22-year logistical support of 28 helicopters. This is the largest and most expansive fixed-price development contract in Sikorsky’s history. In December 2008, Sikorsky and the Canadian government executed amendments to the contract that revised the delivery schedule and contract specifications. The first test flight was successfully conducted in November 2008 and the contract provides for delivery of the first interim configuration helicopter in the fourth quarter of 2010. Sikorsky is in discussions with the Canadian government concerning an anticipated delay in completing certain elements of the specification for the interim aircraft.
Sikorsky’s aftermarket business includes spare parts sales, overhaul and repair services, maintenance contracts and logistics support programs for helicopters and other aircraft. Sales are made directly by Sikorsky and by its subsidiaries and joint ventures. Sikorsky is increasingly engaging in logistics support programs and partnering with its government and commercial customers to manage and provide maintenance and repair services.
Sales to the U.S. government were 63% in 2009, as compared with 57% in 2008. Revenues generated by Sikorsky’s international operations, including U.S. export sales, were 33 percent and 36 percent of total Sikorsky revenues in 2009 and in 2008, respectively. At December 31, 2009, Sikorsky’s business backlog was $10,329 million, including $4,957 million under U.S. government-funded contracts and subcontracts, as compared to $13,167 million and $6,725 million, respectively, at December 31, 2008. Of the total Sikorsky backlog at December 31, 2009, approximately $5,142 million is expected to be realized as sales in 2010.
Other
UTC Power is a world leader in the application of fuel cell technology to stationary and transportation applications. In the application of stationary fuel cell power, UTC has delivered more than 260 200kW phosphoric acid fuel cell power plants since 1992. UTC Power ceased production of the 200kW unit in 2009 and began deliveries of its 400kW phosphoric acid fuel cell. This new fuel cell is expected to have greater durability than any other large stationary fuel cell currently available in the market. UTC Power’s automotive and bus transportation fuel cell power plants are based on proton exchange membrane (PEM) technology, including its PureMotion 120 power plant, which is currently used in revenue service in transit bus applications in Connecticut, California and Europe. UTC Power is currently developing PEM fuel cells for submarine applications. In addition, UTC Power is the maker of alkaline-based fuel cells used to provide electricity and drinking water to the U.S. space shuttle.
Although fuel cells are believed to be superior to conventional power generation technologies in terms of total system efficiency and environmental characteristics, the technology is still in either early commercialization or development. Continued technology advancement and cost reduction are required to achieve wide-scale market acceptance. Government support is needed to fully commercialize fuel cell technology. There is still significant uncertainty as to whether and when commercially viable fuel cells will be produced.
In 2009, we completed the transition of UTC Power’s micro-turbine-based combined cooling, heating and power systems business to Carrier’s businesses, its geothermal power systems business to Pratt & Whitney’s Power Systems business, and program management of its space and defense fuel cell power plant business to Hamilton Sundstrand’s energy, space and defense business. The results of UTC Power are included in the “Eliminations and other” category in the segment financial data in Note 17 to the Consolidated Financial Statements in our 2009 Annual Report.
In December 2009, we agreed to acquire a 49.5% equity stake in Clipper Windpower Plc (Clipper), a California-based wind turbine manufacturer that trades on the AIM London Stock Exchange. We completed the acquisition on January 12, 2010. Pursuant to our agreement with Clipper, we are prohibited from acquiring additional shares of Clipper within two years of the closing date that would result in an equity stake in excess of 49.9% without the prior approval of Clipper. The investment is intended to expand our power generation portfolio and allow us to enter the wind power segment by leveraging our expertise in blade technology, turbines and gearbox design.
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Other Matters Relating to Our Business as a Whole
Competition and Other Factors Affecting Our Businesses
As worldwide businesses, our operations can be affected by a variety of economic and other factors, including those described in this section, in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in our 2009 Annual Report, in Item 1, “Cautionary Note Concerning Factors That May Affect Future Results,” and in Item 1A, “Risk Factors” in this Form 10-K. Each business unit is subject to significant competition from a large number of companies in the United States and other countries, and each competes on the basis of price, delivery schedule, product performance and service.
Our aerospace businesses are subject to substantial competition from domestic manufacturers, foreign manufacturers (whose governments sometimes provide research and development assistance, marketing subsidies and other assistance for their national commercial products) and companies that obtain regulatory agency approval to manufacture spare parts. In particular, Pratt & Whitney experiences intense competition for new commercial airframe/engine combinations. Engine suppliers may offer substantial discounts and other financial incentives, performance and operating cost guarantees, participation in financing arrangements and maintenance agreements. Customer selections of engines and components can also have a significant impact on later sales of parts and services. In addition, the U.S. government’s and other governments’ policies of purchasing parts from suppliers other than the original equipment manufacturer affect military spare parts sales. Significant elements of our aerospace businesses, such as spare parts sales for engines and aircraft in service, have short lead times. Therefore, backlog information may not be indicative of future demand. Pratt & Whitney’s major competitors in the sale of engines are GE Aviation, Rolls-Royce, Honeywell and Turbomeca. For information regarding customer financing commitments, participation in guarantees of customer financing arrangements and performance and operating cost guarantees, see Notes 4 and 14 to the Consolidated Financial Statements in our 2009 Annual Report.
Research and Development
Since changes in technology can have a significant impact on our operations and competitive position, we spend substantial amounts of our own funds on research and development. These expenditures, which are charged to expense as incurred, were $1,558 million or 3.0 percent of total sales in 2009, as compared with $1,771 million or 3.0 percent of total sales in 2008 and $1,678 million or 3.1 percent of total sales in 2007. We also perform research and development work under contracts funded by the U.S. government and other customers. This contract research and development, which is performed principally in the Pratt & Whitney segment and to a lesser extent in the Hamilton Sundstrand and Sikorsky segments, amounted to $2,124 million in 2009, as compared to $2,101 million in 2008 and $2,123 million in 2007. These contract research and development costs include amounts that are expensed as incurred, through cost of products sold, and amounts that are capitalized into inventory to be subsequently recovered through production aircraft shipments. Of the totals, $2,095 million, $2,008 million and $1,872 million were expensed in 2009, 2008 and 2007, respectively. The remaining costs have been capitalized.
U.S. Government Contracts
U.S. government contracts are subject to termination by the government, either for the convenience of the government or for default as a result of our failure to perform under the applicable contract. In the case of a termination for convenience, we would normally be entitled to reimbursement for our allowable costs incurred, plus termination costs and a reasonable profit. If terminated by the government as a result of our default, we could be liable for additional costs the government incurs in acquiring undelivered goods or services from another source and any other damages it suffers. Most of our U.S. government sales are made under fixed-price type contracts, while approximately $2,874 million or 5.5 percent of our total sales for 2009 were made under cost-reimbursement type contracts.
Our contracts with the U.S. government are also subject to audits. Like many defense contractors, we have received audit reports from the U.S. government which recommend that we reduce certain contract prices because cost or pricing data we submitted in negotiation of the contract prices or cost accounting practices may not have conformed to government regulations. Some of these audit reports have involved substantial reductions. We have made voluntary refunds in those cases we believe appropriate, have settled some allegations and continue to litigate certain cases. For further discussion of risks related to government contracting, see the discussion in Item 1A, “Risk Factors” and Item 3, “Legal Proceedings,” in this Form 10-K and Note 16 to the Consolidated Financial Statements in our 2009 Annual Report for further discussion.
Compliance with Environmental and Other Government Regulations
Our operations are subject to and affected by environmental regulation by federal, state and local authorities in the United States and regulatory authorities with jurisdiction over our foreign operations. We have incurred and will likely continue to incur liabilities under various government statutes for the cleanup of pollutants previously released into the environment. We do not anticipate that compliance with current provisions relating to the protection of the environment or that any payments we may be required to make for cleanup liabilities will have a material adverse effect upon our cash flows, competitive position, financial condition or results of operations. Environmental matters are further addressed in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and Notes 1 and 16 to the Consolidated Financial Statements in our 2009 Annual Report.
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Most of the U.S. laws governing environmental matters include criminal provisions. If we were convicted of a violation of the federal Clean Air Act or Clean Water Act, the facility or facilities involved in the violation would be ineligible to be used in performing any U.S. government contract we are awarded until the Environmental Protection Agency certified that the condition giving rise to the violation had been corrected.
We conduct our businesses through subsidiaries and affiliates worldwide. Changes in legislation or government policies can affect our worldwide operations. For example, governmental regulation of refrigerants and energy efficiency standards, elevator safety codes and fire safety regulations are important to the businesses of Carrier, Otis and UTC Fire & Security respectively, while government safety and performance regulations, restrictions on aircraft engine noise and emissions and government procurement practices can impact our aerospace businesses.
Intellectual Property and Raw Materials
We maintain a portfolio of patents, trademarks, licenses and franchises related to our businesses. While this portfolio is cumulatively important to our business, we do not believe that the loss of any one or group of related patents, trademarks, licenses or franchises would have a material adverse effect on our overall business or on any of our operating segments.
We believe we have adequate sources for our purchases of materials, components, services and supplies used in our manufacturing. We work continuously with our supply base to ensure an adequate source of supply and to reduce costs. We pursue cost reductions through a number of mechanisms, including consolidating our purchases, reducing the number of suppliers, strategic global sourcing and using online bidding competitions among potential suppliers. In some instances, we depend upon a single source of supply or participate in commodity markets that may be subject to allocations of limited supplies by suppliers. Like other users in the United States, we are largely dependent upon foreign sources for certain raw materials requirements such as cobalt (Finland, Norway, Russia and Canada), tantalum (Australia and Canada), chromium (South Africa, Kazakhstan, Zimbabwe and Russia) and rhenium (Chile, Kazakhstan and Germany). We have a number of ongoing programs to manage this dependence and the accompanying risk, including long-term agreements and the conservation of materials through scrap reclamation and new manufacturing processes. We believe that our supply management practices are based on an appropriate balancing of the foreseeable risks and the costs of alternative practices. Although recent high prices for some raw materials important to some of our businesses (steel, copper, aluminum, titanium and nickel) have caused margin and cost pressures, we do not foresee any near term unavailability of materials, components or supplies that would have an adverse effect on our overall business or on any of our business segments. For further discussion of the possible effects of the cost and availability of raw materials on our business, see Item 1A, “Risk Factors” in this Form 10-K.
Employees and Employee Relations
At December 31, 2009, our total employment was approximately 206,700, approximately 65 percent of which represents employees based outside the United States. During 2009, we renegotiated twelve domestic multi-year collective bargaining agreements, the largest of which covered certain workers at Sikorsky, Otis and Carrier. In 2010, numerous collective bargaining agreements are subject to renegotiation, the largest of which cover certain workers at Pratt & Whitney, Carrier and Hamilton Sundstrand. Although some previous contract renegotiations have had a significant impact on our financial condition or results of operations, particularly at Sikorsky, we do not anticipate such problems in the renegotiation of the above contracts that would either individually or in the aggregate have a material adverse effect on our financial condition or results of operations. For discussion of the effects of our restructuring actions on employment, see Item 3, “Legal Proceedings” in this Form 10-K and under “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and Note 12 to the Consolidated Financial Statements in our 2009 Annual Report.
For a discussion of other matters which may affect our financial condition, results of operations or cash flows, including the risks of our international operations, see the further discussion under the headings “General” and “Description of Business by Segment” in this section, Item 1A, “Risk Factors” in this Form 10-K, and under “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our 2009 Annual Report.
Cautionary Note Concerning Factors That May Affect Future Results
This Form 10-K contains statements which, to the extent they are not statements of historical or present fact, constitute “forward-looking statements” under the securities laws. From time to time, oral or written forward-looking statements may also be included in other materials released to the public. These forward-looking statements are intended to provide management’s current expectations or plans for our future operating and financial performance, based on assumptions currently believed to be valid. Forward-looking statements can be identified by the use of words such as “believe,” “expect,” “plans,” “strategy,” “prospects,” “estimate,” “project,” “target,” “anticipate,” “guidance” and other words of similar meaning in connection with a discussion of future operating or financial performance. These include, among others, statements relating to:
| • | future revenues, earnings, cash flow, uses of cash and other measures of financial performance; |
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| • | the effect of economic conditions in the United States and globally, including the financial condition of our customers and suppliers; |
| • | new business opportunities; |
| • | restructuring costs and savings; |
| • | the scope, nature or impact of acquisition and divestiture activity, including integration of acquired businesses into our existing businesses; |
| • | the development, production and support of advanced technologies and new products and services; |
| • | the anticipated benefits of diversification and balance of operations across product lines, regions and industries; |
| • | the impact of the negotiation of collective bargaining agreements; |
| • | the outcome of contingencies; |
| • | future repurchases of common stock; |
| • | future levels of indebtedness and capital spending; |
| • | future availability of and access to credit markets; |
| • | pension plan assumptions and future contributions; and |
| • | the effect of changes in tax, environmental and other laws and regulations in the United States and other countries in which we operate. |
All forward-looking statements involve risks and uncertainties that may cause actual results to differ materially from those expressed or implied in the forward-looking statements. This Annual Report on Form 10-K includes important information as to factors that may cause actual results to vary materially from those stated in the forward-looking statements. See the “Notes to Consolidated Financial Statements” under the heading “Contingent Liabilities,” the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” under the headings “Business Overview,” “Critical Accounting Estimates,” “Results of Continuing Operations,” and “Liquidity and Financial Condition” and the section titled “Risk Factors.” Our 2009 Annual Report also includes important information as to these risk factors in the “Business” section under the headings “Description of Business by Segment” and “Other Matters Relating to Our Business as a Whole,” and in the “Risk Factors” and “Legal Proceedings” sections. Additional important information as to these factors is included in our 2009 Annual Report in the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” under the headings “Environmental Matters” and “Restructuring and Other Costs.” For additional information identifying factors that may cause actual results to vary materially from those stated in the forward-looking statements, see our reports on Forms 10-K, 10-Q and 8-K filed with the SEC from time to time.
| Item 1A. | Risk Factors |
Our business, financial condition, operating results and cash flows can be impacted by a number of factors, including, but not limited to, those set forth below, any one of which could cause our actual results to vary materially from recent results or from our anticipated future results. For a discussion identifying additional risk factors and important factors that could cause actual results to differ materially from those anticipated, see the discussion in the “Business” section under the headings “Other Matters Relating to Our Business as a Whole” and “Cautionary Note Concerning Factors That May Affect Future Results” in this Form 10-K and in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Notes to Consolidated Financial Statements” in our 2009 Annual Report.
Our Global Growth Is Subject to a Number of Economic Risks
As widely reported, the global economic turmoil that began in 2008 continued throughout 2009, including widespread recessionary conditions, record levels of unemployment, significant distress of financial institutions, extreme volatility in security prices, severely diminished liquidity and credit availability, rating downgrades of certain investments and declining valuations of others. Governments have taken unprecedented actions intended to address extreme financial and economic conditions that include severely restricted credit and declines in real estate values. In recent months, certain indices and economic data have begun to show first signs of improvement and stabilization in the macroeconomic environment. However, there can be no assurance that these improvements will be broad-based and sustainable, or that they will affect markets relevant to us. Further, there can be no assurance that we will not experience further adverse effects that may be material to our revenues, results of operations, financial condition and ability to access capital. These economic developments affect businesses such as ours in a number of ways. The tightening of credit in financial markets adversely affects the ability of our customers and suppliers to obtain financing for significant purchases and operations and could result in a decrease in or cancellation of orders for our products and services as well as impact the ability of our customers to make payments. Similarly, this tightening of credit may adversely affect our supplier base and increase the potential for one or more of our suppliers to experience financial distress or bankruptcy. Our global business is also adversely affected by decreases in the general level of economic activity,
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such as decreases in business and consumer spending, air travel, construction activity, the financial strength of airline customers and business jet operators, and government procurement. Strengthening of the rate of exchange for the U.S. Dollar against certain major currencies such as the Euro, the Canadian Dollar and other currencies also adversely affects our results. We are unable to predict the likely duration and severity of disruption in financial markets and adverse economic conditions in the U.S. and other countries.
Our Financial Performance Is Dependent on the Conditions of the Construction and Aerospace Industries
The results of our commercial and industrial businesses, which generated approximately 58% of our consolidated revenues in 2009, are influenced by a number of external factors including fluctuations in residential and commercial construction activity, regulatory changes, interest rates, labor costs, foreign currency exchange rates, customer attrition, raw material and energy costs, the tightening of the U.S. credit markets and other global and political factors. In addition to these factors, Carrier’s financial performance can also be influenced by production and utilization of transport equipment and, in its residential business, weather conditions.
The results of our commercial and military aerospace businesses, which generated approximately 42% of our consolidated revenues in 2009, are directly tied to the economic conditions in the commercial aviation and defense industries, which are cyclical in nature. The challenging operating environment currently faced by commercial airlines is expected to continue. As a result, financial difficulties, including bankruptcy, of one or more of the major commercial airlines could result in significant cancellations of orders, reductions in our aerospace revenues and losses under existing contracts. In addition, capital spending and demand for aircraft engine and component aftermarket parts and service by commercial airlines, aircraft operators and aircraft manufacturers are influenced by a wide variety of factors, including current and predicted traffic levels, load factors, aircraft fuel pricing, labor issues, worldwide airline profits, airline consolidation, competition, the retirement of older aircraft, regulatory changes, terrorism and related safety concerns, general economic conditions, corporate profitability, and backlog levels, all of which could reduce both the demand for air travel and the aftermarket sales and margins of our aerospace businesses. Future terrorist actions or pandemic health issues could dramatically reduce both the demand for air travel and our aerospace businesses aftermarket sales and margins. Also, since a substantial portion of the backlog for commercial aerospace customers is scheduled for delivery beyond 2010, changes in economic conditions may cause customers to request that firm orders be rescheduled or canceled. At times, our aerospace businesses also enter into firm fixed-price development contracts, which may require us to bear cost overruns related to unforeseen technical and design challenges that arise during the development stage of the program. In addition, our aerospace businesses face intense competition from domestic and foreign manufacturers of new equipment and spare parts. The defense industry is also affected by a changing global political environment, continued pressure on U.S. and global defense spending and U.S. foreign policy and the level of activity in military flight operations. Spare parts sales and aftermarket service trends are affected by similar factors, including usage, pricing, technological improvements, regulatory changes and the retirement of older aircraft. Furthermore, because of the lengthy research and development cycle involved in bringing products in these business segments to market, we cannot predict the economic conditions that will exist when any new product is complete. A reduction in capital spending in the commercial aviation or defense industries could have a significant effect on the demand for our products, which could have an adverse effect on our financial performance or results of operations.
Our Business May Be Affected by Government Contracting Risks
U.S. government contracts are subject to termination by the government, either for the convenience of the government or for default as a result of our failure to perform under the applicable contract. If terminated by the government as a result of our default, we could be liable for additional costs the government incurs in acquiring undelivered goods or services from another source and any other damages it suffers. We are now, and believe that in light of the current U.S. government contracting environment we will continue to be, the subject of one or more U.S. government investigations. If we or one of our business units were charged with wrongdoing as a result of any U.S. government investigation (including violation of certain environmental or export laws), the U.S. government could suspend us from bidding on or receiving awards of new U.S. government contracts pending the completion of legal proceedings. If convicted or found liable, the U.S. government could subject us to fines, penalties, repayments and treble and other damages. The U.S. government could void any contracts found to be tainted by fraud. The U.S. government also reserves the right to debar a contractor from receiving new government contracts for fraudulent, criminal or other seriously improper conduct. Debarment generally does not exceed three years. Independently, failure to comply with U.S. laws and regulations related to the export of goods and technology outside the United States could result in civil or criminal penalties and suspension or termination of our export privileges. In addition, we are also sensitive to U.S. military budgets, which may fluctuate to reflect the policies of a new administration or Congress.
Our International Operations Subject Us to Economic Risk As Our Results of Operations May Be Adversely Affected by Changes in Economic Conditions, Foreign Currency Fluctuations and Changes in Local Government Regulation
We conduct our business on a global basis, with approximately 59% of our total 2009 segment revenues derived from operations outside of the United States and from U.S. export sales. Changes in local and regional economic conditions, including fluctuations in exchange rates, may affect product demand and reported profits in our non-U.S. operations (primarily the commercial businesses) where transactions are generally denominated in local currencies. In addition, currency fluctuations may affect the prices we pay suppliers for materials used in our products. As a result, our operating margins may also be negatively impacted by worldwide
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currency fluctuations that result in higher costs for certain cross border transactions. Our financial statements are denominated in U.S. dollars. Accordingly, fluctuations in exchange rates may also give rise to translation gains or losses when financial statements of non-U.S. operating units are translated into U.S. dollars. Given that the majority of our revenues are non-U.S. based, a strengthening of the U.S. dollar against other major foreign currencies could adversely affect our results of operations.
The majority of sales in the aerospace businesses are transacted in U.S. dollars, consistent with established industry practice, while the majority of costs at locations outside the United States are incurred in the applicable local currency (principally the Euro and the Canadian dollar). For operating units with U.S. dollar sales and local currency costs, there is a foreign currency exposure that could impact our results of operations depending on market changes in the exchange rate of the U.S. dollar against the applicable foreign currencies. To manage certain exposures, we employ long-term hedging strategies associated with U.S. dollar revenues. See Note 1 and Note 13 to the Consolidated Financial Statements in our 2009 Annual Report for a discussion of our hedging strategies.
Our international sales and operations are subject to risks associated with changes in local government laws, regulations and policies, including those related to tariffs and trade barriers, investments, taxation, exchange controls, employment regulations, and repatriation of earnings. Our international sales and operations are also sensitive to changes in foreign national priorities, including government budgets, as well as to political and economic instability. International transactions may involve increased financial and legal risks due to differing legal systems and customs in foreign countries. For example, as a condition of sale or award of a contract, some international customers require us to agree to offset arrangements, which may include in-country purchases, manufacturing and financial support arrangements. The contract may provide for penalties in the event we fail to perform in accordance with the offset requirements.
In addition, as part of our globalization strategy, we have invested in certain countries, including Argentina, Brazil, China, India, Russia, South Africa and countries in the Middle East, that carry high levels of currency, political and economic risk. We expect that sales to emerging markets will continue to account for a significant portion of our total sales as our business evolves and as these and other developing nations and regions around the world increase their demand for our products. Emerging market operations can present many risks, including civil disturbances, health concerns, cultural differences, such as employment and business practices, volatility in gross domestic product, economic and government instability, and the imposition of exchange controls. While these factors and their impact are difficult to predict, any one or more of them could adversely affect our business, financial condition or operating results.
We Use a Variety of Raw Materials, Supplier-Provided Parts, Components, Sub-Systems and Third Party Contract Manufacturing Services in Our Businesses, and Significant Shortages, Supplier Capacity Constraints, Supplier Production Disruptions or Price Increases Could Increase Our Operating Costs and Adversely Impact the Competitive Positions of Our Products
Our reliance on suppliers, third party contract manufacturing and commodity markets to secure raw materials, parts, components and sub-systems used in our products exposes us to volatility in the prices and availability of these materials. In some instances, we depend upon a single source of supply, manufacturing or assembly or participate in commodity markets that may be subject to allocations of limited supplies by suppliers. A disruption in deliveries from our suppliers or third party contract manufacturers, supplier capacity constraints, supplier and third party contract manufacturer production disruptions, price increases, or decreased availability of raw materials or commodities, could have an adverse effect on our ability to meet our commitments to customers or increase our operating costs. We believe that our supply management and production practices are based on an appropriate balancing of the foreseeable risks and the costs of alternative practices. Nonetheless, price increases, supplier capacity constraints, supplier production disruptions or the unavailability of some raw materials may have an adverse effect on our results of operations or financial condition.
We Engage in Acquisitions and Divestitures, and May Encounter Difficulties Integrating Acquired Businesses with, or Disposing of Divested Businesses from, Our Current Operations; Therefore, We May Not Realize the Anticipated Benefits of these Acquisitions and Divestitures
We seek to grow through strategic acquisitions. In the past several years, we have made various acquisitions and have entered into joint venture arrangements intended to complement and expand our businesses, and may continue to do so in the future. The success of these transactions will depend on our ability to integrate assets and personnel acquired in connection with these transactions, apply our internal controls processes to these acquired businesses, and cooperate with our strategic partners. We may encounter difficulties in integrating acquisitions with our operations, applying our internal controls processes to these acquisitions, or in managing strategic investments. Additionally, we may not realize the degree or timing of benefits we anticipate when we first enter into a transaction. Any of the foregoing could adversely affect our business and results of operations. In addition, the recent effectiveness of revisions to accounting for business combinations, which, among other things, require companies to expense certain acquisition costs as incurred, may cause us to incur greater earnings volatility and generally lower earnings during periods in which we acquire new businesses. Furthermore, we make strategic divestitures from time to time. These divestitures may result in continued financial involvement in the divested businesses, such as through guarantees or other financial arrangements, following the transaction. Lower performance by those divested businesses could affect our future financial results.
We Design, Manufacture and Service Products that Incorporate Advanced Technologies; The Introduction of New Products and Technologies Involves Risks and We May Not Realize the Degree or Timing of Benefits Initially Anticipated
We seek to achieve growth through the design, development, production, sale and support of innovative products that incorporate advanced technologies. We regularly invest substantial amounts in research and development efforts that pursue
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advancements in a wide range of technologies, products and services. Our ability to realize the anticipated benefits of these advancements depends on a variety of factors, including meeting development, production, certification and regulatory approval schedules; execution of internal and external performance plans; availability of internal and supplier-produced parts and materials; performance of suppliers and subcontractors; achieving cost and production efficiencies, validation of innovative technologies and the level of customer interest in new technologies and products. These factors involve significant risks and uncertainties. We or our suppliers and subcontractors may encounter difficulties in developing and producing these new products and services, and may not realize the degree or timing of benefits initially anticipated. In particular, we cannot predict with certainty whether, when and in what quantities our aerospace businesses, particularly Pratt & Whitney, Sikorsky and Hamilton Sundstrand, will produce aircraft engines, helicopters, aircraft systems and components and other products currently in development or pending required certifications. Any of the foregoing could adversely affect our business and results of operations.
We Are Subject to Litigation, Tax, Environmental and Other Legal Compliance Risks That Could Adversely Affect Our Operating Results
We are subject to a variety of litigation tax and legal compliance risks. These risks include, among other things, litigation concerning product liability matters, personal injuries, intellectual property rights, government contracts, taxes, environmental matters and compliance with U.S. and foreign export laws, competition laws and laws governing improper business practices. We or one of our business units could be charged with wrongdoing as a result of such litigation. If convicted or found liable, we could be subject to fines, penalties, repayments, other damages (in certain cases, treble damages), or suspension or debarment from government contracts. Independently, failure of us or one of our business units to comply with applicable export and trade practice laws could result in civil or criminal penalties and suspension or termination of export privileges. As a global business, we are subject to complex laws and regulations in the U.S. and other countries in which we operate. Those laws and regulations may be interpreted in different ways. They may also change from time to time, as may related interpretations and other guidance. Changes in laws and regulations could result in higher expenses and payments, and uncertainty relating to laws and regulations may also affect how we conduct our operations and structure our investments and could limit our ability to enforce our rights. Changes in environmental laws and regulations could lead to new or additional investment in product designs and could increase environmental compliance expenditures. In the area of tax, changes in tax laws and regulations, as well as changes in related interpretations and other tax guidance could materially impact our tax receivables and liabilities and our deferred tax assets and deferred tax liabilities. Additionally, in the ordinary course of business we are subject to examinations by various authorities, including tax authorities. In addition to ongoing investigations, there could be additional investigations launched in the future by governmental authorities in various jurisdictions and existing investigations could be expanded. While we believe we have adopted appropriate risk management and compliance programs to address and reduce these risks, the global and diverse nature of our operations means that these risks will continue to exist and additional legal proceedings and contingencies will arise from time to time. Our results may be affected by the outcome of legal proceedings and other contingencies that cannot be predicted with certainty.
For non-income tax risks, we estimate material loss contingencies and establish reserves as required by generally accepted accounting principles based on our assessment of contingencies where liability is deemed probable and reasonably estimable in light of the facts and circumstances known to us at a particular point in time. Subsequent developments in legal proceedings may affect our assessment and estimates of the loss contingency recorded as a liability or as a reserve against assets in our financial statements and could result in an adverse effect on our results of operations in the period in which a liability would be recognized or cash flows for the period in which damages would be paid. For a description of current legal proceedings, see Part I, Item 3 “Legal Proceedings,” in this Form 10-K. For income tax risks, we recognize tax benefits based on our assessment that a tax benefit has a greater than 50% likelihood of being sustained upon ultimate settlement with the applicable taxing authority that has full knowledge of all relevant facts. For those income tax positions where we assess that there is not a greater than 50% likelihood that such tax benefits will be sustained, we do not recognize a tax benefit in our financial statements. Subsequent events may cause us to change our assessment of the likelihood of sustaining a previously-recognized benefit which could result in an adverse effect on our results of operations in the period in which such event occurs or on our cash flows in the period in which the ultimate settlement with the applicable taxing authority occurs.
| Item 1B. | Unresolved Staff Comments |
None.
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| Item 2. | Properties |
| Number of Facilities - Owned | ||||||||||||||||
| Location |
Otis | Carrier | UTC Fire & Security |
Pratt & Whitney |
Hamilton Sundstrand |
Sikorsky | Other | Total | ||||||||
| Manufacturing: |
||||||||||||||||
| North America |
— | 10 | 4 | 36 | 22 | 8 | — | 80 | ||||||||
| Europe & Middle East |
7 | 7 | 8 | 6 | 17 | 1 | — | 46 | ||||||||
| Asia |
4 | 2 | — | 6 | 2 | — | — | 14 | ||||||||
| Emerging Markets* |
10 | 18 | 4 | 3 | 5 | 1 | — | 41 | ||||||||
| 21 | 37 | 16 | 51 | 46 | 10 | — | 181 | |||||||||
| Non-Manufacturing: |
||||||||||||||||
| North America |
4 | 5 | 4 | 28 | 4 | — | 11 | 56 | ||||||||
| Europe & Middle East |
16 | 10 | 4 | 2 | 1 | — | — | 33 | ||||||||
| Asia |
2 | 2 | 5 | 1 | — | 1 | — | 11 | ||||||||
| Emerging Markets* |
6 | 8 | 4 | — | — | — | — | 18 | ||||||||
| 28 | 25 | 17 | 31 | 5 | 1 | 11 | 118 | |||||||||
| Number of Facilities - Leased | ||||||||||||||||
| Location |
Otis | Carrier | UTC Fire & Security |
Pratt & Whitney |
Hamilton Sundstrand |
Sikorsky | Other | Total | ||||||||
| Manufacturing: |
||||||||||||||||
| North America |
1 | 5 | 5 | 23 | 8 | 5 | 2 | 49 | ||||||||
| Europe & Middle East |
— | 3 | 14 | 1 | 13 | 1 | — | 32 | ||||||||
| Asia |
— | 2 | — | 4 | 2 | — | — | 8 | ||||||||
| Emerging Markets* |
3 | 1 | 9 | — | 5 | — | — | 18 | ||||||||
| 4 | 11 | 28 | 28 | 28 | 6 | 2 | 107 | |||||||||
| Non-Manufacturing: |
||||||||||||||||
| North America |
4 | 47 | 11 | 15 | 3 | 9 | 4 | 93 | ||||||||
| Europe & Middle East |
12 | 19 | 14 | — | — | — | — | 45 | ||||||||
| Asia |
5 | 2 | 7 | 1 | — | — | — | 15 | ||||||||
| Emerging Markets* |
8 | 5 | 2 | — | — | — | — | 15 | ||||||||
| 29 | 73 | 34 | 16 | 3 | 9 | 4 | 168 | |||||||||
| * | For purposes of this table, emerging markets is based on the countries included in the MSCI Emerging Markets IndexSM. |
Our fixed assets as of December 31, 2009 include manufacturing facilities and non-manufacturing facilities such as warehouses set forth in the tables above and a substantial quantity of machinery and equipment, most of which are general purpose machinery and equipment using special jigs, tools and fixtures and in many instances having automatic control features and special adaptations. The facilities, warehouses, machinery and equipment in use as of December 31, 2009 are in good operating condition, are well-maintained and substantially all are in regular use.
| Item 3. | Legal Proceedings |
As previously disclosed, the Department of Justice (DOJ) sued us in 1999 in the U.S. District Court for the Southern District of Ohio, claiming that Pratt & Whitney violated the civil False Claims Act and common law. This lawsuit relates to the “Fighter Engine Competition” between Pratt & Whitney’s F100 engine and General Electric’s F110 engine. The DOJ alleges that the government overpaid for F100 engines under contracts awarded by the U.S. Air Force in fiscal years 1985 through 1990 because Pratt & Whitney inflated its estimated costs for some purchased parts and withheld data that would have revealed the overstatements. At trial of this matter, completed in December 2004, the government claimed Pratt & Whitney’s liability to be $624 million. On August 1, 2008, the trial court judge held that the Air Force had not suffered any actual damages because Pratt & Whitney had made significant price concessions. However, the trial court judge found that Pratt & Whitney violated the False Claims Act due to inaccurate statements
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contained in the 1983 offer. In the absence of actual damages, the trial court judge awarded the DOJ the maximum civil penalty of $7.09 million, or $10,000 for each of the 709 invoices Pratt & Whitney submitted in 1989 and later under the contracts. Both the DOJ and UTC have appealed the decision. Should the government ultimately prevail, the outcome of this matter could result in a material effect on our results of operations in the period in which a liability would be recognized or cash flows for the period in which damages would be paid.
In December 2008, the Department of Defense (DOD) issued a contract claim against Sikorsky to recover overpayments the DOD alleges it has incurred since January 2003 in connection with cost accounting changes approved by the DOD and implemented by Sikorsky in 1999 and 2006. These changes relate to the calculation of material overhead rates in government contracts. The DOD claims that Sikorsky’s liability is approximately $83 million (including interest through December 2009). We believe this claim is without merit and Sikorsky filed an appeal in December 2009 with the U.S. Court of Federal Claims.
As previously disclosed, on February 21, 2007, the European Commission’s Competition Directorate (EU Commission) ruled that Otis’ subsidiaries in Belgium, Luxembourg and the Netherlands, and a portion of the business of Otis’ German subsidiary, violated European Union (EU) competition rules and assessed a €225 million (approximately $300 million) civil fine against Otis, its relevant local entities, and UTC, which was paid during 2007. In May 2007, we filed an appeal of the decision before the EU’s European Court of First Instance. A decision on the appeal is expected within the next twelve months. Depending upon the outcome, a further appeal by either party to the European Court of Justice is possible.
On September 21, 2009, Pratt & Whitney announced plans to close its Connecticut Airfoil Repair Operations facility in East Hartford, Connecticut by the second quarter of 2010 and its engine overhaul facility in Cheshire, Connecticut by early 2011. On September 22, 2009, the International Association of Machinists (IAM) filed a lawsuit in the U.S. District Court for the District of Connecticut in Hartford, Connecticut alleging that Pratt & Whitney’s decision to close these facilities and transfer certain work to facilities outside Connecticut breached the terms of its collective bargaining agreement with the IAM, which expires on December 5, 2010, and seeking to enjoin Pratt & Whitney from moving the work for the duration of the collective bargaining agreement. Pratt & Whitney believes that it has fully complied with the collective bargaining agreement and that the IAM’s contentions are without merit. On February 5, 2010, following a trial on the merits, the court issued a declaratory judgment that Pratt & Whitney had breached its obligations under the collective bargaining agreement and permanently enjoined Pratt & Whitney from closing the facilities and transferring the work described in the challenged plans for the duration of the current collective bargaining agreement. Pratt & Whitney is reviewing the decision and considering whether to appeal. Pratt & Whitney has recorded $53 million of restructuring costs associated with these planned closures. We do not believe that resolution of this matter will have a material adverse effect upon our competitive position, results of operations, cash flows or financial condition.
Like many other industrial companies in recent years, we or our subsidiaries are named as a defendant in lawsuits alleging personal injury as a result of exposure to asbestos integrated into certain of our products or premises. While we have never manufactured asbestos and no longer incorporate it in any currently-manufactured products, certain of our historical products, like those of many other manufacturers, have contained components incorporating asbestos. A substantial majority of these asbestos-related claims have been covered by insurance or other forms of indemnity or have been dismissed without payment. The remainder of the closed cases have been resolved for amounts that are not material individually or in the aggregate. Based on the information currently available, we do not believe that resolution of these asbestos-related matters will have a material adverse effect upon our competitive position, results of operations, cash flows or financial condition.
Except as otherwise noted above, we do not believe that resolution of any of the legal matters discussed above will have a material adverse effect upon our competitive position, results of operations, cash flows or financial condition. A further discussion of government contracts and related investigations, as well as a discussion of our environmental liabilities, can be found under the heading “Other Matters Relating to Our Business as a Whole – Compliance with Environmental and Other Government Regulations” in Item 1, “Business,” and in Item 1A, “Risk Factors,” in this Form 10-K.
| Item 4. | Submission of Matters to a Vote of Security Holders |
No matters were submitted to security holders for a vote during the quarter ended December 31, 2009.
| Item 5. | Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities |
The Performance Graph and Comparative Stock Data appearing in our 2009 Annual Report containing the following data relating to our Common Stock: shareholder return, principal market, quarterly high and low sales prices, approximate number of shareowners and frequency and amount of dividends are hereby incorporated by reference. The information required by Item 5 with respect to securities authorized for issuance under equity compensation plans is incorporated by reference in Part III, Item 12 of this Form 10-K.
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Issuer Purchases of Equity Securities
The following table provides information about our purchases of equity securities that are registered by us pursuant to Section 12 of the Exchange Act during the quarter ended December 31, 2009.
| 2009 |
Total Number of Shares Purchased (000’s) |
Average Price Paid per Share |
Total Number of Shares Purchased as Part of a Publicly Announced Program (000’s) |
Maximum Number of Shares that may yet be Purchased Under the Program (000’s) | |||||
| October 1 - October 31 |
1 | $ | 59.99 | — | 14,037 | ||||
| November 1 - November 30 |
1,733 | 68.04 | 1,733 | 12,304 | |||||
| December 1 - December 31 |
2,922 | 69.17 | 2,922 | 9,382 | |||||
| Total |
4,656 | $ | 68.74 | 4,655 | |||||
We repurchase shares under a program announced on June 11, 2008, which authorized the repurchase of up to 60 million shares of our common stock. Under the current program, shares may be purchased on the open market, in privately negotiated transactions and under plans complying with Rules 10b5-1 and 10b-18 under the Exchange Act, as amended. These repurchases are included within the scope of our overall repurchase program discussed above. We may also reacquire shares outside of the program from time to time in connection with the surrender of shares to cover taxes on vesting of restricted stock. Approximately 1,000 shares were reacquired in transactions outside the program during the quarter.
| Item 6. | Selected Financial Data |
The Five Year Summary appearing in our 2009 Annual Report is hereby incorporated by reference. See “Notes to Consolidated Financial Statements” in our 2009 Annual Report for a description of any accounting changes and acquisitions or dispositions of businesses materially affecting the comparability of the information reflected in the Five Year Summary.
| Item 7. | Management’s Discussion and Analysis of Financial Condition and Results of Operations |
We hereby incorporate by reference in this Form 10-K the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our 2009 Annual Report.
| Item 7A. | Quantitative and Qualitative Disclosures About Market Risk |
For information concerning market risk sensitive instruments, see discussion under the heading “Market Risk and Risk Management” in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our 2009 Annual Report and under the heading “Foreign Exchange and Hedging Activity” in Note 1 and Note 13 to the Consolidated Financial Statements in our 2009 Annual Report.
| Item 8. | Financial Statements and Supplementary Data |
The 2009 and 2008 Consolidated Balance Sheet, and other financial statements for the years 2009, 2008 and 2007, together with the report thereon of PricewaterhouseCoopers LLP dated February 11, 2010 in our 2009 Annual Report are incorporated by reference in this Form 10-K. The 2009 and 2008 unaudited Selected Quarterly Financial Data appearing in our 2009 Annual Report is incorporated by reference in this Form 10-K.
| Item 9. | Changes in and Disagreements with Accountants on Accounting and Financial Disclosure |
None.
| Item 9A. | Controls and Procedures |
As required by Rule 13a-15 under the Securities Exchange Act of 1934, as amended, we carried out an evaluation under the supervision and with the participation of our management, including the Chairman & Chief Executive Officer (CEO), the Senior Vice President and Chief Financial Officer (CFO) and the Vice President, Controller (Controller), of the effectiveness of the design and operation of our disclosure controls and procedures. There are inherent limitations to the effectiveness of any system of disclosure controls and procedures, including the possibility of human error and the circumvention or overriding of the controls and procedures. Accordingly, even effective disclosure controls and procedures can only provide reasonable
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assurance of achieving their control objectives. Based upon our evaluation, our CEO, CFO and Controller concluded that our disclosure controls and procedures were effective to provide reasonable assurance that information required to be disclosed by us in the reports that we file or submit under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods specified in the applicable rules and forms, and that it is accumulated and communicated to our management, including our CEO, CFO and Controller, as appropriate, to allow timely decisions regarding required disclosure.
Our management is responsible for establishing and maintaining adequate internal control over financial reporting. Internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external reporting purposes in accordance with accounting principles generally accepted in the United States of America. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Our management has assessed the effectiveness of our internal control over financial reporting as of December 31, 2009. In making its assessment, management has utilized the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission in Internal Control—Integrated Framework. Our management concluded that based on its assessment, our internal control over financial reporting was effective as of December 31, 2009. The effectiveness of our internal control over financial reporting as of December 31, 2009 has been audited by PricewaterhouseCoopers LLP, an independent registered public accounting firm, as stated in their report which appears in our 2009 Annual Report.
There has been no change in our internal control over financial reporting during the quarter ended December 31, 2009 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
| Item 10. | Directors, Executive Officers and Corporate Governance |
The information required by Item 10 with respect to directors, the Audit Committee of the Board of Directors and audit committee financial experts is incorporated herein by reference to the sections of our Proxy Statement for the 2010 Annual Meeting of Shareowners titled “General Information Concerning the Board of Directors,” “Nominees,” and “Committees of the Board” (under the headings “The Audit Committee” and “The Committee on Nominations and Governance”).
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Executive Officers of the Registrant
The following persons are executive officers of United Technologies Corporation:
| Name |
Title |
Other Business Experience Since 1/1/2005 |
Age 2/11/2010 | |||
| Alain Bellemare | President, Hamilton Sundstrand Corporation (since January 2009) | President, Pratt & Whitney Canada | 48 | |||
| Ari Bousbib | President, Commercial Companies and Executive Vice President (since 2008) | President, Otis Elevator | 48 | |||
| J. Thomas Bowler, Jr. | Senior Vice President, Human Resources and Organization (since 2007) | Vice President, Human Resources, United Technologies Corporation; Vice President, Human Resources and Organization, Pratt & Whitney | 57 | |||
| William M. Brown | President, UTC Fire & Security (since 2006) | President, Asia Pacific, Carrier Corporation | 47 | |||
| Louis R. Chênevert | Director (since 2006), Chairman (since January 2010), President (since 2006) and Chief Executive Officer (since 2008) | President and Chief Operating Officer, United Technologies Corporation; President, Pratt & Whitney | 52 | |||
| Geraud Darnis | President, Carrier Corporation (since 2001) |
____ | 50 | |||
| Charles D. Gill | Senior Vice President and General Counsel (since 2007) | Vice President and General Counsel, and Secretary, Carrier Corporation; Executive Assistant to Chairman and Chief Executive Officer, United Technologies Corporation | 45 | |||
| Gregory J. Hayes | Senior Vice President and Chief Financial Officer (since 2008) | Vice President, Accounting and Finance, United Technologies Corporation; Vice President, Accounting and Control, United Technologies Corporation; Vice President, Controller, United Technologies Corporation | 49 | |||
| David P. Hess | President, Pratt & Whitney (since January 2009) | President, Hamilton Sundstrand Corporation; President, Hamilton Sundstrand Aerospace Power Systems | 54 | |||
| Didier Michaud-Daniel | President, Otis Elevator (since 2008) | President, Otis United Kingdom and Central Europe Area, Otis Elevator | 52 | |||
| Jeffrey P. Pino | President, Sikorsky Aircraft (since 2006) | Senior Vice President, Corporate Strategy, Marketing & Commercial Programs, Sikorsky Aircraft | 55 | |||
| Thomas I. Rogan | Vice President, Treasurer (since 2001) | ____ | 57 | |||
| Margaret M. Smyth | Vice President, Controller (since 2007) | Vice President and Chief Accounting Officer, 3M Co.; Managing Partner, Deloitte & Touche | 46 | |||
All of the officers serve at the pleasure of the Board of Directors of United Technologies Corporation or the subsidiary designated.
Information concerning Section 16(a) compliance is incorporated herein by reference to the section of our Proxy Statement for the 2010 Annual Meeting of Shareowners titled “Other Matters” under the heading “Section 16(a) Beneficial Ownership Reporting Compliance.” We have adopted a code of ethics that applies to all our directors, officers, employees and representatives. This code is publicly available on our website at http://www.utc.com/Governance/Ethics/Code+of+Ethics. Amendments to the
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code of ethics and any grant of a waiver from a provision of the code requiring disclosure under applicable SEC rules will be disclosed on our website. Our Corporate Governance Guidelines and the charters of our Board of Directors’ Audit Committee, Finance Committee, Committee on Nominations and Governance, Public Issues Review Committee and Committee on Compensation and Executive Development are available on our website at http://www.utc.com/Governance/Board+of+Directors. These materials may also be requested in print free of charge by writing to our Investor Relations Department at United Technologies Corporation, United Technologies Building, Investor Relations, Hartford, CT 06101.
| Item 11. | Executive Compensation |
The information required by Item 11 is incorporated herein by reference to the sections of our Proxy Statement for the 2010 Annual Meeting of Shareowners titled “Executive Compensation” and “Director Compensation.”
| Item 12. | Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters |
The information relating to security ownership of certain beneficial owners and management required by Item 12 is incorporated herein by reference to the sections of our Proxy Statement for the 2010 Annual Meeting titled “Security Ownership of Directors, Nominees, Executive Officers and Certain Beneficial Owners.” The Equity Compensation Plan Information required by Item 12 is set forth in the table below.
EQUITY COMPENSATION PLAN INFORMATION
The following table provides information as of December 31, 2009 concerning common stock issuable under equity compensation plans.
| Plan category |
(a) Number of securities to be issued upon exercise of outstanding options, warrants and rights |
(b) Weighted-average exercise price of outstanding options, warrants and rights |
(c) Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) (1) |
|||||||
| Equity compensation plans approved by security holders |
62,029,000 | (2) | $ | 51.82 | 27,219,000 | (3) | ||||
| Equity compensation plans not approved by security holders |
7,947,000 | (4) | $ | 40.50 | 0 | |||||
| Total |
69,976,000 | $ | 50.54 | (5) | 27,219,000 | |||||
| (1) | Consists of shares of UTC Common Stock or units equal in value to a share of UTC Common Stock (e.g., restricted stock, restricted stock units, performance share units) (Full Share Award) available for future issuance under the terms of the 2005 Long-Term Incentive Plan, as amended (2005 LTIP). Full Share Awards will result in a reduction in the number of shares of UTC Common Stock available for delivery under the 2005 LTIP in an amount equal to 3.1 times the number of shares to which the award corresponds. Stock options and stock appreciation rights do not constitute Full Share Awards and will result in a reduction in the number of shares of UTC Common Stock available for delivery under the 2005 LTIP on a one-for-one basis. |
| (2) | Consists of options awarded under the 1989 Long Term Incentive Plan (1989 LTIP), the 2005 LTIP and the Non-Employee Director Stock Option Plan (Non-Employee Director Plan). Options issued under the 1989 LTIP include options that resulted from the conversion of awards granted under equity compensation plans of Sundstrand Corporation at the time it was merged into Hamilton Sundstrand. This amount includes 344,000 restricted shares and restricted share units and 3,112,000 performance share units at the target level. Up to an additional 3,112,000 could be issued if performance goals are achieved above target. |
| (3) | Represents the maximum number of shares of common stock available to be awarded as of December 31, 2009. |
| (4) | Consists of options awarded under the UTC Employee Stock Option Plan. This Plan authorized the award of non-qualified stock options to employees below the executive level considered to have the potential to contribute to the long-term success of UTC. These options consisted of rights to purchase a specified number of shares of UTC Common Stock at a fixed option price equal to the fair market value of UTC Common Stock on the date the stock option was granted. Options vested three years after the grant date and have a ten-year term. Effective April 14, 2005, all equity compensation awards are now provided under the shareowner-approved 2005 LTIP. |
| (5) | Weighted-average calculation does not include restricted shares and performance share units because they have no exercise price. |
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| Item 13. | Certain Relationships and Related Transactions, and Director Independence |
The information required by Item 13 is incorporated herein by reference to the sections of our Proxy Statement for the 2010 Annual Meeting titled “General Information Concerning the Board of Directors,” “Director Independence,” and “Other Matters” (under the heading “Transactions with Related Persons”).
| Item 14. | Principal Accounting Fees and Services |
The information required by Item 14 is incorporated by reference to the section of our Proxy Statement for the 2010 Annual Meeting titled “Appointment of a Firm of Independent Registered Public Accountants to Serve as Independent Auditors for 2010,” including the information provided in that section with regard to “Audit Fees,” “Audit Related Fees,” “Tax Fees” and “All Other Fees.”
| Item 15. | Exhibits and Financial Statement Schedules |
| (a) | Financial Statements, Financial Statement Schedules and Exhibits |
| (1) | Financial Statements (incorporated by reference from the 2009 Annual Report): |
| (2) | Financial Statement Schedule for the three years ended December 31, 2009: |
| Page Number in Form 10-K | ||
| SCHEDULE I—Report of Independent Registered Public Accounting Firm on Financial Statement Schedule |
S-I | |
| S-II | ||
All other schedules are omitted because they are not applicable or the required information is shown in the financial statements or the notes thereto.
| (3) | Exhibits: |
The following list of exhibits includes exhibits submitted with this Form 10-K as filed with the SEC and those incorporated by reference to other filings.
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| Exhibit Number |
||
| 3(i) | Restated Certificate of Incorporation, restated as of May 5, 2006, incorporated by reference to Exhibit 3(i) to UTC’s Annual Report on Form 10-K (Commission file number 1-812) for fiscal year ended December 31, 2006. | |
| 3(ii) | Bylaws as amended and restated effective December 10, 2008, incorporated by reference to Exhibit 3(ii) to UTC’s Current Report on Form 8-K (Commission file number 1-812) filed with the SEC on December 12, 2008. | |
| 4.1 | Amended and Restated Indenture, dated as of May 1, 2001, between UTC and The Bank of New York, as trustee, incorporated by reference to Exhibit 4(a) to UTC’s Registration Statement on Form S-3 (Commission file number 333-60276) filed with the SEC on May 4, 2001. UTC hereby agrees to furnish to the Commission upon request a copy of each other instrument defining the rights of holders of long-term debt of UTC and its consolidated subsidiaries and any unconsolidated subsidiaries. | |
| 10.1 | United Technologies Corporation Annual Executive Incentive Compensation Plan, incorporated by reference to Exhibit 10.1 to UTC’s Annual Report on Form 10-K (Commission file number 1-812) for fiscal year ended December 31, 1995, and Amendment thereto, effective January 1, 2009, incorporated by reference to Exhibit 10.1 to UTC’s Annual Report on Form 10-K (Commission file number 1-812) for fiscal year ended December 31, 2008. | |
| 10.2 | United Technologies Corporation Executive Estate Preservation Program, incorporated by reference to Exhibit 10(iv) to UTC’s Annual Report on Form 10-K (Commission file number 1-812) for fiscal year ended December 31, 1992. | |
| 10.3 | United Technologies Corporation Pension Preservation Plan, as amended and restated, effective December 31, 2009.* | |
| 10.4 | United Technologies Corporation Senior Executive Severance Plan, incorporated by reference to Exhibit 10(vi) to UTC’s Annual Report on Form 10-K (Commission file number 1-812) for fiscal year ended December 31, 1992, as amended by Amendment thereto, effective December 10, 2003, incorporated by reference to Exhibit 10.4 of UTC’s Annual Report on Form 10-K (Commission file number 1-812) for fiscal year ended December 31, 2003, and Amendment thereto, effective June 11, 2008, incorporated by reference to Exhibit 10.4 of UTC’s Quarterly Report on Form 10-Q (Commission file number 1-812) for the quarterly period ended June 30, 2008. | |
| 10.5 | United Technologies Corporation Deferred Compensation Plan, as amended and restated, effective January 1, 2005, incorporated by reference to Exhibit 10.5 of UTC’s Annual Report on Form 10-K (Commission file number 1-812) for fiscal year ended December 31, 2008. | |
| 10.6 | United Technologies Corporation Long Term Incentive Plan, incorporated by reference to Exhibit 10.11 to UTC’s Annual Report on Form 10-K (Commission file number 1-812) for fiscal year ended December 31, 1989, as amended by Amendment No. 1, incorporated by reference to Exhibit 10.6 to UTC’s Annual Report on Form 10-K (Commission file number 1-812) for fiscal year ended December 31, 1995, and Amendment No. 2, incorporated by reference to Exhibit 10.6 to UTC’s Annual Report on Form 10-K (Commission file number 1-812) for fiscal year ended December 31, 2003. | |
| 10.7 | Schedule of Terms for Nonqualified Stock Option and Dividend Equivalent Awards relating to the United Technologies Corporation Long Term Incentive Plan, as amended (referred to above in Exhibit 10.6), incorporated by reference to Exhibit 10.15 to UTC’s Annual Report on Form 10-K (Commission file number 1-812) for fiscal year ended December 31, 2004. | |
| 10.8 | Schedule of Terms and Form of Award for Restricted Stock Awards relating to the United Technologies Corporation Long Term Incentive Plan, as amended (referred to above in Exhibit 10.6), incorporated by reference to Exhibit 10.1 to UTC’s Quarterly Report on Form 10-Q (Commission file number 1-812) for the quarterly period ended September 30, 2004. | |
| 10.9 | Schedule of Terms and Form of Award for Nonqualified Stock Option Awards relating to the United Technologies Corporation Long Term Incentive Plan, as amended (referred to above in Exhibit 10.6), incorporated by reference to Exhibit 10.2 to UTC’s Quarterly Report on Form 10-Q (Commission file number 1-812) for the quarterly period ended September 30, 2004. | |
| 10.10 | Schedule of Terms and Forms of Award for Continuous Improvement Incentive Program Non-qualified Stock Option and Dividend Equivalent Awards relating to the United Technologies Corporation Long Term Incentive Plan, as amended (referred to above in Exhibit 10.6), incorporated by reference to Exhibit 10.6 to UTC’s Quarterly Report on Form 10-Q (Commission file number 1-812) for the quarterly period ended September 30, 2004. | |
| 10.11 | United Technologies Corporation Executive Leadership Group Program, as amended and restated, effective June 10, 2009, incorporated by reference to Exhibit 10.7 to UTC’s Quarterly Report on Form 10-Q (Commission file number 1-812) for the quarterly period ended September 30, 2009. | |
| 10.12 | Schedule of Terms for Restricted Share Unit Retention Awards relating to the United Technologies Corporation Executive Leadership Group Program (referred to above in Exhibit 10.11), incorporated by reference to Exhibit 10.3 to UTC’s Current Report on Form 8-K (Commission file number 1-812) filed with the SEC on March 24, 2006. | |
| 10.13 | Form of Award Agreement for Restricted Share Unit Retention Awards relating to the United Technologies Corporation Executive Leadership Group Program (referred to above in Exhibit 10.11), incorporated by reference to Exhibit 10.2 to UTC’s Current Report on Form 8-K (Commission file number 1-812) filed with the SEC on March 24, 2006. | |
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| 10.14 | United Technologies Corporation Board of Directors Deferred Stock Unit Plan, as amended and restated October 8, 2008, incorporated by reference to Exhibit 10.9 to UTC’s Quarterly Report on Form 10-Q (Commission file number 1-812) for the quarterly period ended September 30, 2008. | |
| 10.15 | Retainer Payment Election Form for United Technologies Corporation Board of Directors Deferred Stock Unit Plan (referred to above in Exhibit 10.14), incorporated by reference to Exhibit 10.1 to UTC’s Current Report on Form 8-K (Commission file number 1-812) filed with the SEC on April 18, 2006. | |
| 10.16 | Form of Deferred Restricted Stock Unit Award relating to the United Technologies Corporation Board of Directors Deferred Stock Unit Plan (referred to above in Exhibit 10.14).* | |
| 10.17 | United Technologies Corporation Nonemployee Director Stock Option Plan, incorporated by reference to Exhibit 10.12 to UTC’s Annual Report on Form 10-K (Commission file number 1-812) for fiscal year ended December 31, 1995, as amended by Amendment No. 1, incorporated by reference to Exhibit 10(iii)(A)(2) to UTC’s Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2000, Amendment No. 2, incorporated by reference to Exhibit 10(iii)(A)(1) to UTC’s Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2001, Amendment No. 3, incorporated by reference to Exhibit 10.17 to UTC’s Annual Report on Form 10-K for fiscal year ending December 31, 2001, Amendment No. 4, incorporated by reference to Exhibit 10.12 to UTC’s Annual Report on Form 10-K (Commission file number 1-812) for fiscal year ending December 31, 2002 and Amendment No. 5, incorporated by reference to Exhibit 10.12 to UTC’s Annual Report on Form 10-K (Commission file number 1-812) for fiscal year ended December 31, 2003. | |
| 10.18 | Form of Nonqualified Stock Option Award relating to the United Technologies Corporation Nonemployee Director Stock Option Plan, as amended (referred to above in Exhibit 10.17), incorporated by reference to Exhibit 10.4 to UTC’s Quarterly Report on Form 10-Q (Commission file number 1-812) for the quarterly period ended September 30, 2004. | |
| 10.19 | United Technologies Corporation 2005 Long-Term Incentive Plan, as amended and restated effective April 9, 2008, incorporated by reference to Exhibit 10.1 to UTC’s Current Report on Form 8-K (Commission file number 1-812) filed with the SEC on April 11, 2008. | |
| 10.20 | Schedule of Terms for restricted stock awards relating to the United Technologies Corporation 2005 Long-Term Incentive Plan (referred to above in Exhibit 10.19), incorporated by reference to Exhibit 10.1 to UTC’s Current Report on Form 8-K (Commission file number 1-812) filed with the SEC on September 20, 2005. | |
| 10.21 | Form of Award Agreement for restricted stock awards relating to the United Technologies Corporation 2005 Long-Term Incentive Plan (referred to above in Exhibit 10.19), incorporated by reference to Exhibit 10.2 to UTC’s Current Report on Form 8-K (Commission file number 1-812) filed with the SEC on September 20, 2005. | |
| 10.22 | Schedule of Terms for non-qualified stock option awards relating to the United Technologies Corporation 2005 Long-Term Incentive Plan (referred to above in Exhibit 10.19), incorporated by reference to Exhibit 10.3 to UTC’s Current Report on Form 8-K (Commission file number 1-812) filed with the SEC on September 20, 2005. | |
| 10.23 | Form of Award Agreement for non-qualified stock option awards relating to the United Technologies Corporation 2005 Long-Term Incentive Plan (referred to above in Exhibit 10.19), incorporated by reference to Exhibit 10.4 to UTC’s Current Report on Form 8-K (Commission file number 1-812) filed with the SEC on September 20, 2005. | |
| 10.24 | Schedule of Terms for performance share unit awards relating to the United Technologies Corporation 2005 Long-Term Incentive Plan (referred to above in Exhibit 10.19), incorporated by reference to Exhibit 10.28 to UTC’s Annual Report on Form 10-K (Commission file number 1-812) for fiscal year ended December 31, 2008. | |
| 10.25 | Schedule of Terms for stock appreciation rights awards relating to the United Technologies Corporation 2005 Long-Term Incentive Plan (referred to above in Exhibit 10.19), incorporated by reference to Exhibit 10.29 to UTC’s Annual Report on Form 10-K (Commission file number 1-812) for fiscal year ended December 31, 2008. | |
| 10.26 | Form of Award Agreement for performance share unit and stock appreciation rights awards relating to the United Technologies Corporation 2005 Long-Term Incentive Plan (referred to above in Exhibit 10.19), incorporated by reference to Exhibit 10.1 to UTC’s Current Report on Form 8-K filed with the SEC on October 16, 2006. | |
| 10.27 | Form of Award Agreement for performance share unit and stock appreciation rights awards relating to the United Technologies Corporation 2005 Long-Term Incentive Plan (referred to above in Exhibit 10.19), incorporated by reference to Exhibit 10.1 to UTC’s Current Report on Form 8-K (Commission file number 1-812) filed with the SEC on December 20, 2005. | |
| 10.28 | United Technologies Corporation LTIP Performance Share Unit Deferral Plan, relating to the 2005 Long-Term Incentive Plan (referred to above in Exhibit 10.19), incorporated by reference to Exhibit 10.36 of UTC’s Annual Report on Form 10-K (Commission file number 1-812) for fiscal year ended December 31, 2008. | |
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| 10.29 | United Technologies Corporation International Deferred Compensation Replacement Plan, effective January 1, 2005, incorporated by reference to Exhibit 10.35 of UTC’s Annual Report on Form 10-K (Commission file number 1-812) for fiscal year ended December 31, 2008. | |
| 10.30 | United Technologies Corporation Company Automatic Excess Plan, effective January 1, 2010.* | |
| 10.31 | United Technologies Corporation Savings Restoration Plan, effective January 1, 2010.* | |
| 11 | Statement Re: Computations of Per Share Earnings.* | |
| 12 | Statement Re: Computation of Ratios.* | |
| 13 | Annual Report for the year ended December 31, 2009 (except for the information therein expressly incorporated by reference in this Form 10-K, the Annual Report is provided solely for the information of the SEC and is not to be deemed “filed” as part of this Form 10-K).* | |
| 14 | Code of Ethics. The UTC Code of Ethics may be accessed via UTC’s website at http://www.utc.com/Governance/Ethics/Code+of+Ethics. | |
| 21 | Subsidiaries of the Registrant.* | |
| 23 | Consent of PricewaterhouseCoopers LLP.* | |
| 24 | Powers of Attorney of John V. Faraci, Jean-Pierre Garnier, Jamie S. Gorelick, Carlos M. Gutierrez, Edward A. Kangas, Charles R. Lee, Richard D. McCormick, Harold W. McGraw III, Richard B. Myers, H. Patrick Swygert, André Villeneuve and Christine Todd Whitman.* | |
| 31 | Rule 13a-14(a)/15d-14(a) Certifications.* | |
| 32 | Section 1350 Certifications.* | |
| 101.INS | XBRL Instance Document.* (File name: utx-20091231.xml) | |
| 101.SCH | XBRL Taxonomy Extension Schema Document.* (File name: utx-20091231.xsd) | |
| 101.PRE | XBRL Taxonomy Presentation Linkbase Document.* (File name: utx-20091231_pre.xml) | |
| 101.LAB | XBRL Taxonomy Label Linkbase Document.* (File name: utx-20091231_lab.xml) | |
| 101.CAL | XBRL Taxonomy Calculation Linkbase Document.* (File name: utx-20091231_cal.xml) | |
| 101. DEF | XBRL Taxonomy Definition Linkbase Document.* File name: utx-20091231_def.xml) | |
Notes to Exhibits List:
| * | Submitted electronically herewith. |
Exhibits 10.1 through 10.31 are contracts, arrangements or compensatory plans filed as exhibits pursuant to Item 15(b) of the requirements for Form 10-K reports.
Attached as Exhibit 101 to this report are the following formatted in XBRL (Extensible Business Reporting Language) for the year ended December 31, 2009: (i) Consolidated Statement of Operations, (ii) Consolidated Balance Sheet, (iii) Consolidated Statement of Cash Flows, (iv) Consolidated Statement of Changes in Equity, (v) Notes to Consolidated Financial Statements tagged in block text format, and (vi) Financial Schedule of Valuation and Qualifying Accounts tagged in block text format.
In accordance with Rule 406T of Regulation S-T, the XBRL related information in Exhibit 101 to this Annual Report on Form 10-K shall not be deemed to be “filed” for purposes of Section 18 of the Exchange Act, or otherwise subject to the liability of that section, and shall not be part of any registration statement or other document filed under the Securities Act or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.
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Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| UNITED TECHNOLOGIES CORPORATION | ||
| (Registrant) | ||
| By: | /s/ GREGORY J. HAYES | |
| Gregory J. Hayes | ||
| Senior Vice President and Chief Financial Officer | ||
| By: | /s/ MARGARET M. SMYTH | |
| Margaret M. Smyth | ||
| Vice President, Controller | ||
Date: February 11, 2010
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.
| Signature |
Title |
Date | ||
| /s/ LOUIS R. CHÊNEVERT Louis R. Chênevert |
Director, Chairman, President and Chief Executive Officer | February 11, 2010 | ||
| /s/ GREGORY J. HAYES Gregory J. Hayes |
Senior Vice President and Chief Financial Officer | February 11, 2010 | ||
| /s/ MARGARET M. SMYTH Margaret M. Smyth |
Vice President, Controller | February 11, 2010 | ||
| /s/ JOHN V. FARACI * (John V. Faraci) |
Director ) | |||
| /s/ JEAN-PIERRE GARNIER* (Jean-Pierre Garnier) |
Director ) | |||
| /s/ JAMIE S. GORELICK * (Jamie S. Gorelick) |
Director ) | |||
| /s/ CARLOS M. GUTIERREZ * (Carlos M. Gutierrez) |
Director ) | |||
| /s/ EDWARD A. KANGAS * (Edward A. Kangas) |
Director ) | |||
| /s/ CHARLES R. LEE * (Charles R. Lee) |
Director ) | |||
| /s/ RICHARD D. MCCORMICK * (Richard D. McCormick) |
Director ) | |||
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| Signature |
Title |
Date | ||
| /s/ HAROLD W. MCGRAW III * (Harold W. McGraw III) |
Director ) | |||
| /s/ RICHARD B. MYERS * (Richard B. Myers) |
Director ) | |||
| /s/ H. PATRICK SWYGERT * (H. Patrick Swygert) |
Director ) | |||
| /s/ ANDRÉ VILLENEUVE * (André Villeneuve) |
Director ) | |||
| /s/ CHRISTINE TODD WHITMAN* (Christine Todd Whitman) |
Director ) | |||
| *By: | /s/ CHARLES D. GILL | |
| Charles D. Gill | ||
| Senior Vice President and General Counsel, as Attorney-in-Fact |
Date: February 11, 2010
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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM ON
FINANCIAL STATEMENT SCHEDULE
To the Board of Directors
of United Technologies Corporation:
Our audits of the consolidated financial statements and of the effectiveness of internal control over financial reporting referred to in our report dated February 11, 2010 appearing in the 2009 Annual Report to Shareowners of United Technologies Corporation (which report and consolidated financial statements are incorporated by reference in this Annual Report on Form 10-K) also included an audit of the financial statement schedule listed in Item 15(a)(2) of this Form 10-K. In our opinion, this financial statement schedule presents fairly, in all material respects, the information set forth therein when read in conjunction with the related consolidated financial statements.
/s/ PricewaterhouseCoopers LLP
Hartford, Connecticut
February 11, 2010
S-I
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UNITED TECHNOLOGIES CORPORATION AND SUBSIDIARIES
Valuation and Qualifying Accounts
Three Years Ended December 31, 2009
(Millions of Dollars)
| Allowances for Doubtful Accounts and Other Customer Financing Activity: |
||||
| Balance December 31, 2006 |
$ | 424 | ||
| Provision charged to income |
41 | |||
| Doubtful accounts written off (net) |
(101 | ) | ||
| Other adjustments |
4 | |||
| Balance December 31, 2007 |
368 | |||
| Provision charged to income |
159 | |||
| Doubtful accounts written off (net) |
(129 | ) | ||
| Other adjustments |
(12 | ) | ||
| Balance December 31, 2008 |
386 | |||
| Provision charged to income |
145 | |||
| Doubtful accounts written off (net) |
(80 | ) | ||
| Balance December 31, 2009 |
$ | 451 | ||
| Future Income Tax Benefits - Valuation allowance: |
||||
| Balance December 31, 2006 |
$ | 542 | ||
| Additions charged to income tax expense |
131 | |||
| Additions charged to goodwill, due to acquisitions |
2 | |||
| Reductions credited to income tax expense |
(36 | ) | ||
| Other adjustments |
(94 | ) | ||
| Balance December 31, 2007 |
545 | |||
| Additions charged to income tax expense |
146 | |||
| Reductions charged to goodwill, due to acquisitions |
(152 | ) | ||
| Reductions credited to income tax expense |
(11 | ) | ||
| Other adjustments |
170 | |||
| Balance December 31, 2008 |
698 | |||
| Additions charged to income tax expense |
186 | |||
| Additions charged to goodwill, due to acquisitions |
3 | |||
| Reductions credited to income tax expense |
(16 | ) | ||
| Other adjustments |
32 | |||
| Balance December 31, 2009 |
$ | 903 | ||
S-II
Exhibit 10.3
UNITED TECHNOLOGIES CORPORATION
PENSION PRESERVATION PLAN
AS AMENDED AND RESTATED EFFECTIVE DECEMBER 31, 2009
WHEREAS, United Technologies Corporation (the “Corporation”) established the United Technologies Corporation Pension Preservation Plan (the “Preservation Plan”) effective January 1, 1978 for the benefit of certain employees and merged the United Technologies Corporation Pension Replacement Plan (the “Replacement Plan”) into the Preservation Plan, effective December 31, 2006; and
WHEREAS, the Corporation reserved the right to amend the Preservation Plan through the action of its Pension Administration and Investment Committee (the “PAIC”) and/or its Pension Administration Committee (the “PAC”); and
WHEREAS, pursuant to a resolution duly adopted on December 3, 2009, the PAIC approved the amendment of the Preservation Plan for the purpose of conforming the terms of the Plan to the changes to the UTC Employee Retirement Plan; and
NOW, THEREFORE, effective December 31, 2009, the Preservation Plan is amended and restated as follows:
| 1. | INTRODUCTION & PURPOSE |
The United Technologies Corporation Pension Preservation Plan (the “Preservation Plan”) is maintained as an unfunded plan solely for the purpose of providing retirement benefits in excess of the retirement and survivor benefits that may be paid from tax-qualified retirement plans due to (i) benefit limitations imposed by Section 415 of the Internal Revenue Code of 1986, as amended from time to time (the “Code”) and (ii) the limitation imposed by Section 401(a)(17) of the Code on compensation that may be taken into account in computing retirement benefits under tax-qualified retirement plans (referred to collectively as the “Limits”). The Preservation Plan restores the amount of the retirement benefit or survivor benefit that may not be paid from the United Technologies Corporation Employee Retirement Plan (or any other tax-qualified defined benefit retirement plan sponsored by the Corporation) (the “Qualified Retirement Plan”) as a result of the Limits so that the total actuarial present value of the Qualified Retirement Plan and Pension Preservation Plan benefits equals the actuarial present value of the retirement benefit or survivor benefit that would be paid from the Qualified Retirement Plan if such Plan were administered without regard to the Limits. Effective with the merger of the Replacement Plan into this Plan, the amount of any reduction of Qualified Plan Retirement benefits resulting from the deferral of compensation that would otherwise be recognized under the Qualified Retirement Plans shall be provided under this Plan. The Preservation Plan shall be administered and construed to effectuate the foregoing intent.
| 2. | EFFECTIVE DATE |
The Preservation Plan became effective on January 1, 1978. Except to the extent otherwise specifically provided herein, the Preservation Plan is hereby amended and restated, effective December 31, 2009. The Preservation Plan, as amended and restated, applies to amounts that were earned or vested after December 31, 2004 under the Preservation and Replacement Plans. Amounts that were earned and vested (within the meaning of Section 409A) under either the Preservation Plan or the Replacement Plan before January 1, 2005, and any subsequent increases in these amounts that are treated as grandfathered benefits under Section 409A, are subject to and shall continue to be governed by the terms of the Prior Plans as set forth in Appendix A and Appendix B as applicable.
From January 1, 2005 to the present, the Preservation Plan has been operated in good faith compliance with Section 409A in accordance with guidance provided by the Internal Revenue Service and provided for the following during this good faith compliance period:
| (a) | Continued commencement of benefits under this Plan and the Qualified Retirement Plan; |
| (b) | Allowance of new payment elections by participants to comply with 409A requirements; and |
| (c) | Prohibited acceleration of any payments that would otherwise have been made in a later year and prohibited deferral to a later year of a payment that would otherwise have been made in the current year. |
| 3. | DEFINITIONS |
Any capitalized terms used herein that are not defined in this Section 3 shall have the meanings given to them by the United Technologies Corporation Employee Retirement Plan unless the context clearly indicates otherwise.
Beneficiary means the person, persons or entity designated in writing by a Participant to receive the value of his or her Current Plan Benefit in the event of the Participant’s death, , in accordance with the terms of this Plan. If a Participant fails to designate a Beneficiary under this Plan, the Beneficiary or Contingent Annuitant shall be determined under the Qualified Retirement Plan. If the Beneficiary (and any contingent Beneficiary) does not survive the Participant or if no Beneficiary is designated under the Qualified Retirement Plan, the value of the Participant’s Plan Benefit will be payable to the estate of the Participant, in accordance with the terms of this Plan.
Compensation Reduction means a reduction in compensation otherwise recognized under the Qualified Retirement Plan (without regard to the Limits) by reason of a Participant’s participation in the United Technologies Corporation Deferred Compensation Plan.
Code means the Internal Revenue Code of 1986, as amended from time to time, and any successor thereto. Reference to any section of the Internal Revenue Code shall include any final regulations or other applicable guidance.
Corporation means the United Technologies Corporation.
Current Plan Benefit means amounts credited on or after January 1, 2005 under either the Preservation or Replacement Plans.
Disability means permanent and total disability as determined under the Corporation’s long-term disability plan applicable to the Participant, or if there is no such plan applicable to the Participant, “Disability” means a determination of total disability by the Social Security Administration; provided that, in either case, the Participant’s condition also qualifies as a “disability” for purposes of Section 409A(a)(2)(C) of the Code.
Election Form means the form provided to Participants electronically or in paper form for the purpose of electing the form of payment for a Current Plan Benefit.
Prior Plans means the United Technologies Corporation Pension Preservation Plan, as in effect on December 31, 2004, as set forth in Appendix A and the United Technologies Corporation Pension Replacement Plan, as in effect on December 31, 2004, as set forth in Appendix B.
Prior Preservation Plan means the United Technologies Corporation Pension Preservation Plan, as in effect on December 31, 2004, as set forth in Appendix A. All amounts earned and vested under the Prior Preservation Plan as of December 31, 2004, and any subsequent increases in these amounts that are permitted to be treated as grandfathered benefits under Section 409A, shall continue to be subject to the terms and conditions of the Prior Preservation Plan and shall not be affected by this amendment and restatement.
Prior Replacement Plan means the United Technologies Corporation Pension Replacement Plan, as in effect on December 31, 2004, as set forth in Appendix B. All amounts earned and vested under the Prior Replacement Plan as of December 31, 2004, and any subsequent increases in these amounts that are permitted to be treated as grandfathered benefits under Section 409A, shall continue to be subject to the terms and conditions of the Prior Replacement Plan and shall not be affected by this amendment and restatement.
Prior Plan Benefit means the aggregate value of the Prior Preservation Plan Benefit and Prior Replacement Plan Benefit as identified in Section 6, which are valued and administered separately in accordance with the terms and procedures in effect under the Prior Plans.
Qualified Retirement Plan means the United Technologies Corporation Employee Retirement Plan (or any other tax-qualified defined benefit retirement plan sponsored by the Corporation or a UTC Company).
Separation from Service means a Participant’s Termination of Employment with all UTC Companies, other than by reason of death. A Separation from Service will be deemed to occur where the Participant and the UTC Company that employs the Participant reasonably anticipate that the bona fide level of services the Participant will perform (whether as
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an employee or as an independent contractor) will be permanently reduced to a level that is less than thirty-seven and a half percent (37.5%) of the average level of bona fide services the Participant performed during the immediately preceding 36 months (or the entire period the Participant has provided services if the Participant has been providing services to the UTC Companies for less than 36 months.) A Participant shall not be considered to have had a Separation from Service as a result of a transfer from one UTC Company to another UTC Company.
Specified Employee means each of the fifty (50) highest-paid officers and other executives of the Corporation and its Subsidiaries, effective annually as of April 1st, based on wages subject to federal income tax withholding, and amounts that are excluded from taxable income by the employee’s election to make pre-tax contributions under a cafeteria plan, section 401(k) plan, or similar plan, determined for the preceding calendar year as provided in Treas. Reg. § 1.415(c)-2(d)(3). The term includes both U.S. and non-U.S. employees, and the compensation used to determine whether an employee is among the fifty (50) highest-paid officers and other executives shall be determined by treating non-U.S. compensation as if it had been earned in the U.S. by a U.S. citizen.
UTC Company means United Technologies Corporation or any entity controlled by or under common control with United Technologies Corporation within the meaning of Section 414(b) or (c) of the Code (but substituting “at least 20 percent” for “at least 80 percent” as the control threshold used in applying Sections 414(b) and (c)).
| 4. | ELIGIBILITY |
Each employee of a UTC Company who is a Participant in the Qualified Retirement Plan shall be eligible to participate in the Preservation Plan if and to the extent such employee’s compensation increases such that the Participant’s Accrued Benefit under the Qualified Retirement Plan is limited by (i) provisions of the Qualified Retirement Plan that are designed solely to comply with the Limits; or (ii) such employee experiences a Compensation Reduction. In no event shall any person who is not entitled to benefits under the Qualified Retirement Plan be eligible for retirement benefits or survivor benefits under this Preservation Plan. An employee of the UTC Companies who is eligible for retirement benefits under the Preservation Plan and has completed three years of “Continuous Service” (as defined in the UTC Employee Retirement Plan as in effect on January 1, 2008) shall be referred to herein as a “Participant.”
| 5. | DETERMINATION OF PRESERVATION PLAN BENEFIT |
The amount of the retirement benefit or survivor benefit payable from the Preservation Plan to or in respect of a Participant shall equal the excess, if any, of (a) over (b), and for purposes of this calculation, it shall be assumed that Qualified Retirement Plan Benefit and Preservation Plan Benefit commence at the same time, where
| (a) | equals the retirement benefit or survivor benefit that would be paid to such Participant (or on his or her behalf to his Contingent Annuitant or Beneficiary) under the Qualified Retirement Plan if the provisions of the Qualified Retirement Plan were administered without regard to the Limits and Compensation Reduction; and |
| (b) | equals the retirement benefit or survivor benefit payable to such Participant (or on his or her behalf to his or her Contingent Annuitant or Beneficiary) under the Qualified Retirement Plan. |
| 6. | PLAN BENEFITS |
| (a) | Prior Plan Benefit. Benefits accrued under the Prior Plan are not intended to be subject to Section 409A of the Code. No amendment to Appendix A or Appendix B that would constitute a “material modification” for purposes of Section 409A shall be effective unless the amending instrument states that it is intended to materially modify Appendix A and/or Appendix B and to cause the Prior Plan(s) to become subject to Section 409A. Although the Prior Plan Benefit is not intended to be subject to Section 409A, neither the UTC Companies nor any director, officer, or other representative of a UTC Company shall be liable for any adverse tax consequence suffered by a Participant or Beneficiary if a Prior Plan Benefit becomes subject to Section 409A. |
| (i) | Prior Preservation Plan Benefit |
Amounts that were credited before January 1, 2005, and any subsequent increases in these amounts that are permitted to be treated as grandfathered benefits under Section 409A of the Code, shall be maintained and accounted for separately and shall remain subject to the terms and conditions of the Prior Plan, as set forth in Appendix A.
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| (ii) | Prior Replacement Plan Benefit |
Amounts that were credited before January 1, 2005, and any subsequent increases in these amounts that are permitted to be treated as grandfathered benefits under Section 409A of the Code, shall be maintained and accounted for separately and shall remain subject to the terms and conditions of the Prior Plan, as set forth in Appendix B.
| (b) | Current Plan Benefit. Current Plan Benefit shall include amounts credited to Participants under either the Preservation or Replacement Plans on or after January 1, 2005. |
| (c) | Sunset of Final Average Earnings Formula Plan Benefit. The determination of benefits payable under Section 5 of this Plan (“Determination of Preservation Plan Benefit”) shall be done in accordance with the applicable terms and provisions of the Qualified Retirement Plan, including the amendment to such Plan that provides for the elimination of the Final Average Earnings Formula and related credited service and compensation determination provisions, effective December 31, 2014. |
| 7. | FORM OF PRESERVATION PLAN BENEFIT |
| (a) | The Committee shall determine, as of the earlier of the Participant’s Separation from Service or the Participant’s date of death, that portion of the Participant’s total retirement benefit or survivor benefit that is to be paid under the Preservation Plan, using the same formula that is used under the UTC Employee Retirement Plan to calculate such Participant’s benefit. The Committee will apply either the Final Average Earnings (FAE) formula, Cash Balance (CB) formula, or both as applicable to each Participant under the Qualified Retirement Plan. The Preservation Plan retirement benefit or survivor benefit shall be paid to the Participant, or on his or her behalf to any Contingent Annuitant or Beneficiary (as designated under the Qualified Retirement Plan), as a monthly annuity, unless a timely election is made in accordance with Subparagraph (c) of this Section 7. |
| (b) | A Participant may elect separate payment methods for Prior and Current Plan Benefits. Prior Plan Benefit elections are administered separately in accordance with the terms and procedures in effect under the Prior Plans, as set forth in Appendices A and B. |
| (c) | Unless a Participant elects a form of the benefit payment for Current Plan Benefit, benefits earned under the Preservation Plan will be paid as a single life annuity or actuarially equivalent life annuity. A Participant may elect to receive a single lump-sum payment or a series of 2 to 10 annual installment payments. A payment election under the Plan shall be made on an electronic or written Election Form, completed and submitted to the UTC Pension Service Center no later than December 31st of the calendar year prior to the year in which the period of service commences on which the benefit is based. A change in actuarially equivalent annuities shall not be deemed to be a change in payment election for purposes of this Plan. Except as provided below in Subsection (d), a Participant’s payment election shall become irrevocable on the election deadline date. |
| (d) | Change in Payment Election. A Participant may make an election to change the form of payment that the Participant elected under Section 7(c), subject to the following requirements: |
| (i) | The new election must be made at least twelve months prior to the date payments are scheduled to commence (and the new election shall be ineffective if the payment commencement date occurs within twelve months after the date of the new election); |
| (ii) | The new election will not take effect until at least twelve months after the date when the Participant submits a new Election Form to the UTC Pension Service Center; and |
| (iii) | The new benefit payment commencement date must be five years later than the date on which payments commence under the current election. |
| (e) | If a Participant’s benefit is calculated under the FAE formula and the Participant elects to have his or her Preservation Plan benefit paid in the form of a single lump-sum or annual installment distribution, the Actuarially Equivalent present value of the Preservation Plan retirement benefit or survivor benefit shall be determined using the RP-2000 Group Annuity Mortality Table and interest assumption equal to the average yield for tax-free municipal bonds of 10-year maturities, averaged over the prior 5 calendar years. For purposes of computing this interest assumption, the Actuary shall utilize the Barclays Capital 10-Year Municipal Bond Index, averaging the published yield for 10-year maturities (credit quality AA or above) on the last business day of the year over the most recent 5 consecutive full calendar year period. This rate shall be adjusted annually at the beginning of each calendar year. |
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| (f) | The payment of a monthly annuity, lump-sum or annual installment distribution in accordance with this Section 7 shall be in full satisfaction of all of the Corporation’s obligations with respect to the Participant under the Preservation Plan. |
| 8. | DISTRIBUTION OF BENEFIT |
| (a) | Except as provided in Section 7(d) (concerning the five-year delay following a Change in Payment Election), Section 8(b) (concerning distributions to Specified Employees), the value of a Participant’s Preservation Plan Benefit will be distributed (or begin to be distributed) to the Participant as follows: |
| (i) | If a Participant’s benefit is calculated under the FAE formula only, the benefit will be paid to Participant on the first of the month following the later of a Participant’s Separation from Service, or when the Participant reaches age 55; |
| (ii) | If a Participant’s benefit is calculated under the CB formula only, the benefit will be paid to Participant on the first of the month following the Participant’s Separation from Service; |
| (iii) | If a Participant’s benefit is calculated under both the FAE and CB formulas, the benefit will be paid to the Participant according to the rules outlined above in Subsections (i) and (ii) for the corresponding portions of the benefit. |
| (b) | Separation from Service of Specified Employees. If the Participant is a Specified Employee on the date of the Participant’s Separation from Service, distribution of the Participant’s Current Plan Benefit to the Participant that is made on account of the Participant’s Separation from Service will not be made or commence earlier than the first day of the seventh month following the date of Separation from Service. |
| (c) | Administrative Adjustments in Payment Date. A payment is treated as being made on the date when it is due under the Plan if the payment is made on the due date specified by the Plan, or on a later date that is either (i) in the same calendar year (for a payment whose specified due date is on or before September 30), or (ii) by the 15th day of the third calendar month following the date specified by the Plan (for a payment whose specified due date is on or after October 1). A payment also is treated as being made on the date when it is due under the Plan if the payment is made not more than 30 days before the due date specified by the Plan. In no event, will a payment to a Specified Employee be made or commence earlier than the first day of the seventh month following the date of Separation from Service. A Participant may not, directly or indirectly, designate the taxable year of a payment made in reliance on the administrative rules in this Section 8(c). |
| 9. | DISTRIBUTION IN THE EVENT OF DEATH |
| (a) | If a Participant’s benefit (or portion of a benefit) is calculated under the FAE formula and the Participant has not made an election to receive his or her Pension Preservation Plan Benefit in a lump sum or installments as of the date of death, any survivor benefits will be paid as a life annuity subject to the following: |
| (i) | If death occurs prior to age 55 with five years of service, the spouse of the Participant shall receive a 50% Contingent Annuity Benefit beginning on the date the Participant would have attained his or her 55th birthday. If the Participant is unmarried, no Plan benefit is payable. |
| (ii) | If death occurs prior to age 55 with ten years of service, the spouse of the Participant shall receive a 100% Contingent Annuity Benefit beginning on the date the Participant would have attained his or her 55th birthday. If the Participant is unmarried, no Plan benefit is payable. |
| (iii) | If death occurs on or after attainment of age 55 with ten years of service or attainment of age 65, survivor benefits shall be paid as a 100% Contingent Annuity Benefit beginning on the first business day of the month following the Participant’s death in the following order: |
| (1) | to the Spouse of the Participant, if the Participant is married at the time of death; |
| (2) | to the named Beneficiary or contingent annuitant, if the Participant is not married at the time of death; |
| (3) | to the children of the Participant if the Participant has not designated a Beneficiary prior to his or her death; or |
| (4) | to the estate of the Participant, if the Participant has no children at the time of his or her death. |
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If the Participant is not married at the time of death and the Participant has not designated a Beneficiary or contingent annuitant, the benefit shall be payable as:
| (1) | a 10-year certain actuarially equivalent annuity to the children of the Participant; or |
| (2) | a 5-year certain actuarially equivalent annuity to the estate of the Participant. |
| (b) | If a Participant’s benefit (or portion of a benefit) is calculated under the FAE formula and the Participant has made an election to receive his or her Preservation Plan Benefit in a lump sum or annual installments in accordance with Section 7(c) herein, such Participant shall have survivor benefits paid to his or her Beneficiary as follows: If death occurs prior to age 55, the Preservation Plan accrued benefit shall be paid in a lump sum payment as of the date the Participant would have attained his or her 55th birthday. If death occurs after the benefit commencement date but before all annual installments have been paid, the remaining installments will be paid to his or her Beneficiary as scheduled. |
| (c) | If a Participant’s benefit (or portion of a benefit) is calculated under the CB formula, the Participant shall have survivor benefits paid in a lump sum on the first business day of the month following the Participant’s death as follows: |
| (i) | to the Spouse of the Participant, if the Participant is married at the time of death; |
| (ii) | to the named Beneficiary or contingent annuitant, if the Participant is not married at the time of death; |
| (iii) | to the children of the Participant if the Participant has not designated a Beneficiary prior to his or her death; or |
| (iv) | to the estate of the Participant, if the Participant has no children at the time of his or her death. |
| 10. | DISABILITY |
In the event of the Disability of a Participant, the Participant’s Plan Benefit will be maintained and distributed in accordance with the terms of the Plan and the Participant’s elections on file.
| 11. | MINIMUM BALANCE PAYOUT PROVISION |
If the value of a Participant’s Current Plan Benefit, determined at the time of the Participant’s Separation From Service is less than one-hundred thousand dollars ($100,000), the Committee will distribute the Participant’s entire Current Plan Benefit in a lump sum on the first business day following the Participant’s Separation From Service, notwithstanding a Participant’s election to receive a different form of distribution.
| 12. | FUNDING |
The Preservation Plan shall be maintained as an unfunded Plan that is not intended to meet the qualification requirements of Section 401 of the Code. Except in the event of a Change in Control of the Corporation (as described in Section 13 hereof), all benefits under the Preservation Plan shall be payable solely from the general assets of the Corporation. In this regard, the rights of each Participant, Contingent Annuitant and Beneficiary under the Preservation Plan with respect to his or her Preservation Plan retirement benefit or survivor benefit shall be those of a general unsecured creditor of the Corporation. No Participant, Contingent Annuitant or Beneficiary hereunder shall be entitled to receive any benefits payable under the Preservation Plan from the assets of the Qualified Retirement Plan, nor shall the Corporation undertake to set aside assets in trust or otherwise segregate assets to fund its obligations under the Preservation Plan except as provided in Section 13 hereof.
| 13. | CHANGE OF CONTROL |
In the event of a Change of Control of the Corporation, the Corporation shall immediately fully fund the value of all Accrued Benefit under the Preservation Plan, determined by the Actuary as of the date of the Change of Control, provided the funding is not proximate to a downturn in the Corporation’s financial health within the meaning of Treas. Reg. Section 1.409A-3(j)(4)(ix)(C)(1). The required proceeds will be contributed to the United Technologies Corporation Pension Preservation Plan Retirement Security Trust, a rabbi trust, and such proceeds will be held and maintained in the United States. In addition, if the United Technologies Corporation Board of Directors Committee on Compensation and Executive Development takes any action under the United Technologies Corporation Long Term Incentive Plan (the “LTIP”), including, without limitation, the accelerated vesting or other adjustment to outstanding LTIP awards in
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anticipation of (i) a Change of Control (ii) an event, which if consummated, would constitute a Change of Control or (iii) any other significant change pertaining to the ownership of the Corporation, the Corporation shall then also immediately fund the United Technologies Corporation Pension Preservation Plan Retirement Security Trust, a rabbi trust, provided the funding is not proximate to a downturn in the Corporation’s financial health within the meaning of Treas. Reg. Section 1.409A-3(j)(4)(ix)(C)(1); and further provided such funds are held and maintained in the United States. For purposes of this Section 13, “Change of Control” shall have the meaning given to that term under the LTIP.
| 14. | NONASSIGNABILITY |
No Participant, Contingent Annuitant or Beneficiary or any other person shall have the right to sell, assign, transfer, pledge, or otherwise encumber any interest in the Preservation Plan. All Preservation Plan benefits are unassignable and non-transferable and shall not be subject to attachment or seizure for the payment of any debts, judgments or other obligations. No Preservation Plan interest shall be transferred by operation of law in the event of the bankruptcy or insolvency of a Participant, Contingent Annuitant, or Beneficiary.
| 15. | NO CONTRACT OF EMPLOYMENT |
Participation in the Preservation Plan shall not be construed to constitute a direct or indirect contract of employment between the Corporation and the Participant. Nothing in the Preservation Plan shall be deemed to give a Participant the right to be retained in the service of the Corporation for any length of time. Participants, Contingent Annuitants and Beneficiaries shall have no rights against the Corporation resulting from participation in the Preservation Plan other than as specifically provided herein.
| 16. | OPERATION AND ADMINISTRATION |
The Preservation Plan shall be administered by the Pension Administration and Investment Committee of United Technologies Corporation (the “Committee”). The Committee shall have the right to delegate its responsibilities hereunder to sub-committees and individuals. Any question of administration or interpretation arising under the Preservation Plan shall be determined by the Committee (or its delegate) in its full discretion, and its decision shall be final and binding upon all parties.
| 17. | TAXES/WITHHOLDING |
The Corporation shall have the right to withhold taxes from Preservation Plan benefit accruals and payments to the extent it reasonably determines such withholding to be required by law to be withheld from such credits and payments.
| 18. | GOVERNING LAW |
The Preservation Plan shall be construed, administered and enforced in accordance with the Employee Retirement Income Security Act of 1974, as amended (“ERISA”), and to the extent not preempted thereby, the laws of the State of Connecticut (disregarding its choice-of-law rules).
| 19. | AMENDMENT AND TERMINATION |
| (a) | The Corporation expects to continue the Preservation Plan indefinitely, but reserves the right, by action of the Committee, to amend or terminate the Preservation Plan at any time, provided, however, that no such action shall decrease any benefits accrued under the Preservation Plan as of the date of such action. Although the benefits accrued under the Preservation Plan are not subject to the restrictions imposed by Section 204(g) of ERISA, the proviso in the preceding sentence shall be construed in a manner consistent with Section 204(g) of ERISA. As a result, the proviso referred to in the preceding sentence imposes restrictions identical with the restrictions that would be imposed on the Preservation Plan if the Preservation Plan were subject to Section 204(g) of ERISA. |
| (b) | Upon the termination of the Plan with respect to all Participants, and termination of all arrangements sponsored by the Corporation or its affiliates that would be aggregated with the Plan under Section 409A of the Code, the Corporation shall have the right, in its sole discretion, and notwithstanding any elections made by the Participant, to pay the Participant’s vested Benefit in a lump sum, to the extent permitted under Section 409A. All payments that may be made pursuant to this Section 19(b) shall be made no earlier than the thirteenth month and no later than the twenty-fourth month after the termination of the Plan. The Corporation may not |
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| accelerate payments pursuant to this Section 19(b) if the termination of the Plan is proximate to a downturn in the Corporation’s financial health within the meaning of Treas. Reg. Section 1.409A-3(j)(4)(ix)(C)(1). If the Corporation exercises its discretion to accelerate payments under this Section 19(b), it shall not adopt any new arrangement that would have been aggregated with this Plan under Section 409A within three years following the date of the Plan’s termination. |
| 20. | COMPLIANCE WITH SECTION 409A |
To the extent that rights or payments under this Plan are subject to Section 409A of the Internal Revenue Code, the Preservation Plan shall be construed and administered in compliance with the conditions of Section 409A and regulations and other guidance issued pursuant to Section 409A for deferral of income taxation until the time the compensation is paid. Any distribution election that would not comply with Section 409A of the Code shall not be effective for purposes of this Plan. To the extent that a provision of this Plan does not comply with Section 409A of the Code, such provision shall be void and without effect. The Corporation does not warrant that the Preservation Plan will comply with Section 409A of the Code with respect to any Participant or with respect to any payment. In no event shall a UTC Company; any director, officer, or employee of a UTC Company (other than the Participant); or any member of the Committee be liable for any additional tax, interest, or penalty incurred by a Participant or Beneficiary as a result of the Preservation Plan’s failure to satisfy the requirements of Section 409A of the Code, or as a result of the Plan’s failure to satisfy any other requirements of applicable tax laws.
| 21. | SUCCESSORS |
The provisions of the Preservation Plan shall bind and inure to the benefit of the Corporation, and its successors and assigns. The term successors shall include any corporate or other business entity that by merger, consolidation, purchase or otherwise acquires all or substantially all of the business and assets of the Corporation and successors of any such Corporation or other entity.
| 22. | BENEFIT CLAIMS PROCEDURE |
| (a) | The Committee shall establish and communicate procedures for Participants to obtain forms required to effect elections and designations under the Plan. The Committee may establish a telephonic communication system to facilitate the administration of the Plan and to provide information to Participants, provided that any estimate of a Participant’s current or projected accrued benefit shall in no event be binding on the Committee in the event of any discrepancy between such estimate and a Participant’s actual accrued benefit, which, in all cases, shall control. Upon notification of the death of any Participant while in the employment of the Employer, the Committee may initiate any claim on behalf of the Spouse, Contingent Annuitant, or Beneficiary. |
| (b) | A Participant or Beneficiary who believes that he or she has been denied a benefit to which he or she is entitled under the Plan (referred to in this Section 22 as a “Claimant”) may file a written request with the Committee setting forth the claim. The Committee shall consider and resolve the claim as set forth below. |
| (i) | Upon receipt of a claim, the Committee or its designated agent shall advise the Claimant that a response will be forthcoming within 90 days. The Committee may, however, extend the response period for up to an additional 90 days for reasonable cause, and shall notify the Claimant of the reason for the extension and the expected response date. The Committee or its designated agent shall respond to the claim within the specified period. |
| (ii) | If the claim is denied in whole or part, the Committee shall provide the Claimant with a written decision, using language calculated to be understood by the Claimant, setting forth (1) the specific reason or reasons for such denial; (2) the specific reference to relevant provisions of this Plan on which such denial is based; (3) a description of any additional material or information necessary for the Claimant to perfect his or her claim and an explanation why such material or such information is necessary; (4) appropriate information as to the steps to be taken if the Claimant wishes to submit the claim for review; (5) the time limits for requesting a review of the claim; and (6) the Claimant’s right to bring an action for benefits under Section 502(a) of ERISA. |
| (iii) | Within 60 days after the Claimant’s receipt of the written decision denying the claim in whole or in part, the Claimant may request a review of such determination by filing a notice of appeal in writing with the Benefit Claims Appeal Committee (the “Benefits Appeal Committee”). Such notice must set forth all relevant |
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| factors upon which the appeal is based. The Claimant or his or her duly authorized representative may, but need not, review the relevant documents and submit issues and comment in writing for consideration by the Benefits Appeal Committee. If the Claimant does not request a review of the initial determination within such 60-day period, the Claimant shall be barred from challenging the determination. |
| (iv) | Within 60 days after the Benefits Appeal Committee receives a request for review, it will review the initial determination. If special circumstances require that the 60-day time period be extended, the Benefits Appeal Committee will so notify the Claimant and will render the decision as soon as possible, but no later than 120 days after receipt of the request for review. |
| (v) | The Benefits Appeal Committee shall have the greatest discretion permitted by law in making decisions pursuant to this Section 22. All decisions on review shall be final and binding with respect to all concerned parties. The decision on review shall set forth, in a manner calculated to be understood by the Claimant, (1) the specific reasons for the decision, including references to the relevant Plan provisions upon which the decision is based; (2) the Claimant’s right to receive, upon request and free of charge, reasonable access to and copies of all documents, records, and other information, relevant to his or her benefits; and (3) the Claimant’s right to bring an action for benefits under Section 502(a) of ERISA. |
Appendix A
This Appendix A sets forth the United Technologies Corporation Pension Preservation Plan, as in effect on December 31, 2004 (“Prior Preservation Plan”), and as modified thereafter from time to time in a manner that does not constitute a “material modification” for purposes of Section 409A. Amounts that were earned and vested (within the meaning of Section 409A) prior to January 1, 2005, and any subsequent increases in these amounts that are permitted to be treated as grandfathered benefits under Section 409A, are generally subject to and shall continue to be governed by the terms of this Prior Preservation Plan.
UNITED TECHNOLOGIES CORPORATION
PENSION PRESERVATION PLAN
AS AMENDED AND RESTATED EFFECTIVE JANUARY 1, 1996
| 1. | INTRODUCTION & PURPOSE |
The United Technologies Corporation Pension Preservation Plan (the “Preservation Plan”) is maintained as an unfunded plan solely for the purpose of providing retirement benefits in excess of the retirement and survivor benefits that may be paid from tax-qualified retirement plans due to (i) benefit limitations imposed by Section 415 of the Internal Revenue Code of 1986, as amended from time to time (the “Code”) and (ii) the limitation imposed by Section 401(a)(17) of the Code on compensation that may be taken into account in computing retirement benefits under tax-qualified retirement plans (referred to collectively as the “Limits”). The Preservation Plan restores the amount of the retirement benefit or survivor benefit that is not paid from the United Technologies Corporation Employee Retirement Plan (or any other tax-qualified defined benefit retirement plan sponsored by the Corporation) (the “Qualified Retirement Plan”) as a result of the Limits so that the total actuarial present value of the Qualified Retirement Plan and Pension Preservation Plan benefits equals the actuarial present value of the retirement benefit or survivor benefit that would be paid from the Qualified Retirement Plan if such Plan were administered without regard to the Limits. The Preservation Plan shall be administered and construed to effectuate the foregoing intent.
The capitalized terms used herein shall have the meanings given to them by the United Technologies Corporation Employee Retirement Plan unless the context clearly indicates otherwise.
| 2. | EFFECTIVE DATE |
The Preservation Plan became effective on January 1, 1978. This amendment and restatement of the Preservation Plan shall be effective January 1, 1996, except to the extent otherwise specifically provided herein.
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| 3. | ELIGIBILITY |
An employee of United Technologies Corporation (the “Corporation”) or an affiliate thereof who is a Participant in the Qualified Retirement Plan shall be eligible to participate in the Preservation Plan if and to the extent the Participant’s Accrued Benefit under the Qualified Retirement Plan is reduced or limited by provisions of the Qualified Retirement Plan that are designed solely to comply with the Limits. In no event shall any person who is not entitled to benefits under the Qualified Retirement Plan be eligible for retirement benefits or survivor benefits under the Preservation Plan. An employee of the Corporation or an affiliate thereof who is eligible for retirement benefits under the Preservation Plan shall be referred to herein as a “Participant.”
| 4. | DETERMINATION OF PRESERVATION PLAN BENEFIT |
The amount of the retirement benefit or survivor benefit payable from the Preservation Plan to or in respect of a Participant shall equal the excess, if any, of (a) over (b), where
| (a) | equals the retirement benefit or survivor benefit that would be paid to such Participant (or on his or her behalf to his Contingent Annuitant or Beneficiary) under the Qualified Retirement Plan if the provisions of the Qualified Retirement Plan were administered without regard to the Limits; and |
| (b) | equals the retirement benefit or survivor benefit payable to such Participant (or on his or her behalf to his or her Contingent Annuitant or Beneficiary) under the Qualified Retirement Plan. |
| 5. | FORM OF PRESERVATION PLAN BENEFIT |
| (a) | The Plan Administrator shall determine, as of the earlier of the Participant’s Retirement Date or the Participant’s date of death, that portion of the Participant’s total retirement benefit or survivor benefit that is to be paid under the Preservation Plan. The Preservation Plan retirement benefit or survivor benefit shall be paid to the Participant, or on his or her behalf to any Contingent Annuitant or Beneficiary (as designated under the Qualified Retirement Plan), in the form of distribution that applies to the benefit payments made to, or on behalf of, the Participant under the Qualified Retirement Plan unless the Participant has made a timely election to receive his or her Preservation Plan retirement benefit in a single lump-sum payment or in a series of 2 to 10 annual installment payments in accordance with this Section 5. |
| (b) | If— |
| (i) | the Participant qualifies for an Early Retirement Annuity or a Normal Retirement Annuity or satisfies the Rule of 65 under Section 5.4 of the United Technologies Corporation Employee Retirement Plan (or dies after qualifying for an Early Retirement Annuity or a Normal Retirement Annuity or satisfying such Rule of 65, but before the date as of which retirement benefits under the Qualified Retirement Plan are scheduled to begin), and |
| (ii) | terminates, or retires from, employment with the Corporation and its affiliates after December 31, 1995, |
the Participant may elect, in accordance with Section 5(c) hereof, to have his or her Preservation Plan retirement benefit or survivor benefit paid in a lump-sum or in annual installments, payable (or commencing) as of the Participant’s Retirement Date. Subject to the provisions of Section 5(c) hereof, a Participant may revoke any such election at any time. A Participant shall have no right under the Preservation Plan to have his or her Qualified Retirement Plan benefit paid in a lump sum or in annual installments. Distributions from the Qualified Retirement Plan shall be governed solely by the terms of the Qualified Retirement Plan.
| (c) | An election to have a lump-sum or installment distribution paid pursuant to Section 5(b) hereof (or a revocation of any such election) shall be disregarded unless it is filed at least one year before the Participant’s Retirement Date (or, if earlier, the first day of the month next following the Participant’s date of death), except that |
| (i) | If such an election or revocation is filed on or before October 30, 1996, the election or revocation shall be given effect only if the Participant consents to a distribution (or the commencement of distributions) under the Preservation Plan as of a date occurring on or after January 1, 1997; and |
| (ii) | If such an election or revocation is filed on or after November 1, 1996, and on or before December 31, 1996, the election or revocation shall be given effect only if the Participant consents to a distribution (or the commencement of distributions) under the Preservation Plan as of a date occurring on or after April 1, 1997. |
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| (d) | If a Participant elects to have his or her Preservation Plan benefit paid in the form of a single lump-sum or annual installment distribution, the Actuarially Equivalent present value of the Preservation Plan retirement benefit or survivor benefit shall be determined using the 1983 Group Annuity Mortality Table and an interest assumption equal to the average yield for tax-free municipal bonds of 10-year maturities, averaged over the prior 5 calendar years. For purposes of computing this interest assumption, the Actuary shall utilize the Lehman Bros. Municipal Bond Index, averaging the published yield for 10-year maturities (credit quality AA or above) on the last business day of the year over the most recent 5 consecutive full calendar year period. This rate shall be adjusted annually at the beginning of each calendar year. |
| (e) | The payment of a lump-sum or annual installment distribution in accordance with this Section 5 shall be in full satisfaction of all of the Corporation’s obligations with respect to the Participant under the Preservation Plan. |
| 6. | DEATH BENEFITS |
A Participant who has made an election to receive Pension Preservation Plan benefits in a lump sum or annual installments in accordance with Section 5 herein shall have survivor benefits paid to his or her Pension Preservation Plan beneficiary as follows. If death occurs prior to age 55, the Pension Preservation Plan accrued benefit shall be paid in a lump sum payment as of the date the Participant would have attained his or her 55th birthday. If death occurs after retirement but before all annual installments have been paid, the remaining installments will be paid to his or her Beneficiary as scheduled unless the estate of the Participant is the Beneficiary in which case the commuted value of the remaining payments will be paid in a lump sum.
If no election to receive Pension Preservation Plan benefits in a lump sum or installments is in effect as of the date of death, any survivor benefits will be paid in accordance with the distribution option in effect and to the Beneficiary or Contingent Annuitant designated under the Qualified Retirement Plan.
| 7. | FUNDING |
The Preservation Plan shall be maintained as an unfunded Plan that is not intended to meet the qualification requirements of Section 401 of the Code. Except in the event of a Change in Control of the Corporation (as described in Section 7 hereof), all benefits under the Preservation Plan shall be payable solely from the general assets of the Corporation. In this regard, the rights of each Participant, Contingent Annuitant and Beneficiary under the Preservation Plan with respect to his or her Preservation Plan retirement benefit or survivor benefit shall be those of a general unsecured creditor of the Corporation. No Participant, Contingent Annuitant or Beneficiary hereunder shall be entitled to receive any benefits payable under the Preservation Plan from the assets of the Qualified Retirement Plan, nor shall the Corporation undertake to set aside assets in trust or otherwise segregate assets to fund its obligations under the Preservation Plan except as provided in Section 7 hereof.
| 8. | CHANGE OF CONTROL |
In the event of a Change of Control of the Corporation, the Corporation shall immediately fully fund the value of all Accrued Benefits under the Preservation Plan, determined by the Actuary as of the date of the Change of Control. The required proceeds will be contributed to the United Technologies Corporation Pension Preservation Plan Retirement Security Trust. In addition, if the United Technologies Corporation Board of Directors Committee on Compensation and Executive Development takes any action under the United Technologies Corporation Long Term Incentive Plan (the “LTIP”), including, without limitation, the accelerated vesting or other adjustment to outstanding LTIP awards in anticipation of (i) a Change of Control (ii) an event, which if consummated, would constitute a Change of Control or (iii) any other significant change pertaining to the ownership of the Corporation, the Corporation shall then also immediately fund the United Technologies Corporation Pension Preservation Plan Retirement Security Trust. For purposes of this Section 7, “Change of Control” shall have the meaning given to that term under the LTIP.
| 9. | NONASSIGNABILITY |
No Participant, Contingent Annuitant or Beneficiary or any other person shall have the right to sell, assign, transfer, pledge, or otherwise encumber any interest in the Preservation Plan. All Preservation Plan benefits are unassignable and non-transferable and shall not be subject to attachment or seizure for the payment of any debts, judgments or other obligations. No Preservation Plan interest shall be transferred by operation of law in the event of the bankruptcy or insolvency of a Participant, Contingent Annuitant, or Beneficiary.
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| 10. | NO CONTRACT OF EMPLOYMENT |
Participation in the Preservation Plan shall not be construed to constitute a direct or indirect contract of employment between the Corporation and the Participant. Nothing in the Preservation Plan shall be deemed to give a Participant the right to be retained in the service of the Corporation for any length of time. Participants, Contingent Annuitants and Beneficiaries shall have no rights against the Corporation resulting from participation in the Preservation Plan other than as specifically provided herein.
| 11. | OPERATION AND ADMINISTRATION |
The Preservation Plan shall be administered by the Pension Administration and Investment Committee of United Technologies Corporation (the “Committee”). The Committee shall have the right to delegate its responsibilities hereunder to sub-committees and individuals. Any question of administration or interpretation arising under the Preservation Plan shall be determined by the Committee (or its delegate) in its full discretion, and its decision shall be final and binding upon all parties.
| 12. | TAXES/WITHHOLDING |
The Corporation shall have the right to withhold taxes from Preservation Plan benefit payments to the extent it reasonably determines such withholding to be required by law.
| 13. | GOVERNING LAW |
The Preservation Plan shall be construed, administered and enforced in accordance with the Employee Retirement Income Security Act of 1974, as amended (“ERISA”), and to the extent not preempted thereby, the laws of the State of Connecticut (disregarding its choice-of-law rules).
| 14. | AMENDMENT AND DISCONTINUANCE |
The Corporation expects to continue the Preservation Plan indefinitely, but reserves the right, by action of the Committee, to amend or discontinue the Preservation Plan at any time, provided, however, that no such action shall decrease any benefits accrued under the Preservation Plan as of the date of such action. Although the benefits accrued under the Preservation Plan are not subject to the restrictions imposed by Section 204(g) of ERISA, the proviso in the preceding sentence shall be construed in a manner consistent with Section 204(g) of ERISA. As a result, the proviso referred to in the preceding sentence imposes restrictions identical with the restrictions that would be imposed on the Preservation Plan if the Preservation Plan were subject to Section 204(g) of ERISA.
| 15. | SUCCESSORS |
The provisions of the Preservation Plan shall bind and inure to the benefit of the Corporation, and its successors and assigns. The term successors shall include any corporate or other business entity that by merger, consolidation, purchase or otherwise acquires all or substantially all of the business and assets of the Corporation and successors of any such Corporation or other entity.
| 16. | BENEFIT CLAIMS PROCEDURE |
| (a) | The Plan Administrator shall establish and communicate procedures for Participants to obtain forms required to effect elections and designations under the Plan. The Plan Administrator may establish a telephonic communication system to facilitate the administration of the Plan and to provide information to Participants, provided that any estimate of a Participant’s current or projected accrued benefit shall in no event be binding on the Plan Administrator in the event of any discrepancy between such estimate and a Participant’s actual Accrued Benefit, which, in all cases, shall control. Upon notification of the death of any Participant while in the employment of the Employer, the Plan Administrator may initiate any claim on behalf of the Spouse, Contingent Annuitant, or Beneficiary. |
| (b) | If a claim is denied, the Plan Administrator or its designated agent shall give the claimant notice in writing of such denial, which notice shall set forth (i) the specific reason(s) for the denial; (ii) specific reference to pertinent Plan provisions on which the denial is based; (iii) a description of any additional material or information necessary for the claimant to perfect the claim and an explanation of why such materials or information are necessary; and (iv) an explanation of the Plan’s claim review procedure. |
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| (c) | Within 60 days after receipt of the notice of denial described above, the claimant may request a review of such denial by filing a notice of appeal in writing with the Benefit Claims Appeal Committee (the “Benefits Appeal Committee”). Such notice must set forth all relevant factors upon which the appeal is based. The Benefits Appeal Committee shall decide the issues raised by the appeal, either with or without holding a hearing, and shall issue to the claimant a written notice setting forth its decision and the reasons for the decision. The Benefits Appeal Committee’s decision shall be made not more than 60 days after it has received the claimant’s request for review, unless the Benefits Appeal Committee determines that special circumstances require an extension of time and so notifies the claimant, in which case a decision shall be made not more than 120 days after it has received the request for review. The Benefits Appeal Committee shall have the greatest discretion permitted by law in making decisions pursuant to this Section 16. All interpretations, determinations, and decisions of the Benefits Appeal Committee in respect of any claim shall be conclusive and binding upon all persons having or claiming to have any interest or right under the Plan. |
Appendix B
This Appendix B sets forth the United Technologies Corporation Pension Replacement Plan, as in effect on December 31, 2004 (“Prior Replacement Plan”), and as modified thereafter from time to time in a manner that does not constitute a “material modification” for purposes of Section 409A. Amounts that were earned and vested (within the meaning of Section 409A) prior to January 1, 2005, and any subsequent increases in these amounts that are permitted to be treated as grandfathered benefits under Section 409A, are generally subject to and shall continue to be governed by the terms of this Prior Replacement Plan.
UNITED TECHNOLOGIES CORPORATION
PENSION REPLACEMENT PLAN
AS AMENDED AND RESTATED EFFECTIVE JANUARY 1, 1996
| 1. | INTRODUCTION & PURPOSE |
The United Technologies Corporation Pension Replacement Plan (the “Replacement Plan”) is maintained as an unfunded plan solely for the purpose of providing retirement benefits in excess of the retirement and survivor benefits that may be paid from the United Technologies Corporation Employee Retirement Plan (or any other tax-qualified defined benefit retirement plan sponsored by the Corporation) (the “Qualified Retirement Plan”) and the United Technologies Corporation Pension Preservation Plan as a result of any reduction in a Participant’s compensation that would otherwise be utilized in computing accrued benefits under such Plans where the reduction results from participation in the Corporation’s Deferred Compensation Plan.
The capitalized terms used herein shall have the meanings given to them by the United Technologies Corporation Employee Retirement Plan unless the context clearly indicates otherwise.
| 2. | EFFECTIVE DATE |
The Replacement Plan became effective on April 1, 1985 as the United Technologies Corporation Supplemental Plan, which was subsequently renamed the United Technologies Corporation Pension Replacement Plan. This amendment and restatement of the Replacement Plan shall be effective January 1, 1996, except to the extent otherwise specifically provided herein.
| 3. | ELIGIBILITY |
An employee of United Technologies Corporation (the “Corporation”) or an affiliate thereof who is a Participant in the Qualified Retirement Plan and the Pension Preservation Plan (if applicable) shall be eligible to participate in the Replacement Plan if and to the extent the Participant’s Accrued Benefit under the Qualified Retirement Plan or the Pension Preservation Plan is reduced as a result of participation in the United Technologies Corporation Deferred Compensation Plan or other similar deferred compensation arrangement if the Corporation authorizes the replacement of pension benefits in such arrangement (the “Deferred Compensation Plan”). In no event shall any person who is not entitled to benefits under the Qualified Retirement Plan be eligible for retirement benefits or survivor benefits under the Replacement Plan. An employee of the Corporation or an affiliate thereof who is eligible for retirement benefits under the Replacement Plan shall be referred to herein as a “Participant.”
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| 4. | DETERMINATION OF REPLACEMENT PLAN BENEFIT |
The amount of the retirement benefit or survivor benefit payable from the Replacement Plan to or in respect of a Participant shall equal the excess, if any, of (a) over (b), where
| (a) | equals the retirement benefit or survivor benefit that would be paid to such Participant (or on his or her behalf to his Contingent Annuitant or Beneficiary) under the Qualified Retirement Plan and the Pension Preservation Plan if the provisions of such Plans were administered by taking into account any compensation that was deferred under the Deferred Compensation Plan; and |
| (b) | equals the retirement benefit or survivor benefit payable to such Participant (or on his or her behalf to his or her Contingent Annuitant or Beneficiary) under the Qualified Retirement Plan and the Pension Preservation Plan. |
| 5. | FORM OF PRESERVATION PLAN BENEFIT |
| (a) | The Plan Administrator shall determine, as of the earlier of the Participant’s Retirement Date or the Participant’s date of death, that portion of the Participant’s total retirement benefit or survivor benefit that is to be paid under the Replacement Plan. The Replacement Plan retirement benefit or survivor benefit shall be paid to the Participant, or on his or her behalf to any Contingent Annuitant or Beneficiary (as designated under the Qualified Retirement Plan), in the form of distribution that applies to the benefit payments made to, or on behalf of, the Participant under the Qualified Retirement Plan unless the Participant has made a timely election to receive his or her Replacement Plan retirement benefit in a single lump-sum payment or in a series of 2 to 10 annual installment payments in accordance with this Section 5. |
| (b) | If— |
| (i) | the Participant qualifies for an Early Retirement Annuity or a Normal Retirement Annuity or satisfies the Rule of 65 under Section 5.4 of the United Technologies Corporation Employee Retirement Plan (or dies after qualifying for an Early Retirement Annuity or a Normal Retirement Annuity or satisfying such Rule of 65, but before the date as of which retirement benefits under the Qualified Retirement Plan are scheduled to begin), and |
| (ii) | terminates, or retires from, employment with the Corporation and its affiliates after December 31, 1995, |
the Participant may elect, in accordance with Section 5(c) hereof, to have his or her Replacement Plan retirement benefit or survivor benefit paid in a lump sum or in annual installments, payable (or commencing) as of the Participant’s Retirement Date. Subject to the provisions of Section 5(c) hereof, a Participant may revoke any such election at any time. A Participant shall have no right under the Replacement Plan to have his or her Qualified Retirement Plan benefit paid in a lump sum or in annual installments. Distributions from the Qualified Retirement Plan shall be governed solely by the terms of the Qualified Retirement Plan.
| (c) | An election to have a lump-sum or installment distribution paid pursuant to Section 5(b) hereof (or a revocation of any such election) shall be disregarded unless it is filed at least one year before the Participant’s Retirement Date (or, if earlier, the first day of the month next following the Participant’s date of death), except that |
| (i) | If such an election or revocation is filed on or before October 30, 1996, the election or revocation shall be given effect only if the Participant consents to a distribution (or the commencement of distributions) under the Replacement Plan as of a date occurring on or after January 1,1997; and |
| (ii) | If such an election or revocation is filed on or after November 1, 1996, and on or before December 31, 1996, the election or revocation shall be given effect only if the Participant consents to a distribution (or the commencement of distributions) under the Replacement Plan as of a date occurring on or after April 1, 1997. |
| (d) | If a Participant elects to have his or her Replacement Plan benefit paid in the form of a single lump-sum or annual installment distribution, the Actuarially Equivalent present value of the Replacement Plan retirement benefit or survivor benefit shall be determined using the 1983 Group Annuity Mortality Table and an interest assumption equal to the average yield for tax-free municipal bonds of 10-year maturities, averaged over the prior 5 calendar years. For purposes of computing this interest assumption, the Actuary shall utilize the Lehman Bros. Municipal Bond Index, averaging the published yield for 10-year maturities (credit quality AA or above) on the last business day of the year over the most recent 5 consecutive full calendar year period. This rate shall be adjusted annually at the beginning of each calendar year. |
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| (e) | The payment of a lump sum or annual installment distribution in accordance with this Section 5 shall be in full satisfaction of all of the Corporation’s obligations with respect to the Participant under the Replacement Plan. |
| 6. | DEATH BENEFITS |
A Participant who has made an election to receive Replacement Plan benefits in a lump sum or annual installments in accordance with Section 5 herein and such election is effective as of the date of the Participant’s death shall have survivor benefits paid to his or her Replacement Plan Beneficiary as follows. If death occurs prior to age 55, the Replacement Plan benefits shall be paid in a lump sum payment as of the date the Participant would have attained his or her 55th birthday. If death occurs after retirement but before all annual installments have been paid, the remaining installments will be paid to his or her Beneficiary as scheduled unless the estate of the Participant is the Beneficiary in which case the commuted value of the remaining payments will be paid in a lump sum.
If no election to receive Replacement Plan benefits in a lump sum or installments is in effect as of the date of death, any survivor benefits will be paid in accordance with the distribution option in effect and to the Beneficiary or Contingent Annuitant designated under the Qualified Retirement Plan.
| 7. | FUNDING |
The Replacement Plan shall be maintained as an unfunded Plan that is not intended to meet the qualification requirements of Section 401 of the Code. Except in the event of a Change in Control of the Corporation (as described in Section 7 hereof), all benefits under the Replacement Plan shall be payable solely from the general assets of the Corporation. In this regard, the rights of each Participant, Contingent Annuitant and Beneficiary under the Replacement Plan with respect to his or her Preservation Plan retirement benefit or survivor benefit shall be those of a general unsecured creditor of the Corporation. No Participant, Contingent Annuitant or Beneficiary hereunder shall be entitled to receive any benefits payable under the Replacement Plan from the assets of the Qualified Retirement Plan, nor shall the Corporation undertake to set aside assets in trust or otherwise segregate assets to fund its obligations under the Replacement Plan except as provided in Section 7 hereof.
| 8. | CHANGE OF CONTROL |
In the event of a Change of Control of the Corporation, the Corporation shall immediately fully fund the value of all Accrued Benefits under the Replacement Plan, determined by the Actuary as of the date of the Change of Control. The required proceeds will be contributed to the United Technologies Corporation Pension Replacement Plan Retirement Security Trust. In addition, if the United Technologies Corporation Board of Directors Committee on Compensation and Executive Development takes any action under the United Technologies Corporation Long Term Incentive Plan (the “LTIP”) including, without limitation, the accelerated vesting or other adjustment to outstanding LTIP awards in anticipation of (i) a Change of Control (ii) an event, which if consummated, would constitute a Change of Control or (iii) any other significant change pertaining to the ownership of the Corporation, the Corporation shall then also immediately fund the United Technologies Corporation Pension Replacement Plan Retirement Security Trust. For purposes of this Section 7, “Change of Control” shall have the meaning given to that term under the LTIP.
| 9. | NONASSIGNABILITY |
No Participant, Contingent Annuitant or Beneficiary or any other person shall have the right to sell, assign, transfer, pledge, or otherwise encumber any interest in the Replacement Plan. All Replacement Plan benefits are unassignable and non-transferable and shall not be subject to attachment or seizure for the payment of any debts, judgments or other obligations. No Replacement Plan interest shall be transferred by operation of law in the event of the bankruptcy or insolvency of a Participant, Contingent Annuitant, or Beneficiary.
| 10. | NO CONTRACT OF EMPLOYMENT |
Participation in the Replacement Plan shall not be construed to constitute a direct or indirect contract of employment between the Corporation and the Participant. Nothing in the Replacement Plan shall be deemed to give a Participant the right to be retained in the service of the Corporation for any length of time. Participants, Contingent Annuitants and Beneficiaries shall have no rights against the Corporation resulting from participation in the Replacement Plan other than as specifically provided herein.
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| 11. | OPERATION AND ADMINISTRATION |
The Replacement Plan shall be administered by the Pension Administration and Investment Committee of United Technologies Corporation (the “Committee”). The Committee shall have the right to delegate its responsibilities hereunder to sub-committees and individuals. Any question of administration or interpretation arising under the Replacement Plan shall be determined by the Committee (or its delegate) in its full discretion, and its decision shall be final and binding upon all parties.
| 12. | TAXES/WITHHOLDING |
The Corporation shall have the right to withhold taxes from Replacement Plan benefit payments to the extent it reasonably determines such withholding to be required by law.
| 13. | GOVERNING LAW |
The Replacement Plan shall be construed, administered and enforced in accordance with the Employee Retirement Income Security Act of 1974, as amended (“ERISA”), and to the extent not preempted thereby, the laws of the State of Connecticut (disregarding its choice-of-law rules).
| 14. | AMENDMENT AND DISCONTINUANCE |
The Corporation expects to continue the Replacement Plan indefinitely, but reserves the right, by action of the Committee, to amend or discontinue the Replacement Plan at any time, provided, however, that no such action shall decrease any benefits accrued under the Replacement Plan as of the date of such action. Although the benefits accrued under the Replacement Plan are not subject to the restrictions imposed by Section 204(g) of ERISA, the proviso in the preceding sentence shall be construed in a manner consistent with Section 204(g) of ERISA. As a result, the proviso referred to in the preceding sentence imposes restrictions identical with the restrictions that would be imposed on the Replacement Plan if the Replacement Plan were subject to Section 204(g) of ERISA.
| 15. | SUCCESSORS |
The provisions of the Replacement Plan shall bind and inure to the benefit of the Corporation, and its successors and assigns. The term successors shall include any corporate or other business entity that by merger, consolidation, purchase or otherwise acquires all or substantially all of the business and assets of the Corporation, and successors of any such Corporation or other entity.
| 16. | BENEFIT CLAIMS PROCEDURE |
| (a) | The Plan Administrator shall establish and communicate procedures for Participants to obtain forms required to effect elections and designations under the Plan. The Plan Administrator may establish a telephonic communication system to facilitate the administration of the Plan and to provide information to Participants, provided that any estimate of a Participant’s current or projected accrued benefit shall in no event be binding on the Plan Administrator in the event of any discrepancy between such estimate and a Participant’s actual Accrued Benefit, which, in all cases, shall control. Upon notification of the death of any Participant while in the employment of the Employer, the Plan Administrator may initiate any claim on behalf of the Spouse, Contingent Annuitant, or Beneficiary. |
| (b) | If a claim is denied, the Plan Administrator or its designated agent shall give the claimant notice in writing of such denial, which notice shall set forth (i) the specific reason(s) for the denial; (ii) specific reference to pertinent Plan provisions on which the denial is based; (iii) a description of any additional material or information necessary for the claimant to perfect the claim and an explanation of why such materials or information are necessary; and (iv) an explanation of the Plan’s claim review procedure. |
| (c) | Within 60 days after receipt of the notice of denial described above, the claimant may request a review of such denial by filing a notice of appeal in writing with the Benefit Claims Appeal Committee (the “Benefits Appeal Committee”). Such notice must set forth all relevant factors upon which the appeal is based. The Benefits Appeal Committee shall decide the issues raised by the appeal, either with or without holding a hearing, and shall issue to the claimant a written notice setting forth its decision and the reasons for the decision. The |
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| Benefits Appeal Committee’s decision shall be made not more than 60 days after it has received the claimant’s request for review, unless the Benefits Appeal Committee determines that special circumstances require an extension of time and so notifies the claimant, in which case a decision shall be made not more than 120 days after it has received the request for review. The Benefits Appeal Committee shall have the greatest discretion permitted by law in making decisions pursuant to this Section 16. All interpretations, determinations, and decisions of the Benefits Appeal Committee in respect of any claim shall be conclusive and binding upon all persons having or claiming to have any interest or right under the Plan. |
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Exhibit 10.16
UTC BOARD OF DIRECTORS
DEFERRED STOCK UNIT PLAN
Deferred Restricted Stock Unit Award
[INSERT NAME OF DIRECTOR]
Under the UTC Board of Directors Deferred Stock Unit Plan, each Non-Employee Director of the Company receives, as of the date of election to the Board, a non-recurring award of deferred restricted stock units having a grant date value of $100,000, based on the closing price of UTC common stock on that date (the “Units”). This award is intended to promote a closer identity of interests between Non-Employee Directors and shareowners by providing Non-Employee Directors with an equity-based interest in the Company’s future performance.
The Units are subject to a restriction on transferability and may not be sold, assigned, pledged or transferred while such restriction remains in effect. However, once vested, you are the owner of such Units on the records of the Company. Your Unit balance will be credited with additional Units equivalent in value to the dividend paid on the corresponding number of shares of UTC Common Stock. The dividend equivalent Units will vest immediately but will otherwise be subject to the same transfer restrictions applicable to the initial Units.
The Units will vest in increments of 20 percent per year. The effective date of the grant of your Units will be . The first 20 percent will vest on the date of UTC’s next Annual Shareowner Meeting. An additional 20 percent will vest on the date of UTC’s Annual Meeting each succeeding year while you continue on the Board. At the time you retire or resign from the Board, your vested Units will be payable in cash in a lump sum. You may, however, elect to receive the value of your vested units following retirement or resignation in 10 or 15 annual installments by checking one of the two boxes below:
| ¨ | 15 annual installments |
| ¨ | 10 annual installments |
If you make or alter such election after you join the Board, you must do so at least one year prior to retiring or resigning from the Board, and your lump sum or installments will begin five years from the date the award would otherwise be scheduled for payment.
Any Units not vested as of the date you resign or retire from the Board will be forfeited without payment of any compensation to you. However, in the event of a “change of control” or a “restructuring event” as defined by the United Technologies Corporation 2005 Long Term Incentive Plan, or upon your death or your resignation from the Board due to disability, or if you retire or resign to accept full-time employment in public or charitable service, all Units that have not previously vested will immediately vest and be payable in cash. Please note, however, that the restriction on transferability continues in effect on vested Units while you remain a Director of UTC. Accordingly, by your acceptance of the Units, you agree that your vested Units will not be transferred by you prior to your retirement or resignation as a Director of UTC.
Deferred Restricted Stock Unit Award
(Continued)
Recognition of Ordinary Income Under U.S. Tax Law
For federal income tax purposes, you will be required to include in your income the amount of any cash paid to you following your departure from the Board. Additional Units credited as a result of dividend payments are likewise not included in your income until they are distributed to you.
The foregoing is only a brief summary of the federal income tax consequences of the Units. You are urged to consult your tax advisor for advice regarding your individual circumstances. UTC will report and withhold such income as required by state, federal or other applicable laws.
[Please confirm your agreement by faxing a signed and dated copy of this award statement to (860) 660-0250.]
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| Date |
| Please Return to: | Office of the Corporate Secretary United Technologies Corporation Fax: (860) 660-0250 |
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Exhibit 10.30
UNITED TECHNOLOGIES CORPORATION
COMPANY AUTOMATIC CONTRIBUTION EXCESS PLAN
January 1, 2010
ARTICLE I – PREAMBLE
United Technologies Corporation (the “Corporation”) hereby establishes the United Technologies Corporation Company Automatic Contribution Excess Plan (“CACEP” or the “Plan”) effective January 1, 2010 for the benefit of certain employees covered by the Company Automatic Feature (the “CAF”) of the United Technologies Corporation Employee Savings Plan (the “Qualified Savings Plan”). The purpose of the CACEP is to provide for the accrual of benefits which are supplemental to CAF benefits payable under the Qualified Savings Plan. CACEP benefits are accrued with respect to compensation that is not taken into account under the Qualified Savings Plan due to compensation limitations imposed by Section 401(a)(17) of the Internal Revenue Code of 1986, as amended (the “IRS Compensation Limit”) or due to the Participant’s elective deferral of compensation.
ARTICLE II – DEFINITIONS
Unless otherwise indicated, capitalized terms herein shall have the same meaning ascribed under the Qualified Savings Plan.
Beneficiary means the person, persons or entity designated on an electronic or written form by the Participant to receive the value of his or her Plan Account in the event of the Participant’s death in accordance with the terms of this Plan. If the Participant fails to designate a Beneficiary, or the Beneficiary (and any contingent Beneficiary) does not survive the Participant, the value of the Participant’s Plan Account will be paid to the estate of the Participant.
Benefit Reduction Contribution means a Contribution by the Corporation to the Participant’s Plan Account to restore the reduction in the Company Automatic Contribution credited to a Participant’s Plan Account as a result of the reduction of such Participant’s Eligible Compensation due to an elective deferral of compensation by the Participant under the United Technologies Deferred Compensation Plan.
Code means the Internal Revenue Code of 1986, as amended from time to time, and any successor thereto. Reference to any section of the Internal Revenue Code shall include any final regulations or other applicable guidance.
Committee means the United Technologies Corporation Deferred Compensation Committee, which is responsible for the administration of the Plan. The Corporation’s Pension Administration Committee shall appoint the Committee’s members.
Company Automatic Contribution or Contribution means the age-graded Contribution credited to the Plan by the Corporation on behalf of the Participant in accordance with Article V.
Corporation means the United Technologies Corporation.
Default Investment Option means the Investment Fund designated by the Plan or selected by the Committee on behalf of all Participants at the time they first become eligible to participate in the Plan. The Default Investment Option shall be established annually and shall be the Credited Interest Fund, unless otherwise determined at the sole discretion of the Committee.
Disability means permanent and total disability as determined under the Corporation’s long-term disability plan applicable to the Participant, or if there is no such plan applicable to the Participant, “Disability” means a determination of total disability by the Social Security Administration; provided that, in either case, the Participant’s condition also qualifies as a “Disability” for purposes of Section 409A(a)(2)(C) of the Code.
Election Form means the form provided by the Committee to Participants electronically or in paper form for the purpose of specifying the method of distribution and/or the percentage allocation among the Investment Funds with respect to a Participant’s Plan Account.
Eligible Compensation means Pensionable Earnings in excess of the IRS Compensation Limit for any Plan Year.
Employee means an employee of the Corporation and or of certain subsidiaries and affiliates of the Corporation, but excluding any employee who is included in a different tax qualified savings plan or is not eligible to participate in the Qualified Savings Plan pursuant to the terms of a collective bargaining agreement between employee representatives and a UTC Company (a “Represented Employee”) unless such employee representatives and the UTC Company agree that the Represented Employees in such unit shall be eligible to participate in the Plan.
Investment Fund means a hypothetical fund that tracks the value of an investment option offered under the Qualified Savings Plan or the UTC Deferred Compensation Plan. Investment Funds offered under the SRP may be changed from time to time by the Committee and shall be valued in the manner set forth in Section 6.4. As of the effective date of this Plan, Investment Funds will include: the Credited Interest Fund as offered under the UTC Deferred Compensation Plan, and the following investment options offered under the Qualified Savings Plan; the Vanguard 500 Index Fund; Global Index Fund, US Value Index Fund; US Growth Index Fund; US Midcap Index Fund; US Small Company Index Fund; and International Equity Fund, or such other investment options as may be established or changed by the Committee from time to time. The value of Participants’ Accounts shall be adjusted to replicate the performance of the applicable Investment Funds. Amounts credited to any Investment Fund do not result in the investment in actual assets corresponding to the Investment Fund.
IRS Compensation Limit means the limitation imposed by Section 401(a)(17) of the Internal Revenue Code of 1986, as amended.
Participant means an eligible Employee (i) who is a Participant in the Qualified Savings Plan; (ii) who qualifies for the CAF of the Qualified Savings Plan; and (iii) whose annual Pensionable Earnings for a Plan Year exceed the limit of IRC Section 401(a)(17).
Pensionable Earnings means the total compensation paid with respect to a Plan Year by a UTC Company to a Participant for services rendered to a UTC Company, before any Tax-Deferred Contribution Election or any election under Section 125 of the Code, including performance related awards, but excluding: other awards; foreign service premiums and allowances; long-term incentive compensation; stock option benefits; reimbursements or other payments related to relocation expenses; contributions to employee benefit plans including reimbursements or payments in lieu thereof, amounts credited to a Participant under a non-qualified deferred compensation plan; severance pay; and pay in lieu of vacation
Plan means the United Technologies Corporation Company Automatic Contribution Excess Plan, as amended from time to time.
Plan Account means an account maintained on behalf of a Participant for the purpose of crediting Company Automatic Contributions.
Plan Year means the calendar year.
Separation from Service means a Participant’s termination of employment with all UTC Companies, other than by reason of death. A Separation from Service will be deemed to occur where the Participant and the UTC Company that employs the Participant reasonably anticipate that the bona fide level of services the Participant will perform (whether as an employee or as an independent contractor) for UTC Companies will be permanently reduced to a level that is less than thirty-seven and a half percent (37.5%) of the average level of bona fide services the Participant performed during the immediately preceding 36 months (or the entire period the Participant has provided services if the Participant has been providing services to UTC Companies for less than 36 months). A Participant shall not be considered to have had a Separation from Service as a result of a transfer from one UTC Company to another UTC Company.
Specified Employee means each of the fifty (50) highest-paid officers and other executives of the Corporation and its Subsidiaries, effective annually as of April 1st, based on wages subject to federal income tax withholding, and amounts that are excluded from taxable income by the employee’s election to make pre-tax contributions under a cafeteria plan, section 401(k) plan, or similar plan, determined for the preceding calendar year as provided in Treas. Reg. § 1.415(c)-2(d)(3). The term includes both U.S. and non-U.S. employees, and the compensation used to determine whether an employee is among the fifty (50) highest-paid officers and other executives shall be determined by treating non-U.S. compensation as if it had been earned in the U.S. by a U.S. citizen.
UTC Company means United Technologies Corporation or any entity controlled by or under common control with United Technologies Corporation within the meaning of Section 414(b) or (c) of the Code (but substituting “at least 20 percent” for “at least 80 percent” as the control threshold used in applying Sections 414(b) and (c)).
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ARTICLE III - ELIGIBILITY AND ENROLLMENT
Section 3.1 - Eligibility
Each Employee of a UTC Company who is a Participant in the Qualified Savings Plan and who qualifies for the CAF of the Qualified Savings Plan shall be eligible to participate in this Plan, if and to the extent, such Employee’s annual Pensionable Earnings for a Plan Year are in excess of the IRS Compensation Limit. In no event shall any person who is not entitled to CAF benefits under the Qualified Savings Plan be eligible for benefits under this Plan.
Section 3.2 - Enrollment
An eligible Participant will automatically be enrolled in the Plan within thirty (30) days of the pay date for which such Participant’s annual Pensionable Earnings exceed the IRS Compensation Limit (“Initial Enrollment Period”).
ARTICLE IV - PARTICIPANT ELECTIONS AND DESIGNATIONS
Section 4.1 - Distribution Election
A Participant must, on or before the election deadline established by the Committee, make an electronic or written election on the Election Form provided by the Committee to have the Participant’s Plan Account distributed in a lump sum or in two to fifteen annual installments. If no distribution election is made with respect to a Participant’s Plan Account, the distribution will be in a lump sum. In addition, any Benefit Reduction Contribution or Company Automatic Contribution based on compensation that a Participant earns after the Participant becomes eligible to participate in the Plan, but before the Participant makes a valid distribution election, shall be paid in a lump sum, or as otherwise provided in a change in distribution election made pursuant to Section 4.4.
Section 4.2 - Election Date
An electronic or written Election Form must be completed and submitted to the Committee during the Initial Enrollment Period, or such date as the Committee may specify. Except as provided below in Section 4.4 (Change in Distribution Election), the choices reflected on the Participant’s Election Form shall be irrevocable on the election deadline.
Section 4.3 - Investment Fund Allocations
A Participant’s Plan Account will be allocated to the Default Investment Option at the time a Participant first becomes eligible to participate in the Plan. Participants will be able to reallocate their existing Plan Account among the available Investment Funds as permitted by the Committee, generally twice per year in June and November. Such reallocations shall be in whole percentages and, unless otherwise specified by the Committee, shall be effective the first business day of July or the first business of day of January, as applicable.
Section 4.4 - Change in Distribution Election
A Participant may make a one-time irrevocable election to change the form of distribution for a Plan Account. A change to the form of distribution must meet all of the following requirements:
| (a) | The new election must be made at least twelve months prior to the date on which payments will commence under the current election and/or date of termination following attainment of age 50 (and the new election shall be ineffective if the payment commencement date under the current election occurs within twelve months after the date of the new election); |
| (b) | The new election will not take effect until at least twelve months after the date when the new election is submitted in a manner acceptable to the Committee; and |
| (c) | The new payment commencement date must be five years later than the date on which payments would commence under the current election. |
Section 4.5 - Investment Fund Allocation at Separation from Service
At Separation from Service, a Participant may reallocate his or her existing Plan Accounts to the Credited Interest Fund as permitted by the Committee, with respect to the period of time following the Separation from Service date and prior to the actual distribution date provided under Article VII.
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Section 4.6 - Designation of Beneficiary
Each Participant shall designate a Beneficiary for his or her Plan Account on an electronic or written form provided by the Committee. A Participant may change such designation on an electronic or written form acceptable to the Committee and will be effective on the date received by the Committee. Designations received after the date of the Participant’s death will not be effective. In the event that no Beneficiary designation is filed with the Committee before the Participant’s death, or if the Beneficiary (and any contingent Beneficiary) does not survive the Participant, the value of the Participant’s Plan Account will be paid to the estate of the Participant. If a Participant designates the Participant’s spouse as the Participant’s Beneficiary, that designation shall not be revoked or otherwise altered or affected by any: (a) change in the marital status of the Participant; (b) agreement between the Participant and such spouse; or (c) judicial decree (such as a divorce decree) affecting any rights that the Participant and such spouse might have as a result of their marriage, separation, or divorce; it being the intent of the Plan that any change in the designation of a Beneficiary hereunder may be made by the Participant only in accordance with the procedures set forth in this Section 4.6. In the event of the death of a Participant, distributions shall be made in accordance with Section 7.6.
ARTICLE V - COMPANY AUTOMATIC CONTRIBUTIONS
Section 5.1 - Contribution Amount
The Corporation will credit an age-graded Company Automatic Contribution to the Plan on behalf of each eligible Participant under the Plan. The Contribution shall be a percentage of the Participant’s Eligible Compensation based on the Participant’s age as of December 31 of the current Plan Year for which the Contribution is credited. The applicable percentages shall be as follows:
| Age as of December 31 |
Applicable Percentage |
||
| Under 30 |
3 | % | |
| 30-34 |
3.5 | % | |
| 35-39 |
4 | % | |
| 40-44 |
4.5 | % | |
| 45-49 |
5 | % | |
| 50+ |
5.5 | % |
Section 5.2 - Eligibility for Contribution
Eligibility for Contribution shall be determined annually. A Participant shall be eligible for a Company Automatic Contribution for a Plan Year, if and to the extent, such Participant’s annual Pensionable Earnings for the Plan Year are in excess of the IRS Compensation Limit.
Participants shall be immediately eligible to receive an allocation of Company Automatic Contributions for a Plan Year at the time such Participant’s annual Pensionable Earnings for the Plan Year are in excess of the IRS Compensation Limit and CAF contributions cease under the Qualified Savings Plan for the Plan Year.
Section 5.3 - Timing of Contribution
Allocation of Company Automatic Contributions shall generally be made to each Participant’s Plan Account on or immediately following each pay period, but no less frequently than once with respect to each Plan Year. The Corporation may in its sole discretion credit additional amounts to Participants’ Plan Accounts.
Section 5.4 - Vesting of Contributions
A Participant shall be vested in the value of Contributions credited to his or her Plan Account upon the first to occur of the following: participation in the Plan for two years; completion of three years of “Continuous Service” (as defined in the UTC Employee Retirement Plan as in effect on January 1, 2008), attainment of age 65, the death or disability of the Participant while employed by a UTC Company, the layoff of a Participant from a UTC Company due to lack of work, or the Participant’s entrance into the military service before completing two years of Plan participation. For purposes of this Section 5.4, a Participant’s date of disability shall be the first day of the fifth month (or such other month as may from time to time be applicable under the federal Social Security Act) prior to the month for which a Participant first receives a disability benefit under the Social Security Act.
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Section 5.5 - Annual Contribution Limitation
In no event shall the Company Automatic Contribution to any Participant’s Plan Account for any calendar year exceed 25% of annual earnings for such calendar year.
ARTICLE VI - PLAN ACCOUNTS
Section 6.1 - Accounts
A Plan Account will be established for each Participant. Company Automatic Contributions shall be allocated or reallocated among Investment Funds in accordance with the Plan terms and each Participant’s instructions in the manner set forth in Section 4.3.
Section 6.2 - Valuation of Credited Interest Fund
Company Automatic Contributions allocated to the Credited Interest Fund will be credited daily with a rate of interest equal to the average interest rate on 10-Year Treasury Bonds as of the last business day of each month from January through October in the calendar year prior to the calendar year in which the interest is credited, plus 1%. The Credited Interest rate shall in no event exceed 120% of the applicable federal rate as published by the IRS.
Section 6.3 - Valuation of Investment Funds
Company Automatic Contributions allocated to Investment Funds will be converted to the applicable Investment Fund units based on the closing share price of that Investment Fund as of date the Contribution is credited to the Participant’s applicable Investment Fund. The value of the units of an Investment Fund will fluctuate on each business day based on the performance of the applicable Investment Fund.
Section 6.4 - Crediting of Benefit Reduction Contribution
At the end of each Plan Year, the Committee will determine whether a Participant is eligible to receive a Benefit Reduction Contribution, and will credit any applicable Benefit Reduction Contribution to the affected Participant’s Plan Account as of the last business day of the Plan Year. Any such amounts will be allocated on a pro-rata basis to the Participant’s Investment Funds in accordance with the Participant’s Default Investment Option or current investment allocation election in effect for that Plan Year.
Section 6.5 - Reports to Participants
The Committee will provide or make available detailed information to Participants regarding the credited value of Plan Accounts, distribution elections, Beneficiary designations, and Investment Fund allocations, not less than once per year. Such information may be provided via electronic media as determined by the Committee.
ARTICLE VII - DISTRIBUTION OF PLAN ACCOUNT
Section 7.1 - Timing of Plan Distributions
Except as provided in Section 4.4 (concerning the five-year delay following a Change in Distribution Election), Section 7.4 (concerning Separation from Service before Attaining Age Fifty), and Section 7.5 (concerning distributions to Specified Employees), the value of a Participant’s Plan Account will be distributed (or begin to be distributed) to the Participant in April of the calendar year following the calendar year of the Participant’s Separation from Service.
Section 7.2 - Method of Distribution
Except as provided in Section 7.4 (concerning Separation from Service before Attaining Age Fifty) or in the following sentence (concerning Company Automatic Contributions and Benefit Reduction Contributions based on compensation earned before the Participant’s benefit distribution election), a Plan Account will be distributed to the Participant in a single lump-sum payment, or in a series of annual installment payments, in accordance with the Participant’s election on file. As provided in Section 4.1, any Benefit Reduction Contribution or Company Automatic Contribution based on compensation that a Participant earns after the Participant becomes eligible to participate in the Plan, but before the Participant makes a
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valid distribution election, shall be paid in a lump sum, or as otherwise provided in a change in distribution election made pursuant to Section 4.4. Annual installment distributions shall be payable to the Participant beginning as of the payment commencement date and continuing as of each anniversary of the payment commencement date thereafter until all installments have been paid. To determine the amount of each installment, the value of the Participant’s Plan Account on the payment date will be multiplied by a fraction, the numerator of which is one and the denominator of which is the remaining number of scheduled installments.
Section 7.3 - Form of Distribution
Plan Account distributions will be made in cash.
Section 7.4 - Separation from Service before Attaining Age Fifty
If a Participant’s Separation from Service occurs before the Participant attains age fifty (50), the full value of the Participant’s Plan Account will be distributed to the Participant in a lump-sum payment in April of the calendar year following the calendar year of the Participant’s Separation from Service (or, if the Participant is a Specified Employee at the time of his or her Separation from Service, on the date provided in Section 7.5, below, if later) regardless of the distribution option elected and regardless of any change in the distribution election.
If a Participant is re-employed following a Separation from Service, the Participant’s age at the time of the Participant’s first Separation from Service will determine how the Participant’s Plan Accounts at the time of the first Separation from Service are distributed. If the Participant accumulates any additional contributions after the Participant is re-hired, the Plan shall separately account for the additional contributions (and related investment gains or losses), and the Participant’s age at the time of the Participant’s second Separation from Service will determine how the additional amounts are distributed.
Section 7.5 - Separation from Service of Specified Employees
Distributions to Specified Employees will not be made or commence earlier than the first day of the seventh month following the date of Separation from Service. All Plan Accounts shall continue to accrue hypothetical investment gains and losses as provided in Article VI until the distribution date.
Section 7.6 - Distribution in the Event of Death
In the event of the death of a Participant before the Participant’s Plan Account has been fully distributed, the full remaining value of the Participant’s Plan Account will be distributed to the designated Beneficiary or the Participant’s estate in a lump sum on the first business day of the third month following the Participant’s death.
Section 7.7 - Accelerated Distribution in the Case of an Unforeseeable Emergency
| (a) | Unforeseeable Emergency. The Committee may, upon a Participant’s written application, agree to an accelerated distribution of some or all of the value of a Participant’s Plan Account upon the occurrence of an unforeseeable emergency. An “unforeseeable emergency” is a severe financial hardship to the Participant resulting from (1) an illness or accident of the Participant, the Participant’s spouse, the Participant’s Beneficiary, or the Participant’s dependent (as defined in IRC Section 152, without regard to Section 152(b)(1), (b)(2), and (d)(1)(B)); (2) loss of the Participant’s property due to casualty; or (3) other similar extraordinary and unforeseeable circumstances arising as a result of events beyond the control of the Participant. Whether a Participant is faced with an unforeseeable emergency permitting a distribution is to be determined based on the relevant facts and circumstances of each case. Acceleration will not be granted if the emergency is or may be relieved through reimbursement or compensation from insurance or otherwise, or by liquidation of the Participant’s assets (to the extent the liquidation of such assets would not cause severe financial hardship). |
| (b) | Amount of Distribution Permitted Upon an Unforeseeable Emergency. Distributions on account of an unforeseeable emergency, as defined in Section 7.7(a), shall be limited to the amount reasonably necessary to satisfy the emergency need. Such amount may include amounts necessary to pay any Federal, state, local, or foreign income taxes or penalties reasonably anticipated to result from the distribution. |
| (c) | The Committee will determine from which Investment Funds hardship distributions will be made. Any Participant who is an officer or director of the Corporation within the meaning of Section 16 of the Securities Exchange Act of 1934 is not eligible for distributions on account of unforeseeable emergency. |
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Section 7.8 - Disability
In the event of the Disability of a Participant that qualifies as a “Separation from Service” for purposes of Section 409A of the Code, the Participant’s Plan Accounts will be distributed in accordance with the Participant’s elections on file.
Section 7.9 Administrative Adjustments in Payment Date
A payment is treated as being made on the date when it is due under the Plan if the payment is made on the due date specified by the Plan, or on a later date that is either (a) in the same calendar year (for a payment whose specified due date is on or before September 30), or (b) by the 15th day of the third calendar month following the date specified by the Plan (for a payment whose specified due date is on or after October 1). A payment also is treated as being made on the date when it is due under the Plan if the payment is made not more than 30 days before the due date specified by the Plan. In no event will a payment to a Specified Employee be made or commence earlier than the first day of the seventh month following the date of Separation from Service. A Participant may not, directly or indirectly, designate the taxable year of a payment made in reliance on the administrative rules in this Section 7.9.
ARTICLE VIII - AMENDMENT AND TERMINATION OF PLAN
Section 8.1 - Amendment
The Corporation may, at any time, amend the Plan in whole or in part, provided that no amendment may decrease the value of any Plan Accounts as of the date of such amendment. In the event of any change in law or regulation relating to the Plan and the tax treatment of Plan Accounts, the Plan shall, without further action by the Committee, be deemed to be amended to comply with any such change in law or regulation effective as of the first date necessary to prevent the taxation, constructive receipt or deemed distribution of Plan Accounts prior to the date Plan Accounts would be distributed under the provisions of Article VII.
Section 8.2 - Plan Suspension and Termination
| (a) | The Corporation’s Pension Administration Committee, may, at any time, suspend or terminate the Plan if, in its sole judgment, the continuance of the Plan, the tax, accounting, or other effects thereof, or potential payments thereunder would not be in the best interest of the Corporation or for any other reason. |
| (b) | In the event of the suspension of the Plan, no additional contributions shall be made under the Plan. All previous contributions shall be distributed in accordance with the otherwise applicable provisions of the Plan and the applicable elections on file. |
| (c) | Upon the termination of the Plan with respect to all Participants, and the termination of all arrangements sponsored by the Corporation or its affiliates that would be aggregated with the Plan under Section 409A of the Code (“Section 409A”), the Corporation shall have the right, in its sole discretion, and notwithstanding any elections made by the Participant, to pay the Participant’s Plan Account in a lump sum, to the extent permitted under Section 409A. All payments that may be made pursuant to this Section 8.2(c) shall be made no earlier than the thirteenth month and no later than the twenty-fourth month after the termination of the Plan. The Corporation may not accelerate payments pursuant to this Section 8.2(c) if the termination of the Plan is proximate to a downturn in the Corporation’s financial health within the meaning of Treas. Reg. section 1.409A-3(j)(4)(ix)(C)(1). If the Corporation exercises its discretion to accelerate payments under this Section 8.2(c), it shall not adopt any new arrangement that would have been aggregated with the Plan under Section 409A within three years following the date of the Plan’s termination. |
Section 8.3 - No Consent Required
The consent of any Participant, Beneficiary, or other person shall not be required with respect to any amendment, suspension, or termination of the Plan.
ARTICLE IX - GENERAL PROVISIONS
Section 9.1 - Unsecured General Creditor
The Corporation’s obligations under the Plan constitute an unfunded and unsecured promise to pay money in the future. Participants’ and Beneficiaries’ rights under the Plan are solely those of a general unsecured creditor of the Corporation. No assets will be placed in trust, set aside or otherwise segregated to fund or offset liabilities in respect of the Plan or Participants’ Plan Accounts.
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Section 9.2 - Nonassignability
No Participant or Beneficiary or any other person shall have the right to sell, assign, transfer, pledge, or otherwise encumber any interest in the Plan. All Plan Accounts and the rights to all payments are unassignable and non-transferable. Plan Accounts or payment hereunder, prior to actual payment, will not be subject to attachment or seizure for the payment of any debts, judgments or other obligations. Plan Accounts or other Plan benefit will not be transferred by operation of law in the event of a Participant’s or any Beneficiary’s bankruptcy or insolvency.
Section 9.3 - No Contract of Employment
Participation in the Plan shall not be construed to constitute a direct or indirect contract of employment between any UTC Company and any Participant. Participants and Beneficiaries will have no rights against any UTC Company resulting from participation in the Plan other than as specifically provided herein. Nothing in the Plan shall be deemed to give a Participant the right to be retained in the service of any UTC Company for any length of time or to interfere with the right of any UTC Company to terminate a Participant’s employment.
Section 9.4 - Governing Law
The provisions of the Plan will be construed and interpreted according to the laws of the State of Connecticut, to the extent not preempted by federal law.
Section 9.5 - Validity
If any provision of the Plan is held to be illegal or invalid for any reason, the remaining provisions of the Plan will be construed and enforced as if such illegal and invalid provision had never been inserted herein.
Section 9.6 - Notice
Any notice or filing required or permitted to be given to the Committee under the Plan shall be sufficient if sent by first-class mail, to the United Technologies Corporation Deferred Compensation Committee, 1 Financial Plaza, Hartford, Connecticut 06101, Attn: Director, Compensation, MS-504. Any notice or filing required or permitted to be given to any Participant or Beneficiary under the Plan shall be sufficient if provided either electronically, hand-delivered, or mailed to the address (or email address, as the case may be) of the Participant or Beneficiary then listed on the records of the Corporation. Any such notice will be deemed given as of the date of delivery or, if delivery is made by mail, as of the date shown on the postmark or email system.
Section 9.7 - Successors
The provisions of the Plan shall bind and inure to the benefit of the Corporation and its successors and assigns. The term successors as used herein shall include any corporate or other business entity, which by merger, consolidation, purchase or otherwise acquires all or substantially all of the business and assets of the Corporation, and successors of any such corporation or other business entity.
Section 9.8 - Incompetence
If the Committee determines, upon evidence satisfactory to the Committee, that any Participant or Beneficiary to whom a benefit is payable under the Plan is unable to care for his or her affairs because of illness or accident, any payment due (unless prior claim therefore shall have been made by a duly authorized guardian or other legal representative) may be paid, upon appropriate indemnification of the Committee and the Corporation, to the spouse of the Participant or other person deemed by the Committee to have incurred expenses for the benefit of and on behalf of such Participant or Beneficiary. Any such payment from a Participant’s Plan Account shall be a complete discharge of any liability under the Plan with respect to the amount so paid.
Section 9.9 - Section 409A Compliance
To the extent that rights or payments under this Plan are subject to Section 409A of the Internal Revenue Code, the Plan shall be construed and administered in compliance with the conditions of Section 409A and regulations and other guidance issued pursuant to Section 409A for deferral of income taxation until the time the compensation is paid. Any
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distribution election that would not comply with Section 409A of the Code shall not be effective for purposes of this Plan. To the extent that a provision of this Plan does not comply with Section 409A of the Code, such provision shall be void and without effect. The Corporation does not warrant that the Plan will comply with Section 409A of the Code with respect to any Participant or with respect to any payment. In no event shall any UTC Company; any director, officer, or employee of a UTC Company (other than the Participant); or any member of the Committee be liable for any additional tax, interest, or penalty incurred by a Participant or Beneficiary as a result of the Plan’s failure to satisfy the requirements of Section 409A of the Code, or as a result of the Plan’s failure to satisfy any other requirements of applicable tax laws.
Section 9.10 Withholding Taxes
The Committee may make any appropriate arrangements to deduct from all Contributions, vested Plan Accounts and distributions under the Plan any taxes that the Committee reasonably determines to be required by law to be withheld from such credits and payments.
ARTICLE X - ADMINISTRATION AND CLAIMS
Section 10.1 - Plan Administration
The Committee shall be solely responsible for the administration and operation of the Plan. The Committee shall have full and exclusive authority and discretion to interpret the provisions of the Plan and to establish such administrative procedures as it deems necessary and appropriate to carry out the purposes of the Plan.
Any person claiming a benefit, requesting an interpretation or ruling under the Plan, or requesting information under the Plan shall present the request in writing to the Committee at United Technologies Corporation, 1 Financial Plaza, Hartford, Connecticut 06101, Attn: Deferred Compensation Committee. The Committee shall respond in writing as soon as practicable.
Section 10.2 - Claim Procedures
A Participant or Beneficiary who believes that he or she has been denied a benefit to which he or she is entitled under the Plan (referred to in this Section 10.2 as a “Claimant”) may file a written request with the Committee setting forth the claim. The Committee shall consider and resolve the claim as set forth below.
| (a) | Upon receipt of a claim, the Committee shall advise the Claimant that a response will be forthcoming within 90 days. The Committee may, however, extend the response period for up to an additional 90 days for reasonable cause, and shall notify the Claimant of the reason for the extension and the expected response date. The Committee shall respond to the claim within the specified period. |
| (b) | If the claim is denied in whole or part, the Committee shall provide the Claimant with a written decision, using language calculated to be understood by the Claimant, setting forth (1) the specific reason or reasons for such denial; (2) the specific reference to relevant provisions of this Plan on which such denial is based; (3) a description of any additional material or information necessary for the Claimant to perfect his or her claim and an explanation why such material or such information is necessary; (4) appropriate information as to the steps to be taken if the Claimant wishes to submit the claim for review; (5) the time limits for requesting a review of the claim; and (6) the Claimant’s right to bring an action for benefits under Section 502(a) of ERISA. |
| (c) | Within 60 days after the Claimant’s receipt of the written decision denying the claim in whole or in part, the Claimant may request in writing that the Committee review the determination. The Claimant or his or her duly authorized representative may, but need not, review the relevant documents and submit issues and comment in writing for consideration by the Committee. If the Claimant does not request a review of the initial determination within such 60-day period, the Claimant shall be barred from challenging the determination. |
| (d) | Within 60 days after the Committee receives a request for review, it will review the initial determination. If special circumstances require that the 60-day time period be extended, the Committee will so notify the Claimant and will render the decision as soon as possible, but no later than 120 days after receipt of the request for review. |
| (e) | All decisions on review shall be final and binding with respect to all concerned parties. The decision on review shall set forth, in a manner calculated to be understood by the Claimant, (1) the specific reasons for the decision, including references to the relevant Plan provisions upon which the decision is based; (2) the Claimant’s right to receive, upon request and free of charge, reasonable access to and copies of all documents, records, and other information, relevant to his or her benefits; and (3) the Claimant’s right to bring an action for benefits under Section 502(a) of ERISA. |
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CERTAIN REGULATORY MATTERS
The Plan is subject to the Employee Retirement Income Security Act of 1974, as amended (“ERISA”). Because the Plan is an unfunded plan maintained by an employer primarily for the purpose of providing deferred compensation for a select group of management or highly compensated employees, the Plan is exempt from most of ERISA’s requirements. Although the Plan is subject to Part 1 (Reporting and Disclosure) and Part 5 (Administration and Enforcement) of Title I, Subtitle B of ERISA, the Department of Labor has issued a regulation that exempts the Plan from most of ERISA’s reporting and disclosure requirements.
TO WHOM SHOULD QUESTIONS CONCERNING THE PLAN BE DIRECTED?
All questions concerning the operation of the Plan (including information concerning the administrators of the Plan) should be directed to:
Director, Compensation
United Technologies Corporation
1 Financial Plaza, MS 504
Hartford, Connecticut 06101
Telephone: 860-728-6381
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Exhibit 10.31
UNITED TECHNOLOGIES CORPORATION
SAVINGS RESTORATION PLAN
January 1, 2010
ARTICLE I - PREAMBLE
United Technologies Corporation (the “Corporation”) hereby establishes the United Technologies Corporation Savings Restoration Plan (“SRP” or the “Plan”) effective January 1, 2010 for the benefit of eligible employees of the Corporation and certain subsidiaries and affiliates of the Corporation (the “Employees”). The purpose of the SRP is to offer Employees the opportunity to defer a portion of their compensation in excess of the limitation imposed by Section 401(a)(17) of the Internal Revenue Code of 1986, as amended (the “IRS Compensation Limit”) and to accrue benefits which are not provided under the United Technologies Corporation Employee Savings Plan (the “Qualified Savings Plan”) due to limitations imposed by Section 415 of the Internal Revenue Code or the IRS Compensation Limit.
The SRP shall constitute a “parallel excess plan” within the meaning of the New York Stock Exchange listing requirements. All or substantially all Employees who participate in the Qualified Savings Plan whose annual pensionable earnings are in excess of the IRS Compensation Limit are eligible to participate in the SRP under substantially similar terms and conditions as the Qualified Savings Plan, except for the elimination of specified limitations on contributions and benefits under the IRC. The SRP shall be administered and construed to effectuate the foregoing intent.
ARTICLE II - DEFINITIONS
Unless otherwise indicated, capitalized terms herein shall have the same meaning ascribed under the Qualified Savings Plan.
Beneficiary means the person, persons or entity designated on an electronic or written form by the Participant to receive the value of his or her Plan Accounts in the event of the Participant’s death in accordance with the terms of this Plan. If the Participant fails to designate a Beneficiary, or the Beneficiary (and any contingent Beneficiary) does not survive the Participant, the value of the Participant’s Plan Accounts will be paid to the estate of the Participant.
Code means the Internal Revenue Code of 1986, as amended from time to time, and any successor thereto. Reference to any section of the Internal Revenue Code shall include any final regulations or other applicable guidance.
Committee means the United Technologies Corporation Deferred Compensation Committee, which is responsible for the administration of the Plan. The Corporation’s Pension Administration Committee shall appoint the Committee’s members.
Corporation means the United Technologies Corporation.
Deferral Period means the period prior to the receipt of Eligible Compensation deferred hereunder.
“Disability” means permanent and total disability as determined under the Corporation’s long-term disability plan applicable to the Participant, or if there is no such plan applicable to the Participant, “Disability” means a determination of total disability by the Social Security Administration; provided that, in either case, the Participant’s condition also qualifies as a “disability” for purposes of Section 409A(a)(2)(C) of the Code.
Election Form means the enrollment form provided by the Committee to Participants electronically or in paper form for the purpose of deferring Eligible Compensation under the Plan. Each Participant’s Election Form must specify the percentage of Eligible Compensation to be deferred with respect to the following calendar year; the percentage allocation among the Investment Funds with respect to the Participant Contribution Account; and if not previously elected for the Plan Accounts, the method of distribution.
Eligible Compensation means Pensionable Earnings in excess of the IRS Compensation Limit for any Plan Year.
Employee means an employee of the Corporation or of certain subsidiaries and affiliates of the Corporation, but excluding any employee who is included in a different tax qualified savings plan or is not eligible to participate in the Qualified Savings Plan pursuant to the terms of a collective bargaining agreement between employee representatives and a UTC Company (a “Represented Employee”) unless such employee representatives and the UTC Company agree that the Represented Employees in such unit shall be eligible to participate in the Plan.
Investment Fund means a hypothetical fund that tracks the value of an investment option offered under the Qualified Savings Plan or the UTC Deferred Compensation Plan. Investment Funds offered under the SRP may be changed from time to time by the Committee and shall be valued in the manner set forth in Section 6.4. As of the effective date of this Plan, Investment Funds will include: the Credited Interest Fund as offered under the UTC Deferred Compensation Plan, and the following investment options offered under the Qualified Savings Plan: the Vanguard 500 Index Fund; the UTC Stock Unit Fund; Global Index Fund, US Value Index Fund; US Growth Index Fund; US Midcap Index Fund; US Small Company Index Fund; and International Equity Fund; or such other investment options as may be established or changed by the Committee from time to time. The value of Participants’ Accounts shall be adjusted to replicate the performance of the applicable Investment Funds. Amounts credited to any Investment Fund do not result in the investment in actual assets corresponding to the Investment Fund.
IRS Compensation Limit means the limitation imposed by Section 401(a)(17) of the Internal Revenue Code of 1986, as amended.
Participant means an eligible Employee who is a participant in the Qualified Savings Plan, whose annual Pensionable Earnings are in excess of the limit of IRC Section 401(a)(17) or whose Corporation matching contribution is otherwise limited by the Code, and who elects to defer Eligible Compensation under the Plan.
Participant Contribution Account means a Plan Account maintained on behalf of a Participant who defers Eligible Compensation under this Plan.
Pensionable Earnings means the total compensation paid with respect to a Plan Year by a UTC Company to a Participant for services rendered to a UTC Company, before any Tax-Deferred Contribution Election or any election under Section 125 of the Code, including performance related awards, but excluding: other awards; foreign service premiums and allowances; long-term incentive compensation; stock option benefits; reimbursements or other payments related to relocation expenses; contributions to employee benefit plans including reimbursements or payments in lieu thereof, amounts credited to a Participant under a non-qualified deferred compensation plan; severance pay; and pay in lieu of vacation.
Performance-based Compensation means performance-based compensation as defined in Treas. Reg. §1.409A–1(e)).
Plan means the United Technologies Corporation Savings Restoration Plan, as amended from time to time.
Plan Accounts means the Participant Contribution Account and the UTC Contribution Account maintained on behalf of a Participant.
Plan Year means the calendar year.
Separation from Service means a Participant’s termination of employment with all UTC Companies, other than by reason of death. A Separation from Service will be deemed to occur where the Participant and the UTC Company that employs the Participant reasonably anticipate that the bona fide level of services the Participant will perform (whether as an employee or as an independent contractor) for UTC Companies will be permanently reduced to a level that is less than thirty-seven and a half percent (37.5%) of the average level of bona fide services the Participant performed during the immediately preceding 36 months (or the entire period the Participant has provided services if the Participant has been providing services to the UTC Companies for less than 36 months). A Participant shall not be considered to have had a Separation from Service as a result of a transfer from one UTC Company to another UTC Company.
Specified Employee means each of the fifty (50) highest-paid officers and other executives of the Corporation and its Subsidiaries, effective annually as of April 1st, based on wages subject to federal income tax withholding, and amounts that are excluded from taxable income by the employee’s election to make pre-tax contributions under a cafeteria plan, section 401(k) plan, or similar plan, determined for the preceding calendar year as provided in Treas. Reg. § 1.415(c)-2(d)(3). The term includes both U.S. and non-U.S. employees, and the compensation used to determine whether an employee is among the fifty (50) highest-paid officers and other executives shall be determined by treating non-U.S. compensation as if it had been earned in the U.S. by a U.S. citizen.
UTC Common Stock means the common stock of United Technologies Corporation.
UTC Company means United Technologies Corporation or any entity controlled by or under common control with United Technologies Corporation within the meaning of Section 414(b) or (c) of the Code (but substituting “at least 20 percent” for “at least 80 percent” as the control threshold used in applying Sections 414(b) and (c)).
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UTC Contribution means the amount credited to a Participant’s UTC Contribution Account in accordance with the formula set forth in Article V.
UTC Contribution Account means a Plan Account maintained on behalf of a Participant for the purpose of crediting UTC Contributions.
ARTICLE III - ELIGIBILITY AND PARTICIPATION
Section 3.1 - Eligibility
| (a) | Eligibility to Make Employee Contributions. Employees who are participants in the Qualified Savings Plan shall be eligible to participate in the SRP if and to the extent such Employee’s annual Pensionable Earnings are in excess of the limit of IRC Section 401(a)(17). |
| (b) | Eligibility for UTC Contributions. An Employee who is eligible to participate in the SRP and has completed one year of “Continuous Service” (as defined in the UTC Employee Retirement Plan as in effect on January 1, 2008) shall be eligible to receive UTC Contributions in accordance with Article V of the Plan. |
Section 3.2 - Participation
With respect to any calendar year for which the Committee offers the opportunity to defer Eligible Compensation, each eligible Participant may elect to participate in the Plan by timely filing with the Committee an Election Form, properly completed in accordance with Section 4.1. Participation in the Plan is entirely voluntary.
ARTICLE IV - PARTICIPANT ELECTIONS AND DESIGNATIONS
Section 4.1 - Election
An eligible Participant may, on or before the election deadline established by the Committee, make an electronic or written election on the Election Form provided by the Committee to defer Eligible Compensation for the immediately following calendar year.
Section 4.2 - Election Amount
An eligible Participant must designate in the Election Form the percentage of Eligible Compensation that will be deferred under the Plan, in a whole percentage between one and six percent.
Section 4.3 - Election Date
To defer Eligible Compensation under the Plan, an electronic or written Election Form must be completed and submitted to the Committee no later than the December 31 immediately preceding the calendar year to which the election applies, or such earlier date as the Committee may specify. To the extent an election is made to defer Eligible Compensation that includes an incentive compensation payment that qualifies as Performance-based Compensation as defined in Treas. Reg. §1.409A–1(e)), with respect to services to be performed in the current calendar year and otherwise payable in the immediately following calendar year, such election must be submitted to the Committee no later than the June 30 of the current calendar year, or such earlier date as the Committee may specify. In all other cases, the deferral election must be submitted by December 31 preceding the calendar year in which the Eligible Compensation is earned or such earlier date as the Committee may specify.
A deferral election shall be effective only if the individual making the election is still an eligible Participant at the election deadline. Except as provided below in Section 4.6 (Change in Election), the choices reflected on the Participant’s Election Form shall be irrevocable on the election deadline. An eligible Employee must timely submit an election by the election deadline to be eligible to participate in the Plan. Once an election is made to defer Eligible Compensation, the election will be deemed an evergreen election and will be applied to future Plan years, unless the election is revised or cancelled during a subsequent annual enrollment period.
Section 4.4 - Distribution Election
At the time the Participant first elects to defer Eligible Compensation under this Plan, the Participant must at that time elect the method of distribution of the Participant’s Plan Accounts. Distribution options include a lump sum or two to fifteen annual installments. If no distribution election is made with respect to a Participant’s Plan Accounts, the distribution will be in a lump sum.
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Section 4.5 - Investment Fund Allocations
When completing the Election Form, the Participant must allocate the amount to be deferred, in whole percentages, among the available Investment Funds. To the extent that the Participant fails to make an effective allocation among the available Investment Funds, the deferral shall be allocated entirely to the Credited Interest Fund.
Participants may reallocate their existing Plan Accounts among the available Investment Funds as permitted by the Committee, generally twice per year in June and November. Such reallocations shall be in whole percentages and, unless otherwise specified by the Committee, shall be effective the first business day of July or the first business of day of January, as applicable.
Section 4.6 - Change in Election
A Participant may make a one-time irrevocable election to change the form of distribution for the Plan Accounts. A change to the form of distribution must meet all of the following requirements:
| (a) | The new election must be made at least twelve months prior to the date on which payments will commence under the current election and/or date of termination following attainment of age 50 (and the new election shall be ineffective if the payment commencement date under the current election occurs within twelve months after the date of the new election); |
| (b) | The new election will not take effect until at least twelve months after the date when the new election is submitted in a manner acceptable to the Committee; and |
| (c) | The new payment commencement date must be five years later than the date on which payments would commence under the current election. |
Section 4.7 - Investment Fund Allocation at Separation from Service
Notwithstanding Section 5.3 (Form of Contribution), at Separation from Service, a Participant may reallocate his or her existing Plan Accounts to the Credited Interest Fund as permitted by the Committee, with respect to the period of time following the Separation from Service date and prior to the actual distribution date provided under Article VII.
Section 4.8 - Designation of Beneficiary
Each Participant shall designate a Beneficiary for his or her Plan Account on an electronic or written form provided by the Committee. A Participant may change such designation on an electronic or written form acceptable to the Committee and will be effective on the date received by the Committee. Designations received after the date of the Participant’s death will not be effective. In the event that no Beneficiary designation is filed with the Committee before the Participant’s death, or if the Beneficiary (and any contingent Beneficiary) does not survive the Participant, the value of all Plan Accounts hereunder will be paid to the estate of the Participant. If a Participant designates the Participant’s spouse as the Participant’s Beneficiary, that designation shall not be revoked or otherwise altered or affected by any: (a) change in the marital status of the Participant; (b) agreement between the Participant and such spouse; or (c) judicial decree (such as a divorce decree) affecting any rights that the Participant and such spouse might have as a result of their marriage, separation, or divorce; it being the intent of the Plan that any change in the designation of a Beneficiary hereunder may be made by the Participant only in accordance with the procedures set forth in this Section 4.8. In the event of the death of a Participant, distributions shall be made in accordance with Section 7.6.
ARTICLE V - UTC CONTRIBUTIONS
Section 5.1 - Contribution Amount
The Corporation will credit a sixty percent (60%) matching contribution to the Plan on up to six percent (6%) of each Participant’s Eligible Compensation deferred under the Plan.
Section 5.2 - Eligibility for Contribution
No Participant shall receive an allocation of UTC Contributions until such Participant has met the participation requirements of Section 3.1(b) of the Plan.
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Section 5.3 - Form of Contribution
The UTC Contribution shall be provided in the form of hypothetical shares or units of UTC Common Stock. Participants may not exchange amounts credited to their UTC Contribution Account to other investment options. In no event shall the UTC Contribution to any Participant’s UTC Contribution Accounts for any calendar year exceed 25% of annual earnings for such calendar year.
Section 5.4 - Timing of Contribution
Allocation of UTC Contributions and Participant deferrals shall generally be made to each Participant’s UTC Contribution Account on or immediately following each pay period, but no less frequently than once with respect to each Plan Year. The Corporation may in its sole discretion credit additional amounts to Participants’ UTC Contribution Accounts.
Section 5.5 - Vesting of Contributions
A Participant is always 100% vested in his or her deferrals into the Plan and associated earnings. A Participant shall be vested in the value of UTC Contributions credited to his or her Plan Account upon the first to occur of the following: participation in the Plan for two years; completion of three years of “Continuous Service” (as defined in the UTC Employee Retirement Plan as in effect on January 1, 2008), attainment of age 65, the death or disability of the Participant while employed by a UTC Company, the layoff of a Participant from a UTC Company due to lack of work, or the Participant’s entrance into the military service before completing two years of Plan participation. For purposes of this Section 5.5, a Participant’s date of disability shall be the first day of the fifth month (or such other month as may from time to time be applicable under the federal Social Security Act) prior to the month for which a Participant first receives a disability benefit under the Social Security Act.
ARTICLE VI - PLAN ACCOUNTS
Section 6.1 - Accounts
A Participant Contribution Account and a UTC Contribution Account will be established for each Participant.
| (a) | Participant Contribution Accounts. Participant Contribution Accounts shall be allocated or reallocated among Investment Funds in accordance with the Plan terms and each Participant’s instructions in the manner set forth in Section 4.5. Participant Contribution Accounts shall be credited with hypothetical investment fund shares or units on the applicable pay date on which Eligible Compensation would otherwise have been paid. Participant Contribution Accounts will be credited daily with investment earnings and losses, including dividends and capital gains, where applicable, in accordance with the Plan terms and a Participant’s investment elections. |
| (b) | UTC Contribution Accounts. UTC Contribution Accounts shall be credited with hypothetical shares or units of UTC Common Stock (“UTC Deferred Stock Units”), in the manner set forth in Article V. UTC Deferred Stock Units may not be exchanged for any other Investment Funds . UTC Contribution Accounts will be credited daily with investment earnings and losses, including dividends, associated with UTC Common Stock. |
Section 6.2 - Valuation of Credited Interest Fund
Deferred amounts allocated to the Credited Interest Fund will be credited daily with a rate of interest equal to the average interest rate on 10-Year Treasury Bonds as of the last business day of each month from January through October in the calendar year prior to the calendar year in which the interest is credited, plus 1%. The Credited Interest rate shall in no event exceed 120% of the applicable federal rate as published by the IRS.
Section 6.3 - Valuation of UTC Stock Unit Fund
Deferred compensation allocated to the UTC Stock Unit Fund will be converted to UTC Deferred Stock Units, including fractional Stock Units. A UTC Deferred Stock Unit is equal to the closing price of one share of UTC Common Stock as reported on the composite tape of the New York Stock Exchange. The number of UTC Deferred Stock Units will be calculated by dividing the amount of Eligible Compensation deferred by the closing price of UTC Common Stock on the date when the deferred amount is credited to the Participant’s UTC Stock Unit Fund. UTC Deferred Stock Units will be credited with dividend equivalent payments equal to the Corporation’s declared dividend on UTC Common Stock (if any). Such dividend equivalent payments will be converted to additional UTC Deferred Stock Units and fractional units using the closing price of UTC Common Stock as of the date such dividends are credited to the Participant’s UTC Stock Unit Fund.
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Section 6.4 - Valuation of Investment Funds
Deferred compensation allocated to Investment Funds will be converted to the applicable Investment Fund units based on the closing share price of that Investment Fund as of date the deferred amount is credited to the Participant’s applicable Investment Fund. The value of the units of an Investment Fund will fluctuate on each business day based on the performance of the applicable Investment Fund.
Section 6.5 - Allocation to Accounts
During the year of deferral, deferred amounts will be allocated to the Participant’s Participant Contribution Account and Investment Funds as of the date the deferred amounts would otherwise have been paid to the Participant.
Section 6.6 - Reports to Participants
The Committee will provide or make available detailed information to Participants regarding the credited value of Plan Accounts, distribution elections, Beneficiary designations, and Investment Fund allocations, not less than once per year. Such information may be provided via electronic media as determined by the Committee.
ARTICLE VII - DISTRIBUTION OF ACCOUNTS
Section 7.1 - Timing of Plan Distributions
Except as provided in Section 4.6 (concerning the five-year delay following a Change in Election), Section 7.4 (concerning Separation from Service before Attaining Age Fifty), and Section 7.5 (concerning distributions to Specified Employees), the value of a Participant’s Plan Accounts will be distributed (or begin to be distributed) to the Participant in April of the calendar year following the calendar year of the Participant’s Separation from Service.
Section 7.2 - Method of Distribution
Except as provided in Section 7.4 (concerning Separation from Service before Attaining Age Fifty), Plan Accounts will be distributed to the Participant in a single lump-sum payment, or in a series of annual installment payments, in accordance with the Participant’s election on file. Annual installment distributions shall be payable to the Participant beginning as of the payment commencement date and continuing as of each anniversary of the payment commencement date thereafter until all installments have been paid. To determine the amount of each installment, the value of the Participant’s Plan Accounts on the payment date will be multiplied by a fraction, the numerator of which is one and the denominator of which is the remaining number of scheduled installments.
Section 7.3 - Form of Distribution
Participant Contribution Account distributions will be made in cash and UTC Contribution Account distributions will be made in UTC Common Stock.
Section 7.4 - Separation from Service before Attaining Age Fifty
If a Participant’s Separation from Service occurs before the Participant attains age fifty (50), the full value of the Participant’s Plan Accounts will be distributed to the Participant in a lump-sum payment in April of the calendar year following the calendar year of the Participant’s Separation from Service (or, if the Participant is a Specified Employee at the time of his or her Separation from Service, on the date provided in Section 7.5, below, if later) regardless of the distribution option elected and regardless of any change in the distribution election.
If a Participant is re-employed following a Separation from Service, the Participant’s age at the time of the Participant’s first Separation from Service will determine how the Participant’s Plan Accounts at the time of the first Separation from Service are distributed. If the Participant accumulates any additional deferrals after the Participant is re-hired, the Plan shall separately account for the additional deferrals (and related investment gains or losses), and the Participant’s age at the time of the Participant’s second Separation from Service will determine how the additional amounts are distributed.
Section 7.5 - Separation from Service of Specified Employees
Distributions to Specified Employees will not be made or commence earlier than the first day of the seventh month following the date of Separation from Service. All Plan Accounts shall continue to accrue hypothetical investment gains and losses as provided in Article VI until the distribution date.
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Section 7.6 - Distribution in the Event of Death
In the event of the death of a Participant before the Participant’s Plan Account has been fully distributed, the full remaining value of the Participant’s Plan Accounts will be distributed to the designated Beneficiary or the Participant’s estate in a lump sum on the first business day of the third month following the Participant’s death.
Section 7.7 - Accelerated Distribution in the Case of an Unforeseeable Emergency
| (a) | Unforeseeable Emergency. The Committee may, upon a Participant’s written application, agree to an accelerated distribution of some or all of the value of a Participant’s Plan Accounts upon the occurrence of an unforeseeable emergency. An “unforeseeable emergency” is a severe financial hardship to the Participant resulting from (1) an illness or accident of the Participant, the Participant’s spouse, the Participant’s Beneficiary, or the Participant’s dependent (as defined in IRC Section 152, without regard to Section 152(b)(1), (b)(2), and (d)(1)(B)); (2) loss of the Participant’s property due to casualty; or (3) other similar extraordinary and unforeseeable circumstances arising as a result of events beyond the control of the Participant. Whether a Participant is faced with an unforeseeable emergency permitting a distribution is to be determined based on the relevant facts and circumstances of each case. Acceleration will not be granted if the emergency is or may be relieved through reimbursement or compensation from insurance or otherwise, by liquidation of the Participant’s assets (to the extent the liquidation of such assets would not cause severe financial hardship), or by cessation of deferrals under the Plan. |
| (b) | Amount of Distribution Permitted Upon an Unforeseeable Emergency. Distributions on account of an unforeseeable emergency, as defined in Section 7.7(a), shall be limited to the amount reasonably necessary to satisfy the emergency need. Such amount may include amounts necessary to pay any Federal, state, local, or foreign income taxes or penalties reasonably anticipated to result from the distribution. |
| (c) | The Committee will determine from which Investment Funds hardship distributions will be made. Any Participant who is an officer or director of the Corporation within the meaning of Section 16 of the Securities Exchange Act of 1934 is not eligible for distributions on account of unforeseeable emergency. |
Section 7.8 - Disability
In the event of the Disability of a Participant that qualifies as a “Separation from Service” for purposes of Section 409A of the Code, the Participant’s Plan Accounts will be distributed in accordance with the Participant’s elections on file.
Section 7.9 - Administrative Adjustments in Payment Date
A payment is treated as being made on the date when it is due under the Plan if the payment is made on the due date specified by the Plan, or on a later date that is either (a) in the same calendar year (for a payment whose specified due date is on or before September 30), or (b) by the 15th day of the third calendar month following the date specified by the Plan (for a payment whose specified due date is on or after October 1). A payment also is treated as being made on the date when it is due under the Plan if the payment is made not more than 30 days before the due date specified by the Plan. In no event will a payment to a Specified Employee be made or commence earlier than the first day of the seventh month following the date of Separation from Service. A Participant may not, directly or indirectly, designate the taxable year of a payment made in reliance on the administrative rules in this Section 7.9.
ARTICLE VIII - AMENDMENT AND TERMINATION OF PLAN
Section 8.1 - Amendment
The Corporation may, at any time, amend the Plan in whole or in part, provided that no amendment may decrease the value of any Plan Accounts as of the date of such amendment. In the event of any change in law or regulation relating to the Plan and the tax treatment of Plan Accounts, the Plan shall, without further action by the Committee, be deemed to be amended to comply with any such change in law or regulation effective as of the first date necessary to prevent the taxation, constructive receipt or deemed distribution of Plan Accounts prior to the date Plan Accounts would be distributed under the provisions of Article VII.
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Section 8.2 - Plan Suspension and Termination
| (a) | The Corporation’s Pension Administration Committee, may, at any time, suspend or terminate the Plan with respect to new or existing Election Forms if, in its sole judgment, the continuance of the Plan, the tax, accounting, or other effects thereof, or potential payments thereunder would not be in the best interest of the Corporation or for any other reason. |
| (b) | In the event of the suspension of the Plan, no additional deferrals or UTC Contributions shall be made under the Plan. All previous deferrals and UTC Contributions shall accumulate and be distributed in accordance with the otherwise applicable provisions of the Plan and the applicable elections on file. |
| (c) | Upon the termination of the Plan with respect to all Participants, and the termination of all arrangements sponsored by the Corporation or its affiliates that would be aggregated with the Plan under Section 409A of the Code (“Section 409A”), the Corporation shall have the right, in its sole discretion, and notwithstanding any elections made by the Participant, to pay the Participant’s Plan Accounts in a lump sum, to the extent permitted under Section 409A. All payments that may be made pursuant to this Section 8.2(c) shall be made no earlier than the thirteenth month and no later than the twenty-fourth month after the termination of the Plan. The Corporation may not accelerate payments pursuant to this Section 8.2(c) if the termination of the Plan is proximate to a downturn in the Corporation’s financial health within the meaning of Treas. Reg. section 1.409A-3(j)(4)(ix)(C)(1). If the Corporation exercises its discretion to accelerate payments under this Section 8.2(c), it shall not adopt any new arrangement that would have been aggregated with the Plan under Section 409A within three years following the date of the Plan’s termination. |
Section 8.3 - No Consent Required
The consent of any Participant, Beneficiary, or other person shall not be required with respect to any amendment, suspension, or termination of the Plan.
ARTICLE IX - GENERAL PROVISIONS
Section 9.1 - Unsecured General Creditor
The Corporation’s obligations under the Plan constitute an unfunded and unsecured promise to pay money or deliver shares in the future. Participants’ and Beneficiaries’ rights under the Plan are solely those of a general unsecured creditor of the Corporation. No assets will be placed in trust, set aside or otherwise segregated to fund or offset liabilities in respect of the Plan or Participants’ Plan Accounts.
Section 9.2 - Nonassignability
No Participant or Beneficiary or any other person shall have the right to sell, assign, transfer, pledge, or otherwise encumber any interest in the Plan. All Plan Accounts and the rights to all payments are unassignable and non-transferable. Plan Accounts or payment hereunder, prior to actual payment, will not be subject to attachment or seizure for the payment of any debts, judgments or other obligations. Plan Accounts or other Plan benefit will not be transferred by operation of law in the event of a Participant’s or any Beneficiary’s bankruptcy or insolvency.
Section 9.3 - No Contract of Employment
Participation in the Plan shall not be construed to constitute a direct or indirect contract of employment between any UTC Company and any Participant. Participants and Beneficiaries will have no rights against any UTC Company resulting from participation in the Plan other than as specifically provided herein. Nothing in the Plan shall be deemed to give a Participant the right to be retained in the service of any UTC Company for any length of time or to interfere with the right of any UTC Company to terminate a Participant’s employment prior to the end of any Deferral Period.
Section 9.4 - Governing Law
The provisions of the Plan will be construed and interpreted according to the laws of the State of Connecticut, to the extent not preempted by federal law.
Section 9.5 - Validity
If any provision of the Plan is held to be illegal or invalid for any reason, the remaining provisions of the Plan will be construed and enforced as if such illegal and invalid provision had never been inserted herein.
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Section 9.6 - Notice
Any notice or filing required or permitted to be given to the Committee under the Plan shall be sufficient if sent by first-class mail, to the United Technologies Corporation Deferred Compensation Committee, 1 Financial Plaza, Hartford, Connecticut 06101, Attn: Director, Compensation, MS-504. Any notice or filing required or permitted to be given to any Participant or Beneficiary under the Plan shall be sufficient if provided either electronically, hand-delivered, or mailed to the address (or email address, as the case may be) of the Participant or Beneficiary then listed on the records of the Corporation. Any such notice will be deemed given as of the date of delivery or, if delivery is made by mail, as of the date shown on the postmark or email system.
Section 9.7 - Successors
The provisions of the Plan shall bind and inure to the benefit of the Corporation and its successors and assigns. The term successors as used herein shall include any corporate or other business entity, which by merger, consolidation, purchase or otherwise acquires all or substantially all of the business and assets of the Corporation, and successors of any such corporation or other business entity.
Section 9.8 - Incompetence
If the Committee determines, upon evidence satisfactory to the Committee, that any Participant or Beneficiary to whom a benefit is payable under the Plan is unable to care for his or her affairs because of illness or accident, any payment due (unless prior claim therefore shall have been made by a duly authorized guardian or other legal representative) may be paid, upon appropriate indemnification of the Committee and the Corporation, to the spouse of the Participant or other person deemed by the Committee to have incurred expenses for the benefit of and on behalf of such Participant or Beneficiary. Any such payment from a Participant’s Plan Accounts shall be a complete discharge of any liability under the Plan with respect to the amount so paid.
Section 9.9 - Section 409A Compliance
To the extent that rights or payments under this Plan are subject to Section 409A of the Internal Revenue Code, the Plan shall be construed and administered in compliance with the conditions of Section 409A and regulations and other guidance issued pursuant to Section 409A for deferral of income taxation until the time the compensation is paid. Any distribution election that would not comply with Section 409A of the Code shall not be effective for purposes of this Plan. To the extent that a provision of this Plan does not comply with Section 409A of the Code, such provision shall be void and without effect. The Corporation does not warrant that the Plan will comply with Section 409A of the Code with respect to any Participant or with respect to any payment. In no event shall any UTC Company; any director, officer, or employee of a UTC Company (other than the Participant); or any member of the Committee be liable for any additional tax, interest, or penalty incurred by a Participant or Beneficiary as a result of the Plan’s failure to satisfy the requirements of Section 409A of the Code, or as a result of the Plan’s failure to satisfy any other requirements of applicable tax laws.
Section 9.10 - Withholding Taxes
The Committee may make any appropriate arrangements to deduct from all deferrals, Contributions, vested Plan Accounts, and distributions under the Plan any taxes that the Committee reasonably determines to be required by law to be withheld from such credits and payments.
ARTICLE X - ADMINISTRATION AND CLAIMS
Section 10.1 - Plan Administration
The Committee shall be solely responsible for the administration and operation of the Plan. The Committee shall have full and exclusive authority and discretion to interpret the provisions of the Plan and to establish such administrative procedures as it deems necessary and appropriate to carry out the purposes of the Plan.
Any person claiming a benefit, requesting an interpretation or ruling under the Plan, or requesting information under the Plan shall present the request in writing to the Committee at United Technologies Corporation, 1 Financial Plaza, Hartford, Connecticut 06101, Attn: Deferred Compensation Committee. The Committee shall respond in writing as soon as practicable.
-9-
Section 10.2 - Claim Procedures
A Participant or Beneficiary who believes that he or she has been denied a benefit to which he or she is entitled under the Plan (referred to in this Section 10.2 as a “Claimant”) may file a written request with the Committee setting forth the claim. The Committee shall consider and resolve the claim as set forth below.
| (a) | Upon receipt of a claim, the Committee shall advise the Claimant that a response will be forthcoming within 90 days. The Committee may, however, extend the response period for up to an additional 90 days for reasonable cause, and shall notify the Claimant of the reason for the extension and the expected response date. The Committee shall respond to the claim within the specified period. |
| (b) | If the claim is denied in whole or part, the Committee shall provide the Claimant with a written decision, using language calculated to be understood by the Claimant, setting forth (1) the specific reason or reasons for such denial; (2) the specific reference to relevant provisions of this Plan on which such denial is based; (3) a description of any additional material or information necessary for the Claimant to perfect his or her claim and an explanation why such material or such information is necessary; (4) appropriate information as to the steps to be taken if the Claimant wishes to submit the claim for review; (5) the time limits for requesting a review of the claim; and (6) the Claimant’s right to bring an action for benefits under Section 502(a) of ERISA. |
| (c) | Within 60 days after the Claimant’s receipt of the written decision denying the claim in whole or in part, the Claimant may request in writing that the Committee review the determination. The Claimant or his or her duly authorized representative may, but need not, review the relevant documents and submit issues and comment in writing for consideration by the Committee. If the Claimant does not request a review of the initial determination within such 60-day period, the Claimant shall be barred from challenging the determination. |
| (d) | Within 60 days after the Committee receives a request for review, it will review the initial determination. If special circumstances require that the 60-day time period be extended, the Committee will so notify the Claimant and will render the decision as soon as possible, but no later than 120 days after receipt of the request for review. |
| (e) | All decisions on review shall be final and binding with respect to all concerned parties. The decision on review shall set forth, in a manner calculated to be understood by the Claimant, (1) the specific reasons for the decision, including references to the relevant Plan provisions upon which the decision is based; (2) the Claimant’s right to receive, upon request and free of charge, reasonable access to and copies of all documents, records, and other information, relevant to his or her benefits; and (3) the Claimant’s right to bring an action for benefits under Section 502(a) of ERISA. |
CERTAIN REGULATORY MATTERS
The Plan is subject to the Employee Retirement Income Security Act of 1974, as amended (“ERISA”). Because the Plan is an unfunded plan maintained by an employer primarily for the purpose of providing deferred compensation for a select group of management or highly compensated employees, the Plan is exempt from most of ERISA’s requirements. Although the Plan is subject to Part 1 (Reporting and Disclosure) and Part 5 (Administration and Enforcement) of Title I, Subtitle B of ERISA, the Department of Labor has issued a regulation that exempts the Plan from most of ERISA’s reporting and disclosure requirements.
TO WHOM SHOULD QUESTIONS CONCERNING THE PLAN BE DIRECTED?
All questions concerning the operation of the Plan (including information concerning the administrators of the Plan) should be directed to:
Director, Compensation
United Technologies Corporation
1 Financial Plaza, MS 504
Hartford, Connecticut 06101
Telephone: 860-728-6381
-10-
Exhibit 11
UNITED TECHNOLOGIES CORPORATION
AND SUBSIDIARIES
STATEMENT RE: COMPUTATION OF PER SHARE EARNINGS
| Full year | |||||||||||||||
| (in millions of dollars, except per share amounts) |
2009 | 2008 | 2007 | 2006 | 2005 | ||||||||||
| Net income attributable to common shareowners1 |
$ | 3,829 | $ | 4,689 | $ | 4,224 | $ | 3,732 | $ | 3,069 | |||||
| Basic earnings for period |
$ | 3,829 | $ | 4,689 | $ | 4,224 | $ | 3,732 | $ | 3,069 | |||||
| Diluted earnings for period |
$ | 3,829 | $ | 4,689 | $ | 4,224 | $ | 3,732 | $ | 3,069 | |||||
| Basic average number of shares outstanding during the period (thousands) |
917,400 | 937,800 | 963,900 | 980,000 | 991,200 | ||||||||||
| Stock awards (thousands) |
11,400 | 18,600 | 24,900 | 25,700 | 23,300 | ||||||||||
| Diluted average number of shares outstanding during the period (thousands) |
928,800 | 956,400 | 988,800 | 1,005,700 | 1,014,500 | ||||||||||
| Basic earnings per common share |
$ | 4.17 | $ | 5.00 | $ | 4.38 | $ | 3.81 | $ | 3.10 | |||||
| Diluted earnings per common share |
$ | 4.12 | $ | 4.90 | $ | 4.27 | $ | 3.71 | $ | 3.03 | |||||
| 1 | As of January 1, 2009, we adopted the provisions under the Consolidation Topic of the FASB ASC as it relates to the accounting and reporting standards for noncontrolling interests in consolidated subsidiaries as reported in consolidated financial statements. These provisions require that the amount of net income attributable to the noncontrolling interests be included in consolidated net income on the face of the Consolidated Statement of Operations. Earnings per share has not been affected as a result of the adoption of the provisions under this Topic. Additional information pertaining to the accounting for noncontrolling interests is included in Note 9 to the Consolidated Financial Statements in our 2009 Annual Report. |
Exhibit 12
UNITED TECHNOLOGIES CORPORATION
AND SUBSIDIARIES
STATEMENT RE: COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
| Full year | ||||||||||||||||||||
| (in millions of dollars) |
2009 | 2008 | 2007 | 2006 | 2005 | |||||||||||||||
| Fixed Charges: |
||||||||||||||||||||
| Interest expense1 |
$ | 705 | $ | 689 | $ | 666 | $ | 606 | $ | 498 | ||||||||||
| Interest capitalized |
18 | 19 | 16 | 19 | 16 | |||||||||||||||
| One-third of rents2 |
154 | 168 | 146 | 96 | 100 | |||||||||||||||
| Total fixed charges |
$ | 877 | $ | 876 | $ | 828 | $ | 721 | $ | 614 | ||||||||||
| Earnings: |
||||||||||||||||||||
| Income before income taxes |
$ | 5,760 | $ | 6,936 | $ | 6,384 | $ | 5,492 | $ | 4,684 | ||||||||||
| Fixed charges per above |
877 | 876 | 828 | 721 | 614 | |||||||||||||||
| Less: capitalized interest |
(18 | ) | (19 | ) | (16 | ) | (19 | ) | (16 | ) | ||||||||||
| 859 | 857 | 812 | 702 | 598 | ||||||||||||||||
| Amortization of interest capitalized |
17 | 9 | 8 | 8 | 10 | |||||||||||||||
| Total earnings |
$ | 6,636 | $ | 7,802 | $ | 7,204 | $ | 6,202 | $ | 5,292 | ||||||||||
| Ratio of earnings to fixed charges |
7.57 | 8.91 | 8.70 | 8.60 | 8.62 | |||||||||||||||
| 1 | Pursuant to the guidance in the Income Taxes Topic of the FASB ASC, interest related to unrecognized tax benefits recorded was approximately $21 million, $39 million, $56 million, $38 million and $25 million for the years 2009, 2008, 2007, 2006 and 2005, respectively. The ratio of earnings to fixed charges would have been 7.75, 9.32, 9.33, 9.08 and 8.98 for the years 2009, 2008, 2007, 2006 and 2005, respectively, if such interest were excluded from the calculation. |
| 2 | Reasonable approximation of the interest factor. |
Exhibit 13
| (in millions, except per share amounts) | 2009 | 2008 | 2007 | 2006 | 2005 | |||||||||||||||
| For the year |
||||||||||||||||||||
| Revenues 1 |
$ | 52,920 | $ | 59,757 | $ | 55,716 | $ | 48,651 | $ | 43,414 | ||||||||||
| Research and development |
1,558 | 1,771 | 1,678 | 1,529 | 1,367 | |||||||||||||||
| Restructuring and other costs |
830 | 357 | 166 | 288 | 267 | |||||||||||||||
| Net income 2 |
4,179 | 5,053 | 4,548 | 3,998 | 3,336 | |||||||||||||||
| Income attributable to common shareowners before cumulative effect of a change in accounting principle 3 |
3,829 | 4,689 | 4,224 | 3,732 | 3,164 | |||||||||||||||
| Net income attributable to common shareowners 2 |
3,829 | 4,689 | 4,224 | 3,732 | 3,069 | |||||||||||||||
| Earnings per share: |
||||||||||||||||||||
| Basic: |
||||||||||||||||||||
| Income attributable to common shareowners before cumulative effect of a change in accounting principle 3 |
4.17 | 5.00 | 4.38 | 3.81 | 3.19 | |||||||||||||||
| Cumulative effect of a change in accounting principle 3 |
— | — | — | — | (.09 | ) | ||||||||||||||
| Net income attributable to common shareowners |
4.17 | 5.00 | 4.38 | 3.81 | 3.10 | |||||||||||||||
| Diluted: |
||||||||||||||||||||
| Income attributable to common shareowners before cumulative effect of a change in accounting principle 3 |
4.12 | 4.90 | 4.27 | 3.71 | 3.12 | |||||||||||||||
| Cumulative effect of a change in accounting principle 3 |
— | — | — | — | (.09 | ) | ||||||||||||||
| Net income attributable to common shareowners |
4.12 | 4.90 | 4.27 | 3.71 | 3.03 | |||||||||||||||
| Cash dividends per common share |
1.54 | 1.35 | 1.17 | 1.02 | .88 | |||||||||||||||
| Average number of shares of Common Stock outstanding: |
||||||||||||||||||||
| Basic |
917 | 938 | 964 | 980 | 991 | |||||||||||||||
| Diluted |
929 | 956 | 989 | 1,006 | 1,014 | |||||||||||||||
| Cash flow from operations |
5,353 | 6,161 | 5,330 | 4,803 | 4,334 | |||||||||||||||
| Capital expenditures |
826 | 1,216 | 1,153 | 954 | 929 | |||||||||||||||
| Acquisitions, including debt assumed |
703 | 1,448 | 2,336 | 1,049 | 4,583 | |||||||||||||||
| Repurchase of Common Stock |
1,100 | 3,160 | 2,001 | 2,068 | 1,181 | |||||||||||||||
| Dividends paid on Common Stock 4 |
1,356 | 1,210 | 1,080 | 951 | 832 | |||||||||||||||
| At year end |
||||||||||||||||||||
| Working capital |
$ | 5,281 | $ | 4,665 | $ | 4,602 | $ | 3,636 | $ | 1,861 | ||||||||||
| Total assets 1,5 |
55,762 | 56,837 | 54,888 | 47,382 | 46,159 | |||||||||||||||
| Long-term debt, including current portion 6 |
9,490 | 10,453 | 8,063 | 7,074 | 6,628 | |||||||||||||||
| Total debt 6 |
9,744 | 11,476 | 9,148 | 7,931 | 8,240 | |||||||||||||||
| Debt to total capitalization 2,5,6 |
32% | 41% | 29% | 30% | 32% | |||||||||||||||
| Total equity 2,5,6 |
20,999 | 16,681 | 22,064 | 18,133 | 17,769 | |||||||||||||||
| Number of employees |
206,700 | 223,100 | 225,600 | 214,500 | 218,200 | |||||||||||||||
| • | During 2005, we acquired Kidde, which in conjunction with Chubb (acquired during 2003) forms the UTC Fire & Security segment. |
| • | During 2005, a 2-for-1 split of our common stock was effected in the form of a share dividend. |
| Note 1 | During 2009, we adopted the provisions of the Collaborative Arrangements Topic of the Financial Accounting Standards Board Accounting Standards Codification (FASB ASC) which requires that participants in a collaborative arrangement report costs incurred and revenues generated from such transactions on a gross basis and in the appropriate lines in each company’s financial statements. The provisions of this Topic were applied retrospectively to all periods presented. |
| Note 2 | During 2009, we adopted the provisions under the Consolidation Topic of the FASB ASC as it relates to the accounting and reporting standards for noncontrolling interests (previously referred to as minority interests) in consolidated subsidiaries as reported in consolidated financial statements. These provisions require that the carrying value of noncontrolling interests be removed from the mezzanine section of the balance sheet and reclassified as equity, and that consolidated net income be recast to include net income attributable to the noncontrolling interests. The provisions of this Topic were applied retrospectively to all periods presented. |
| Note 3 | During 2005, we adopted accounting standards related to Asset Retirement and Environmental Obligations and the accounting for Share-Based Payments. |
| Note 4 | Excludes dividends paid on Employee Stock Ownership Plan Common Stock. |
| Note 5 | During 2006, we adopted the accounting related to Employers’ Accounting for Defined Benefit Pension and Other Postretirement Plans which resulted in an approximately $1.8 billion non-cash charge to equity and a $2.4 billion non-cash reduction to total assets. In addition, we early-adopted the measurement date provisions of this standard effective January 1, 2007, which increased shareowners’ equity by approximately $425 million and decreased long-term liabilities by approximately $620 million. |
| Note 6 | The increase in the 2008 debt to total capitalization ratio reflects unrealized losses of approximately $4.2 billion, net of taxes, associated with the effect of market conditions on our pension plans, and the 2008 debt issuances totaling $2.25 billion. The decrease in the 2009 debt to total capitalization ratio, as compared to 2008, reflects the reversal of unrealized losses in our pension plans of approximately $1.1 billion, the beneficial impact of foreign exchange rate movement of approximately $1.0 billion, and the reduction of approximately $1.7 billion of total debt. |
1
Management’s Discussion and Analysis
2
3
4
5
6
7
Segment Review
| Revenues | Operating Profits | Operating Profit Margin | ||||||||||||||||||||||||||||||
| (in millions of dollars) | 2009 | 2008 | 2007 | 2009 | 2008 | 2007 | 2009 | 2008 | 2007 | |||||||||||||||||||||||
| Otis |
$ | 11,779 | $ | 12,949 | $ | 11,885 | $ | 2,447 | $ | 2,477 | $ | 2,321 | 20.8% | 19.1% | 19.5% | |||||||||||||||||
| Carrier |
11,413 | 14,944 | 14,644 | 740 | 1,316 | 1,381 | 6.5% | 8.8% | 9.4% | |||||||||||||||||||||||
| UTC Fire & Security |
5,531 | 6,462 | 5,754 | 493 | 542 | 443 | 8.9% | 8.4% | 7.7% | |||||||||||||||||||||||
| Pratt & Whitney |
12,577 | 14,041 | 13,086 | 1,835 | 2,122 | 2,011 | 14.6% | 15.1% | 15.4% | |||||||||||||||||||||||
| Hamilton Sundstrand |
5,599 | 6,207 | 5,636 | 857 | 1,099 | 967 | 15.3% | 17.7% | 17.2% | |||||||||||||||||||||||
| Sikorsky |
6,318 | 5,368 | 4,789 | 608 | 478 | 373 | 9.6% | 8.9% | 7.8% | |||||||||||||||||||||||
| Total segment |
53,217 | 59,971 | 55,794 | 6,980 | 8,034 | 7,496 | 13.1% | 13.4% | 13.4% | |||||||||||||||||||||||
| Eliminations and other |
(297) | (214) | (78) | (167) | (1) | (60) | ||||||||||||||||||||||||||
| General corporate expenses |
— | — | — | (348) | (408) | (386) | ||||||||||||||||||||||||||
| Consolidated |
$ | 52,920 | $ | 59,757 | $ | 55,716 | $ | 6,465 | $ | 7,625 | $ | 7,050 | 12.2% | 12.8% | 12.7% | |||||||||||||||||
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
Consolidated Statement of Operations
| (in millions of dollars, except per share amounts) | 2009 | 2008 | 2007 | ||||||||
| Revenues: |
|||||||||||
| Product sales |
$ | 37,332 | $ | 43,234 | $ | 40,182 | |||||
| Service sales |
15,093 | 15,885 | 14,694 | ||||||||
| Other income, net |
495 | 638 | 840 | ||||||||
| 52,920 | 59,757 | 55,716 | |||||||||
| Costs and Expenses: |
|||||||||||
| Cost of products sold |
28,905 | 32,833 | 30,869 | ||||||||
| Cost of services sold |
9,956 | 10,804 | 10,010 | ||||||||
| Research and development |
1,558 | 1,771 | 1,678 | ||||||||
| Selling, general and administrative |
6,036 | 6,724 | 6,109 | ||||||||
| Operating profit |
6,465 | 7,625 | 7,050 | ||||||||
| Interest |
705 | 689 | 666 | ||||||||
| Income before income taxes |
5,760 | 6,936 | 6,384 | ||||||||
| Income tax expense |
1,581 | 1,883 | 1,836 | ||||||||
| Net income |
4,179 | 5,053 | 4,548 | ||||||||
| Less: Noncontrolling interest in subsidiaries’ earnings |
350 | 364 | 324 | ||||||||
| Net income attributable to common shareowners |
$ | 3,829 | $ | 4,689 | $ | 4,224 | |||||
| Earnings per share of common stock |
|||||||||||
| Basic |
$ | 4.17 | $ | 5.00 | $ | 4.38 | |||||
| Diluted |
$ | 4.12 | $ | 4.90 | $ | 4.27 | |||||
|
Dividends per share of common stock |
$ | 1.54 | $ | 1.35 | $ | 1.17 | |||||
|
Average number of shares outstanding: |
|||||||||||
| Basic shares |
917 | 938 | 964 | ||||||||
| Diluted shares |
929 | 956 | 989 | ||||||||
See accompanying Notes to Consolidated Financial Statements
26
| (in millions of dollars, except per share amounts – shares in thousands) | 2009 | 2008 | ||||||
| Assets |
||||||||
| Cash and cash equivalents |
$ | 4,449 | $ | 4,327 | ||||
| Accounts receivable (net of allowance for doubtful accounts of $390 and $332) |
8,469 | 9,480 | ||||||
| Inventories and contracts in progress, net |
7,509 | 8,340 | ||||||
| Future income tax benefits, current |
1,689 | 1,551 | ||||||
| Other assets, current |
1,078 | 769 | ||||||
| Total Current Assets |
23,194 | 24,467 | ||||||
| Customer financing assets |
1,047 | 1,002 | ||||||
| Future income tax benefits |
2,102 | 3,633 | ||||||
| Fixed assets, net |
6,364 | 6,348 | ||||||
| Goodwill |
16,298 | 15,363 | ||||||
| Intangible assets |
3,538 | 3,443 | ||||||
| Other assets |
3,219 | 2,581 | ||||||
| Total Assets |
$ | 55,762 | $ | 56,837 | ||||
| Liabilities and Equity |
||||||||
| Short-term borrowings |
$ | 254 | $ | 1,023 | ||||
| Accounts payable |
4,634 | 5,594 | ||||||
| Accrued liabilities |
11,792 | 12,069 | ||||||
| Long-term debt currently due |
1,233 | 1,116 | ||||||
| Total Current Liabilities |
17,913 | 19,802 | ||||||
| Long-term debt |
8,257 | 9,337 | ||||||
| Future pension and postretirement benefit obligations |
4,150 | 6,574 | ||||||
| Other long-term liabilities |
4,054 | 4,198 | ||||||
| Total Liabilities |
34,374 | 39,911 | ||||||
| Commitments and contingent liabilities (Notes 4 and 16) |
||||||||
| Redeemable noncontrolling interest |
389 | 245 | ||||||
| Shareowners’ Equity: |
||||||||
| Capital Stock: |
||||||||
| Preferred Stock, $1 par value; 250,000 shares authorized; None issued or outstanding |
— | — | ||||||
| Common Stock, $1 par value; 4,000,000 shares authorized; 1,381,700 and 1,370,054 shares issued |
11,746 | 11,179 | ||||||
| Treasury Stock - 444,958 and 426,113 common shares at cost |
(15,408 | ) | (14,316 | ) | ||||
| Retained earnings |
27,396 | 25,034 | ||||||
| Unearned ESOP shares |
(181 | ) | (200 | ) | ||||
| Accumulated other comprehensive income (loss): |
||||||||
| Foreign currency translation |
379 | (641 | ) | |||||
| Other |
(3,866 | ) | (5,293 | ) | ||||
| Total Accumulated other comprehensive loss |
(3,487 | ) | (5,934 | ) | ||||
| Total Shareowners’ Equity |
20,066 | 15,763 | ||||||
| Noncontrolling interest |
933 | 918 | ||||||
| Total Equity |
20,999 | 16,681 | ||||||
| Total Liabilities and Equity |
$ | 55,762 | $ | 56,837 | ||||
See accompanying Notes to Consolidated Financial Statements
27
Consolidated Statement of Cash Flows
| (in millions of dollars) | 2009 | 2008 | 2007 | |||||||||
| Operating Activities: |
||||||||||||
| Net income attributable to common shareowners |
$ | 3,829 | $ | 4,689 | $ | 4,224 | ||||||
| Noncontrolling interest in subsidiaries’ earnings |
350 | 364 | 324 | |||||||||
| Net income |
4,179 | 5,053 | 4,548 | |||||||||
| Adjustments to reconcile net income to net cash flows provided by operating activities: |
||||||||||||
| Depreciation and amortization |
1,258 | 1,321 | 1,173 | |||||||||
| Deferred income tax provision |
451 | 45 | 58 | |||||||||
| Stock compensation cost |
153 | 211 | 198 | |||||||||
| Change in: |
||||||||||||
| Accounts receivable |
955 | (546 | ) | (534 | ) | |||||||
| Inventories and contracts in progress |
695 | (562 | ) | (1,111 | ) | |||||||
| Other current assets |
(3 | ) | 35 | 44 | ||||||||
| Accounts payable and accrued liabilities |
(582 | ) | 843 | 1,633 | ||||||||
| Global pension contributions |
(1,270 | ) | (193 | ) | (182 | ) | ||||||
| Other operating activities, net |
(483 | ) | (46 | ) | (497 | ) | ||||||
| Net cash flows provided by operating activities |
5,353 | 6,161 | 5,330 | |||||||||
| Investing Activities: |
||||||||||||
| Capital expenditures |
(826 | ) | (1,216 | ) | (1,153 | ) | ||||||
| Increase in customer financing assets |
(171 | ) | (285 | ) | (411 | ) | ||||||
| Decrease in customer financing assets |
80 | 138 | 272 | |||||||||
| Investments in businesses |
(703 | ) | (1,252 | ) | (2,037 | ) | ||||||
| Dispositions of businesses |
158 | 337 | 298 | |||||||||
| Other investing activities, net |
358 | (58 | ) | (151 | ) | |||||||
| Net cash flows used in investing activities |
(1,104 | ) | (2,336 | ) | (3,182 | ) | ||||||
| Financing Activities: |
||||||||||||
| Issuance of long-term debt |
37 | 2,248 | 1,032 | |||||||||
| Repayment of long-term debt |
(1,012 | ) | (48 | ) | (330 | ) | ||||||
| (Decrease) increase in short-term borrowings, net |
(762 | ) | 91 | 191 | ||||||||
| Common Stock issued under employee stock plans |
342 | 163 | 415 | |||||||||
| Dividends paid on Common Stock |
(1,356 | ) | (1,210 | ) | (1,080 | ) | ||||||
| Repurchase of Common Stock |
(1,100 | ) | (3,160 | ) | (2,001 | ) | ||||||
| Other financing activities, net |
(340 | ) | (322 | ) | (182 | ) | ||||||
| Net cash flows used in financing activities |
(4,191 | ) | (2,238 | ) | (1,955 | ) | ||||||
| Effect of foreign exchange rate changes on cash and cash equivalents |
64 | (164 | ) | 165 | ||||||||
| Net increase in cash and cash equivalents |
122 | 1,423 | 358 | |||||||||
| Cash and cash equivalents, beginning of year |
4,327 | 2,904 | 2,546 | |||||||||
| Cash and cash equivalents, end of year |
$ | 4,449 | $ | 4,327 | $ | 2,904 | ||||||
| Supplemental Disclosure of Cash Flow Information: |
||||||||||||
| Interest paid, net of amounts capitalized |
$ | 704 | $ | 659 | $ | 629 | ||||||
| Income taxes paid, net of refunds |
$ | 1,396 | $ | 1,912 | $ | 1,818 | ||||||
| Non-cash investing and financing activities include: |
||||||||||||
| Contributions of UTC Common Stock to domestic defined benefit pension plans of $0, $250 and |
||||||||||||
See accompanying Notes to Consolidated Financial Statements
28
Consolidated Statement of Changes in Equity
| (in millions of dollars) | Common Stock |
Treasury Stock |
||||||
| Balance at December 31, 2006 |
$ | 9,622 | $ | (9,413 | ) | |||
| Effect of changing pension plan measurement date, net of taxes of $193 (Note 11) |
||||||||
| Adoption of accounting for uncertainty in income taxes (Note 10) |
||||||||
| Adoption of accounting for redeemable noncontrolling interests (Note 9) |
||||||||
| Opening balance at January 1, 2007, as adjusted |
$ | 9,622 | $ | (9,413 | ) | |||
| Comprehensive income (loss): |
||||||||
| Net income |
||||||||
| Redeemable noncontrolling interest in subsidiaries earnings |
||||||||
| Other comprehensive income (loss), net of tax: |
||||||||
| Foreign currency translation adjustments |
||||||||
| Change in pension and post-retirement benefit plans, net of income taxes of $419 |
||||||||
| Adjustment for sale of securities, net of tax benefit of $50 |
||||||||
| Unrealized cash flow hedging gain, net of income taxes of $58 |
||||||||
| Total other comprehensive income, net of tax |
||||||||
| Comprehensive income |
||||||||
| Common Stock issued under employee plans (13.8 million shares), net of tax benefit of $130 |
863 | 13 | ||||||
| Common Stock contributed to defined benefit pension plans (2.3 million shares) |
87 | 63 | ||||||
| Common Stock repurchased (28.3 million shares) |
(2,001 | ) | ||||||
| Dividends on Common Stock |
||||||||
| Dividends on ESOP Common Stock |
||||||||
| Dividends attributable to noncontrolling interest |
||||||||
| Redeemable noncontrolling interest accretion |
||||||||
| Other changes in noncontrolling interest |
||||||||
| Balance at December 31, 2007 |
$ | 10,572 | $ | (11,338 | ) | |||
| Comprehensive income (loss): |
||||||||
| Net income |
||||||||
| Redeemable noncontrolling interest in subsidiaries earnings |
||||||||
| Other comprehensive income (loss), net of tax: |
||||||||
| Foreign currency translation adjustments |
||||||||
| Change in pension and post-retirement benefit plans, net of tax benefit of $2,512 |
||||||||
| Adjustment for sale of securities, net of tax benefit of $41 |
||||||||
| Unrealized cash flow hedging loss, net of tax benefit of $127 |
||||||||
| Total other comprehensive income (loss), net of tax |
||||||||
| Comprehensive income (loss) |
||||||||
| Common Stock issued under employee plans (5.7 million shares), net of tax benefit of $32 |
525 | 14 | ||||||
| Common Stock contributed to defined benefit pension plans (5.0 million shares) |
82 | 168 | ||||||
| Common Stock repurchased (50.4 million shares) |
(3,160 | ) | ||||||
| Dividends on Common Stock |
||||||||
| Dividends on ESOP Common Stock |
||||||||
| Dividends attributable to noncontrolling interest |
||||||||
| Redeemable noncontrolling interest accretion |
||||||||
| Other changes in noncontrolling interest |
||||||||
| Balance at December 31, 2008 |
$ | 11,179 | $ | (14,316 | ) | |||
| Comprehensive income (loss): |
||||||||
| Net income |
||||||||
| Redeemable noncontrolling interest in subsidiaries earnings |
||||||||
| Other comprehensive income (loss), net of tax: |
||||||||
| Foreign currency translation adjustments |
||||||||
| Change in pension and post-retirement benefit plans, net of income taxes of $569 |
||||||||
| Adjustment for sale of securities, net of income taxes of $66 |
||||||||
| Unrealized cash flow hedging gain, net of income taxes of $106 |
||||||||
| Total other comprehensive income (loss), net of tax |
||||||||
| Comprehensive income (loss) |
||||||||
| Common Stock issued under employee plans (11.9 million shares), net of tax benefit of $50 |
634 | 8 | ||||||
| Common Stock repurchased (19.1 million shares) |
(1,100 | ) | ||||||
| Dividends on Common Stock |
||||||||
| Dividends on ESOP Common Stock |
||||||||
| Dividends attributable to noncontrolling interest |
||||||||
| Redeemable noncontrolling interest accretion |
||||||||
| Purchase of subsidiary shares in noncontrolling interest |
(67 | ) | ||||||
| Acquired noncontrolling interest |
||||||||
| Other changes in noncontrolling interest |
||||||||
| Balance at December 31, 2009 |
$ | 11,746 | $ | (15,408 | ) | |||
See accompanying Notes to Consolidated Financial Statements
29
| Shareowners’ Equity | ||||||||||||||||||||||
| Retained Earnings | Unearned ESOP Shares | Accumulated Other Comprehensive Income (Loss) |
Noncontrolling Interest | Total Equity | Redeemable Noncontrolling Interest |
|||||||||||||||||
| $ | 18,754 | $ | (227 | ) | $ | (1,439 | ) | $ | 755 | $ | 18,052 | $ | 81 | |||||||||
| (45 | ) | 470 | 425 | |||||||||||||||||||
| (19 | ) | (19 | ) | |||||||||||||||||||
| (114 | ) | (114 | ) | $ | 114 | |||||||||||||||||
| $ | 18,576 | $ | (227 | ) | $ | (969 | ) | $ | 755 | $ | 18,344 | $ | 195 | |||||||||
| 4,224 | 324 | 4,548 | ||||||||||||||||||||
| (14 | ) | (14 | ) | 14 | ||||||||||||||||||
| 716 | 44 | 760 | 10 | |||||||||||||||||||
| 776 | 776 | |||||||||||||||||||||
| (84 | ) | (84 | ) | |||||||||||||||||||
| 139 | 139 | |||||||||||||||||||||
| 1,591 | ||||||||||||||||||||||
| 6,125 | ||||||||||||||||||||||
| (36 | ) | 13 | 853 | |||||||||||||||||||
| 150 | ||||||||||||||||||||||
| (2,001 | ) | |||||||||||||||||||||
| (1,080 | ) | (1,080 | ) | |||||||||||||||||||
| (47 | ) | (47 | ) | |||||||||||||||||||
| (246 | ) | (246 | ) | (23 | ) | |||||||||||||||||
| (6 | ) | (6 | ) | 6 | ||||||||||||||||||
| (28 | ) | (28 | ) | 1 | ||||||||||||||||||
| $ | 21,631 | $ | (214 | ) | $ | 578 | $ | 835 | $ | 22,064 | $ | 203 | ||||||||||
| 4,689 | 364 | 5,053 | ||||||||||||||||||||
| (19 | ) | (19 | ) | 19 | ||||||||||||||||||
| (1,990 | ) | 1 | (1,989 | ) | 38 | |||||||||||||||||
| (4,153 | ) | (4,153 | ) | |||||||||||||||||||
| (59 | ) | (59 | ) | |||||||||||||||||||
| (310 | ) | (310 | ) | |||||||||||||||||||
| (6,511 | ) | |||||||||||||||||||||
| (1,477 | ) | |||||||||||||||||||||
| (19 | ) | 14 | 534 | |||||||||||||||||||
| 250 | ||||||||||||||||||||||
| (3,160 | ) | |||||||||||||||||||||
| (1,210 | ) | (1,210 | ) | |||||||||||||||||||
| (52 | ) | (52 | ) | |||||||||||||||||||
| (305 | ) | (305 | ) | (20 | ) | |||||||||||||||||
| (5 | ) | (5 | ) | 5 | ||||||||||||||||||
| 42 | 42 | |||||||||||||||||||||
| $ | 25,034 | $ | (200 | ) | $ | (5,934 | ) | $ | 918 | $ | 16,681 | $ | 245 | |||||||||
| 3,829 | 350 | 4,179 | ||||||||||||||||||||
| (17 | ) | (17 | ) | 17 | ||||||||||||||||||
| 1,020 | 8 | 1,028 | (5 | ) | ||||||||||||||||||
| 1,073 | 1,073 | |||||||||||||||||||||
| 99 | 99 | |||||||||||||||||||||
| 255 | 255 | |||||||||||||||||||||
| 2,455 | ||||||||||||||||||||||
| 6,617 | ||||||||||||||||||||||
| (43 | ) | 19 | 618 | |||||||||||||||||||
| (1,100 | ) | |||||||||||||||||||||
| (1,356 | ) | (1,356 | ) | |||||||||||||||||||
| (59 | ) | (59 | ) | |||||||||||||||||||
| (329 | ) | (329 | ) | (17 | ) | |||||||||||||||||
| (9 | ) | (9 | ) | 9 | ||||||||||||||||||
| (25 | ) | (92 | ) | (3 | ) | |||||||||||||||||
| 36 | 36 | 143 | ||||||||||||||||||||
| (8 | ) | (8 | ) | |||||||||||||||||||
| $ | 27,396 | $ | (181 | ) | $ | (3,487 | ) | $ | 933 | $ | 20,999 | $ | 389 | |||||||||
30
Notes to Consolidated Financial Statements
31
32
33
34
35
36
37
38
39
40
41
42
The fair value measurement of plan assets using significant unobservable inputs (Level 3) changed during 2009 due to the following:
| 2009 Changes in Fair Value Measurements Using Significant Unobservable Inputs (Level 3) | ||||||||||||||||||||||||
| (in millions of dollars) | Global Equity Commingled Funds |
Enhanced Global Equities |
Private Equities |
Corporate Bonds |
Real Estate |
Total | ||||||||||||||||||
| Beginning Balance, December 31, 2008 |
$ | 21 | $ | 7 | $ | 990 | $ | 96 | $ | 894 | $ | 2,008 | ||||||||||||
| Realized gains/(losses) |
(4 | ) | — | (90 | ) | 13 | (35 | ) | (116 | ) | ||||||||||||||
| Unrealized gains/(losses) relating to instruments still held in the reporting period |
5 | — | 140 | 30 | (228 | ) | (53 | ) | ||||||||||||||||
| Purchases, sales, issuances and settlements (net) |
(22 | ) | 4 | 5 | (139 | ) | 84 | (68 | ) | |||||||||||||||
| Transfers in/out (net) |
— | — | — | — | — | — | ||||||||||||||||||
| Ending Balance, December 31, 2009 |
$ | — | $ | 11 | $ | 1,045 | $ | — | $ | 715 | $ | 1,771 | ||||||||||||
43
44
45
| (shares and units in thousands) | Stock Options |
Stock Rights |
Performance Share Units |
Other Incentive Shares/ Units |
||||||||||||||||||||
| Shares | Average Price * |
Shares | Average Price * |
Units | Average Price ** |
|||||||||||||||||||
| Outstanding at: |
||||||||||||||||||||||||
| December 31, 2006 |
71,976 | $ | 37.71 | 6,860 | $ | 56.78 | 1,141 | $ | 56.53 | 549 | ||||||||||||||
| Granted |
275 | 64.49 | 7,578 | 65.33 | 1,085 | 62.81 | 125 | |||||||||||||||||
| Exercised/earned |
(14,458 | ) | 31.39 | (61 | ) | 45.16 | — | — | (85 | ) | ||||||||||||||
| Cancelled |
(782 | ) | 39.35 | (491 | ) | 60.22 | (69 | ) | 59.63 | (2 | ) | |||||||||||||
| December 31, 2007 |
57,011 | $ | 39.42 | 13,886 | $ | 61.37 | 2,157 | $ | 59.59 | 587 | ||||||||||||||
| Granted |
192 | 74.57 | 7,221 | 74.23 | 948 | 75.21 | 174 | |||||||||||||||||
| Exercised/earned |
(6,095 | ) | 32.65 | (14 | ) | 47.34 | — | — | (144 | ) | ||||||||||||||
| Cancelled |
(110 | ) | 44.75 | (798 | ) | 66.57 | (111 | ) | 64.59 | (55 | ) | |||||||||||||
| December 31, 2008 |
50,998 | $ | 40.35 | 20,295 | $ | 65.75 | 2,994 | $ | 64.35 | 562 | ||||||||||||||
| Granted |
325 | 54.95 | 8,239 | 54.92 | 1,302 | 54.95 | 180 | |||||||||||||||||
| Exercised/earned |
(12,095 | ) | 35.04 | (346 | ) | 56.42 | (1,064 | ) | 56.53 | (96 | ) | |||||||||||||
| Cancelled |
(332 | ) | 43.54 | (851 | ) | 62.75 | (120 | ) | 63.50 | (15 | ) | |||||||||||||
| December 31, 2009 |
38,896 | $ | 42.10 | 27,337 | $ | 62.70 | 3,112 | $ | 63.12 | 631 | ||||||||||||||
| * | weighted-average exercise price |
| ** | weighted-average grant stock price |
| Equity Awards Outstanding Expected to Vest |
Equity Awards Outstanding That Are Exercisable | ||||||||||||||||||||||||||
| (shares thousands, aggregate intrinsic value in millions) | Awards | Average Price * |
Aggregate Intrinsic Value |
Remaining Term ** |
Awards | Average Price * |
Aggregate Intrinsic Value |
Remaining Term ** | |||||||||||||||||||
| Stock Options/Stock Appreciation Rights |
65,661 | $ | 50.34 | $ | 1,252 | 5.1 | 45,879 | $ | 44.50 | $ | 1,143 | 3.9 | |||||||||||||||
| Performance Share Units/Restricted Stock |
2,419 | — | $ | 168 | 1.4 | ||||||||||||||||||||||
| * | weighted-average exercise price per share |
| ** | weighted-average contractual remaining term in years |
46
47
48
| (in millions of dollars) | Assets Balance Sheet Location | Liabilities Balance Sheet Location | |||||||||
| Derivatives designated as hedging instruments: |
|||||||||||
| Foreign Exchange Contracts |
Other Current Assets | $ | 107 | Accrued Liabilities | $ | 31 | |||||
| Foreign Exchange Contracts |
Other Assets | 33 | Other Long-Term Liabilities | 4 | |||||||
| $ | 140 | $ | 35 | ||||||||
| Derivatives not designated as hedging instruments: |
|||||||||||
| Foreign Exchange Contracts |
Other Current Assets | $ | 113 | Accrued Liabilities | $ | 106 | |||||
| Foreign Exchange Contracts |
Other Assets | 5 | Other Long-Term Liabilities | 3 | |||||||
| $ | 118 | $ | 109 | ||||||||
| Total Derivative Contracts |
$ | 258 | $ | 144 | |||||||
49
50
51
The following table illustrates the effect of the retroactive application on our Revenues and Costs and Expenses for all collaborative arrangements existing as of the effective date:
| 2008 | 2007 | ||||||||||||||||||||||
| (in millions of dollars) | As Previously Reported |
Effect of Retroactive Application |
Currently Reported |
As Previously Reported |
Effect of Retroactive Application |
Currently Reported | |||||||||||||||||
| Revenues: |
|||||||||||||||||||||||
| Product sales |
$ | 42,175 | $ | 1,059 | $ | 43,234 | $ | 39,240 | $ | 942 | $ | 40,182 | |||||||||||
| Service sales |
15,868 | 17 | 15,885 | 14,679 | 15 | 14,694 | |||||||||||||||||
| Other income, net |
638 | — | 638 | 840 | — | 840 | |||||||||||||||||
| 58,681 | 1,076 | 59,757 | 54,759 | 957 | 55,716 | ||||||||||||||||||
| Costs and Expenses: |
|||||||||||||||||||||||
| Cost of products sold |
31,774 | 1,059 | 32,833 | 29,927 | 942 | 30,869 | |||||||||||||||||
| Cost of services sold |
10,787 | 17 | 10,804 | 9,995 | 15 | 10,010 | |||||||||||||||||
| Research and development |
1,771 | — | 1,771 | 1,678 | — | 1,678 | |||||||||||||||||
| Selling, general and administrative |
6,724 | — | 6,724 | 6,109 | — | 6,109 | |||||||||||||||||
| Operating profit |
$ | 7,625 | $ | — | $ | 7,625 | $ | 7,050 | $ | — | $ | 7,050 | |||||||||||
52
53
| Total Revenues | Operating Profits | |||||||||||||||||||||||
| (in millions of dollars) | 2009 | 2008 | 2007 | 2009 | 2008 | 2007 | ||||||||||||||||||
| Otis |
$ | 11,779 | $ | 12,949 | $ | 11,885 | $ | 2,447 | $ | 2,477 | $ | 2,321 | ||||||||||||
| Carrier |
11,413 | 14,944 | 14,644 | 740 | 1,316 | 1,381 | ||||||||||||||||||
| UTC Fire & Security |
5,531 | 6,462 | 5,754 | 493 | 542 | 443 | ||||||||||||||||||
| Pratt & Whitney |
12,577 | 14,041 | 13,086 | 1,835 | 2,122 | 2,011 | ||||||||||||||||||
| Hamilton Sundstrand |
5,599 | 6,207 | 5,636 | 857 | 1,099 | 967 | ||||||||||||||||||
| Sikorsky |
6,318 | 5,368 | 4,789 | 608 | 478 | 373 | ||||||||||||||||||
| Total segment |
53,217 | 59,971 | 55,794 | 6,980 | 8,034 | 7,496 | ||||||||||||||||||
| Eliminations and other |
(297 | ) | (214 | ) | (78 | ) | (167 | ) | (1 | ) | (60 | ) | ||||||||||||
| General corporate expenses |
— | — | — | (348 | ) | (408 | ) | (386 | ) | |||||||||||||||
| Consolidated |
$ | 52,920 | $ | 59,757 | $ | 55,716 | $ | 6,465 | $ | 7,625 | $ | 7,050 | ||||||||||||
| Total Assets | Capital Expenditures | Depreciation & Amortization | |||||||||||||||||||||||||||||||||
| (in millions of dollars) | 2009 | 2008 | 2007 | 2009 | 2008 | 2007 | 2009 | 2008 | 2007 | ||||||||||||||||||||||||||
| Otis |
$ | 7,908 | $ | 7,731 | $ | 7,721 | $ | 67 | $ | 150 | $ | 136 | $ | 204 | $ | 203 | $ | 186 | |||||||||||||||||
| Carrier |
9,804 | 10,810 | 10,335 | 90 | 191 | 181 | 191 | 194 | 188 | ||||||||||||||||||||||||||
| UTC Fire & Security |
10,304 | 10,022 | 11,143 | 72 | 95 | 101 | 214 | 238 | 202 | ||||||||||||||||||||||||||
| Pratt & Whitney |
10,063 | 10,018 | 9,586 | 288 | 412 | 384 | 329 | 368 | 307 | ||||||||||||||||||||||||||
| Hamilton Sundstrand |
8,509 | 8,648 | 8,965 | 114 | 141 | 160 | 174 | 178 | 163 | ||||||||||||||||||||||||||
| Sikorsky |
4,167 | 3,985 | 3,412 | 95 | 165 | 128 | 68 | 62 | 52 | ||||||||||||||||||||||||||
| Total segment |
50,755 | 51,214 | 51,162 | 726 | 1,154 | 1,090 | 1,180 | 1,243 | 1,098 | ||||||||||||||||||||||||||
| Eliminations and other 1 |
5,007 | 5,623 | 3,726 | 100 | 62 | 63 | 78 | 78 | 75 | ||||||||||||||||||||||||||
| Consolidated |
$ | 55,762 | $ | 56,837 | $ | 54,888 | $ | 826 | $ | 1,216 | $ | 1,153 | $ | 1,258 | $ | 1,321 | $ | 1,173 | |||||||||||||||||
| 1 | The asset increase from 2007 to 2008 primarily reflects the increase in cash and cash equivalents held at UTC Corporate. |
54
Geographic External Revenues and Operating Profit. Geographic external revenues and operating profits are attributed to the geographic regions based on their location of origin. U.S. external revenues include export sales to commercial customers outside the United States and sales to the U.S. government, commercial and affiliated customers, which are known to be for resale to customers outside the United States. Long-lived assets are net fixed assets attributed to the specific geographic regions.
| External Revenues | Operating Profits | Long-Lived Assets | |||||||||||||||||||||||||||||||||
| (in millions of dollars) | 2009 | 2008 | 2007 | 2009 | 2008 | 2007 | 2009 | 2008 | 2007 | ||||||||||||||||||||||||||
| United States Operations |
$ | 28,337 | $ | 29,477 | $ | 27,665 | $ | 3,771 | $ | 3,945 | $ | 3,508 | $ | 3,096 | $ | 3,198 | $ | 3,109 | |||||||||||||||||
| International Operations |
|||||||||||||||||||||||||||||||||||
| Europe |
12,269 | 15,180 | 13,917 | 1,743 | 2,219 | 2,204 | 1,346 | 1,347 | 1,356 | ||||||||||||||||||||||||||
| Asia Pacific |
7,138 | 8,212 | 7,991 | 990 | 1,037 | 1,041 | 845 | 800 | 762 | ||||||||||||||||||||||||||
| Other |
5,040 | 6,619 | 5,783 | 476 | 833 | 743 | 714 | 671 | 803 | ||||||||||||||||||||||||||
| Eliminations and other |
136 | 269 | 360 | (515 | ) | (409 | ) | (446 | ) | 363 | 332 | 266 | |||||||||||||||||||||||
| Consolidated |
$ | 52,920 | $ | 59,757 | $ | 55,716 | $ | 6,465 | $ | 7,625 | $ | 7,050 | $ | 6,364 | $ | 6,348 | $ | 6,296 | |||||||||||||||||
Revenues from U.S. operations include export sales as follows:
| (in millions of dollars) | 2009 | 2008 | 2007 | ||||||||
| Europe |
$ | 2,089 | $ | 2,180 | $ | 1,858 | |||||
| Asia Pacific |
2,430 | 2,221 | 2,387 | ||||||||
| Other |
2,477 | 2,861 | 2,247 | ||||||||
| $ | 6,996 | $ | 7,262 | $ | 6,492 | ||||||
Major Customers. Revenues include sales under prime contracts and subcontracts to the U.S. government, primarily related to Pratt & Whitney, Hamilton Sundstrand and Sikorsky products, as follows:
| (in millions of dollars) | 2009 | 2008 | 2007 | ||||||||
| Pratt & Whitney |
$ | 3,942 | $ | 3,804 | $ | 3,765 | |||||
| Hamilton Sundstrand |
1,230 | 1,089 | 948 | ||||||||
| Sikorsky |
3,979 | 3,063 | 2,774 | ||||||||
| Other |
127 | 35 | 39 | ||||||||
| $ | 9,278 | $ | 7,991 | $ | 7,526 | ||||||
Selected Quarterly Financial Data (Unaudited)
| 2009 Quarters | 2008 Quarters | ||||||||||||||||||||||||||||||
| (in millions of dollars, except per share amounts) | First | Second | Third | Fourth | First | Second | Third | Fourth | |||||||||||||||||||||||
| Sales |
$ | 12,199 | $ | 13,060 | $ | 13,187 | $ | 13,979 | $ | 13,834 | $ | 15,812 | $ | 14,973 | $ | 14,500 | |||||||||||||||
| Gross margin |
3,092 | 3,459 | 3,351 | 3,662 | 3,596 | 4,176 | 4,038 | 3,672 | |||||||||||||||||||||||
| Net income attributable to common shareowners |
722 | 976 | 1,058 | 1,073 | 1,000 | 1,275 | 1,269 | 1,145 | |||||||||||||||||||||||
| Earnings per share of Common Stock: |
|||||||||||||||||||||||||||||||
| Basic – net income |
$ | .79 | $ | 1.06 | $ | 1.15 | $ | 1.17 | $ | 1.05 | $ | 1.35 | $ | 1.36 | $ | 1.24 | |||||||||||||||
| Diluted – net income |
$ | .78 | $ | 1.05 | $ | 1.14 | $ | 1.15 | $ | 1.03 | $ | 1.32 | $ | 1.33 | $ | 1.23 | |||||||||||||||
Comparative Stock Data (Unaudited)
| 2009 | 2008 | ||||||||||||||||||||||
| Common Stock | High | Low | Dividend | High | Low | Dividend | |||||||||||||||||
| First quarter |
$ | 55.51 | $ | 37.40 | $ | .385 | $ | 77.14 | $ | 65.20 | $ | .320 | |||||||||||
| Second quarter |
$ | 56.99 | $ | 42.06 | $ | .385 | $ | 75.86 | $ | 60.51 | $ | .320 | |||||||||||
| Third quarter |
$ | 63.72 | $ | 49.00 | $ | .385 | $ | 67.95 | $ | 56.15 | $ | .320 | |||||||||||
| Fourth quarter |
$ | 70.89 | $ | 59.31 | $ | .385 | $ | 59.96 | $ | 41.76 | $ | .385 | |||||||||||
Our common stock is listed on the New York Stock Exchange. The high and low prices are based on the Composite Tape of the New York Stock Exchange. There were approximately 25,778 registered shareholders at December 31, 2009.
55
Performance Graph (Unaudited)
The following graph presents the cumulative total shareholder return for the five years ending December 31, 2009 for our common stock, as compared to the Standard & Poor’s 500 Stock Index and to the Dow Jones 30 Industrial Average. Our common stock price is a component of both indices. These figures assume that all dividends paid over the five-year period were reinvested, and that the starting value of each index and the investment in common stock was $100.00 on December 31, 2004.
| December | |||||||||||||||||||||||
| 2004 | 2005 | 2006 | 2007 | 2008 | 2009 | ||||||||||||||||||
| United Technologies Corporation |
$ | 100.00 | $ | 110.05 | $ | 125.08 | $ | 155.65 | $ | 111.40 | $ | 148.48 | |||||||||||
| S&P 500 Index |
$ | 100.00 | $ | 104.91 | $ | 121.48 | $ | 128.16 | $ | 80.74 | $ | 102.11 | |||||||||||
| Dow Jones Industrial Average |
$ | 100.00 | $ | 101.75 | $ | 121.11 | $ | 131.85 | $ | 89.77 | $ | 109.34 | |||||||||||
56
94
95
96
Exhibit 21
United Technologies Corporation
Subsidiary and Affiliate Listing
December 31, 2009
| Entity Name |
State/Country of Incorporation | |
| 3206772 Nova Scotia Company | Canada | |
| Australia Holdings Inc. | Delaware | |
| Beesail Limited | England | |
| Caricor Ltd. | Delaware | |
| Carrier Commercial Refrigeration, Inc. | Delaware | |
| Carrier Corporation | Delaware | |
| Carrier Enterprise, LLC | Delaware | |
| Carrier HVACR Investments B.V. | Netherlands | |
| Carrier Technologies ULC | Canada | |
| Ceesail Limited | England | |
| Chubb (UK) Limited | England | |
| Chubb Asia Holdings Limited | England | |
| Chubb Fire Limited | England | |
| Chubb Group (International) Limited | England | |
| Chubb Group Limited | England | |
| Chubb Group Properties Limited | England | |
| Chubb Group Security Limited | England | |
| Chubb International (Netherlands) BV | Netherlands | |
| Chubb International Holdings Limited | England | |
| Chubb International Limited | England | |
| Chubb Investments Limited | England | |
| Chubb Limited | England | |
| Chubb Nederland B.V. | Netherlands | |
| Chubb Overseas Investments Limited | England | |
| Chubb Security Holdings Australia Limited | Australia | |
| Chubb White Peak (UK) Limited | England | |
| Commonwealth Luxembourg Holdings S.a.r.l. | Luxembourg | |
| Empresas Carrier, S. De R.L. De C.V. | Mexico | |
| Fyrnetics (Hong Kong) Limited | Hong Kong | |
| GST Holdings Limited | Cayman Islands | |
| Hamilton Sundstrand Corporation | Delaware | |
| Hamilton Sundstrand Holdings, Inc. | Delaware | |
| Hamilton Sundstrand International Holdings Ltd. | Cayman Islands | |
| Helicopter Support, Inc. | Connecticut | |
| Ie Pe Ge B.V. | Netherlands | |
| International Comfort Products, LLC | Delaware | |
| Kaysail Limited | England | |
| Kidde America Inc. | Delaware | |
| Kidde Fire Protection Inc. | Delaware | |
| Kidde Holdings Limited | England | |
| Kidde International Limited | England | |
| Kidde Limited | England | |
| Kidde Technologies Inc. (*) | Delaware | |
| Kidde UK | England | |
| Kidde US Holdings Inc. | Delaware | |
| KNA Inc. | Delaware | |
| Latin American Holding, Inc. | Delaware |
United Technologies Corporation
Subsidiary and Affiliate Listing
December 31, 2009
| Entity Name |
State/Country of Incorporation | |
| Lenel Systems International, Inc. | Delaware | |
| Milton Roy Company | Pennsylvania | |
| Moonless Limited | England | |
| Nippon Otis Elevator Company | Japan | |
| Noresco, LLC | Delaware | |
| NSI, Inc. | Delaware | |
| Otis Elevator Company | New Jersey | |
| Otis Elevator Korea | Republic of Korea | |
| Otis Far East Holdings Limited | Hong Kong | |
| Otis Holdings GmbH & Co. OHG | Germany | |
| Otis International Holdings UK Limited | England | |
| Otis Limited | England | |
| Otis Pacific Holdings B.V. | Netherlands | |
| Otis S.C.S. | France | |
| Parkview Participations LLC | Delaware | |
| Parkview Treasury Services (UK) Limited | United Kingdom | |
| Pilgrim House Group Limited | England | |
| Pratt & Whitney Canada Corp. | Canada | |
| Pratt & Whitney Canada Holdings Corp. | Canada | |
| Pratt & Whitney Canada Leasing, Limited Partnership | Canada | |
| Pratt & Whitney Engine Leasing, LLC | Delaware | |
| Pratt & Whitney Power Systems, Inc. | Delaware | |
| Pratt & Whitney Rocketdyne, Inc. | Delaware | |
| Pratt Aero Limited Partnership | Canada | |
| Ratier-Figeac, SAS | France | |
| SICLI Holding SAS | France | |
| Sikorsky Aircraft Corporation | Delaware | |
| Sirius Korea Limited | England | |
| Sullair Corporation | Indiana | |
| United Technologies Australia Holdings Limited | Australia | |
| United Technologies Canada, Ltd. | Canada | |
| United Technologies Cortran, Inc. | Delaware | |
| United Technologies Electronic Controls, Inc. | Delaware | |
| United Technologies Far East Limited | Hong Kong | |
| United Technologies Finance (U.K.) Limited | England | |
| United Technologies France SAS | France | |
| United Technologies Holding GmbH | Germany | |
| United Technologies Holdings Limited | England | |
| United Technologies Holdings SAS | France | |
| United Technologies Intercompany Lending Ireland Limited | Ireland | |
| United Technologies International Corporation-Asia Private Limited | Singapore | |
| United Technologies International SAS | France | |
| United Technologies Luxembourg S.a.r.l. | Luxembourg | |
| United Technologies Paris SNC | France | |
| UT (UK) LIMITED | England | |
| UT Finance Corporation | Delaware | |
| UT Luxembourg Holding I S.a.r.l. | Luxembourg |
United Technologies Corporation
Subsidiary and Affiliate Listing
December 31, 2009
| Entity Name |
State/Country of Incorporation | |
| UT Luxembourg Holding II S.a.r.l. | Luxembourg | |
| UT Park View, Inc. | Delaware | |
| UTC Canada Corporation | Canada | |
| UTC Fire & Security Corporation | Delaware | |
| UTCL Holdings, Limited | Canada | |
| UTCL Investments B.V. | Netherlands | |
| UTX Holdings S.C.S. | France | |
| White Peak Finance Ireland | Ireland | |
| Wytwornia Sprzetu Komunikacyjnego PZL-Rzeszow S.A. | Poland | |
| Xizi Otis Elevator Company Limited | China | |
| Zardoya Otis, S.A. | Spain |
| * | Kidde Technologies Inc. also conducts business as Kidde Aerospace & Defense, Fenwal Safety Systems and Kidde Dual Spectrum. |
Other subsidiaries of the Registrant have been omitted from this listing since, considered in the aggregate as a single subsidiary, they would not constitute a significant subsidiary.
Exhibit 23
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We hereby consent to the incorporation by reference in the Registration Statement on Form S-3 (No. 333-144830), in the Registration Statement on Form S-4 (No. 333-77991) as amended by Post-Effective Amendment No. 1 on Form S-8 (No. 333-77991) and in the Registration Statements on Form S-8 (Nos. 333-163822, 333-156390, 333-156385, 333-150643, 333-125293, 333-110020, 333-100724, 333-100723, 333-100718, 333-82911, 333-77817, 333-21853, 333-21851, 033-57769 and 033-51385) of United Technologies Corporation of our report dated February 11, 2010 relating to the financial statements and the effectiveness of internal control over financial reporting, which appears in the Annual Report to Shareowners, which is incorporated in this Annual Report on Form 10-K. We also consent to the incorporation by reference of our report dated February 11, 2010 relating to the financial statement schedule, which appears on page S-I of this Form 10-K.
/s/ PricewaterhouseCoopers LLP
Hartford, Connecticut
February 11, 2010
Exhibit 24
UNITED TECHNOLOGIES CORPORATION
Power of Attorney
The undersigned, as a member of the Board of Directors, or as an officer of UNITED TECHNOLOGIES CORPORATION, a Delaware corporation (the “Corporation”), or as a member of a committee of said Board, or in all of said capacities, hereby constitutes and appoints CHARLES D. GILL, KATHLEEN M. HOPKO and GREGORY J. HAYES, or any one of them, his or her true and lawful attorneys and agents to do any and all acts and things and execute any and all instruments which the said attorneys and agents may deem necessary or advisable to enable the Corporation to comply with the Securities Exchange Act of 1934 and any rules and regulations and requirements of the Securities and Exchange Commission in respect thereof in connection with the filing of the Annual Report of the Corporation on Form 10-K for the fiscal year ended December 31, 2009, including specifically, but without limiting the generality of the foregoing, the power and authority to sign the name of the undersigned, in the capacities aforesaid or in any other capacity, to such Form 10-K Annual Report filed or to be filed with the Securities and Exchange Commission, and any and all amendments to the said Form 10-K Annual Report, and any and all instruments and documents filed as a part of or in connection with the said Form 10-K Annual Report or any amendments thereto; hereby ratifying and confirming all that the said attorneys and agents, or any one of them, have done, shall do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has signed this Power of Attorney this 8th day of February, 2010.
| /s/ JOHN V. FARACI |
| John V. Faraci |
UNITED TECHNOLOGIES CORPORATION
Power of Attorney
The undersigned, as a member of the Board of Directors, or as an officer of UNITED TECHNOLOGIES CORPORATION, a Delaware corporation (the “Corporation”), or as a member of a committee of said Board, or in all of said capacities, hereby constitutes and appoints CHARLES D. GILL, KATHLEEN M. HOPKO and GREGORY J. HAYES, or any one of them, his or her true and lawful attorneys and agents to do any and all acts and things and execute any and all instruments which the said attorneys and agents may deem necessary or advisable to enable the Corporation to comply with the Securities Exchange Act of 1934 and any rules and regulations and requirements of the Securities and Exchange Commission in respect thereof in connection with the filing of the Annual Report of the Corporation on Form 10-K for the fiscal year ended December 31, 2009, including specifically, but without limiting the generality of the foregoing, the power and authority to sign the name of the undersigned, in the capacities aforesaid or in any other capacity, to such Form 10-K Annual Report filed or to be filed with the Securities and Exchange Commission, and any and all amendments to the said Form 10-K Annual Report, and any and all instruments and documents filed as a part of or in connection with the said Form 10-K Annual Report or any amendments thereto; hereby ratifying and confirming all that the said attorneys and agents, or any one of them, have done, shall do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has signed this Power of Attorney this 8th day of February, 2010.
| /s/ JEAN-PIERRE GARNIER |
| Jean-Pierre Garnier |
UNITED TECHNOLOGIES CORPORATION
Power of Attorney
The undersigned, as a member of the Board of Directors, or as an officer of UNITED TECHNOLOGIES CORPORATION, a Delaware corporation (the “Corporation”), or as a member of a committee of said Board, or in all of said capacities, hereby constitutes and appoints CHARLES D. GILL, KATHLEEN M. HOPKO and GREGORY J. HAYES, or any one of them, his or her true and lawful attorneys and agents to do any and all acts and things and execute any and all instruments which the said attorneys and agents may deem necessary or advisable to enable the Corporation to comply with the Securities Exchange Act of 1934 and any rules and regulations and requirements of the Securities and Exchange Commission in respect thereof in connection with the filing of the Annual Report of the Corporation on Form 10-K for the fiscal year ended December 31, 2009, including specifically, but without limiting the generality of the foregoing, the power and authority to sign the name of the undersigned, in the capacities aforesaid or in any other capacity, to such Form 10-K Annual Report filed or to be filed with the Securities and Exchange Commission, and any and all amendments to the said Form 10-K Annual Report, and any and all instruments and documents filed as a part of or in connection with the said Form 10-K Annual Report or any amendments thereto; hereby ratifying and confirming all that the said attorneys and agents, or any one of them, have done, shall do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has signed this Power of Attorney this 8th day of February, 2010.
| /s/ JAMIE S. GORELICK |
| Jamie S. Gorelick |
UNITED TECHNOLOGIES CORPORATION
Power of Attorney
The undersigned, as a member of the Board of Directors, or as an officer of UNITED TECHNOLOGIES CORPORATION, a Delaware corporation (the “Corporation”), or as a member of a committee of said Board, or in all of said capacities, hereby constitutes and appoints CHARLES D. GILL, KATHLEEN M. HOPKO and GREGORY J. HAYES, or any one of them, his or her true and lawful attorneys and agents to do any and all acts and things and execute any and all instruments which the said attorneys and agents may deem necessary or advisable to enable the Corporation to comply with the Securities Exchange Act of 1934 and any rules and regulations and requirements of the Securities and Exchange Commission in respect thereof in connection with the filing of the Annual Report of the Corporation on Form 10-K for the fiscal year ended December 31, 2009, including specifically, but without limiting the generality of the foregoing, the power and authority to sign the name of the undersigned, in the capacities aforesaid or in any other capacity, to such Form 10-K Annual Report filed or to be filed with the Securities and Exchange Commission, and any and all amendments to the said Form 10-K Annual Report, and any and all instruments and documents filed as a part of or in connection with the said Form 10-K Annual Report or any amendments thereto; hereby ratifying and confirming all that the said attorneys and agents, or any one of them, have done, shall do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has signed this Power of Attorney this 8th day of February, 2010.
| /s/ CARLOS M. GUTIERREZ |
| Carlos M. Gutierrez |
UNITED TECHNOLOGIES CORPORATION
Power of Attorney
The undersigned, as a member of the Board of Directors, or as an officer of UNITED TECHNOLOGIES CORPORATION, a Delaware corporation (the “Corporation”), or as a member of a committee of said Board, or in all of said capacities, hereby constitutes and appoints CHARLES D. GILL, KATHLEEN M. HOPKO and GREGORY J. HAYES, or any one of them, his or her true and lawful attorneys and agents to do any and all acts and things and execute any and all instruments which the said attorneys and agents may deem necessary or advisable to enable the Corporation to comply with the Securities Exchange Act of 1934 and any rules and regulations and requirements of the Securities and Exchange Commission in respect thereof in connection with the filing of the Annual Report of the Corporation on Form 10-K for the fiscal year ended December 31, 2009, including specifically, but without limiting the generality of the foregoing, the power and authority to sign the name of the undersigned, in the capacities aforesaid or in any other capacity, to such Form 10-K Annual Report filed or to be filed with the Securities and Exchange Commission, and any and all amendments to the said Form 10-K Annual Report, and any and all instruments and documents filed as a part of or in connection with the said Form 10-K Annual Report or any amendments thereto; hereby ratifying and confirming all that the said attorneys and agents, or any one of them, have done, shall do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has signed this Power of Attorney this 8th day of February, 2010.
| /s/ EDWARD A. KANGAS |
| Edward A. Kangas |
UNITED TECHNOLOGIES CORPORATION
Power of Attorney
The undersigned, as a member of the Board of Directors, or as an officer of UNITED TECHNOLOGIES CORPORATION, a Delaware corporation (the “Corporation”), or as a member of a committee of said Board, or in all of said capacities, hereby constitutes and appoints CHARLES D. GILL, KATHLEEN M. HOPKO and GREGORY J. HAYES, or any one of them, his or her true and lawful attorneys and agents to do any and all acts and things and execute any and all instruments which the said attorneys and agents may deem necessary or advisable to enable the Corporation to comply with the Securities Exchange Act of 1934 and any rules and regulations and requirements of the Securities and Exchange Commission in respect thereof in connection with the filing of the Annual Report of the Corporation on Form 10-K for the fiscal year ended December 31, 2009, including specifically, but without limiting the generality of the foregoing, the power and authority to sign the name of the undersigned, in the capacities aforesaid or in any other capacity, to such Form 10-K Annual Report filed or to be filed with the Securities and Exchange Commission, and any and all amendments to the said Form 10-K Annual Report, and any and all instruments and documents filed as a part of or in connection with the said Form 10-K Annual Report or any amendments thereto; hereby ratifying and confirming all that the said attorneys and agents, or any one of them, have done, shall do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has signed this Power of Attorney this 8th day of February, 2010.
| /s/ CHARLES R. LEE |
| Charles R. Lee |
UNITED TECHNOLOGIES CORPORATION
Power of Attorney
The undersigned, as a member of the Board of Directors, or as an officer of UNITED TECHNOLOGIES CORPORATION, a Delaware corporation (the “Corporation”), or as a member of a committee of said Board, or in all of said capacities, hereby constitutes and appoints CHARLES D. GILL, KATHLEEN M. HOPKO and GREGORY J. HAYES, or any one of them, his or her true and lawful attorneys and agents to do any and all acts and things and execute any and all instruments which the said attorneys and agents may deem necessary or advisable to enable the Corporation to comply with the Securities Exchange Act of 1934 and any rules and regulations and requirements of the Securities and Exchange Commission in respect thereof in connection with the filing of the Annual Report of the Corporation on Form 10-K for the fiscal year ended December 31, 2009, including specifically, but without limiting the generality of the foregoing, the power and authority to sign the name of the undersigned, in the capacities aforesaid or in any other capacity, to such Form 10-K Annual Report filed or to be filed with the Securities and Exchange Commission, and any and all amendments to the said Form 10-K Annual Report, and any and all instruments and documents filed as a part of or in connection with the said Form 10-K Annual Report or any amendments thereto; hereby ratifying and confirming all that the said attorneys and agents, or any one of them, have done, shall do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has signed this Power of Attorney this 8th day of February, 2010.
| /s/ RICHARD D. MCCORMICK |
| Richard D. McCormick |
UNITED TECHNOLOGIES CORPORATION
Power of Attorney
The undersigned, as a member of the Board of Directors, or as an officer of UNITED TECHNOLOGIES CORPORATION, a Delaware corporation (the “Corporation”), or as a member of a committee of said Board, or in all of said capacities, hereby constitutes and appoints CHARLES D. GILL, KATHLEEN M. HOPKO and GREGORY J. HAYES, or any one of them, his or her true and lawful attorneys and agents to do any and all acts and things and execute any and all instruments which the said attorneys and agents may deem necessary or advisable to enable the Corporation to comply with the Securities Exchange Act of 1934 and any rules and regulations and requirements of the Securities and Exchange Commission in respect thereof in connection with the filing of the Annual Report of the Corporation on Form 10-K for the fiscal year ended December 31, 2009, including specifically, but without limiting the generality of the foregoing, the power and authority to sign the name of the undersigned, in the capacities aforesaid or in any other capacity, to such Form 10-K Annual Report filed or to be filed with the Securities and Exchange Commission, and any and all amendments to the said Form 10-K Annual Report, and any and all instruments and documents filed as a part of or in connection with the said Form 10-K Annual Report or any amendments thereto; hereby ratifying and confirming all that the said attorneys and agents, or any one of them, have done, shall do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has signed this Power of Attorney this 8th day of February, 2010.
| /s/ HAROLD W. MCGRAW III |
| Harold W. McGraw III |
UNITED TECHNOLOGIES CORPORATION
Power of Attorney
The undersigned, as a member of the Board of Directors, or as an officer of UNITED TECHNOLOGIES CORPORATION, a Delaware corporation (the “Corporation”), or as a member of a committee of said Board, or in all of said capacities, hereby constitutes and appoints CHARLES D. GILL, KATHLEEN M. HOPKO and GREGORY J. HAYES, or any one of them, his or her true and lawful attorneys and agents to do any and all acts and things and execute any and all instruments which the said attorneys and agents may deem necessary or advisable to enable the Corporation to comply with the Securities Exchange Act of 1934 and any rules and regulations and requirements of the Securities and Exchange Commission in respect thereof in connection with the filing of the Annual Report of the Corporation on Form 10-K for the fiscal year ended December 31, 2009, including specifically, but without limiting the generality of the foregoing, the power and authority to sign the name of the undersigned, in the capacities aforesaid or in any other capacity, to such Form 10-K Annual Report filed or to be filed with the Securities and Exchange Commission, and any and all amendments to the said Form 10-K Annual Report, and any and all instruments and documents filed as a part of or in connection with the said Form 10-K Annual Report or any amendments thereto; hereby ratifying and confirming all that the said attorneys and agents, or any one of them, have done, shall do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has signed this Power of Attorney this 8th day of February, 2010.
| /s/ RICHARD B. MYERS |
| Richard B. Myers |
UNITED TECHNOLOGIES CORPORATION
Power of Attorney
The undersigned, as a member of the Board of Directors, or as an officer of UNITED TECHNOLOGIES CORPORATION, a Delaware corporation (the “Corporation”), or as a member of a committee of said Board, or in all of said capacities, hereby constitutes and appoints CHARLES D. GILL, KATHLEEN M. HOPKO and GREGORY J. HAYES, or any one of them, his or her true and lawful attorneys and agents to do any and all acts and things and execute any and all instruments which the said attorneys and agents may deem necessary or advisable to enable the Corporation to comply with the Securities Exchange Act of 1934 and any rules and regulations and requirements of the Securities and Exchange Commission in respect thereof in connection with the filing of the Annual Report of the Corporation on Form 10-K for the fiscal year ended December 31, 2009, including specifically, but without limiting the generality of the foregoing, the power and authority to sign the name of the undersigned, in the capacities aforesaid or in any other capacity, to such Form 10-K Annual Report filed or to be filed with the Securities and Exchange Commission, and any and all amendments to the said Form 10-K Annual Report, and any and all instruments and documents filed as a part of or in connection with the said Form 10-K Annual Report or any amendments thereto; hereby ratifying and confirming all that the said attorneys and agents, or any one of them, have done, shall do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has signed this Power of Attorney this 8th day of February, 2010.
| /s/ H. PATRICK SWYGERT |
| H. Patrick Swygert |
UNITED TECHNOLOGIES CORPORATION
Power of Attorney
The undersigned, as a member of the Board of Directors, or as an officer of UNITED TECHNOLOGIES CORPORATION, a Delaware corporation (the “Corporation”), or as a member of a committee of said Board, or in all of said capacities, hereby constitutes and appoints CHARLES D. GILL, KATHLEEN M. HOPKO and GREGORY J. HAYES, or any one of them, his or her true and lawful attorneys and agents to do any and all acts and things and execute any and all instruments which the said attorneys and agents may deem necessary or advisable to enable the Corporation to comply with the Securities Exchange Act of 1934 and any rules and regulations and requirements of the Securities and Exchange Commission in respect thereof in connection with the filing of the Annual Report of the Corporation on Form 10-K for the fiscal year ended December 31, 2009, including specifically, but without limiting the generality of the foregoing, the power and authority to sign the name of the undersigned, in the capacities aforesaid or in any other capacity, to such Form 10-K Annual Report filed or to be filed with the Securities and Exchange Commission, and any and all amendments to the said Form 10-K Annual Report, and any and all instruments and documents filed as a part of or in connection with the said Form 10-K Annual Report or any amendments thereto; hereby ratifying and confirming all that the said attorneys and agents, or any one of them, have done, shall do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has signed this Power of Attorney this 8th day of February, 2010.
| /s/ ANDRÉ VILLENEUVE |
| André Villeneuve |
UNITED TECHNOLOGIES CORPORATION
Power of Attorney
The undersigned, as a member of the Board of Directors, or as an officer of UNITED TECHNOLOGIES CORPORATION, a Delaware corporation (the “Corporation”), or as a member of a committee of said Board, or in all of said capacities, hereby constitutes and appoints CHARLES D. GILL, KATHLEEN M. HOPKO and GREGORY J. HAYES, or any one of them, his or her true and lawful attorneys and agents to do any and all acts and things and execute any and all instruments which the said attorneys and agents may deem necessary or advisable to enable the Corporation to comply with the Securities Exchange Act of 1934 and any rules and regulations and requirements of the Securities and Exchange Commission in respect thereof in connection with the filing of the Annual Report of the Corporation on Form 10-K for the fiscal year ended December 31, 2009, including specifically, but without limiting the generality of the foregoing, the power and authority to sign the name of the undersigned, in the capacities aforesaid or in any other capacity, to such Form 10-K Annual Report filed or to be filed with the Securities and Exchange Commission, and any and all amendments to the said Form 10-K Annual Report, and any and all instruments and documents filed as a part of or in connection with the said Form 10-K Annual Report or any amendments thereto; hereby ratifying and confirming all that the said attorneys and agents, or any one of them, have done, shall do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has signed this Power of Attorney this 8th day of February, 2010.
| /s/ CHRISTINE TODD WHITMAN |
| Christine Todd Whitman |
Exhibit 31.1
CERTIFICATION
I, Louis R. Chênevert, certify that:
| 1. | I have reviewed this annual report on Form 10-K of United Technologies Corporation; |
| 2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
| 3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
| 4. | The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
| a. | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
| b. | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
| c. | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
| d. | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
| 5. | The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
| a. | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
| b. | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
| /s/ LOUIS R. CHÊNEVERT | ||||
| Louis R. Chênevert | ||||
| Date: February 11, 2010 | Chairman, President and Chief Executive Officer |
Exhibit 31.2
CERTIFICATION
I, Gregory J. Hayes, certify that:
| 1. | I have reviewed this annual report on Form 10-K of United Technologies Corporation; |
| 2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
| 3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
| 4. | The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
| a. | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
| b. | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
| c. | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
| d. | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
| 5. | The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
| a. | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
| b. | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
| /s/ GREGORY J. HAYES | ||||
| Gregory J. Hayes | ||||
| Date: February 11, 2010 | Senior Vice President and Chief Financial Officer |
Exhibit 31.3
CERTIFICATION
I, Margaret M. Smyth, certify that:
| 1. | I have reviewed this annual report on Form 10-K of United Technologies Corporation; |
| 2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
| 3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
| 4. | The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
| a. | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
| b. | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
| c. | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
| d. | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
| 5. | The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
| a. | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
| b. | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
| /s/ MARGARET M. SMYTH | ||||
| Margaret M. Smyth | ||||
| Date: February 11, 2010 | Vice President, Controller |
Exhibit 32
Section 1350 Certifications
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
(Subsections (a) and (b) of Section 1350, Chapter 63 of Title 18, United States Code)
Pursuant to section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of section 1350, chapter 63 of title 18, United States Code), each of the undersigned officers of United Technologies Corporation, a Delaware corporation (the “Corporation”), does hereby certify that:
The Annual Report on Form 10-K for the year ended December 31, 2009 (the “Form 10-K”) of the Corporation fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934 and information contained in the Form 10-K fairly presents, in all material respects, the financial condition and results of operations of the Corporation.
| Date: February 11, 2010 | /s/ LOUIS R. CHÊNEVERT | |||
| Louis R. Chênevert | ||||
| Chairman, President and Chief Executive Officer | ||||
| Date: February 11, 2010 | /s/ GREGORY J. HAYES | |||
| Gregory J. Hayes | ||||
| Senior Vice President and Chief Financial Officer | ||||
| Date: February 11, 2010 | /s/ MARGARET M. SMYTH | |||
| Margaret M. Smyth | ||||
| Vice President, Controller | ||||