0000101829
2009-04-01
2009-06-30
0000101829
2008-04-01
2008-06-30
0000101829
2009-06-30
0000101829
2008-12-31
0000101829
2009-01-01
2009-06-30
0000101829
2008-01-01
2008-06-30
0000101829
2007-12-31
0000101829
2008-06-30
xbrli:shares
iso4217:USD
iso4217:USD
xbrli:shares
941273401
59346468617
10-Q
2009-06-30
false
Not Applicable
UNITED TECHNOLOGIES CORP /DE/
0000101829
--12-31
Yes
No
Yes
Large Accelerated Filer
060570975
9327000000
3733000000
136000000
132000000
11657000000
4155000000
8829000000
7111000000
2490000000
2807000000
384000000
434000000
1574000000
1775000000
13196000000
15944000000
1637000000
2099000000
177000000
176000000
1460000000
1923000000
394000000
548000000
1066000000
1375000000
90000000
100000000
976000000
1275000000
1.06
1.35
1.05
1.32
919000000
944000000
929000000
966000000
.39
.32
17989000000
21602000000
7270000000
8044000000
186000000
256000000
25445000000
29902000000
13867000000
16430000000
4841000000
5444000000
793000000
845000000
3057000000
3410000000
2887000000
3773000000
352000000
341000000
2535000000
3432000000
670000000
978000000
1865000000
2454000000
167000000
1698000000
1.85
1.83
2.40
2.34
919000000
927000000
948000000
971000000
179000000
2275000000
.77
.64
4016000000
4327000000
8522000000
9480000000
8539000000
8340000000
1593000000
1551000000
966000000
769000000
23636000000
24467000000
1029000000
1002000000
3451000000
3633000000
15077000000
15106000000
8898000000
8758000000
6179000000
6348000000
15754000000
15363000000
3456000000
3443000000
3040000000
2581000000
56545000000
56837000000
1242000000
1023000000
4599000000
5594000000
11877000000
12069000000
853000000
1116000000
18571000000
19802000000
8721000000
9337000000
6589000000
6574000000
4258000000
4198000000
38139000000
39911000000
11369000000
11179000000
14661000000
14316000000
26133000000
25159000000
187000000
200000000
-5275000000
-5905000000
17379000000
15917000000
1027000000
1009000000
18406000000
16926000000
56545000000
56837000000
-609000000
-645000000
-23000000
133000000
-78000000
-110000000
821000000
-936000000
-320000000
-822000000
-75000000
-16000000
622000000
-1035000000
-47000000
31000000
2025000000
2306000000
340000000
542000000
197000000
546000000
44000000
85000000
38000000
92000000
-4000000
136000000
-527000000
-1231000000
-876000000
994000000
248000000
586000000
-101000000
-102000000
679000000
583000000
350000000
1520000000
-229000000
-191000000
-1785000000
-612000000
-24000000
75000000
-311000000
538000000
-401000000
0
2904000000
3442000000
<html><head><meta http-equiv="Content-Type" content="text/html; charset=utf-8" /></head><body><DIV><FONT SIZE=2><P>The Condensed Consolidated Financial Statements at June 30, 2009 and for the quarters and six months ended June 30, 2009 and 2008 are unaudited, but in the opinion of management include all adjustments (consisting only of normal recurring adjustments) necessary for a fair presentation of the results for the interim periods. We have adopted Statement of Financial Accounting Standards (SFAS) No. 165, “Subsequent Events” (SFAS 165) effective beginning the quarter ended June 30, 2009 and have evaluated for disclosure subsequent events that have occurred up to July 24, 2009, the date of issuance of our financial statements. The results reported in these Condensed Consolidated Financial Statements should not necessarily be taken as indicative of results that may be expected for the entire year. The financial information included herein should be read in conjunction with the financial statements and notes in our Annual Report to Shareowners (2008 Annual Report) incorporated by reference to our Annual Report on Form 10-K for calendar year 2008 (2008 Form 10-K). Certain reclassifications have been made herein to 2008 amounts to conform to the current year presentation. These include the adoption of SFAS No. 160, “Noncontrolling Interests in Consolidated Financial Statements” (SFAS 160) and Emerging Issues Task Force (EITF) Issue No. 07-1, “Accounting for Collaborative Arrangements” (EITF 07-1). See discussion in Notes 9 and 11, respectively, to the Condensed Consolidated Financial Statements.</FONT></DIV></body></html>
<html><head><meta http-equiv="Content-Type" content="text/html; charset=utf-8" /></head><body><DIV><FONT SIZE=2><P>Note 1: Acquisitions, Dispositions, Goodwill and Other Intangible Assets<BR>Business Acquisitions. Effective January 1, 2009, we adopted the provisions of SFAS 141(R), “Business Combinations (revised 2007)” (SFAS 141(R)). SFAS 141(R) retains the underlying concepts of SFAS 141, “Business Combinations” (SFAS 141) in that all business combinations are still required to be accounted for at fair value under the acquisition method of accounting, but changes the method of applying the acquisition method in a number of significant aspects. Acquisition costs will generally be expensed as incurred; noncontrolling interests will be valued at fair value at the acquisition date; in-process research and development will be recorded at fair value as an indefinite-lived intangible asset at the acquisition date; restructuring costs associated with a business combination will generally be expensed subsequent to the acquisition date; and changes in deferred tax asset valuation allowances and income tax uncertainties after the acquisition date generally will affect income tax expense. SFAS 141(R) is effective on a prospective basis for all of our business combinations for which the acquisition date is on or after January 1, 2009, with the exception of the accounting for valuation allowances on deferred taxes and acquired tax contingencies. SFAS 141(R) amends SFAS No. 109, “Accounting for Income Taxes” (SFAS 109) such that adjustments made to valuation allowances on deferred taxes and acquired tax contingencies associated with acquisitions that closed prior to the effective date of SFAS 141(R) would also apply the provisions of SFAS 141(R). <BR> <BR>During the first six months of 2009, our investment in businesses was approximately $197 million, and consisted primarily of a number of small acquisitions in both our commercial and aerospace businesses. The assets and liabilities of acquired businesses are recorded at fair value at the date of acquisition under the acquisition method. The final purchase price allocation of all acquired businesses is subject to the completion of the valuation of certain assets and liabilities, as well as plans for consolidation of facilities, relocation or reduction of employees and other restructuring activities. For acquisitions subject to SFAS 141(R), during the measurement period, we will recognize additional assets or liabilities if new information is obtained about facts and circumstances that existed as of the acquisition date that, if known, would have resulted in the recognition of those assets and liabilities as of that date. The measurement period shall not exceed one year from the acquisition date. Further, any associated restructuring activities will be expensed in future periods and not recorded through purchase accounting as previously done under SFAS 141. There was no significant impact from the effects of the SFAS 141(R) changes on our acquisition activity in the first six months of 2009. <BR> <BR>During the second quarter of 2009, Otis recorded a $52 million non-cash, non-taxable gain recognized on the remeasurement to fair value of a previously held equity interest in a joint venture as a result of the purchase of a controlling interest. <BR> <BR>In July 2009, Carrier and Watsco, Inc (Watsco) formed Carrier Enterprise, LLC, a venture to distribute Carrier, Bryant, Payne and Totaline residential and light commercial heating, ventilating and air-conditioning products in the U.S. Sunbelt region and selected territories in the Caribbean and Latin America. As part of the transaction, Carrier contributed its distribution businesses located in these regions into the new venture. In consideration of its contribution, Carrier received approximately 3 million shares of common stock of Watsco and a 40 percent non-controlling interest in the new venture, which included a business contributed by Watsco. Watsco will own a 60 percent interest in the venture with options to purchase an additional 20 percent interest from Carrier in future years. <BR> <BR>Goodwill. Changes in our goodwill balances for the first six months of 2009 were as follows:<BR></FONT></DIV><DIV><table style="border-collapse: collapse; margin-top: 20px;"><tr><td colspan=2 width=217 height=40 align=left style="border-bottom: 1px solid #000000;"><font size=2><B>(in millions of dollars)</B></font></td><td width=19 height=40 align=left><font size=2><B> </B></font></td><td colspan=2 width=98 height=40 align=center style="border-bottom: 1px solid #000000;"><font size=2><B>Balance as of January 1, 2009</B></font></td><td width=19 height=40 align=left><font size=2> </font></td><td colspan=2 width=123 height=40 align=center style="border-bottom: 1px solid #000000;"><font size=2><B>Goodwill resulting from business combinations</B></font></td><td width=19 height=40 align=left><font size=2> </font></td><td colspan=2 width=116 height=40 align=center style="border-bottom: 1px solid #000000;"><font size=2><B>Foreign currency translation and other</B></font></td><td width=19 height=40 align=left><font size=2> </font></td><td colspan=2 width=91 height=40 align=center style="border-bottom: 1px solid #000000;"><font size=2><B>Balance as of June 30, 2009</B></font></td></tr><tr><td colspan=2 width=217 height=17 align=left style="border-top: 1px solid #000000;"><font size=2>Otis </font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left style="border-top: 1px solid #000000;"><font size=2>$</font></td><td width=84 height=17 align=right style="border-top: 1px solid #000000;"><font size=2> 1,193 </font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left style="border-top: 1px solid #000000;"><font size=2>$</font></td><td width=109 height=17 align=right style="border-top: 1px solid #000000;"><font size=2> 112 </font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left style="border-top: 1px solid #000000;"><font size=2>$</font></td><td width=102 height=17 align=right style="border-top: 1px solid #000000;"><font size=2> (14)</font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left style="border-top: 1px solid #000000;"><font size=2>$</font></td><td width=77 height=17 align=right style="border-top: 1px solid #000000;"><font size=2> 1,291 </font></td></tr><tr><td colspan=2 width=217 height=17 align=left><font size=2>Carrier</font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left><font size=2> </font></td><td width=84 height=17 align=right><font size=2> 3,270 </font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left><font size=2> </font></td><td width=109 height=17 align=right><font size=2> 3 </font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left><font size=2> </font></td><td width=102 height=17 align=right><font size=2> (15)</font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left><font size=2> </font></td><td width=77 height=17 align=right><font size=2> 3,258 </font></td></tr><tr><td colspan=2 width=217 height=17 align=left><font size=2>UTC Fire & Security</font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left><font size=2> </font></td><td width=84 height=17 align=right><font size=2> 5,074 </font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left><font size=2> </font></td><td width=109 height=17 align=right><font size=2> 23 </font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left><font size=2> </font></td><td width=102 height=17 align=right><font size=2> 253 </font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left><font size=2> </font></td><td width=77 height=17 align=right><font size=2> 5,350 </font></td></tr><tr><td colspan=2 width=217 height=17 align=left><font size=2>Pratt & Whitney</font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left><font size=2> </font></td><td width=84 height=17 align=right><font size=2> 1,037 </font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left><font size=2> </font></td><td width=109 height=17 align=right><font size=2> - </font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left><font size=2> </font></td><td width=102 height=17 align=right><font size=2> 33 </font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left><font size=2> </font></td><td width=77 height=17 align=right><font size=2> 1,070 </font></td></tr><tr><td colspan=2 width=217 height=17 align=left><font size=2>Hamilton Sundstrand</font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left><font size=2> </font></td><td width=84 height=17 align=right><font size=2> 4,423 </font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left><font size=2> </font></td><td width=109 height=17 align=right><font size=2> 20 </font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left><font size=2> </font></td><td width=102 height=17 align=right><font size=2> 49 </font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left><font size=2> </font></td><td width=77 height=17 align=right><font size=2> 4,492 </font></td></tr><tr><td colspan=2 width=217 height=17 align=left><font size=2>Sikorsky</font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left style="border-bottom: 1px solid #000000;"><font size=2> </font></td><td width=84 height=17 align=right style="border-bottom: 1px solid #000000;"><font size=2> 249 </font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left style="border-bottom: 1px solid #000000;"><font size=2> </font></td><td width=109 height=17 align=right style="border-bottom: 1px solid #000000;"><font size=2> - </font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left style="border-bottom: 1px solid #000000;"><font size=2> </font></td><td width=102 height=17 align=right style="border-bottom: 1px solid #000000;"><font size=2> (7)</font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left style="border-bottom: 1px solid #000000;"><font size=2> </font></td><td width=77 height=17 align=right style="border-bottom: 1px solid #000000;"><font size=2> 242 </font></td></tr><tr><td width=33 height=8 align=left><font size=2> </font></td><td width=184 height=8 align=left><font size=2> </font></td><td width=19 height=8 align=left><font size=2> </font></td><td width=14 height=8 align=left style="border-top: 1px solid #000000;"><font size=2> </font></td><td width=84 height=8 align=right style="border-top: 1px solid #000000;"><font size=2> </font></td><td width=19 height=8 align=left><font size=2> </font></td><td width=14 height=8 align=left style="border-top: 1px solid #000000;"><font size=2> </font></td><td width=109 height=8 align=right style="border-top: 1px solid #000000;"><font size=2> </font></td><td width=19 height=8 align=left><font size=2> </font></td><td width=14 height=8 align=left style="border-top: 1px solid #000000;"><font size=2> </font></td><td width=102 height=8 align=right style="border-top: 1px solid #000000;"><font size=2> </font></td><td width=19 height=8 align=left><font size=2> </font></td><td width=14 height=8 align=left style="border-top: 1px solid #000000;"><font size=2> </font></td><td width=77 height=8 align=right style="border-top: 1px solid #000000;"><font size=2> </font></td></tr><tr><td colspan=2 width=217 height=17 align=left><font size=2>Total Segments</font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left><font size=2> </font></td><td width=84 height=17 align=right><font size=2> 15,246 </font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left><font size=2> </font></td><td width=109 height=17 align=right><font size=2> 158 </font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left><font size=2> </font></td><td width=102 height=17 align=right><font size=2> 299 </font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left><font size=2> </font></td><td width=77 height=17 align=right><font size=2> 15,703 </font></td></tr><tr><td colspan=2 width=217 height=17 align=left><font size=2>Eliminations & Other</font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left style="border-bottom: 1px solid #000000;"><font size=2> </font></td><td width=84 height=17 align=right style="border-bottom: 1px solid #000000;"><font size=2> 117 </font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left style="border-bottom: 1px solid #000000;"><font size=2> </font></td><td width=109 height=17 align=right style="border-bottom: 1px solid #000000;"><font size=2> - </font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left style="border-bottom: 1px solid #000000;"><font size=2> </font></td><td width=102 height=17 align=right style="border-bottom: 1px solid #000000;"><font size=2> (66)</font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left style="border-bottom: 1px solid #000000;"><font size=2> </font></td><td width=77 height=17 align=right style="border-bottom: 1px solid #000000;"><font size=2> 51 </font></td></tr><tr><td width=33 height=8 align=left><font size=2> </font></td><td width=184 height=8 align=left><font size=2> </font></td><td width=19 height=8 align=left><font size=2> </font></td><td width=14 height=8 align=left style="border-top: 1px solid #000000;"><font size=2> </font></td><td width=84 height=8 align=right style="border-top: 1px solid #000000;"><font size=2> </font></td><td width=19 height=8 align=left><font size=2> </font></td><td width=14 height=8 align=left style="border-top: 1px solid #000000;"><font size=2> </font></td><td width=109 height=8 align=right style="border-top: 1px solid #000000;"><font size=2> </font></td><td width=19 height=8 align=left><font size=2> </font></td><td width=14 height=8 align=left style="border-top: 1px solid #000000;"><font size=2> </font></td><td width=102 height=8 align=right style="border-top: 1px solid #000000;"><font size=2> </font></td><td width=19 height=8 align=left><font size=2> </font></td><td width=14 height=8 align=left style="border-top: 1px solid #000000;"><font size=2> </font></td><td width=77 height=8 align=right style="border-top: 1px solid #000000;"><font size=2> </font></td></tr><tr><td width=33 height=17 align=left><font size=2> </font></td><td width=184 height=17 align=left><font size=2>Total</font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left style="border-bottom: 3px double #000000;"><font size=2>$</font></td><td width=84 height=17 align=right style="border-bottom: 3px double #000000;"><font size=2> 15,363 </font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left style="border-bottom: 3px double #000000;"><font size=2>$</font></td><td width=109 height=17 align=right style="border-bottom: 3px double #000000;"><font size=2> 158 </font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left style="border-bottom: 3px double #000000;"><font size=2>$</font></td><td width=102 height=17 align=right style="border-bottom: 3px double #000000;"><font size=2> 233 </font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left style="border-bottom: 3px double #000000;"><font size=2>$</font></td><td width=77 height=17 align=right style="border-bottom: 3px double #000000;"><font size=2> 15,754 </font></td></tr><tr><td width=33 height=8 align=left><font size=2> </font></td><td width=184 height=8 align=left><font size=2> </font></td><td width=19 height=8 align=left><font size=2> </font></td><td width=14 height=8 align=left style="border-top: 3px double #000000;"><font size=2> </font></td><td width=84 height=8 align=right style="border-top: 3px double #000000;"><font size=2> </font></td><td width=19 height=8 align=left><font size=2> </font></td><td width=14 height=8 align=left style="border-top: 3px double #000000;"><font size=2> </font></td><td width=109 height=8 align=right style="border-top: 3px double #000000;"><font size=2> </font></td><td width=19 height=8 align=left><font size=2> </font></td><td width=14 height=8 align=left style="border-top: 3px double #000000;"><font size=2> </font></td><td width=102 height=8 align=right style="border-top: 3px double #000000;"><font size=2> </font></td><td width=19 height=8 align=left><font size=2> </font></td><td width=14 height=8 align=left style="border-top: 3px double #000000;"><font size=2> </font></td><td width=77 height=8 align=right style="border-top: 3px double #000000;"><font size=2> </font></td></tr></table></DIV><DIV><FONT SIZE=2><P>Intangible Assets. Identifiable intangible assets are comprised of the following:</FONT></DIV><DIV><table style="border-collapse: collapse; margin-top: 20px;"><tr><td width=33 height=17 align=left><font size=2> </font></td><td width=33 height=17 align=left><font size=2> </font></td><td width=33 height=17 align=left><font size=2> </font></td><td width=192 height=17 align=left><font size=2> </font></td><td width=19 height=17 align=left><font size=2> </font></td><td colspan=5 width=195 height=17 align=center style="border-bottom: 1px solid #000000;"><font size=2><B>June 30, 2009</B></font></td><td width=19 height=17 align=left><font size=2> </font></td><td colspan=5 width=195 height=17 align=center style="border-bottom: 1px solid #000000;"><font size=2><B>December 31, 2008</B></font></td></tr><tr><td colspan=4 width=291 height=34 align=left style="border-bottom: 1px solid #000000;"><font size=2><B>(in millions of dollars)</B></font></td><td width=19 height=34 align=left><font size=2> </font></td><td colspan=2 width=88 height=34 align=center style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;"><font size=2><B>Gross Amount</B></font></td><td width=19 height=34 align=left style="border-top: 1px solid #000000;"><font size=2><B> </B></font></td><td colspan=2 width=88 height=34 align=center style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;"><font size=2><B>Accumulated Amortization</B></font></td><td width=19 height=34 align=left><font size=2> </font></td><td colspan=2 width=88 height=34 align=center style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;"><font size=2><B>Gross Amount</B></font></td><td width=19 height=34 align=left style="border-top: 1px solid #000000;"><font size=2><B> </B></font></td><td colspan=2 width=88 height=34 align=center style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;"><font size=2><B>Accumulated Amortization</B></font></td></tr><tr><td colspan=4 width=291 height=17 align=left style="border-top: 1px solid #000000;"><font size=2>Amortized:</font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=13 height=17 align=left style="border-top: 1px solid #000000;"><font size=2> </font></td><td width=75 height=17 align=left style="border-top: 1px solid #000000;"><font size=2> </font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=13 height=17 align=left style="border-top: 1px solid #000000;"><font size=2> </font></td><td width=75 height=17 align=left style="border-top: 1px solid #000000;"><font size=2> </font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=13 height=17 align=left style="border-top: 1px solid #000000;"><font size=2> </font></td><td width=75 height=17 align=left style="border-top: 1px solid #000000;"><font size=2> </font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=13 height=17 align=left style="border-top: 1px solid #000000;"><font size=2> </font></td><td width=75 height=17 align=right style="border-top: 1px solid #000000;"><font size=2> </font></td></tr><tr><td width=33 height=17 align=left><font size=2> </font></td><td colspan=3 width=258 height=17 align=left><font size=2>Service portfolios</font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=13 height=17 align=left><font size=2>$</font></td><td width=75 height=17 align=right><font size=2> 1,656 </font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=13 height=17 align=left><font size=2>$</font></td><td width=75 height=17 align=right><font size=2> (745)</font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=13 height=17 align=left><font size=2>$</font></td><td width=75 height=17 align=right><font size=2> 1,625 </font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=13 height=17 align=left><font size=2>$</font></td><td width=75 height=17 align=right><font size=2> (700)</font></td></tr><tr><td width=33 height=17 align=left><font size=2> </font></td><td colspan=3 width=258 height=17 align=left><font size=2>Patents and trademarks</font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=13 height=17 align=left><font size=2> </font></td><td width=75 height=17 align=right><font size=2> 357 </font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=13 height=17 align=left><font size=2> </font></td><td width=75 height=17 align=right><font size=2> (116)</font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=13 height=17 align=left><font size=2> </font></td><td width=75 height=17 align=right><font size=2> 333 </font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=13 height=17 align=left><font size=2> </font></td><td width=75 height=17 align=right><font size=2> (103)</font></td></tr><tr><td width=33 height=17 align=left><font size=2> </font></td><td colspan=3 width=258 height=17 align=left><font size=2>Other, principally customer relationships</font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=13 height=17 align=left style="border-bottom: 1px solid #000000;"><font size=2> </font></td><td width=75 height=17 align=right style="border-bottom: 1px solid #000000;"><font size=2> 2,558 </font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=13 height=17 align=left style="border-bottom: 1px solid #000000;"><font size=2> </font></td><td width=75 height=17 align=right style="border-bottom: 1px solid #000000;"><font size=2> (955)</font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=13 height=17 align=left style="border-bottom: 1px solid #000000;"><font size=2> </font></td><td width=75 height=17 align=right style="border-bottom: 1px solid #000000;"><font size=2> 2,460 </font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=13 height=17 align=left style="border-bottom: 1px solid #000000;"><font size=2> </font></td><td width=75 height=17 align=right style="border-bottom: 1px solid #000000;"><font size=2> (825)</font></td></tr><tr><td width=33 height=8 align=left><font size=2> </font></td><td width=33 height=8 align=left><font size=2> </font></td><td width=33 height=8 align=left><font size=2> </font></td><td width=192 height=8 align=left><font size=2> </font></td><td width=19 height=8 align=left><font size=2> </font></td><td width=13 height=8 align=left style="border-top: 1px solid #000000;"><font size=2> </font></td><td width=75 height=8 align=right style="border-top: 1px solid #000000;"><font size=2> </font></td><td width=19 height=8 align=left><font size=2> </font></td><td width=13 height=8 align=left style="border-top: 1px solid #000000;"><font size=2> </font></td><td width=75 height=8 align=right style="border-top: 1px solid #000000;"><font size=2> </font></td><td width=19 height=8 align=left><font size=2> </font></td><td width=13 height=8 align=left style="border-top: 1px solid #000000;"><font size=2> </font></td><td width=75 height=8 align=right style="border-top: 1px solid #000000;"><font size=2> </font></td><td width=19 height=8 align=left><font size=2> </font></td><td width=13 height=8 align=left style="border-top: 1px solid #000000;"><font size=2> </font></td><td width=75 height=8 align=right style="border-top: 1px solid #000000;"><font size=2> </font></td></tr><tr><td width=33 height=17 align=left><font size=2> </font></td><td width=33 height=17 align=left><font size=2> </font></td><td width=33 height=17 align=left><font size=2> </font></td><td width=192 height=17 align=left><font size=2> </font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=13 height=17 align=left style="border-bottom: 1px solid #000000;"><font size=2> </font></td><td width=75 height=17 align=right style="border-bottom: 1px solid #000000;"><font size=2> 4,571 </font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=13 height=17 align=left style="border-bottom: 1px solid #000000;"><font size=2> </font></td><td width=75 height=17 align=right style="border-bottom: 1px solid #000000;"><font size=2> (1,816)</font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=13 height=17 align=left style="border-bottom: 1px solid #000000;"><font size=2> </font></td><td width=75 height=17 align=right style="border-bottom: 1px solid #000000;"><font size=2> 4,418 </font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=13 height=17 align=left style="border-bottom: 1px solid #000000;"><font size=2> </font></td><td width=75 height=17 align=right style="border-bottom: 1px solid #000000;"><font size=2> (1,628)</font></td></tr><tr><td width=33 height=8 align=left><font size=2> </font></td><td width=33 height=8 align=left><font size=2> </font></td><td width=33 height=8 align=left><font size=2> </font></td><td width=192 height=8 align=left><font size=2> </font></td><td width=19 height=8 align=left><font size=2> </font></td><td width=13 height=8 align=left style="border-top: 1px solid #000000;"><font size=2> </font></td><td width=75 height=8 align=right style="border-top: 1px solid #000000;"><font size=2> </font></td><td width=19 height=8 align=left><font size=2> </font></td><td width=13 height=8 align=left style="border-top: 1px solid #000000;"><font size=2> </font></td><td width=75 height=8 align=right style="border-top: 1px solid #000000;"><font size=2> </font></td><td width=19 height=8 align=left><font size=2> </font></td><td width=13 height=8 align=left style="border-top: 1px solid #000000;"><font size=2> </font></td><td width=75 height=8 align=right style="border-top: 1px solid #000000;"><font size=2> </font></td><td width=19 height=8 align=left><font size=2> </font></td><td width=13 height=8 align=left style="border-top: 1px solid #000000;"><font size=2> </font></td><td width=75 height=8 align=right style="border-top: 1px solid #000000;"><font size=2> </font></td></tr><tr><td colspan=4 width=291 height=17 align=left><font size=2>Unamortized:</font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=13 height=17 align=left><font size=2> </font></td><td width=75 height=17 align=right><font size=2> </font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=13 height=17 align=left><font size=2> </font></td><td width=75 height=17 align=right><font size=2> </font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=13 height=17 align=left><font size=2> </font></td><td width=75 height=17 align=right><font size=2> </font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=13 height=17 align=left><font size=2> </font></td><td width=75 height=17 align=right><font size=2> </font></td></tr><tr><td width=33 height=17 align=left><font size=2> </font></td><td colspan=3 width=258 height=17 align=left><font size=2>Trademarks and other</font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=13 height=17 align=left style="border-bottom: 1px solid #000000;"><font size=2> </font></td><td width=75 height=17 align=right style="border-bottom: 1px solid #000000;"><font size=2> 701 </font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=13 height=17 align=left style="border-bottom: 1px solid #000000;"><font size=2> </font></td><td width=75 height=17 align=right style="border-bottom: 1px solid #000000;"><font size=2> - </font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=13 height=17 align=left style="border-bottom: 1px solid #000000;"><font size=2> </font></td><td width=75 height=17 align=right style="border-bottom: 1px solid #000000;"><font size=2> 653 </font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=13 height=17 align=left style="border-bottom: 1px solid #000000;"><font size=2> </font></td><td width=75 height=17 align=right style="border-bottom: 1px solid #000000;"><font size=2> - </font></td></tr><tr><td width=33 height=8 align=left><font size=2> </font></td><td width=33 height=8 align=left><font size=2> </font></td><td width=33 height=8 align=left><font size=2> </font></td><td width=192 height=8 align=left><font size=2> </font></td><td width=19 height=8 align=left><font size=2> </font></td><td width=13 height=8 align=left style="border-top: 1px solid #000000;"><font size=2> </font></td><td width=75 height=8 align=right style="border-top: 1px solid #000000;"><font size=2> </font></td><td width=19 height=8 align=left><font size=2> </font></td><td width=13 height=8 align=left style="border-top: 1px solid #000000;"><font size=2> </font></td><td width=75 height=8 align=right style="border-top: 1px solid #000000;"><font size=2> </font></td><td width=19 height=8 align=left><font size=2> </font></td><td width=13 height=8 align=left style="border-top: 1px solid #000000;"><font size=2> </font></td><td width=75 height=8 align=right style="border-top: 1px solid #000000;"><font size=2> </font></td><td width=19 height=8 align=left><font size=2> </font></td><td width=13 height=8 align=left style="border-top: 1px solid #000000;"><font size=2> </font></td><td width=75 height=8 align=right style="border-top: 1px solid #000000;"><font size=2> </font></td></tr><tr><td width=33 height=18 align=left><font size=2> </font></td><td width=33 height=18 align=left><font size=2> </font></td><td colspan=2 width=225 height=18 align=left><font size=2>Total</font></td><td width=19 height=18 align=left><font size=2> </font></td><td width=13 height=18 align=left style="border-bottom: 3px double #000000;"><font size=2>$</font></td><td width=75 height=18 align=right style="border-bottom: 3px double #000000;"><font size=2> 5,272 </font></td><td width=19 height=18 align=left><font size=2> </font></td><td width=13 height=18 align=left style="border-bottom: 3px double #000000;"><font size=2>$</font></td><td width=75 height=18 align=right style="border-bottom: 3px double #000000;"><font size=2> (1,816)</font></td><td width=19 height=18 align=left><font size=2> </font></td><td width=13 height=18 align=left style="border-bottom: 3px double #000000;"><font size=2>$</font></td><td width=75 height=18 align=right style="border-bottom: 3px double #000000;"><font size=2> 5,071 </font></td><td width=19 height=18 align=left><font size=2> </font></td><td width=13 height=18 align=left style="border-bottom: 3px double #000000;"><font size=2>$</font></td><td width=75 height=18 align=right style="border-bottom: 3px double #000000;"><font size=2> (1,628)</font></td></tr><tr><td width=33 height=8 align=left><font size=2> </font></td><td width=33 height=8 align=left><font size=2> </font></td><td width=33 height=8 align=left><font size=2> </font></td><td width=192 height=8 align=left><font size=2> </font></td><td width=19 height=8 align=left><font size=2> </font></td><td width=13 height=8 align=left style="border-top: 3px double #000000;"><font size=2> </font></td><td width=75 height=8 align=right style="border-top: 3px double #000000;"><font size=2> </font></td><td width=19 height=8 align=left><font size=2> </font></td><td width=13 height=8 align=left style="border-top: 3px double #000000;"><font size=2> </font></td><td width=75 height=8 align=right style="border-top: 3px double #000000;"><font size=2> </font></td><td width=19 height=8 align=left><font size=2> </font></td><td width=13 height=8 align=left style="border-top: 3px double #000000;"><font size=2> </font></td><td width=75 height=8 align=right style="border-top: 3px double #000000;"><font size=2> </font></td><td width=19 height=8 align=left><font size=2> </font></td><td width=13 height=8 align=left style="border-top: 3px double #000000;"><font size=2> </font></td><td width=75 height=8 align=right style="border-top: 3px double #000000;"><font size=2> </font></td></tr></table></DIV><DIV><FONT SIZE=2><P>Amortization of intangible assets for the quarter and six months ended June 30, 2009 was $85 million and $171 million, respectively, compared with $95 million and $187 million for the same periods of 2008. Amortization of these intangible assets for 2009 through 2013 is expected to approximate $275 million per year. <BR></FONT></DIV></body></html>
<html><head><meta http-equiv="Content-Type" content="text/html; charset=utf-8" /></head><body><DIV><FONT SIZE=2><P>Note 2: Earnings Per Share </FONT></DIV><DIV><table style="border-collapse: collapse; margin-top: 20px;"><tr><td width=29 height=17 align=left><font size=2> </font></td><td width=374 height=17 align=left><font size=2> </font></td><td width=17 height=17 align=left><font size=2> </font></td><td colspan=5 width=155 height=17 align=center style="border-bottom: 1px solid #000000;"><font size=2><B>Quarter Ended June 30,</B></font></td><td width=17 height=17 align=left><font size=2> </font></td><td colspan=5 width=155 height=17 align=center style="border-bottom: 1px solid #000000;"><font size=2><B>Six Months Ended June 30,</B></font></td></tr><tr><td colspan=2 width=403 height=17 align=left style="border-bottom: 1px solid #000000;"><font size=2><B>(in millions of dollars, except per share amounts)</B></font></td><td width=17 height=17 align=left><font size=2> </font></td><td colspan=2 width=69 height=17 align=center style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;"><font size=2><B>2009 </B></font></td><td width=17 height=17 align=left style="border-top: 1px solid #000000;"><font size=2> </font></td><td colspan=2 width=69 height=17 align=center style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;"><font size=2><B>2008 </B></font></td><td width=17 height=17 align=left><font size=2> </font></td><td colspan=2 width=69 height=17 align=center style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;"><font size=2><B>2009 </B></font></td><td width=17 height=17 align=left style="border-top: 1px solid #000000;"><font size=2> </font></td><td colspan=2 width=69 height=17 align=center style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;"><font size=2><B>2008 </B></font></td></tr><tr><td colspan=2 width=403 height=18 align=left style="border-top: 1px solid #000000;"><font size=2>Net income attributable to common shareowners</font></td><td width=17 height=18 align=left><font size=2> </font></td><td width=13 height=18 align=left style="border-top: 1px solid #000000;border-bottom: 3px double #000000;"><font size=2>$</font></td><td width=56 height=18 align=right style="border-top: 1px solid #000000;border-bottom: 3px double #000000;"><font size=2> 976 </font></td><td width=17 height=18 align=left><font size=2> </font></td><td width=13 height=18 align=left style="border-top: 1px solid #000000;border-bottom: 3px double #000000;"><font size=2>$</font></td><td width=56 height=18 align=right style="border-top: 1px solid #000000;border-bottom: 3px double #000000;"><font size=2> 1,275 </font></td><td width=17 height=18 align=left><font size=2> </font></td><td width=13 height=18 align=left style="border-top: 1px solid #000000;border-bottom: 3px double #000000;"><font size=2>$</font></td><td width=56 height=18 align=right style="border-top: 1px solid #000000;border-bottom: 3px double #000000;"><font size=2> 1,698 </font></td><td width=17 height=18 align=left><font size=2> </font></td><td width=13 height=18 align=left style="border-top: 1px solid #000000;border-bottom: 3px double #000000;"><font size=2>$</font></td><td width=56 height=18 align=right style="border-top: 1px solid #000000;border-bottom: 3px double #000000;"><font size=2> 2,275 </font></td></tr><tr><td width=29 height=18 align=left><font size=2> </font></td><td width=374 height=18 align=left><font size=2> </font></td><td width=17 height=18 align=left><font size=2> </font></td><td width=13 height=18 align=left style="border-top: 3px double #000000;"><font size=2> </font></td><td width=56 height=18 align=left style="border-top: 3px double #000000;"><font size=2> </font></td><td width=17 height=18 align=left><font size=2> </font></td><td width=13 height=18 align=left style="border-top: 3px double #000000;"><font size=2> </font></td><td width=56 height=18 align=left style="border-top: 3px double #000000;"><font size=2> </font></td><td width=17 height=18 align=left><font size=2> </font></td><td width=13 height=18 align=left style="border-top: 3px double #000000;"><font size=2> </font></td><td width=56 height=18 align=left style="border-top: 3px double #000000;"><font size=2> </font></td><td width=17 height=18 align=left><font size=2> </font></td><td width=13 height=18 align=left style="border-top: 3px double #000000;"><font size=2> </font></td><td width=56 height=18 align=left style="border-top: 3px double #000000;"><font size=2> </font></td></tr><tr><td colspan=2 width=403 height=17 align=left><font size=2>Average shares:</font></td><td width=17 height=17 align=left><font size=2> </font></td><td width=13 height=17 align=left><font size=2> </font></td><td width=56 height=17 align=left><font size=2> </font></td><td width=17 height=17 align=left><font size=2> </font></td><td width=13 height=17 align=left><font size=2> </font></td><td width=56 height=17 align=left><font size=2> </font></td><td width=17 height=17 align=left><font size=2> </font></td><td width=13 height=17 align=left><font size=2> </font></td><td width=56 height=17 align=left><font size=2> </font></td><td width=17 height=17 align=left><font size=2> </font></td><td width=13 height=17 align=left><font size=2> </font></td><td width=56 height=17 align=left><font size=2> </font></td></tr><tr><td width=29 height=17 align=left><font size=2> </font></td><td width=374 height=17 align=left><font size=2>Basic</font></td><td width=17 height=17 align=left><font size=2> </font></td><td width=13 height=17 align=left><font size=2> </font></td><td width=56 height=17 align=right><font size=2> 919 </font></td><td width=17 height=17 align=left><font size=2> </font></td><td width=13 height=17 align=left><font size=2> </font></td><td width=56 height=17 align=right><font size=2> 944 </font></td><td width=17 height=17 align=left><font size=2> </font></td><td width=13 height=17 align=left><font size=2> </font></td><td width=56 height=17 align=right><font size=2> 919 </font></td><td width=17 height=17 align=left><font size=2> </font></td><td width=13 height=17 align=left><font size=2> </font></td><td width=56 height=17 align=right><font size=2> 948 </font></td></tr><tr><td width=29 height=17 align=left><font size=2> </font></td><td width=374 height=17 align=left><font size=2>Stock awards</font></td><td width=17 height=17 align=left><font size=2> </font></td><td width=13 height=17 align=left style="border-bottom: 1px solid #000000;"><font size=2> </font></td><td width=56 height=17 align=right style="border-bottom: 1px solid #000000;"><font size=2> 10 </font></td><td width=17 height=17 align=left><font size=2> </font></td><td width=13 height=17 align=left style="border-bottom: 1px solid #000000;"><font size=2> </font></td><td width=56 height=17 align=right style="border-bottom: 1px solid #000000;"><font size=2> 22 </font></td><td width=17 height=17 align=left><font size=2> </font></td><td width=13 height=17 align=left style="border-bottom: 1px solid #000000;"><font size=2> </font></td><td width=56 height=17 align=right style="border-bottom: 1px solid #000000;"><font size=2> 8 </font></td><td width=17 height=17 align=left><font size=2> </font></td><td width=13 height=17 align=left style="border-bottom: 1px solid #000000;"><font size=2> </font></td><td width=56 height=17 align=right style="border-bottom: 1px solid #000000;"><font size=2> 23 </font></td></tr><tr><td width=29 height=18 align=left><font size=2> </font></td><td width=374 height=18 align=left><font size=2>Diluted</font></td><td width=17 height=18 align=left><font size=2> </font></td><td width=13 height=18 align=left style="border-top: 1px solid #000000;border-bottom: 3px double #000000;"><font size=2> </font></td><td width=56 height=18 align=right style="border-top: 1px solid #000000;border-bottom: 3px double #000000;"><font size=2> 929 </font></td><td width=17 height=18 align=left><font size=2> </font></td><td width=13 height=18 align=left style="border-top: 1px solid #000000;border-bottom: 3px double #000000;"><font size=2> </font></td><td width=56 height=18 align=right style="border-top: 1px solid #000000;border-bottom: 3px double #000000;"><font size=2> 966 </font></td><td width=17 height=18 align=left><font size=2> </font></td><td width=13 height=18 align=left style="border-top: 1px solid #000000;border-bottom: 3px double #000000;"><font size=2> </font></td><td width=56 height=18 align=right style="border-top: 1px solid #000000;border-bottom: 3px double #000000;"><font size=2> 927 </font></td><td width=17 height=18 align=left><font size=2> </font></td><td width=13 height=18 align=left style="border-top: 1px solid #000000;border-bottom: 3px double #000000;"><font size=2> </font></td><td width=56 height=18 align=right style="border-top: 1px solid #000000;border-bottom: 3px double #000000;"><font size=2> 971 </font></td></tr><tr><td width=29 height=18 align=left><font size=2> </font></td><td width=374 height=18 align=left><font size=2> </font></td><td width=17 height=18 align=left><font size=2> </font></td><td width=13 height=18 align=left style="border-top: 3px double #000000;"><font size=2> </font></td><td width=56 height=18 align=left style="border-top: 3px double #000000;"><font size=2> </font></td><td width=17 height=18 align=left><font size=2> </font></td><td width=13 height=18 align=left style="border-top: 3px double #000000;"><font size=2> </font></td><td width=56 height=18 align=left style="border-top: 3px double #000000;"><font size=2> </font></td><td width=17 height=18 align=left><font size=2> </font></td><td width=13 height=18 align=left style="border-top: 3px double #000000;"><font size=2> </font></td><td width=56 height=18 align=left style="border-top: 3px double #000000;"><font size=2> </font></td><td width=17 height=18 align=left><font size=2> </font></td><td width=13 height=18 align=left style="border-top: 3px double #000000;"><font size=2> </font></td><td width=56 height=18 align=left style="border-top: 3px double #000000;"><font size=2> </font></td></tr><tr><td colspan=2 width=403 height=17 align=left><font size=2>Earnings per share of Common Stock:</font></td><td width=17 height=17 align=left><font size=2> </font></td><td width=13 height=17 align=left><font size=2> </font></td><td width=56 height=17 align=left><font size=2> </font></td><td width=17 height=17 align=left><font size=2> </font></td><td width=13 height=17 align=left><font size=2> </font></td><td width=56 height=17 align=left><font size=2> </font></td><td width=17 height=17 align=left><font size=2> </font></td><td width=13 height=17 align=left><font size=2> </font></td><td width=56 height=17 align=left><font size=2> </font></td><td width=17 height=17 align=left><font size=2> </font></td><td width=13 height=17 align=left><font size=2> </font></td><td width=56 height=17 align=left><font size=2> </font></td></tr><tr><td width=29 height=17 align=left><font size=2> </font></td><td width=374 height=17 align=left><font size=2>Basic </font></td><td width=17 height=17 align=left><font size=2> </font></td><td width=13 height=17 align=left><font size=2>$</font></td><td width=56 height=17 align=right><font size=2>1.06 </font></td><td width=17 height=17 align=left><font size=2> </font></td><td width=13 height=17 align=left><font size=2>$</font></td><td width=56 height=17 align=right><font size=2>1.35 </font></td><td width=17 height=17 align=left><font size=2> </font></td><td width=13 height=17 align=left><font size=2>$</font></td><td width=56 height=17 align=right><font size=2>1.85 </font></td><td width=17 height=17 align=left><font size=2> </font></td><td width=13 height=17 align=left><font size=2>$</font></td><td width=56 height=17 align=right><font size=2>2.40 </font></td></tr><tr><td width=29 height=17 align=left><font size=2> </font></td><td width=374 height=17 align=left><font size=2>Diluted</font></td><td width=17 height=17 align=left><font size=2> </font></td><td width=13 height=17 align=left><font size=2>$</font></td><td width=56 height=17 align=right><font size=2>1.05 </font></td><td width=17 height=17 align=left><font size=2> </font></td><td width=13 height=17 align=left><font size=2>$</font></td><td width=56 height=17 align=right><font size=2>1.32 </font></td><td width=17 height=17 align=left><font size=2> </font></td><td width=13 height=17 align=left><font size=2>$</font></td><td width=56 height=17 align=right><font size=2>1.83 </font></td><td width=17 height=17 align=left><font size=2> </font></td><td width=13 height=17 align=left><font size=2>$</font></td><td width=56 height=17 align=right><font size=2>2.34 </font></td></tr></table></DIV><DIV><FONT SIZE=2><P>The computation of diluted earnings per share excludes the effect of the potential exercise of stock awards, including stock appreciation rights (SARs) and stock options when the average market price of the common stock is lower than the exercise price of the related SARs and options during the period. These outstanding stock awards are not included in the computation of diluted earnings per share because the effect would have been antidilutive.   For the quarter and six months ended June 30, 2009, the number of stock awards excluded from the computation was 37.5 million and 38.8 million, respectively.  For the quarter and six months ended June 30, 2008, the number of stock awards excluded from the computation was 8.7 million and 6.0 million, respectively. </FONT></DIV></body></html>
<html><head><meta http-equiv="Content-Type" content="text/html; charset=utf-8" /></head><body><DIV><FONT SIZE=2><P>Note 3: Inventories and Contracts in Progress </FONT></DIV><DIV><table style="border-collapse: collapse; margin-top: 20px;"><tr><td width=532 height=17 align=left><font size=2><B> </B></font></td><td width=19 height=17 align=left><font size=2><B> </B></font></td><td colspan=2 width=74 height=17 align=center><font size=2><B> </B></font></td><td width=19 height=17 align=left><font size=2><B> </B></font></td><td colspan=2 width=74 height=17 align=center><font size=2><B> </B></font></td></tr><tr><td width=532 height=34 align=left style="border-bottom: 1px solid #000000;"><font size=2><B>(in millions of dollars)</B></font></td><td width=19 height=34 align=left><font size=2><B></B></font></td><td colspan=2 width=74 height=34 align=center style="border-bottom: 1px solid #000000;"><font size=2><B>June 30, 2009</B></font></td><td width=19 height=34 align=left><font size=2><B> </B></font></td><td colspan=2 width=74 height=34 align=center style="border-bottom: 1px solid #000000;"><font size=2><B>December 31, 2008</B></font></td></tr><tr><td width=532 height=17 align=left style="border-top: 1px solid #000000;"><font size=2>Raw materials</font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=13 height=17 align=left style="border-top: 1px solid #000000;"><font size=2>$</font></td><td width=61 height=17 align=right style="border-top: 1px solid #000000;"><font size=2> 1,244 </font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=13 height=17 align=left style="border-top: 1px solid #000000;"><font size=2>$</font></td><td width=61 height=17 align=right style="border-top: 1px solid #000000;"><font size=2> 1,271 </font></td></tr><tr><td width=532 height=17 align=left><font size=2>Work-in-process</font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=13 height=17 align=left><font size=2> </font></td><td width=61 height=17 align=right><font size=2> 3,548 </font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=13 height=17 align=left><font size=2> </font></td><td width=61 height=17 align=right><font size=2> 3,295 </font></td></tr><tr><td width=532 height=17 align=left><font size=2>Finished goods</font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=13 height=17 align=left><font size=2> </font></td><td width=61 height=17 align=right><font size=2> 3,591 </font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=13 height=17 align=left><font size=2> </font></td><td width=61 height=17 align=right><font size=2> 3,634 </font></td></tr><tr><td width=532 height=17 align=left><font size=2>Contracts in progress</font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=13 height=17 align=left style="border-bottom: 1px solid #000000;"><font size=2> </font></td><td width=61 height=17 align=right style="border-bottom: 1px solid #000000;"><font size=2> 6,480 </font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=13 height=17 align=left style="border-bottom: 1px solid #000000;"><font size=2> </font></td><td width=61 height=17 align=right style="border-bottom: 1px solid #000000;"><font size=2> 6,113 </font></td></tr><tr><td width=532 height=17 align=left><font size=2> </font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=13 height=17 align=left style="border-top: 1px solid #000000;"><font size=2> </font></td><td width=61 height=17 align=right style="border-top: 1px solid #000000;"><font size=2> 14,863 </font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=13 height=17 align=left style="border-top: 1px solid #000000;"><font size=2> </font></td><td width=61 height=17 align=right style="border-top: 1px solid #000000;"><font size=2> 14,313 </font></td></tr><tr><td width=532 height=17 align=left><font size=2>Less:</font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=13 height=17 align=left><font size=2> </font></td><td width=61 height=17 align=right><font size=2> </font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=13 height=17 align=left><font size=2> </font></td><td width=61 height=17 align=right><font size=2> </font></td></tr><tr><td width=532 height=17 align=left><font size=2>Progress payments, secured by lien, on U.S. Government contracts</font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=13 height=17 align=left><font size=2> </font></td><td width=61 height=17 align=right><font size=2> (381)</font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=13 height=17 align=left><font size=2> </font></td><td width=61 height=17 align=right><font size=2> (476)</font></td></tr><tr><td width=532 height=17 align=left><font size=2>Billings on contracts in progress</font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=13 height=17 align=left style="border-bottom: 1px solid #000000;"><font size=2> </font></td><td width=61 height=17 align=right style="border-bottom: 1px solid #000000;"><font size=2> (5,943)</font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=13 height=17 align=left style="border-bottom: 1px solid #000000;"><font size=2> </font></td><td width=61 height=17 align=right style="border-bottom: 1px solid #000000;"><font size=2> (5,497)</font></td></tr><tr><td width=532 height=18 align=left><font size=2> </font></td><td width=19 height=18 align=left><font size=2> </font></td><td width=13 height=18 align=left style="border-top: 1px solid #000000;border-bottom: 3px double #000000;"><font size=2>$</font></td><td width=61 height=18 align=right style="border-top: 1px solid #000000;border-bottom: 3px double #000000;"><font size=2> 8,539 </font></td><td width=19 height=18 align=left><font size=2> </font></td><td width=13 height=18 align=left style="border-top: 1px solid #000000;border-bottom: 3px double #000000;"><font size=2>$</font></td><td width=61 height=18 align=right style="border-top: 1px solid #000000;border-bottom: 3px double #000000;"><font size=2> 8,340 </font></td></tr></table></DIV><DIV><FONT SIZE=2><P>As of June 30, 2009 and December 31, 2008, inventory also includes capitalized research and development costs of $887 million and $833 million, respectively, related to certain aerospace programs. These capitalized costs will be liquidated as production units are delivered to the customer. The capitalized contract research and development costs within inventory principally relate to capitalized costs on Sikorsky’s CH-148 contract with the Canadian government. The CH-148 is a derivative of the H-92, a military variant of the S-92. <BR> <BR>Certain reclassifications have been made to the 2008 inventory components presented above in order to conform to the current year presentation.</FONT></DIV></body></html>
<html><head><meta http-equiv="Content-Type" content="text/html; charset=utf-8" /></head><body><DIV><FONT SIZE=2><P>Note 4: Borrowings and Lines of Credit <BR>At June 30, 2009, we had committed credit agreements from banks permitting aggregate borrowings of up to $2.5 billion under a $1.5 billion revolving credit agreement and a $1.0 billion multicurrency revolving credit agreement, both of which are available for general funding purposes, including acquisitions. As of June 30, 2009, there were no borrowings under either of these revolving credit agreements, which expire in October 2011 and November 2011, respectively. The undrawn portions under both of these agreements are also available to serve as backup facilities for the issuance of commercial paper. We generally use our commercial paper borrowings for general corporate purposes, including the funding of potential acquisitions and repurchases of our common stock. We had $856 million of commercial paper outstanding at June 30, 2009, all of which was scheduled to mature in less than one month. <BR> <BR>In February 2009, we redeemed the entire $500 million outstanding principal amount of our Floating Rate Notes Due 2009 that were due June 1, 2009 at a redemption price in U.S. dollars equal to 100% of the principal amount, plus interest accrued.  On June 1, 2009, we repaid our $400 million of 6½% Notes Due 2009 which matured on the same date. <BR> <BR>We have an existing universal shelf registration statement filed with the Securities and Exchange Commission (SEC) for an indeterminate amount of securities for future issuance, subject to our internal limitations on the amount of debt to be issued under this shelf registration statement. <BR><BR></FONT></DIV></body></html>
<html><head><meta http-equiv="Content-Type" content="text/html; charset=utf-8" /></head><body><DIV><FONT SIZE=2><P>Note 5: Income Taxes <BR>We conduct business globally and, as a result, UTC or one or more of our subsidiaries files income tax returns in the U.S. federal jurisdiction and various state and foreign jurisdictions. In the normal course of business we are subject to examination by taxing authorities throughout the world, including such major jurisdictions as Australia, Canada, China, France, Germany, Hong Kong, Italy, Japan, South Korea, Singapore, Spain, the United Kingdom and the United States. With few exceptions, we are no longer subject to U.S. federal, state and local, or non-U.S. income tax examinations for years before 1998. <BR> <BR>We assess uncertain tax positions in accordance with Financial Accounting Standards Board Interpretation No. 48 “Accounting for Uncertainty in Income Taxes – an interpretation of FASB Statement No. 109”. We recognize interest accrued related to unrecognized tax benefits in interest expense. Penalties, if incurred, would be recognized as a component of income tax expense. There were no material changes to unrecognized tax benefits or to related accrued interest in the quarter. It is reasonably possible that over the next twelve months the amount of unrecognized tax benefits may change within a range of a net decrease of $125 million to a net increase of $50 million resulting from additional worldwide uncertain tax positions, from the reevaluation of current uncertain tax positions arising from developments in examinations, in appeals, or in the courts, or from the closure of tax statutes. Not included in the range is €182 million (approximately $255 million) of tax benefits that we have claimed related to a 1998 German reorganization. These tax benefits are currently being reviewed by the German Tax Office in the course of an audit of tax years 1999 to 2000. In 2008 the German Federal Tax Court denied benefits to another taxpayer in a case involving a German tax law relevant to our reorganization. The determination of the German Federal Tax Court on this other matter has been appealed to the European Court of Justice (ECJ) to determine if the underlying German tax law is violative of European Union (EU) principles.  It is our position that it is more likely than not that the relevant German tax law is violative of EU principles and we have not accrued tax expense for this matter. As developments in the pending ECJ case warrant, it may become necessary for us to accrue for this matter, and related interest. <BR> <BR>In 2009, we expect to complete the examination phase of the Internal Revenue Service (IRS) review of tax years 2004 and 2005 and that the IRS review of tax years 2006 and 2007 will commence. <BR> <BR>The effective tax rate for the quarter ended June 30, 2009 has decreased as compared to the same period of 2008 as a result of the non-taxability of a gain recognized in the quarter ended June 30, 2009 on the remeasurement to fair value of a previously held equity interest in an Otis joint venture due to the purchase of a controlling interest in the venture. The effective tax rate for the six months ended June 30, 2009 decreased as compared to the same period of 2008 as a result of the favorable tax impact of approximately $25 million in the first quarter of 2009 related to the formation of a commercial venture and the non-taxability of the second quarter 2009 Otis gain. The effective tax rate for the balance of the year is expected to be approximately 28% before the impacts of any discrete events. <BR></FONT></DIV></body></html>
<html><head><meta http-equiv="Content-Type" content="text/html; charset=utf-8" /></head><body><DIV><FONT SIZE=2><P>Note 6: Employee Benefit Plans <BR>Pension and Postretirement Plans. We sponsor both funded and unfunded domestic and foreign defined pension and postretirement plans. Contributions to these plans during the quarters and six months ended June 30, 2009 and 2008 were as follows: <BR></FONT></DIV><DIV><table style="border-collapse: collapse; margin-top: 20px;"><tr><td width=312 height=17 align=left><font size=2> </font></td><td width=19 height=17 align=left><font size=2> </font></td><td colspan=5 width=161 height=17 align=center><font size=2><B>Quarter Ended</B></font></td><td width=19 height=17 align=center><font size=2><B> </B></font></td><td colspan=5 width=167 height=17 align=center><font size=2><B>Six Months Ended</B></font></td></tr><tr><td width=312 height=17 align=left><font size=2> </font></td><td width=19 height=17 align=left><font size=2> </font></td><td colspan=5 width=161 height=17 align=center style="border-bottom: 1px solid #000000;"><font size=2><B>June 30,</B></font></td><td width=19 height=17 align=center><font size=2><B> </B></font></td><td colspan=5 width=167 height=17 align=center style="border-bottom: 1px solid #000000;"><font size=2><B>June 30,</B></font></td></tr><tr><td width=312 height=17 align=left style="border-bottom: 1px solid #000000;"><font size=2><B>(in millions of dollars)</B></font></td><td width=19 height=17 align=left><font size=2><B></B></font></td><td width=13 height=17 align=center style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;"><font size=2> </font></td><td width=55 height=17 align=center style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;"><font size=2><B>2009 </B></font></td><td width=19 height=17 align=center style="border-top: 1px solid #000000;"><font size=2> </font></td><td width=13 height=17 align=center style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;"><font size=2> </font></td><td width=61 height=17 align=center style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;"><font size=2><B>2008 </B></font></td><td width=19 height=17 align=center><font size=2><B> </B></font></td><td width=13 height=17 align=center style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;"><font size=2> </font></td><td width=61 height=17 align=center style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;"><font size=2><B>2009 </B></font></td><td width=19 height=17 align=center style="border-top: 1px solid #000000;"><font size=2> </font></td><td width=13 height=17 align=center style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;"><font size=2> </font></td><td width=61 height=17 align=center style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;"><font size=2><B>2008 </B></font></td></tr><tr><td width=312 height=18 align=left style="border-top: 1px solid #000000;"><font size=2>Defined Benefit Plans</font></td><td width=19 height=18 align=left><font size=2> </font></td><td width=13 height=18 align=left style="border-top: 1px solid #000000;border-bottom: 3px double #000000;"><font size=2>$</font></td><td width=55 height=18 align=right style="border-top: 1px solid #000000;border-bottom: 3px double #000000;"><font size=2>428 </font></td><td width=19 height=18 align=left><font size=2> </font></td><td width=13 height=18 align=left style="border-top: 1px solid #000000;border-bottom: 3px double #000000;"><font size=2>$</font></td><td width=61 height=18 align=right style="border-top: 1px solid #000000;border-bottom: 3px double #000000;"><font size=2>17 </font></td><td width=19 height=18 align=right><font size=2> </font></td><td width=13 height=18 align=left style="border-top: 1px solid #000000;border-bottom: 3px double #000000;"><font size=2>$</font></td><td width=61 height=18 align=right style="border-top: 1px solid #000000;border-bottom: 3px double #000000;"><font size=2>451 </font></td><td width=19 height=18 align=left><font size=2> </font></td><td width=13 height=18 align=left style="border-top: 1px solid #000000;border-bottom: 3px double #000000;"><font size=2>$</font></td><td width=61 height=18 align=right style="border-top: 1px solid #000000;border-bottom: 3px double #000000;"><font size=2>45 </font></td></tr><tr><td width=312 height=19 align=left><font size=2>Defined Contribution Plans</font></td><td width=19 height=19 align=left><font size=2> </font></td><td width=13 height=19 align=left style="border-top: 3px double #000000;border-bottom: 3px double #000000;"><font size=2>$</font></td><td width=55 height=19 align=right style="border-top: 1px solid #000000;border-bottom: 3px double #000000;"><font size=2>48 </font></td><td width=19 height=19 align=left><font size=2> </font></td><td width=13 height=19 align=left style="border-top: 3px double #000000;border-bottom: 3px double #000000;"><font size=2>$</font></td><td width=61 height=19 align=right style="border-top: 3px double #000000;border-bottom: 3px double #000000;"><font size=2>63 </font></td><td width=19 height=19 align=left><font size=2> </font></td><td width=13 height=19 align=left style="border-top: 3px double #000000;border-bottom: 3px double #000000;"><font size=2>$</font></td><td width=61 height=19 align=right style="border-top: 1px solid #000000;border-bottom: 3px double #000000;"><font size=2>101 </font></td><td width=19 height=19 align=left><font size=2> </font></td><td width=13 height=19 align=left style="border-top: 3px double #000000;border-bottom: 3px double #000000;"><font size=2>$</font></td><td width=61 height=19 align=right style="border-top: 3px double #000000;border-bottom: 3px double #000000;"><font size=2>118 </font></td></tr></table></DIV><DIV><FONT SIZE=2><P>In the first six months of 2009, we contributed $401 million in cash to our domestic defined benefit pension plans, all of which was contributed in the second quarter of 2009. There were no contributions to our domestic defined benefit pension plans in the first six months of 2008. <BR> <BR>The following table illustrates the components of net periodic benefit cost for our pension and other postretirement benefits: <BR></FONT></DIV><DIV><table style="border-collapse: collapse; margin-top: 20px;"><tr><td width=312 height=17 align=left><font size=2> </font></td><td width=19 height=17 align=left><font size=2> </font></td><td colspan=5 width=167 height=17 align=center><font size=2><B>Pension Benefits</B></font></td><td width=19 height=17 align=left><font size=2> </font></td><td colspan=5 width=167 height=17 align=center><font size=2><B>Other Postretirement Benefits</B></font></td></tr><tr><td width=312 height=17 align=left><font size=2> </font></td><td width=19 height=17 align=left><font size=2> </font></td><td colspan=5 width=167 height=17 align=center><font size=2><B>Quarter Ended</B></font></td><td width=19 height=17 align=left><font size=2> </font></td><td colspan=5 width=167 height=17 align=center><font size=2><B>Quarter Ended</B></font></td></tr><tr><td width=312 height=17 align=left><font size=2> </font></td><td width=19 height=17 align=left><font size=2> </font></td><td colspan=5 width=167 height=17 align=center style="border-bottom: 1px solid #000000;"><font size=2><B>June 30,</B></font></td><td width=19 height=17 align=left><font size=2> </font></td><td colspan=5 width=167 height=17 align=center style="border-bottom: 1px solid #000000;"><font size=2><B>June 30,</B></font></td></tr><tr><td width=312 height=17 align=left style="border-bottom: 1px solid #000000;"><font size=2><B>(in millions of dollars)</B></font></td><td width=19 height=17 align=left><font size=2></font></td><td colspan=2 width=74 height=17 align=center style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;"><font size=2><B>2009 </B></font></td><td width=19 height=17 align=left style="border-top: 1px solid #000000;"><font size=2> </font></td><td colspan=2 width=74 height=17 align=center style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;"><font size=2><B>2008 </B></font></td><td width=19 height=17 align=left><font size=2> </font></td><td colspan=2 width=74 height=17 align=center style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;"><font size=2><B>2009 </B></font></td><td width=19 height=17 align=left style="border-top: 1px solid #000000;"><font size=2> </font></td><td colspan=2 width=74 height=17 align=center style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;"><font size=2><B>2008 </B></font></td></tr><tr><td width=312 height=17 align=left style="border-top: 1px solid #000000;"><font size=2>Service cost</font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=13 height=17 align=left style="border-top: 1px solid #000000;"><font size=2>$</font></td><td width=61 height=17 align=right style="border-top: 1px solid #000000;"><font size=2> 108 </font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=13 height=17 align=left style="border-top: 1px solid #000000;"><font size=2>$</font></td><td width=61 height=17 align=right style="border-top: 1px solid #000000;"><font size=2> 114 </font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=13 height=17 align=left style="border-top: 1px solid #000000;"><font size=2>$</font></td><td width=61 height=17 align=right style="border-top: 1px solid #000000;"><font size=2> 1 </font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=13 height=17 align=left style="border-top: 1px solid #000000;"><font size=2>$</font></td><td width=61 height=17 align=right style="border-top: 1px solid #000000;"><font size=2> 1 </font></td></tr><tr><td width=312 height=17 align=left><font size=2>Interest cost</font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=13 height=17 align=left><font size=2> </font></td><td width=61 height=17 align=right><font size=2> 319 </font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=13 height=17 align=left><font size=2> </font></td><td width=61 height=17 align=right><font size=2> 320 </font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=13 height=17 align=left><font size=2> </font></td><td width=61 height=17 align=right><font size=2> 13 </font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=13 height=17 align=left><font size=2> </font></td><td width=61 height=17 align=right><font size=2> 14 </font></td></tr><tr><td width=312 height=17 align=left><font size=2>Expected return on plan assets</font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=13 height=17 align=left><font size=2> </font></td><td width=61 height=17 align=right><font size=2> (403)</font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=13 height=17 align=left><font size=2> </font></td><td width=61 height=17 align=right><font size=2> (421)</font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=13 height=17 align=left><font size=2> </font></td><td width=61 height=17 align=right><font size=2> - </font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=13 height=17 align=left><font size=2> </font></td><td width=61 height=17 align=right><font size=2> (1)</font></td></tr><tr><td width=312 height=17 align=left><font size=2>Amortization</font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=13 height=17 align=left><font size=2> </font></td><td width=61 height=17 align=right><font size=2> 14 </font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=13 height=17 align=left><font size=2> </font></td><td width=61 height=17 align=right><font size=2> 12 </font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=13 height=17 align=left><font size=2> </font></td><td width=61 height=17 align=right><font size=2> (1)</font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=13 height=17 align=left><font size=2> </font></td><td width=61 height=17 align=right><font size=2> (2)</font></td></tr><tr><td width=312 height=17 align=left><font size=2>Recognized actuarial net loss (gain)</font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=13 height=17 align=left style="border-bottom: 1px solid #000000;"><font size=2> </font></td><td width=61 height=17 align=right style="border-bottom: 1px solid #000000;"><font size=2> 56 </font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=13 height=17 align=left style="border-bottom: 1px solid #000000;"><font size=2> </font></td><td width=61 height=17 align=right style="border-bottom: 1px solid #000000;"><font size=2> 31 </font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=13 height=17 align=left style="border-bottom: 1px solid #000000;"><font size=2> </font></td><td width=61 height=17 align=right style="border-bottom: 1px solid #000000;"><font size=2> (1)</font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=13 height=17 align=left style="border-bottom: 1px solid #000000;"><font size=2> </font></td><td width=61 height=17 align=right style="border-bottom: 1px solid #000000;"><font size=2> - </font></td></tr><tr><td width=312 height=17 align=left><font size=2> </font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=13 height=17 align=left style="border-top: 1px solid #000000;"><font size=2> </font></td><td width=61 height=17 align=right style="border-top: 1px solid #000000;"><font size=2> 94 </font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=13 height=17 align=left style="border-top: 1px solid #000000;"><font size=2> </font></td><td width=61 height=17 align=right style="border-top: 1px solid #000000;"><font size=2> 56 </font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=13 height=17 align=left style="border-top: 1px solid #000000;"><font size=2> </font></td><td width=61 height=17 align=right style="border-top: 1px solid #000000;"><font size=2> 12 </font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=13 height=17 align=left style="border-top: 1px solid #000000;"><font size=2> </font></td><td width=61 height=17 align=right style="border-top: 1px solid #000000;"><font size=2> 12 </font></td></tr><tr><td width=312 height=17 align=left><font size=2>Net settlement and curtailment loss </font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=13 height=17 align=left style="border-bottom: 1px solid #000000;"><font size=2> </font></td><td width=61 height=17 align=right style="border-bottom: 1px solid #000000;"><font size=2> 4 </font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=13 height=17 align=left style="border-bottom: 1px solid #000000;"><font size=2> </font></td><td width=61 height=17 align=right style="border-bottom: 1px solid #000000;"><font size=2> - </font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=13 height=17 align=left style="border-bottom: 1px solid #000000;"><font size=2> </font></td><td width=61 height=17 align=right style="border-bottom: 1px solid #000000;"><font size=2> - </font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=13 height=17 align=left style="border-bottom: 1px solid #000000;"><font size=2> </font></td><td width=61 height=17 align=right style="border-bottom: 1px solid #000000;"><font size=2> - </font></td></tr><tr><td width=312 height=18 align=left><font size=2>Total net periodic benefit cost</font></td><td width=19 height=18 align=left><font size=2> </font></td><td width=13 height=18 align=left style="border-top: 1px solid #000000;border-bottom: 3px double #000000;"><font size=2>$</font></td><td width=61 height=18 align=right style="border-top: 1px solid #000000;border-bottom: 3px double #000000;"><font size=2> 98 </font></td><td width=19 height=18 align=left><font size=2> </font></td><td width=13 height=18 align=left style="border-top: 1px solid #000000;border-bottom: 3px double #000000;"><font size=2>$</font></td><td width=61 height=18 align=right style="border-top: 1px solid #000000;border-bottom: 3px double #000000;"><font size=2> 56 </font></td><td width=19 height=18 align=left><font size=2> </font></td><td width=13 height=18 align=left style="border-top: 1px solid #000000;border-bottom: 3px double #000000;"><font size=2>$</font></td><td width=61 height=18 align=right style="border-top: 1px solid #000000;border-bottom: 3px double #000000;"><font size=2> 12 </font></td><td width=19 height=18 align=left><font size=2> </font></td><td width=13 height=18 align=left style="border-top: 1px solid #000000;border-bottom: 3px double #000000;"><font size=2>$</font></td><td width=61 height=18 align=right style="border-top: 1px solid #000000;border-bottom: 3px double #000000;"><font size=2> 12 </font></td></tr><tr><td width=312 height=7 align=left><font size=2> </font></td><td width=19 height=7 align=left><font size=2> </font></td><td width=13 height=7 align=left style="border-top: 3px double #000000;"><font size=2> </font></td><td width=61 height=7 align=right style="border-top: 3px double #000000;"><font size=2> </font></td><td width=19 height=7 align=left><font size=2> </font></td><td width=13 height=7 align=left style="border-top: 3px double #000000;"><font size=2> </font></td><td width=61 height=7 align=right style="border-top: 3px double #000000;"><font size=2> </font></td><td width=19 height=7 align=left><font size=2> </font></td><td width=13 height=7 align=left style="border-top: 3px double #000000;"><font size=2> </font></td><td width=61 height=7 align=right style="border-top: 3px double #000000;"><font size=2> </font></td><td width=19 height=7 align=left><font size=2> </font></td><td width=13 height=7 align=left style="border-top: 3px double #000000;"><font size=2> </font></td><td width=61 height=7 align=right style="border-top: 3px double #000000;"><font size=2> </font></td></tr><tr><td width=312 height=17 align=left><font size=2> </font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=13 height=17 align=left><font size=2> </font></td><td width=61 height=17 align=right><font size=2> </font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=13 height=17 align=left><font size=2> </font></td><td width=61 height=17 align=right><font size=2> </font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=13 height=17 align=left><font size=2> </font></td><td width=61 height=17 align=right><font size=2> </font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=13 height=17 align=left><font size=2> </font></td><td width=61 height=17 align=right><font size=2> </font></td></tr><tr><td width=312 height=17 align=left><font size=2> </font></td><td width=19 height=17 align=left><font size=2> </font></td><td colspan=5 width=167 height=17 align=center><font size=2><B>Pension Benefits</B></font></td><td width=19 height=17 align=left><font size=2> </font></td><td colspan=5 width=167 height=17 align=center><font size=2><B>Other Postretirement Benefits</B></font></td></tr><tr><td width=312 height=17 align=left><font size=2> </font></td><td width=19 height=17 align=left><font size=2> </font></td><td colspan=5 width=167 height=17 align=center><font size=2><B>Six Months Ended</B></font></td><td width=19 height=17 align=left><font size=2> </font></td><td colspan=5 width=167 height=17 align=center><font size=2><B>Six Months Ended</B></font></td></tr><tr><td width=312 height=17 align=left><font size=2> </font></td><td width=19 height=17 align=left><font size=2> </font></td><td colspan=5 width=167 height=17 align=center style="border-bottom: 1px solid #000000;"><font size=2><B>June 30,</B></font></td><td width=19 height=17 align=left><font size=2> </font></td><td colspan=5 width=167 height=17 align=center style="border-bottom: 1px solid #000000;"><font size=2><B>June 30,</B></font></td></tr><tr><td width=312 height=17 align=left style="border-bottom: 1px solid #000000;"><font size=2><B>(in millions of dollars)</B></font></td><td width=19 height=17 align=left><font size=2></font></td><td colspan=2 width=74 height=17 align=center style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;"><font size=2><B>2009 </B></font></td><td width=19 height=17 align=left style="border-top: 1px solid #000000;"><font size=2> </font></td><td colspan=2 width=74 height=17 align=center style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;"><font size=2><B>2008 </B></font></td><td width=19 height=17 align=left><font size=2> </font></td><td colspan=2 width=74 height=17 align=center style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;"><font size=2><B>2009 </B></font></td><td width=19 height=17 align=left style="border-top: 1px solid #000000;"><font size=2> </font></td><td colspan=2 width=74 height=17 align=center style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;"><font size=2><B>2008 </B></font></td></tr><tr><td width=312 height=17 align=left style="border-top: 1px solid #000000;"><font size=2>Service cost</font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=13 height=17 align=left style="border-top: 1px solid #000000;"><font size=2>$</font></td><td width=61 height=17 align=right style="border-top: 1px solid #000000;"><font size=2> 214 </font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=13 height=17 align=left style="border-top: 1px solid #000000;"><font size=2>$</font></td><td width=61 height=17 align=right style="border-top: 1px solid #000000;"><font size=2> 227 </font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=13 height=17 align=left style="border-top: 1px solid #000000;"><font size=2>$</font></td><td width=61 height=17 align=right style="border-top: 1px solid #000000;"><font size=2> 2 </font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=13 height=17 align=left style="border-top: 1px solid #000000;"><font size=2>$</font></td><td width=61 height=17 align=right style="border-top: 1px solid #000000;"><font size=2> 2 </font></td></tr><tr><td width=312 height=17 align=left><font size=2>Interest cost</font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=13 height=17 align=left><font size=2> </font></td><td width=61 height=17 align=right><font size=2> 635 </font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=13 height=17 align=left><font size=2> </font></td><td width=61 height=17 align=right><font size=2> 640 </font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=13 height=17 align=left><font size=2> </font></td><td width=61 height=17 align=right><font size=2> 25 </font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=13 height=17 align=left><font size=2> </font></td><td width=61 height=17 align=right><font size=2> 27 </font></td></tr><tr><td width=312 height=17 align=left><font size=2>Expected return on plan assets</font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=13 height=17 align=left><font size=2> </font></td><td width=61 height=17 align=right><font size=2> (802)</font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=13 height=17 align=left><font size=2> </font></td><td width=61 height=17 align=right><font size=2> (841)</font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=13 height=17 align=left><font size=2> </font></td><td width=61 height=17 align=right><font size=2> - </font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=13 height=17 align=left><font size=2> </font></td><td width=61 height=17 align=right><font size=2> (1)</font></td></tr><tr><td width=312 height=17 align=left><font size=2>Amortization</font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=13 height=17 align=left><font size=2> </font></td><td width=61 height=17 align=right><font size=2> 28 </font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=13 height=17 align=left><font size=2> </font></td><td width=61 height=17 align=right><font size=2> 25 </font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=13 height=17 align=left><font size=2> </font></td><td width=61 height=17 align=right><font size=2> (2)</font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=13 height=17 align=left><font size=2> </font></td><td width=61 height=17 align=right><font size=2> (4)</font></td></tr><tr><td width=312 height=17 align=left><font size=2>Recognized actuarial net loss (gain)</font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=13 height=17 align=left style="border-bottom: 1px solid #000000;"><font size=2> </font></td><td width=61 height=17 align=right style="border-bottom: 1px solid #000000;"><font size=2> 112 </font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=13 height=17 align=left style="border-bottom: 1px solid #000000;"><font size=2> </font></td><td width=61 height=17 align=right style="border-bottom: 1px solid #000000;"><font size=2> 61 </font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=13 height=17 align=left style="border-bottom: 1px solid #000000;"><font size=2> </font></td><td width=61 height=17 align=right style="border-bottom: 1px solid #000000;"><font size=2> (2)</font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=13 height=17 align=left style="border-bottom: 1px solid #000000;"><font size=2> </font></td><td width=61 height=17 align=right style="border-bottom: 1px solid #000000;"><font size=2> - </font></td></tr><tr><td width=312 height=17 align=left><font size=2> </font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=13 height=17 align=left style="border-top: 1px solid #000000;"><font size=2> </font></td><td width=61 height=17 align=right style="border-top: 1px solid #000000;"><font size=2> 187 </font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=13 height=17 align=left style="border-top: 1px solid #000000;"><font size=2> </font></td><td width=61 height=17 align=right style="border-top: 1px solid #000000;"><font size=2> 112 </font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=13 height=17 align=left style="border-top: 1px solid #000000;"><font size=2> </font></td><td width=61 height=17 align=right style="border-top: 1px solid #000000;"><font size=2> 23 </font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=13 height=17 align=left style="border-top: 1px solid #000000;"><font size=2> </font></td><td width=61 height=17 align=right style="border-top: 1px solid #000000;"><font size=2> 24 </font></td></tr><tr><td width=312 height=17 align=left><font size=2>Net settlement and curtailment loss (gain)</font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=13 height=17 align=left style="border-bottom: 1px solid #000000;"><font size=2> </font></td><td width=61 height=17 align=right style="border-bottom: 1px solid #000000;"><font size=2> 17 </font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=13 height=17 align=left style="border-bottom: 1px solid #000000;"><font size=2> </font></td><td width=61 height=17 align=right style="border-bottom: 1px solid #000000;"><font size=2> (2)</font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=13 height=17 align=left style="border-bottom: 1px solid #000000;"><font size=2> </font></td><td width=61 height=17 align=right style="border-bottom: 1px solid #000000;"><font size=2> - </font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=13 height=17 align=left style="border-bottom: 1px solid #000000;"><font size=2> </font></td><td width=61 height=17 align=right style="border-bottom: 1px solid #000000;"><font size=2> - </font></td></tr><tr><td width=312 height=18 align=left><font size=2>Total net periodic benefit cost</font></td><td width=19 height=18 align=left><font size=2> </font></td><td width=13 height=18 align=left style="border-top: 1px solid #000000;border-bottom: 3px double #000000;"><font size=2>$</font></td><td width=61 height=18 align=right style="border-top: 1px solid #000000;border-bottom: 3px double #000000;"><font size=2> 204 </font></td><td width=19 height=18 align=left><font size=2> </font></td><td width=13 height=18 align=left style="border-top: 1px solid #000000;border-bottom: 3px double #000000;"><font size=2>$</font></td><td width=61 height=18 align=right style="border-top: 1px solid #000000;border-bottom: 3px double #000000;"><font size=2> 110 </font></td><td width=19 height=18 align=left><font size=2> </font></td><td width=13 height=18 align=left style="border-top: 1px solid #000000;border-bottom: 3px double #000000;"><font size=2>$</font></td><td width=61 height=18 align=right style="border-top: 1px solid #000000;border-bottom: 3px double #000000;"><font size=2> 23 </font></td><td width=19 height=18 align=left><font size=2> </font></td><td width=13 height=18 align=left style="border-top: 1px solid #000000;border-bottom: 3px double #000000;"><font size=2>$</font></td><td width=61 height=18 align=right style="border-top: 1px solid #000000;border-bottom: 3px double #000000;"><font size=2> 24 </font></td></tr></table></DIV></body></html>
<html><head><meta http-equiv="Content-Type" content="text/html; charset=utf-8" /></head><body><DIV><FONT SIZE=2><P>Note 7: Restructuring and Related Costs <BR> <BR>During the first six months of 2009, we recorded net pre-tax restructuring and related charges in our business segments totaling $464 million for new and ongoing restructuring actions as follows: <BR></FONT></DIV><DIV><table style="border-collapse: collapse; margin-top: 20px;"><tr><td width=632 height=17 align=left style="border-bottom: 1px solid #000000;"><font size=2><B>(in millions of dollars)</B></font></td><td width=14 height=17 align=left style="border-bottom: 1px solid #000000;"><font size=2> </font></td><td width=75 height=17 align=left style="border-bottom: 1px solid #000000;"><font size=2> </font></td></tr><tr><td width=632 height=17 align=left style="border-top: 1px solid #000000;"><font size=2>Otis</font></td><td width=14 height=17 align=left style="border-top: 1px solid #000000;"><font size=2>$</font></td><td width=75 height=17 align=right style="border-top: 1px solid #000000;"><font size=2> 79 </font></td></tr><tr><td width=632 height=17 align=left><font size=2>Carrier</font></td><td width=14 height=17 align=left><font size=2> </font></td><td width=75 height=17 align=right><font size=2> 96 </font></td></tr><tr><td width=632 height=17 align=left><font size=2>UTC Fire & Security</font></td><td width=14 height=17 align=left><font size=2> </font></td><td width=75 height=17 align=right><font size=2> 100 </font></td></tr><tr><td width=632 height=17 align=left><font size=2>Pratt & Whitney</font></td><td width=14 height=17 align=left><font size=2> </font></td><td width=75 height=17 align=right><font size=2> 120 </font></td></tr><tr><td width=632 height=17 align=left><font size=2>Hamilton Sundstrand</font></td><td width=14 height=17 align=left><font size=2> </font></td><td width=75 height=17 align=right><font size=2> 56 </font></td></tr><tr><td width=632 height=17 align=left><font size=2>Sikorsky</font></td><td width=14 height=17 align=left><font size=2> </font></td><td width=75 height=17 align=right><font size=2> 7 </font></td></tr><tr><td width=632 height=17 align=left><font size=2>Eliminations & Other</font></td><td width=14 height=17 align=left><font size=2> </font></td><td width=75 height=17 align=right><font size=2> 3 </font></td></tr><tr><td width=632 height=17 align=left><font size=2>General corporate expenses</font></td><td width=14 height=17 align=left style="border-bottom: 1px solid #000000;"><font size=2> </font></td><td width=75 height=17 align=right style="border-bottom: 1px solid #000000;"><font size=2> 3 </font></td></tr><tr><td width=632 height=27 align=left><font size=2>Total</font></td><td width=14 height=27 align=left style="border-top: 1px solid #000000;border-bottom: 3px double #000000;"><font size=2>$</font></td><td width=75 height=27 align=right style="border-top: 1px solid #000000;border-bottom: 3px double #000000;"><font size=2> 464 </font></td></tr></table></DIV><DIV><FONT SIZE=2><P>The net charges included $192 million in cost of sales, $254 million in selling, general and administrative expenses and $18 million in other income and, as described below, primarily relate to actions initiated during 2009 and 2008. <BR> <BR>2009 Actions. During the first six months of 2009, we initiated restructuring actions relating to ongoing cost reduction efforts, including workforce reductions and the consolidation of administrative offices. We recorded net pre-tax restructuring and related charges totaling $434 million, including $167 million in cost of sales, $249 million in selling, general and administrative expenses and $18 million in other income. <BR> <BR>We expect the 2009 actions that were initiated in the first six months to result in net workforce reductions of approximately 10,600 hourly and salaried employees, the exiting of approximately 2 million net square feet of facilities and the disposal of assets associated with the exited facilities. As of June 30, 2009, net workforce reductions of approximately 7,000 employees have been completed. The majority of the remaining workforce and all facility related cost reduction actions are targeted for completion during 2009 and 2010. No specific plans for significant other actions have been finalized at this time. <BR> <BR>The following table summarizes the accrual balances and utilization by cost type for the 2009 restructuring actions:<BR></FONT></DIV><DIV><table style="border-collapse: collapse; margin-top: 20px;"><tr><td width=289 height=56 align=left style="border-bottom: 1px solid #000000;"><font size=2><B>(in millions of dollars)</B></font></td><td width=19 height=56 align=center><font size=2></font></td><td colspan=2 width=89 height=56 align=center style="border-bottom: 1px solid #000000;"><font size=2><B>Severance</B></font></td><td width=19 height=56 align=center><font size=2> </font></td><td colspan=2 width=89 height=56 align=center style="border-bottom: 1px solid #000000;"><font size=2><B>Asset
Write-downs</B></font></td><td width=19 height=56 align=center><font size=2> </font></td><td colspan=2 width=89 height=56 align=center style="border-bottom: 1px solid #000000;"><font size=2><B>Facility Exit and Lease Termination Costs</B></font></td><td width=19 height=56 align=center><font size=2> </font></td><td colspan=2 width=89 height=56 align=center style="border-bottom: 1px solid #000000;"><font size=2><B>Total</B></font></td></tr><tr><td width=289 height=17 align=left style="border-top: 1px solid #000000;"><font size=2>Restructuring accruals at March 31, 2009</font></td><td width=19 height=17 align=center><font size=2> </font></td><td width=14 height=17 align=left style="border-top: 1px solid #000000;"><font size=2>$</font></td><td width=75 height=17 align=right style="border-top: 1px solid #000000;"><font size=2> 99 </font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left style="border-top: 1px solid #000000;"><font size=2>$</font></td><td width=75 height=17 align=right style="border-top: 1px solid #000000;"><font size=2> - </font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left style="border-top: 1px solid #000000;"><font size=2>$</font></td><td width=75 height=17 align=right style="border-top: 1px solid #000000;"><font size=2> 5 </font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left style="border-top: 1px solid #000000;"><font size=2>$</font></td><td width=75 height=17 align=right style="border-top: 1px solid #000000;"><font size=2> 104 </font></td></tr><tr><td width=289 height=17 align=left><font size=2>Net pre-tax restructuring charges</font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left><font size=2> </font></td><td width=75 height=17 align=right><font size=2> 255 </font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left><font size=2> </font></td><td width=75 height=17 align=right><font size=2> 14 </font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left><font size=2> </font></td><td width=75 height=17 align=right><font size=2> 14 </font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left><font size=2> </font></td><td width=75 height=17 align=right><font size=2> 283 </font></td></tr><tr><td width=289 height=17 align=left><font size=2>Utilization</font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left style="border-bottom: 1px solid #000000;"><font size=2> </font></td><td width=75 height=17 align=right style="border-bottom: 1px solid #000000;"><font size=2> (104)</font></td><td width=19 height=17 align=right><font size=2> </font></td><td width=14 height=17 align=left style="border-bottom: 1px solid #000000;"><font size=2> </font></td><td width=75 height=17 align=right style="border-bottom: 1px solid #000000;"><font size=2> (14)</font></td><td width=19 height=17 align=right><font size=2> </font></td><td width=14 height=17 align=left style="border-bottom: 1px solid #000000;"><font size=2> </font></td><td width=75 height=17 align=right style="border-bottom: 1px solid #000000;"><font size=2> (12)</font></td><td width=19 height=17 align=right><font size=2> </font></td><td width=14 height=17 align=left style="border-bottom: 1px solid #000000;"><font size=2> </font></td><td width=75 height=17 align=right style="border-bottom: 1px solid #000000;"><font size=2> (130)</font></td></tr><tr><td width=289 height=17 align=left><font size=2>Balance at June 30, 2009</font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;"><font size=2>$</font></td><td width=75 height=17 align=right style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;"><font size=2> 250 </font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;"><font size=2>$</font></td><td width=75 height=17 align=right style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;"><font size=2> - </font></td><td width=19 height=17 align=right><font size=2> </font></td><td width=14 height=17 align=left style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;"><font size=2>$</font></td><td width=75 height=17 align=right style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;"><font size=2> 7 </font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;"><font size=2>$</font></td><td width=75 height=17 align=right style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;"><font size=2> 257 </font></td></tr></table></DIV><DIV><FONT SIZE=2><P>The following table summarizes expected, incurred and remaining costs for the 2009 restructuring actions by type:<BR></FONT></DIV><DIV><table style="border-collapse: collapse; margin-top: 20px;"><tr><td width=289 height=50 align=left style="border-bottom: 1px solid #000000;"><font size=2><B>(in millions of dollars)</B></font></td><td width=19 height=50 align=left><font size=2></font></td><td colspan=2 width=89 height=50 align=center style="border-bottom: 1px solid #000000;"><font size=2><B>Severance</B></font></td><td width=19 height=50 align=left><font size=2> </font></td><td colspan=2 width=89 height=50 align=center style="border-bottom: 1px solid #000000;"><font size=2><B>Asset Write-Downs</B></font></td><td width=19 height=50 align=left><font size=2> </font></td><td colspan=2 width=89 height=50 align=center style="border-bottom: 1px solid #000000;"><font size=2><B>Facility Exit and Lease Termination Costs</B></font></td><td width=19 height=50 align=left><font size=2> </font></td><td colspan=2 width=89 height=50 align=center style="border-bottom: 1px solid #000000;"><font size=2><B>Total</B></font></td></tr><tr><td width=289 height=17 align=left style="border-top: 1px solid #000000;"><font size=2>Expected costs</font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left style="border-top: 1px solid #000000;"><font size=2>$</font></td><td width=75 height=17 align=right style="border-top: 1px solid #000000;"><font size=2> 423 </font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left style="border-top: 1px solid #000000;"><font size=2>$</font></td><td width=75 height=17 align=right style="border-top: 1px solid #000000;"><font size=2> 20 </font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left style="border-top: 1px solid #000000;"><font size=2>$</font></td><td width=75 height=17 align=right style="border-top: 1px solid #000000;"><font size=2> 55 </font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left style="border-top: 1px solid #000000;"><font size=2>$</font></td><td width=75 height=17 align=right style="border-top: 1px solid #000000;"><font size=2> 498 </font></td></tr><tr><td width=289 height=17 align=left><font size=2>Costs incurred - quarter ended March 31, 2009</font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left><font size=2> </font></td><td width=75 height=17 align=right><font size=2> (140)</font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left><font size=2> </font></td><td width=75 height=17 align=right><font size=2> (6)</font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left><font size=2> </font></td><td width=75 height=17 align=right><font size=2> (5)</font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left><font size=2> </font></td><td width=75 height=17 align=right><font size=2> (151)</font></td></tr><tr><td width=289 height=17 align=left><font size=2>Costs incurred - quarter ended June 30, 2009</font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left style="border-bottom: 1px solid #000000;"><font size=2> </font></td><td width=75 height=17 align=right style="border-bottom: 1px solid #000000;"><font size=2> (255)</font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left style="border-bottom: 1px solid #000000;"><font size=2> </font></td><td width=75 height=17 align=right style="border-bottom: 1px solid #000000;"><font size=2> (14)</font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left style="border-bottom: 1px solid #000000;"><font size=2> </font></td><td width=75 height=17 align=right style="border-bottom: 1px solid #000000;"><font size=2> (14)</font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left style="border-bottom: 1px solid #000000;"><font size=2> </font></td><td width=75 height=17 align=right style="border-bottom: 1px solid #000000;"><font size=2> (283)</font></td></tr><tr><td width=289 height=18 align=left><font size=2>Remaining costs at June 30, 2009</font></td><td width=19 height=18 align=left><font size=2> </font></td><td width=14 height=18 align=left style="border-top: 1px solid #000000;border-bottom: 3px double #000000;"><font size=2>$</font></td><td width=75 height=18 align=right style="border-top: 1px solid #000000;border-bottom: 3px double #000000;"><font size=2> 28 </font></td><td width=19 height=18 align=left><font size=2> </font></td><td width=14 height=18 align=left style="border-top: 1px solid #000000;border-bottom: 3px double #000000;"><font size=2>$</font></td><td width=75 height=18 align=right style="border-top: 1px solid #000000;border-bottom: 3px double #000000;"><font size=2> - </font></td><td width=19 height=18 align=left><font size=2> </font></td><td width=14 height=18 align=left style="border-top: 1px solid #000000;border-bottom: 3px double #000000;"><font size=2>$</font></td><td width=75 height=18 align=right style="border-top: 1px solid #000000;border-bottom: 3px double #000000;"><font size=2> 36 </font></td><td width=19 height=18 align=left><font size=2> </font></td><td width=14 height=18 align=left style="border-top: 1px solid #000000;border-bottom: 3px double #000000;"><font size=2>$</font></td><td width=75 height=18 align=right style="border-top: 1px solid #000000;border-bottom: 3px double #000000;"><font size=2> 64 </font></td></tr></table></DIV><DIV><FONT SIZE=2><P>The following table summarizes expected, incurred and remaining costs for the 2009 restructuring actions by segment: <BR></FONT></DIV><DIV><table style="border-collapse: collapse; margin-top: 20px;"><tr><td width=289 height=17 align=left><font size=2><B> </B></font></td><td width=19 height=17 align=left><font size=2><B> </B></font></td><td width=14 height=17 align=left><font size=2><B> </B></font></td><td width=75 height=17 align=left><font size=2><B> </B></font></td><td width=18 height=17 align=left><font size=2><B> </B></font></td><td width=14 height=17 align=left><font size=2><B> </B></font></td><td colspan=2 width=94 height=17 align=center><font size=2><B>Costs Incurred - </B></font></td><td width=19 height=17 align=center><font size=2><B> </B></font></td><td colspan=2 width=89 height=17 align=center><font size=2><B>Costs Incurred - </B></font></td><td width=19 height=17 align=left><font size=2><B> </B></font></td><td colspan=2 width=89 height=17 align=center><font size=2><B>Remaining</B></font></td></tr><tr><td width=289 height=17 align=left><font size=2><B> </B></font></td><td width=19 height=17 align=left><font size=2><B> </B></font></td><td width=14 height=17 align=left><font size=2><B> </B></font></td><td width=75 height=17 align=left><font size=2><B> </B></font></td><td width=18 height=17 align=left><font size=2><B> </B></font></td><td width=14 height=17 align=left><font size=2><B> </B></font></td><td colspan=2 width=94 height=17 align=center><font size=2><B>Quarter Ended</B></font></td><td width=19 height=17 align=center><font size=2><B> </B></font></td><td colspan=2 width=89 height=17 align=center><font size=2><B>Quarter Ended</B></font></td><td width=19 height=17 align=left><font size=2><B> </B></font></td><td colspan=2 width=89 height=17 align=center><font size=2><B>Costs at</B></font></td></tr><tr><td width=289 height=17 align=left style="border-bottom: 1px solid #000000;"><font size=2><B>(in millions of dollars)</B></font></td><td width=19 height=17 align=left><font size=2><B></B></font></td><td colspan=2 width=89 height=17 align=center style="border-bottom: 1px solid #000000;"><font size=2><B>Expected Costs</B></font></td><td width=18 height=17 align=center><font size=2><B> </B></font></td><td width=14 height=17 align=left><font size=2><B> </B></font></td><td colspan=2 width=94 height=17 align=center style="border-bottom: 1px solid #000000;"><font size=2><B>March 31, 2009</B></font></td><td width=19 height=17 align=center style="border-bottom: 1px solid #000000;"><font size=2><B> </B></font></td><td colspan=2 width=89 height=17 align=center style="border-bottom: 1px solid #000000;"><font size=2><B>June 30, 2009</B></font></td><td width=19 height=17 align=left><font size=2><B> </B></font></td><td colspan=2 width=89 height=17 align=center style="border-bottom: 1px solid #000000;"><font size=2><B>June 30, 2009</B></font></td></tr><tr><td width=289 height=17 align=left style="border-top: 1px solid #000000;"><font size=2>Otis </font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left style="border-top: 1px solid #000000;"><font size=2>$</font></td><td width=75 height=17 align=right style="border-top: 1px solid #000000;"><font size=2> 90 </font></td><td width=18 height=17 align=right><font size=2> </font></td><td width=14 height=17 align=left><font size=2>$</font></td><td width=75 height=17 align=right style="border-top: 1px solid #000000;"><font size=2> (21)</font></td><td width=19 height=17 align=left style="border-top: 1px solid #000000;"><font size=2> </font></td><td width=19 height=17 align=left style="border-top: 1px solid #000000;"><font size=2> </font></td><td width=14 height=17 align=left style="border-top: 1px solid #000000;"><font size=2>$</font></td><td width=75 height=17 align=right style="border-top: 1px solid #000000;"><font size=2> (57)</font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left style="border-top: 1px solid #000000;"><font size=2>$</font></td><td width=75 height=17 align=right style="border-top: 1px solid #000000;"><font size=2> 12 </font></td></tr><tr><td width=289 height=17 align=left><font size=2>Carrier</font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left><font size=2> </font></td><td width=75 height=17 align=right><font size=2> 113 </font></td><td width=18 height=17 align=right><font size=2> </font></td><td width=14 height=17 align=left><font size=2> </font></td><td width=75 height=17 align=right><font size=2> (35)</font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left><font size=2> </font></td><td width=75 height=17 align=right><font size=2> (53)</font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left><font size=2> </font></td><td width=75 height=17 align=right><font size=2> 25 </font></td></tr><tr><td width=289 height=17 align=left><font size=2>UTC Fire & Security</font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left><font size=2> </font></td><td width=75 height=17 align=right><font size=2> 108 </font></td><td width=18 height=17 align=right><font size=2> </font></td><td width=14 height=17 align=left><font size=2> </font></td><td width=75 height=17 align=right><font size=2> (13)</font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left><font size=2> </font></td><td width=75 height=17 align=right><font size=2> (83)</font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left><font size=2> </font></td><td width=75 height=17 align=right><font size=2> 12 </font></td></tr><tr><td width=289 height=17 align=left><font size=2>Pratt & Whitney</font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left><font size=2> </font></td><td width=75 height=17 align=right><font size=2> 112 </font></td><td width=18 height=17 align=right><font size=2> </font></td><td width=14 height=17 align=left><font size=2> </font></td><td width=75 height=17 align=right><font size=2> (59)</font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left><font size=2> </font></td><td width=75 height=17 align=right><font size=2> (43)</font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left><font size=2> </font></td><td width=75 height=17 align=right><font size=2> 10 </font></td></tr><tr><td width=289 height=17 align=left><font size=2>Hamilton Sundstrand</font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left><font size=2> </font></td><td width=75 height=17 align=right><font size=2> 61 </font></td><td width=18 height=17 align=right><font size=2> </font></td><td width=14 height=17 align=left><font size=2> </font></td><td width=75 height=17 align=right><font size=2> (19)</font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left><font size=2> </font></td><td width=75 height=17 align=right><font size=2> (37)</font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left><font size=2> </font></td><td width=75 height=17 align=right><font size=2> 5 </font></td></tr><tr><td width=289 height=17 align=left><font size=2>Sikorsky</font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left><font size=2> </font></td><td width=75 height=17 align=right><font size=2> 7 </font></td><td width=18 height=17 align=right><font size=2> </font></td><td width=14 height=17 align=left><font size=2> </font></td><td width=75 height=17 align=right><font size=2> - </font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left><font size=2> </font></td><td width=75 height=17 align=right><font size=2> (7)</font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left><font size=2> </font></td><td width=75 height=17 align=right><font size=2> - </font></td></tr><tr><td width=289 height=17 align=left><font size=2>Eliminations & Other</font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left><font size=2> </font></td><td width=75 height=17 align=right><font size=2> 4 </font></td><td width=18 height=17 align=right><font size=2> </font></td><td width=14 height=17 align=left><font size=2> </font></td><td width=75 height=17 align=right><font size=2> (3)</font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left><font size=2> </font></td><td width=75 height=17 align=right><font size=2> (1)</font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left><font size=2> </font></td><td width=75 height=17 align=right><font size=2> - </font></td></tr><tr><td width=289 height=17 align=left><font size=2>General corporate expenses</font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left style="border-bottom: 1px solid #000000;"><font size=2> </font></td><td width=75 height=17 align=right style="border-bottom: 1px solid #000000;"><font size=2> 3 </font></td><td width=18 height=17 align=right><font size=2> </font></td><td width=14 height=17 align=left style="border-bottom: 1px solid #000000;"><font size=2> </font></td><td width=75 height=17 align=right style="border-bottom: 1px solid #000000;"><font size=2> (1)</font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left style="border-bottom: 1px solid #000000;"><font size=2> </font></td><td width=75 height=17 align=right style="border-bottom: 1px solid #000000;"><font size=2> (2)</font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left style="border-bottom: 1px solid #000000;"><font size=2> </font></td><td width=75 height=17 align=right style="border-bottom: 1px solid #000000;"><font size=2> - </font></td></tr><tr><td width=289 height=18 align=left><font size=2>Total</font></td><td width=19 height=18 align=left><font size=2> </font></td><td width=14 height=18 align=left style="border-top: 1px solid #000000;border-bottom: 3px double #000000;"><font size=2>$</font></td><td width=75 height=18 align=right style="border-top: 1px solid #000000;border-bottom: 3px double #000000;"><font size=2> 498 </font></td><td width=18 height=18 align=right><font size=2> </font></td><td width=14 height=18 align=left style="border-top: 1px solid #000000;border-bottom: 3px double #000000;"><font size=2>$</font></td><td width=75 height=18 align=right style="border-top: 1px solid #000000;border-bottom: 3px double #000000;"><font size=2> (151)</font></td><td width=19 height=18 align=left><font size=2> </font></td><td width=19 height=18 align=left><font size=2> </font></td><td width=14 height=18 align=left style="border-top: 1px solid #000000;border-bottom: 3px double #000000;"><font size=2>$</font></td><td width=75 height=18 align=right style="border-top: 1px solid #000000;border-bottom: 3px double #000000;"><font size=2> (283)</font></td><td width=19 height=18 align=left><font size=2> </font></td><td width=14 height=18 align=left style="border-top: 1px solid #000000;border-bottom: 3px double #000000;"><font size=2>$</font></td><td width=75 height=18 align=right style="border-top: 1px solid #000000;border-bottom: 3px double #000000;"><font size=2> 64 </font></td></tr></table></DIV><DIV><FONT SIZE=2><P>2008 Actions. During the first six months of 2009, we recorded net pre-tax restructuring and related charges and reversals totaling $28 million for restructuring actions initiated in 2008, including $23 million in cost of sales and $5 million in selling, general and administrative expenses. The 2008 actions relate to ongoing cost reduction efforts, including selling, general and administrative reductions, principally at Carrier, Pratt & Whitney, and UTC Fire & Security, and the consolidation of manufacturing facilities. <BR> <BR>As of June 30, 2009, net workforce reductions of approximately 5,500 employees of an expected 6,300 employees have been completed, and 200,000 net square feet of facilities of an expected 1.2 million net square feet have been exited. The majority of the remaining workforce and facility related cost reduction actions are targeted for completion during 2009 and 2010. <BR> <BR>The following table summarizes the accrual balances and utilization by cost type for the 2008 restructuring actions: <BR></FONT></DIV><DIV><table style="border-collapse: collapse; margin-top: 20px;"><tr><td width=289 height=56 align=left style="border-bottom: 1px solid #000000;"><font size=2><B>(in millions of dollars)</B></font></td><td width=19 height=56 align=center><font size=2></font></td><td colspan=2 width=89 height=56 align=center style="border-bottom: 1px solid #000000;"><font size=2><B>Severance</B></font></td><td width=19 height=56 align=center><font size=2> </font></td><td colspan=2 width=89 height=56 align=center style="border-bottom: 1px solid #000000;"><font size=2><B>Asset
Write-downs</B></font></td><td width=19 height=56 align=center><font size=2> </font></td><td colspan=2 width=89 height=56 align=center style="border-bottom: 1px solid #000000;"><font size=2><B>Facility Exit and Lease Termination Costs</B></font></td><td width=19 height=56 align=center><font size=2> </font></td><td colspan=2 width=89 height=56 align=center style="border-bottom: 1px solid #000000;"><font size=2><B>Total</B></font></td></tr><tr><td width=289 height=17 align=left style="border-top: 1px solid #000000;"><font size=2>Restructuring accruals at March 31, 2009</font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left style="border-top: 1px solid #000000;"><font size=2>$</font></td><td width=75 height=17 align=right style="border-top: 1px solid #000000;"><font size=2> 95 </font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left style="border-top: 1px solid #000000;"><font size=2>$</font></td><td width=75 height=17 align=right style="border-top: 1px solid #000000;"><font size=2> - </font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left style="border-top: 1px solid #000000;"><font size=2>$</font></td><td width=75 height=17 align=right style="border-top: 1px solid #000000;"><font size=2> 6 </font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left style="border-top: 1px solid #000000;"><font size=2>$</font></td><td width=75 height=17 align=right style="border-top: 1px solid #000000;"><font size=2> 101 </font></td></tr><tr><td width=289 height=17 align=left><font size=2>Net pre-tax restructuring charges</font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left><font size=2> </font></td><td width=75 height=17 align=right><font size=2> 14 </font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left><font size=2> </font></td><td width=75 height=17 align=right><font size=2> - </font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left><font size=2> </font></td><td width=75 height=17 align=right><font size=2> 3 </font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left><font size=2> </font></td><td width=75 height=17 align=right><font size=2> 17 </font></td></tr><tr><td width=289 height=17 align=left><font size=2>Utilization</font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left style="border-bottom: 1px solid #000000;"><font size=2> </font></td><td width=75 height=17 align=right style="border-bottom: 1px solid #000000;"><font size=2> (40)</font></td><td width=19 height=17 align=right><font size=2> </font></td><td width=14 height=17 align=left style="border-bottom: 1px solid #000000;"><font size=2> </font></td><td width=75 height=17 align=right style="border-bottom: 1px solid #000000;"><font size=2> - </font></td><td width=19 height=17 align=right><font size=2> </font></td><td width=14 height=17 align=left style="border-bottom: 1px solid #000000;"><font size=2> </font></td><td width=75 height=17 align=right style="border-bottom: 1px solid #000000;"><font size=2> (4)</font></td><td width=19 height=17 align=right><font size=2> </font></td><td width=14 height=17 align=left style="border-bottom: 1px solid #000000;"><font size=2> </font></td><td width=75 height=17 align=right style="border-bottom: 1px solid #000000;"><font size=2> (44)</font></td></tr><tr><td width=289 height=18 align=left><font size=2>Balance at June 30, 2009</font></td><td width=19 height=18 align=left><font size=2> </font></td><td width=14 height=18 align=left style="border-top: 1px solid #000000;border-bottom: 3px double #000000;"><font size=2>$</font></td><td width=75 height=18 align=right style="border-top: 1px solid #000000;border-bottom: 3px double #000000;"><font size=2> 69 </font></td><td width=19 height=18 align=left><font size=2> </font></td><td width=14 height=18 align=left style="border-top: 1px solid #000000;border-bottom: 3px double #000000;"><font size=2>$</font></td><td width=75 height=18 align=right style="border-top: 1px solid #000000;border-bottom: 3px double #000000;"><font size=2> - </font></td><td width=19 height=18 align=right><font size=2> </font></td><td width=14 height=18 align=left style="border-top: 1px solid #000000;border-bottom: 3px double #000000;"><font size=2>$</font></td><td width=75 height=18 align=right style="border-top: 1px solid #000000;border-bottom: 3px double #000000;"><font size=2> 5 </font></td><td width=19 height=18 align=left><font size=2> </font></td><td width=14 height=18 align=left style="border-top: 1px solid #000000;border-bottom: 3px double #000000;"><font size=2>$</font></td><td width=75 height=18 align=right style="border-top: 1px solid #000000;border-bottom: 3px double #000000;"><font size=2> 74 </font></td></tr></table></DIV><DIV><FONT SIZE=2><P>The following table summarizes expected, incurred and remaining costs for the 2008 restructuring actions by type: <BR></FONT></DIV><DIV><table style="border-collapse: collapse; margin-top: 20px;"><tr><td width=289 height=50 align=left style="border-bottom: 1px solid #000000;"><font size=2><B>(in millions of dollars)</B></font></td><td width=19 height=50 align=left><font size=2></font></td><td colspan=2 width=89 height=50 align=center style="border-bottom: 1px solid #000000;"><font size=2><B>Severance</B></font></td><td width=19 height=50 align=left><font size=2> </font></td><td colspan=2 width=89 height=50 align=center style="border-bottom: 1px solid #000000;"><font size=2><B>Asset Write-Downs</B></font></td><td width=19 height=50 align=left><font size=2> </font></td><td colspan=2 width=89 height=50 align=center style="border-bottom: 1px solid #000000;"><font size=2><B>Facility Exit and Lease Termination Costs</B></font></td><td width=19 height=50 align=left><font size=2> </font></td><td colspan=2 width=89 height=50 align=center style="border-bottom: 1px solid #000000;"><font size=2><B>Total</B></font></td></tr><tr><td width=289 height=17 align=left style="border-top: 1px solid #000000;"><font size=2>Expected costs</font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left style="border-top: 1px solid #000000;"><font size=2>$</font></td><td width=75 height=17 align=right style="border-top: 1px solid #000000;"><font size=2> 299 </font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left style="border-top: 1px solid #000000;"><font size=2>$</font></td><td width=75 height=17 align=right style="border-top: 1px solid #000000;"><font size=2> 24 </font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left style="border-top: 1px solid #000000;"><font size=2>$</font></td><td width=75 height=17 align=right style="border-top: 1px solid #000000;"><font size=2> 55 </font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left style="border-top: 1px solid #000000;"><font size=2>$</font></td><td width=75 height=17 align=right style="border-top: 1px solid #000000;"><font size=2> 378 </font></td></tr><tr><td width=289 height=17 align=left><font size=2>Costs incurred through December 31, 2008</font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left><font size=2> </font></td><td width=75 height=17 align=right><font size=2> (277)</font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left><font size=2> </font></td><td width=75 height=17 align=right><font size=2> (24)</font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left><font size=2> </font></td><td width=75 height=17 align=right><font size=2> (26)</font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left><font size=2> </font></td><td width=75 height=17 align=right><font size=2> (327)</font></td></tr><tr><td width=289 height=17 align=left><font size=2>Costs incurred - quarter ended March 31, 2009</font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left><font size=2> </font></td><td width=75 height=17 align=right><font size=2> (5)</font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left><font size=2> </font></td><td width=75 height=17 align=right><font size=2> - </font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left><font size=2> </font></td><td width=75 height=17 align=right><font size=2> (6)</font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left><font size=2> </font></td><td width=75 height=17 align=right><font size=2> (11)</font></td></tr><tr><td width=289 height=17 align=left><font size=2>Costs incurred - quarter ended June 30, 2009</font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left style="border-bottom: 1px solid #000000;"><font size=2> </font></td><td width=75 height=17 align=right style="border-bottom: 1px solid #000000;"><font size=2> (14)</font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left style="border-bottom: 1px solid #000000;"><font size=2> </font></td><td width=75 height=17 align=right style="border-bottom: 1px solid #000000;"><font size=2> - </font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left style="border-bottom: 1px solid #000000;"><font size=2> </font></td><td width=75 height=17 align=right style="border-bottom: 1px solid #000000;"><font size=2> (3)</font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left style="border-bottom: 1px solid #000000;"><font size=2> </font></td><td width=75 height=17 align=right style="border-bottom: 1px solid #000000;"><font size=2> (17)</font></td></tr><tr><td width=289 height=18 align=left><font size=2>Remaining costs at June 30, 2009</font></td><td width=19 height=18 align=left><font size=2> </font></td><td width=14 height=18 align=left style="border-top: 1px solid #000000;border-bottom: 3px double #000000;"><font size=2>$</font></td><td width=75 height=18 align=right style="border-top: 1px solid #000000;border-bottom: 3px double #000000;"><font size=2> 3 </font></td><td width=19 height=18 align=left><font size=2> </font></td><td width=14 height=18 align=left style="border-top: 1px solid #000000;border-bottom: 3px double #000000;"><font size=2>$</font></td><td width=75 height=18 align=right style="border-top: 1px solid #000000;border-bottom: 3px double #000000;"><font size=2> - </font></td><td width=19 height=18 align=left><font size=2> </font></td><td width=14 height=18 align=left style="border-top: 1px solid #000000;border-bottom: 3px double #000000;"><font size=2>$</font></td><td width=75 height=18 align=right style="border-top: 1px solid #000000;border-bottom: 3px double #000000;"><font size=2> 20 </font></td><td width=19 height=18 align=left><font size=2> </font></td><td width=14 height=18 align=left style="border-top: 1px solid #000000;border-bottom: 3px double #000000;"><font size=2>$</font></td><td width=75 height=18 align=right style="border-top: 1px solid #000000;border-bottom: 3px double #000000;"><font size=2> 23 </font></td></tr></table></DIV><DIV><FONT SIZE=2><P>The following table summarizes expected, incurred and remaining costs for the 2008 restructuring actions by segment: <BR></FONT></DIV><DIV><table style="border-collapse: collapse; margin-top: 20px;"><tr><td width=195 height=17 align=left><font size=2><B> </B></font></td><td width=19 height=17 align=left><font size=2><B> </B></font></td><td width=14 height=17 align=left><font size=2><B> </B></font></td><td width=75 height=17 align=left><font size=2><B> </B></font></td><td width=15 height=17 align=left><font size=2><B> </B></font></td><td colspan=2 width=108 height=17 align=center><font size=2><B>Costs Incurred</B></font></td><td width=19 height=17 align=left><font size=2><B> </B></font></td><td colspan=2 width=89 height=17 align=center><font size=2><B>Costs Incurred</B></font></td><td width=19 height=17 align=left><font size=2><B> </B></font></td><td colspan=2 width=89 height=17 align=center><font size=2><B>Costs Incurred - </B></font></td><td width=19 height=17 align=left><font size=2><B> </B></font></td><td colspan=2 width=89 height=17 align=center><font size=2><B>Remaining</B></font></td></tr><tr><td width=195 height=17 align=left><font size=2><B> </B></font></td><td width=19 height=17 align=left><font size=2><B> </B></font></td><td width=14 height=17 align=left><font size=2><B> </B></font></td><td width=75 height=17 align=left><font size=2><B> </B></font></td><td width=15 height=17 align=left><font size=2><B> </B></font></td><td colspan=2 width=108 height=17 align=center><font size=2><B>through</B></font></td><td width=19 height=17 align=left><font size=2><B> </B></font></td><td colspan=2 width=89 height=17 align=center><font size=2><B>through</B></font></td><td width=19 height=17 align=left><font size=2><B> </B></font></td><td colspan=2 width=89 height=17 align=center><font size=2><B>Quarter ended</B></font></td><td width=19 height=17 align=left><font size=2><B> </B></font></td><td colspan=2 width=89 height=17 align=center><font size=2><B>Costs at</B></font></td></tr><tr><td width=195 height=17 align=left style="border-bottom: 1px solid #000000;"><font size=2><B>(in millions of dollars)</B></font></td><td width=19 height=17 align=left><font size=2><B></B></font></td><td colspan=2 width=89 height=17 align=center style="border-bottom: 1px solid #000000;"><font size=2><B>Expected Costs</B></font></td><td width=15 height=17 align=center><font size=2><B> </B></font></td><td colspan=2 width=108 height=17 align=center style="border-bottom: 1px solid #000000;"><font size=2><B>December 31, 2008</B></font></td><td width=19 height=17 align=left><font size=2><B> </B></font></td><td colspan=2 width=89 height=17 align=center style="border-bottom: 1px solid #000000;"><font size=2><B>March 31, 2009</B></font></td><td width=19 height=17 align=left><font size=2><B> </B></font></td><td colspan=2 width=89 height=17 align=center style="border-bottom: 1px solid #000000;"><font size=2><B>June 30, 2009</B></font></td><td width=19 height=17 align=left><font size=2><B> </B></font></td><td colspan=2 width=89 height=17 align=center style="border-bottom: 1px solid #000000;"><font size=2><B>June 30, 2009</B></font></td></tr><tr><td width=195 height=17 align=left style="border-top: 1px solid #000000;"><font size=2>Otis </font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left style="border-top: 1px solid #000000;"><font size=2>$</font></td><td width=75 height=17 align=right style="border-top: 1px solid #000000;"><font size=2> 23 </font></td><td width=15 height=17 align=right><font size=2> </font></td><td width=13 height=17 align=left style="border-top: 1px solid #000000;"><font size=2>$</font></td><td width=95 height=17 align=right style="border-top: 1px solid #000000;"><font size=2> (21)</font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left style="border-top: 1px solid #000000;"><font size=2>$</font></td><td width=75 height=17 align=right style="border-top: 1px solid #000000;"><font size=2> (1)</font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left style="border-top: 1px solid #000000;"><font size=2>$</font></td><td width=75 height=17 align=right style="border-top: 1px solid #000000;"><font size=2> - </font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left style="border-top: 1px solid #000000;"><font size=2>$</font></td><td width=75 height=17 align=right style="border-top: 1px solid #000000;"><font size=2> 1 </font></td></tr><tr><td width=195 height=17 align=left><font size=2>Carrier</font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left><font size=2> </font></td><td width=75 height=17 align=right><font size=2> 165 </font></td><td width=15 height=17 align=right><font size=2> </font></td><td width=13 height=17 align=left><font size=2> </font></td><td width=95 height=17 align=right><font size=2> (141)</font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left><font size=2> </font></td><td width=75 height=17 align=right><font size=2> (6)</font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left><font size=2> </font></td><td width=75 height=17 align=right><font size=2> (2)</font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left><font size=2> </font></td><td width=75 height=17 align=right><font size=2> 16 </font></td></tr><tr><td width=195 height=17 align=left><font size=2>UTC Fire & Security</font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left><font size=2> </font></td><td width=75 height=17 align=right><font size=2> 67 </font></td><td width=15 height=17 align=right><font size=2> </font></td><td width=13 height=17 align=left><font size=2> </font></td><td width=95 height=17 align=right><font size=2> (58)</font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left><font size=2> </font></td><td width=75 height=17 align=right><font size=2> (1)</font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left><font size=2> </font></td><td width=75 height=17 align=right><font size=2> (3)</font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left><font size=2> </font></td><td width=75 height=17 align=right><font size=2> 5 </font></td></tr><tr><td width=195 height=17 align=left><font size=2>Pratt & Whitney</font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left><font size=2> </font></td><td width=75 height=17 align=right><font size=2> 112 </font></td><td width=15 height=17 align=right><font size=2> </font></td><td width=13 height=17 align=left><font size=2> </font></td><td width=95 height=17 align=right><font size=2> (93)</font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left><font size=2> </font></td><td width=75 height=17 align=right><font size=2> (5)</font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left><font size=2> </font></td><td width=75 height=17 align=right><font size=2> (13)</font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left><font size=2> </font></td><td width=75 height=17 align=right><font size=2> 1 </font></td></tr><tr><td width=195 height=17 align=left><font size=2>Hamilton Sundstrand</font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left><font size=2> </font></td><td width=75 height=17 align=right><font size=2> 11 </font></td><td width=15 height=17 align=right><font size=2> </font></td><td width=13 height=17 align=left><font size=2> </font></td><td width=95 height=17 align=right><font size=2> (13)</font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left><font size=2> </font></td><td width=75 height=17 align=right><font size=2> 1 </font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left><font size=2> </font></td><td width=75 height=17 align=right><font size=2> 1 </font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left><font size=2> </font></td><td width=75 height=17 align=right><font size=2> - </font></td></tr><tr><td width=195 height=17 align=left><font size=2>Eliminations & Other</font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left style="border-bottom: 1px solid #000000;"><font size=2> </font></td><td width=75 height=17 align=right style="border-bottom: 1px solid #000000;"><font size=2> - </font></td><td width=15 height=17 align=right><font size=2> </font></td><td width=13 height=17 align=left style="border-bottom: 1px solid #000000;"><font size=2> </font></td><td width=95 height=17 align=right style="border-bottom: 1px solid #000000;"><font size=2> (1)</font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left style="border-bottom: 1px solid #000000;"><font size=2> </font></td><td width=75 height=17 align=right style="border-bottom: 1px solid #000000;"><font size=2> 1 </font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left style="border-bottom: 1px solid #000000;"><font size=2> </font></td><td width=75 height=17 align=right style="border-bottom: 1px solid #000000;"><font size=2> - </font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left style="border-bottom: 1px solid #000000;"><font size=2> </font></td><td width=75 height=17 align=right style="border-bottom: 1px solid #000000;"><font size=2> - </font></td></tr><tr><td width=195 height=18 align=left><font size=2>Total</font></td><td width=19 height=18 align=left><font size=2> </font></td><td width=14 height=18 align=left style="border-top: 1px solid #000000;border-bottom: 3px double #000000;"><font size=2>$</font></td><td width=75 height=18 align=right style="border-top: 1px solid #000000;border-bottom: 3px double #000000;"><font size=2> 378 </font></td><td width=15 height=18 align=right><font size=2> </font></td><td width=13 height=18 align=left style="border-top: 1px solid #000000;border-bottom: 3px double #000000;"><font size=2>$</font></td><td width=95 height=18 align=right style="border-top: 1px solid #000000;border-bottom: 3px double #000000;"><font size=2> (327)</font></td><td width=19 height=18 align=left><font size=2> </font></td><td width=14 height=18 align=left style="border-top: 1px solid #000000;border-bottom: 3px double #000000;"><font size=2>$</font></td><td width=75 height=18 align=right style="border-top: 1px solid #000000;border-bottom: 3px double #000000;"><font size=2> (11)</font></td><td width=19 height=18 align=left><font size=2> </font></td><td width=14 height=18 align=left style="border-top: 1px solid #000000;border-bottom: 3px double #000000;"><font size=2>$</font></td><td width=75 height=18 align=right style="border-top: 1px solid #000000;border-bottom: 3px double #000000;"><font size=2> (17)</font></td><td width=19 height=18 align=left><font size=2> </font></td><td width=14 height=18 align=left style="border-top: 1px solid #000000;border-bottom: 3px double #000000;"><font size=2>$</font></td><td width=75 height=18 align=right style="border-top: 1px solid #000000;border-bottom: 3px double #000000;"><font size=2> 23 </font></td></tr></table></DIV><DIV><FONT SIZE=2><P> </FONT></DIV></body></html>
<html><head><meta http-equiv="Content-Type" content="text/html; charset=utf-8" /></head><body><DIV><FONT SIZE=2><P>Note 8: Financial Instruments<BR>In March of 2008, the FASB issued SFAS No. 161, “Disclosures about Derivative Instruments and Hedging Activities, an amendment of FASB Statement No. 133” (SFAS 161). SFAS 161 requires entities to provide enhanced disclosure about how and why the entity uses derivative instruments, how the instruments and related hedged items are accounted for under SFAS No. 133, “Accounting for Derivative Instruments and Hedging Activities,” (SFAS 133) and how the instruments and related hedged items affect the financial position, results of operations, and cash flows of the entity. We adopted SFAS 161 during the quarter ended March 31, 2009. <BR> <BR>We enter into derivative instruments for risk management purposes only, including derivatives designated as hedging instruments under SFAS 133 and those utilized as economic hedges. We operate internationally and, in the normal course of business, are exposed to fluctuations in interest rates, foreign exchange rates and commodity prices. These fluctuations can increase the costs of financing, investing and operating the business. We have used derivative instruments, including swaps, forward contracts and options to manage certain foreign currency, interest rate and commodity price exposures. <BR> <BR>By nature, all financial instruments involve market and credit risks. We enter into derivative and other financial instruments with major investment grade financial institutions and have policies to monitor the credit risk of those counterparties. We limit counterparty exposure and concentration of risk by diversifying counterparties. While there can be no assurance, we do not anticipate any material non-performance by any of these counterparties. <BR> <BR>Foreign Currency Forward Contracts. We manage our foreign currency transaction risks to acceptable limits through the use of derivatives to hedge forecasted cash flows associated with foreign currency transaction exposures which are accounted for as cash flow hedges, as deemed appropriate. To the extent these derivatives are effective in offsetting the variability of the hedged cash flows, and otherwise meet the hedge accounting criteria of SFAS 133, changes in the derivatives’ fair value are not included in current earnings but are included in Accumulated Other Non-Shareowners’ Changes in Equity. These changes in fair value will subsequently be reclassified into earnings as a component of product sales or expenses, as applicable, when the forecasted transaction occurs. To the extent that a previously designated hedging transaction is no longer an effective hedge, any ineffectiveness measured in the hedging relationship is recorded currently in earnings in the period it occurs. <BR> <BR>To the extent the hedge accounting criteria of SFAS 133 are not met, the foreign currency forward contracts are utilized as economic hedges and changes in the fair value of these contracts are recorded currently in earnings in the period in which they occur. These include hedges that are used to reduce exchange rate risks arising from the change in fair value of certain foreign currency denominated assets and liabilities (i.e. payables, receivables) and other economic hedges where the hedge accounting criteria of SFAS 133 were not met. <BR> <BR>The four quarter rolling average of the notional amount of foreign exchange contracts hedging foreign currency transactions was $9.4 billion and $11.2 billion at June 30, 2009 and December 31, 2008, respectively. <BR> <BR>Commodity Forward Contracts. We enter into commodity forward contracts to reduce the risk of fluctuations in the price we pay for certain commodities (for example, nickel) which are used directly in the production of our products, or are components of the products we procure to use in the production of our products. These hedges are economic hedges and the changes in fair value of these contracts are recorded currently in earnings in the period in which they occur. The fair value of commodity contracts were insignificant for the period ended June 30, 2009. <BR> <BR>The outstanding notional amount of contracts hedging commodity exposures was insignificant at June 30, 2009 and December 31, 2008, respectively. <BR> <BR>The following table summarizes the fair value of derivative instruments as of June 30, 2009:</FONT></DIV><DIV><table style="border-collapse: collapse; margin-top: 20px;"><tr><td colspan=2 width=253 height=17 align=left><font size=2> </font></td><td width=9 height=17 align=left><font size=2> </font></td><td width=138 height=17 align=center><font size=2><B>Assets</B></font></td><td width=10 height=17 align=center><font size=2><B> </B></font></td><td width=14 height=17 align=center><font size=2><B> </B></font></td><td width=43 height=17 align=center><font size=2><B> </B></font></td><td width=14 height=17 align=left><font size=2> </font></td><td width=150 height=17 align=center><font size=2><B>Liabilities</B></font></td><td width=10 height=17 align=center><font size=2><B> </B></font></td><td width=14 height=17 align=center><font size=2><B> </B></font></td><td width=43 height=17 align=center><font size=2><B> </B></font></td></tr><tr><td colspan=2 width=253 height=17 align=left style="border-bottom: 1px solid #000000;"><font size=2><B>(in millions of dollars)</B></font></td><td width=9 height=17 align=left><font size=2> </font></td><td width=138 height=17 align=center style="border-bottom: 1px solid #000000;"><font size=2><B>Balance Sheet Location</B></font></td><td width=10 height=17 align=center><font size=2><B> </B></font></td><td width=14 height=17 align=center><font size=2><B> </B></font></td><td width=43 height=17 align=center><font size=2><B> </B></font></td><td width=14 height=17 align=left><font size=2> </font></td><td width=150 height=17 align=center style="border-bottom: 1px solid #000000;"><font size=2><B>Balance Sheet Location</B></font></td><td width=10 height=17 align=center><font size=2><B> </B></font></td><td width=14 height=17 align=center><font size=2><B> </B></font></td><td width=43 height=17 align=center><font size=2><B> </B></font></td></tr><tr><td colspan=2 width=253 height=17 align=left style="border-top: 1px solid #000000;"><font size=2>Derivatives designated as hedging instruments:</font></td><td width=9 height=17 align=left><font size=2> </font></td><td width=138 height=17 align=left style="border-top: 1px solid #000000;"><font size=2> </font></td><td width=10 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left><font size=2> </font></td><td width=43 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left><font size=2> </font></td><td width=150 height=17 align=left style="border-top: 1px solid #000000;"><font size=2> </font></td><td width=10 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left><font size=2> </font></td><td width=43 height=17 align=left><font size=2> </font></td></tr><tr><td width=21 height=17 align=left><font size=2> </font></td><td width=232 height=17 align=left><font size=2>Foreign Exchange Contracts</font></td><td width=9 height=17 align=left><font size=2> </font></td><td width=138 height=17 align=left><font size=2>Other Current Assets</font></td><td width=10 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left><font size=2>$</font></td><td width=43 height=17 align=right><font size=2> 12 </font></td><td width=14 height=17 align=left><font size=2> </font></td><td width=150 height=17 align=left><font size=2>Accrued Liabilities</font></td><td width=10 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left><font size=2>$</font></td><td width=43 height=17 align=right><font size=2> 165 </font></td></tr><tr><td width=21 height=17 align=left><font size=2> </font></td><td width=232 height=17 align=left><font size=2>Foreign Exchange Contracts</font></td><td width=9 height=17 align=left><font size=2> </font></td><td width=138 height=17 align=left><font size=2>Other Assets</font></td><td width=10 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left><font size=2> </font></td><td width=43 height=17 align=right style="border-bottom: 1px solid #000000;"><font size=2> 27 </font></td><td width=14 height=17 align=left><font size=2> </font></td><td width=150 height=17 align=left><font size=2>Other Long-Term Liabilities</font></td><td width=10 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left><font size=2> </font></td><td width=43 height=17 align=right style="border-bottom: 1px solid #000000;"><font size=2> 25 </font></td></tr><tr><td width=21 height=17 align=left><font size=2> </font></td><td width=232 height=17 align=left><font size=2> </font></td><td width=9 height=17 align=left><font size=2> </font></td><td width=138 height=17 align=left><font size=2> </font></td><td width=10 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left><font size=2>$</font></td><td width=43 height=17 align=right style="border-top: 1px solid #000000;"><font size=2> 39 </font></td><td width=14 height=17 align=left><font size=2> </font></td><td width=150 height=17 align=left><font size=2> </font></td><td width=10 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left><font size=2>$</font></td><td width=43 height=17 align=right style="border-top: 1px solid #000000;"><font size=2> 190 </font></td></tr><tr><td width=21 height=11 align=left><font size=2> </font></td><td width=232 height=11 align=left><font size=2> </font></td><td width=9 height=11 align=left><font size=2> </font></td><td width=138 height=11 align=left><font size=2> </font></td><td width=10 height=11 align=left><font size=2> </font></td><td width=14 height=11 align=left><font size=2> </font></td><td width=43 height=11 align=left><font size=2> </font></td><td width=14 height=11 align=left><font size=2> </font></td><td width=150 height=11 align=left><font size=2> </font></td><td width=10 height=11 align=left><font size=2> </font></td><td width=14 height=11 align=left><font size=2> </font></td><td width=43 height=11 align=left><font size=2> </font></td></tr><tr><td colspan=2 width=253 height=17 align=left><font size=2>Derivatives not designated as hedging instruments:</font></td><td width=9 height=17 align=left><font size=2> </font></td><td width=138 height=17 align=left><font size=2> </font></td><td width=10 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left><font size=2> </font></td><td width=43 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left><font size=2> </font></td><td width=150 height=17 align=left><font size=2> </font></td><td width=10 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left><font size=2> </font></td><td width=43 height=17 align=left><font size=2> </font></td></tr><tr><td width=21 height=17 align=left><font size=2> </font></td><td width=232 height=17 align=left><font size=2>Foreign Exchange Contracts</font></td><td width=9 height=17 align=left><font size=2> </font></td><td width=138 height=17 align=left><font size=2>Other Current Assets</font></td><td width=10 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left><font size=2>$</font></td><td width=43 height=17 align=right><font size=2> 50 </font></td><td width=14 height=17 align=left><font size=2> </font></td><td width=150 height=17 align=left><font size=2>Accrued Liabilities</font></td><td width=10 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left><font size=2>$</font></td><td width=43 height=17 align=right><font size=2> 67 </font></td></tr><tr><td width=21 height=17 align=left><font size=2> </font></td><td width=232 height=17 align=left><font size=2>Foreign Exchange Contracts</font></td><td width=9 height=17 align=left><font size=2> </font></td><td width=138 height=17 align=left><font size=2>Other Assets</font></td><td width=10 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left><font size=2> </font></td><td width=43 height=17 align=right style="border-bottom: 1px solid #000000;"><font size=2> 3 </font></td><td width=14 height=17 align=left><font size=2> </font></td><td width=150 height=17 align=left><font size=2>Other Long-Term Liabilities</font></td><td width=10 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left><font size=2> </font></td><td width=43 height=17 align=right style="border-bottom: 1px solid #000000;"><font size=2> 3 </font></td></tr><tr><td width=21 height=17 align=left><font size=2> </font></td><td width=232 height=17 align=left><font size=2> </font></td><td width=9 height=17 align=left><font size=2> </font></td><td width=138 height=17 align=left><font size=2> </font></td><td width=10 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left><font size=2>$</font></td><td width=43 height=17 align=right style="border-top: 1px solid #000000;"><font size=2> 53 </font></td><td width=14 height=17 align=left><font size=2> </font></td><td width=150 height=17 align=left><font size=2> </font></td><td width=10 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left><font size=2>$</font></td><td width=43 height=17 align=right style="border-top: 1px solid #000000;"><font size=2> 70 </font></td></tr><tr><td width=21 height=11 align=left><font size=2> </font></td><td width=232 height=11 align=left><font size=2> </font></td><td width=9 height=11 align=left><font size=2> </font></td><td width=138 height=11 align=left><font size=2> </font></td><td width=10 height=11 align=left><font size=2> </font></td><td width=14 height=11 align=left><font size=2> </font></td><td width=43 height=11 align=left style="border-bottom: 1px solid #000000;"><font size=2> </font></td><td width=14 height=11 align=left><font size=2> </font></td><td width=150 height=11 align=left><font size=2> </font></td><td width=10 height=11 align=left><font size=2> </font></td><td width=14 height=11 align=left><font size=2> </font></td><td width=43 height=11 align=left style="border-bottom: 1px solid #000000;"><font size=2> </font></td></tr><tr><td colspan=2 width=253 height=18 align=left><font size=2>Total Derivative Contracts </font></td><td width=9 height=18 align=left><font size=2> </font></td><td width=138 height=18 align=left><font size=2> </font></td><td width=10 height=18 align=left><font size=2> </font></td><td width=14 height=18 align=left><font size=2>$</font></td><td width=43 height=18 align=right style="border-top: 1px solid #000000;border-bottom: 3px double #000000;"><font size=2> 92 </font></td><td width=14 height=18 align=left><font size=2> </font></td><td width=150 height=18 align=left><font size=2> </font></td><td width=10 height=18 align=left><font size=2> </font></td><td width=14 height=18 align=left><font size=2>$</font></td><td width=43 height=18 align=right style="border-top: 1px solid #000000;border-bottom: 3px double #000000;"><font size=2> 260 </font></td></tr></table></DIV><DIV><FONT SIZE=2><P>The impact on Accumulated Other Non-Shareowners’ Changes in Equity from foreign exchange derivative instruments that qualified as cash flow hedges under SFAS 133 for the period was as follows:<BR></FONT></DIV><DIV><table style="border-collapse: collapse; margin-top: 20px;"><tr><td width=35 height=17 align=left><font size=2><B> </B></font></td><td width=95 height=17 align=left><font size=2><B> </B></font></td><td width=411 height=17 align=left><font size=2><B> </B></font></td><td width=11 height=17 align=left><font size=2><B> </B></font></td><td width=18 height=17 align=left><font size=2><B> </B></font></td><td width=68 height=17 align=center><font size=2><B>Quarter Ended</B></font></td><td width=18 height=17 align=left><font size=2><B> </B></font></td><td width=68 height=17 align=center><font size=2><B>Six Months Ended</B></font></td></tr><tr><td colspan=3 width=541 height=17 align=left style="border-bottom: 1px solid #000000;"><font size=2><B>(in millions of dollars)</B></font></td><td width=11 height=17 align=left><font size=2><B> </B></font></td><td width=18 height=17 align=left style="border-bottom: 1px solid #000000;"><font size=2> </font></td><td width=68 height=17 align=center style="border-bottom: 1px solid #000000;"><font size=2><B>June 30, 2009</B></font></td><td width=18 height=17 align=left style="border-bottom: 1px solid #000000;"><font size=2> </font></td><td width=68 height=17 align=center style="border-bottom: 1px solid #000000;"><font size=2><B>June 30, 2009</B></font></td></tr><tr><td colspan=3 width=541 height=17 align=left style="border-top: 1px solid #000000;"><font size=2>Gain recorded in Accumulated Other Non-Shareowners' Changes in Equity </font></td><td width=11 height=17 align=left><font size=2><B> </B></font></td><td width=18 height=17 align=left style="border-top: 1px solid #000000;"><font size=2>$</font></td><td width=68 height=17 align=right style="border-top: 1px solid #000000;"><font size=2> 135 </font></td><td width=18 height=17 align=left style="border-top: 1px solid #000000;"><font size=2>$</font></td><td width=68 height=17 align=right style="border-top: 1px solid #000000;"><font size=2> 2 </font></td></tr><tr><td colspan=3 width=541 height=17 align=left><font size=2>Loss reclassified from Accumulated Other Non-Shareowners' Changes in Equity into Product Sales (effective portion)</font></td><td width=11 height=17 align=left><font size=2> </font></td><td width=18 height=17 align=left><font size=2> </font></td><td width=68 height=17 align=right><font size=2> (39)</font></td><td width=18 height=17 align=left><font size=2> </font></td><td width=68 height=17 align=right><font size=2> (99)</font></td></tr><tr><td colspan=3 width=541 height=17 align=left><font size=2>Loss recognized in Other Income, net on derivative (ineffective portion)</font></td><td width=11 height=17 align=left><font size=2> </font></td><td width=18 height=17 align=left><font size=2> </font></td><td width=68 height=17 align=right><font size=2> - </font></td><td width=18 height=17 align=left><font size=2> </font></td><td width=68 height=17 align=right><font size=2> (5)</font></td></tr><tr><td width=35 height=6 align=left><font size=2> </font></td><td width=95 height=6 align=left><font size=2> </font></td><td width=411 height=6 align=left><font size=2> </font></td><td width=11 height=6 align=left><font size=2> </font></td><td width=18 height=6 align=left><font size=2> </font></td><td width=68 height=6 align=left><font size=2> </font></td><td width=18 height=6 align=left><font size=2> </font></td><td width=68 height=6 align=left><font size=2> </font></td></tr></table></DIV><DIV><FONT SIZE=2><P>Assuming current market conditions continue, of the amount recorded in Accumulated Other Non-Shareowners’ Changes in Equity, a $142 million pre-tax loss is expected to be reclassified into product sales or cost of products sold to reflect the fixed prices obtained from foreign exchange hedging within the next 12 months. Gains and losses recognized in earnings related to the discontinuance or the ineffectiveness of cash flow hedges was $5 million for the six months ended June 30, 2009. The ineffectiveness recognized in earnings was the result of certain forecasted product sales transactions no longer occurring and was recorded in the first quarter of 2009. At June 30, 2009, all derivative contracts accounted for as cash flow hedges mature by December 2014.<BR></FONT></DIV><DIV><FONT SIZE=2><P>The effect on the Condensed Consolidated Statement of Operations from foreign exchange contracts not designated as hedging instruments under SFAS 133 was as follows:<BR></FONT></DIV><DIV><table style="border-collapse: collapse; margin-top: 20px;"><tr><td width=35 height=17 align=left><font size=2><B> </B></font></td><td width=95 height=17 align=left><font size=2><B> </B></font></td><td width=411 height=17 align=left><font size=2><B> </B></font></td><td width=11 height=17 align=left><font size=2><B> </B></font></td><td width=18 height=17 align=left><font size=2><B> </B></font></td><td width=68 height=17 align=center><font size=2><B>Quarter Ended</B></font></td><td width=18 height=17 align=left><font size=2><B> </B></font></td><td width=68 height=17 align=center><font size=2><B>Six Months Ended</B></font></td></tr><tr><td colspan=3 width=541 height=17 align=left style="border-bottom: 1px solid #000000;"><font size=2><B>(in millions of dollars)</B></font></td><td width=11 height=17 align=left><font size=2><B> </B></font></td><td width=18 height=17 align=left style="border-bottom: 1px solid #000000;"><font size=2> </font></td><td width=68 height=17 align=center style="border-bottom: 1px solid #000000;"><font size=2><B>June 30, 2009</B></font></td><td width=18 height=17 align=left style="border-bottom: 1px solid #000000;"><font size=2> </font></td><td width=68 height=17 align=center style="border-bottom: 1px solid #000000;"><font size=2><B>June 30, 2009</B></font></td></tr><tr><td colspan=3 width=541 height=17 align=left style="border-top: 1px solid #000000;"><font size=2>Gain (Loss) recognized in Other Income, net </font></td><td width=11 height=17 align=left><font size=2><B> </B></font></td><td width=18 height=17 align=left style="border-top: 1px solid #000000;"><font size=2>$</font></td><td width=68 height=17 align=right style="border-top: 1px solid #000000;"><font size=2> 33 </font></td><td width=18 height=17 align=left style="border-top: 1px solid #000000;"><font size=2>$</font></td><td width=68 height=17 align=right style="border-top: 1px solid #000000;"><font size=2> (48)</font></td></tr><tr><td width=35 height=6 align=left><font size=2> </font></td><td width=95 height=6 align=left><font size=2> </font></td><td width=411 height=6 align=left><font size=2> </font></td><td width=11 height=6 align=left><font size=2> </font></td><td width=18 height=6 align=left><font size=2> </font></td><td width=68 height=6 align=left><font size=2> </font></td><td width=18 height=6 align=left><font size=2> </font></td><td width=68 height=6 align=left><font size=2> </font></td></tr></table></DIV><DIV><FONT SIZE=2><P>Fair Value Disclosure. SFAS No. 157, “Fair Value Measurements” (SFAS 157), defines fair value, establishes a framework for measuring fair value and expands the related disclosure requirements. This statement applies under other accounting pronouncements that require or permit fair value measurements. The statement indicates, among other things, that a fair value measurement assumes that the transaction to sell an asset or transfer a liability occurs in the principal market for the asset or liability or, in the absence of a principal market, the most advantageous market for the asset or liability. SFAS 157 defines fair value based upon an exit price model. <BR> <BR>We adopted SFAS 157 as of January 1, 2008, with the exception of the application of the statement to non-recurring nonfinancial assets and nonfinancial liabilities, which was delayed by FSP FAS 157-2, “Effective Date of FASB Statement No. 157,” to fiscal years beginning after November 15, 2008, which we therefore adopted as of January 1, 2009. As of June 30, 2009, we do not have any significant non-recurring measurements of nonfinancial assets and nonfinancial liabilities. <BR> <BR>Valuation Hierarchy. SFAS 157 establishes a valuation hierarchy for disclosure of the inputs to the valuations used to measure fair value. This hierarchy prioritizes the inputs into three broad levels as follows. Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities. Level 2 inputs are quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets in markets that are not active, inputs other than quoted prices that are observable for the asset or liability, including interest rates, yield curves and credit risks, or inputs that are derived principally from or corroborated by observable market data through correlation. Level 3 inputs are unobservable inputs based on our own assumptions used to measure assets and liabilities at fair value. A financial asset or liability’s classification within the hierarchy is determined based on the lowest level input that is significant to the fair value measurement. <BR> <BR>The following table provides the assets and liabilities carried at fair value measured on a recurring basis as of June 30, 2009:</FONT></DIV><DIV><table style="border-collapse: collapse; margin-top: 20px;"><tr><td width=289 height=60 align=left style="border-bottom: 1px solid #000000;"><font size=2><B>(in millions of dollars)</B></font></td><td width=19 height=60 align=left><font size=2><B></B></font></td><td colspan=2 width=88 height=60 align=center style="border-bottom: 1px solid #000000;"><font size=2><B>Total Carrying Value at
June 30, 2009</B></font></td><td width=19 height=60 align=left><font size=2> </font></td><td colspan=2 width=88 height=60 align=center style="border-bottom: 1px solid #000000;"><font size=2><B>Quoted price in active markets
(Level 1)</B></font></td><td width=19 height=60 align=left><font size=2> </font></td><td colspan=2 width=88 height=60 align=center style="border-bottom: 1px solid #000000;"><font size=2><B>Significant other observable inputs
(Level 2)</B></font></td><td width=19 height=60 align=left><font size=2> </font></td><td colspan=2 width=88 height=60 align=center style="border-bottom: 1px solid #000000;"><font size=2><B>Unobservable inputs
(Level 3)</B></font></td></tr><tr><td width=289 height=17 align=left style="border-top: 1px solid #000000;"><font size=2>Available-for-sale securities</font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=13 height=17 align=left style="border-top: 1px solid #000000;"><font size=2>$</font></td><td width=75 height=17 align=right style="border-top: 1px solid #000000;"><font size=2> 388 </font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=13 height=17 align=left style="border-top: 1px solid #000000;"><font size=2>$</font></td><td width=75 height=17 align=right style="border-top: 1px solid #000000;"><font size=2> 388 </font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=13 height=17 align=left style="border-top: 1px solid #000000;"><font size=2>$</font></td><td width=75 height=17 align=right style="border-top: 1px solid #000000;"><font size=2> - </font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=13 height=17 align=left style="border-top: 1px solid #000000;"><font size=2>$</font></td><td width=75 height=17 align=right style="border-top: 1px solid #000000;"><font size=2> - </font></td></tr><tr><td width=289 height=17 align=left><font size=2>Derivative assets</font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=13 height=17 align=left><font size=2> </font></td><td width=75 height=17 align=right><font size=2> 92 </font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=13 height=17 align=left><font size=2> </font></td><td width=75 height=17 align=right><font size=2> - </font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=13 height=17 align=left><font size=2> </font></td><td width=75 height=17 align=right><font size=2> 92 </font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=13 height=17 align=left><font size=2> </font></td><td width=75 height=17 align=right><font size=2> - </font></td></tr><tr><td width=289 height=17 align=left><font size=2>Derivative liabilities</font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=13 height=17 align=left><font size=2> </font></td><td width=75 height=17 align=right><font size=2> 260 </font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=13 height=17 align=left><font size=2> </font></td><td width=75 height=17 align=right><font size=2> - </font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=13 height=17 align=left><font size=2> </font></td><td width=75 height=17 align=right><font size=2> 260 </font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=13 height=17 align=left><font size=2> </font></td><td width=75 height=17 align=right><font size=2> - </font></td></tr></table></DIV><DIV><FONT SIZE=2><P>Valuation Techniques. Our available for sale securities include equity investments that are traded in an active market. They are measured at fair value using closing stock prices from active markets and are classified within Level 1 of the valuation hierarchy. Our derivative assets and liabilities include foreign exchange and commodity derivatives that are measured at fair value using observable market inputs such as forward rates, interest rates, our own credit risk and our counterparties’ credit risks. Based on these inputs, the derivative assets and liabilities are classified within Level 2 of the valuation hierarchy. Based on our continued ability to trade securities and enter into forward contracts, we consider the markets for our fair value instruments to be active. <BR> <BR>As of June 30, 2009, there has not been any significant impact to the fair value of our derivative liabilities due to our own credit risk. Similarly, there has not been any significant adverse impact to our derivative assets based on our evaluation of our counterparties’ credit risks. <BR> <BR>In April 2009, the FASB issued FSP FAS 107-1 and APB 28-1, “Interim Disclosure about Fair Value of Financial Instruments” (FSP FAS 107-1 & APB 28-1). FSP FAS 107-1 & APB 28-1 require interim disclosures regarding the fair values of financial instruments that are within the scope of SFAS No. 107, “Disclosures about the Fair Value of Financial Instruments.” Additionally, FSP FAS 107-1 & APB 28-1 require disclosure of the methods and significant assumptions used to estimate the fair value of financial instruments on an interim basis as well as changes in the methods and significant assumptions from prior periods. FSP FAS 107-1 & APB 28-1 do not change the accounting treatment for these financial instruments. We adopted FSP FAS 107-1 & APB 28-1 during the quarter ended June 30, 2009. <BR> <BR>The carrying amounts and fair values of financial instruments at June 30, 2009 and December 31, 2008 are as follows:<BR></FONT></DIV><DIV><table style="border-collapse: collapse; margin-top: 20px;"><tr><td width=33 height=17 align=left><font size=2> </font></td><td width=320 height=17 align=left><font size=2> </font></td><td width=19 height=17 align=left><font size=2> </font></td><td colspan=5 width=175 height=17 align=center style="border-bottom: 1px solid #000000;"><font size=2><B>June 30, 2009</B></font></td><td width=19 height=17 align=left><font size=2> </font></td><td colspan=5 width=175 height=17 align=center style="border-bottom: 1px solid #000000;"><font size=2><B>December 31, 2008</B></font></td></tr><tr><td colspan=2 width=353 height=34 align=left style="border-bottom: 1px solid #000000;"><font size=2><B>(in millions of dollars)</B></font></td><td width=19 height=34 align=left><font size=2></font></td><td colspan=2 width=78 height=34 align=center style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;"><font size=2><B>Carrying
Amount</B></font></td><td width=19 height=34 align=left style="border-top: 1px solid #000000;"><font size=2> </font></td><td colspan=2 width=78 height=34 align=center style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;"><font size=2><B>Fair
Value</B></font></td><td width=19 height=34 align=left><font size=2></font></td><td colspan=2 width=78 height=34 align=center style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;"><font size=2><B>Carrying
Amount</B></font></td><td width=19 height=34 align=left style="border-top: 1px solid #000000;"><font size=2> </font></td><td colspan=2 width=78 height=34 align=center style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;"><font size=2><B>Fair
Value</B></font></td></tr><tr><td colspan=2 width=353 height=17 align=left style="border-top: 1px solid #000000;"><font size=2>Financial Assets and Liabilities</font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left style="border-top: 1px solid #000000;"><font size=2> </font></td><td width=64 height=17 align=left style="border-top: 1px solid #000000;"><font size=2> </font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left style="border-top: 1px solid #000000;"><font size=2> </font></td><td width=64 height=17 align=left style="border-top: 1px solid #000000;"><font size=2> </font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left style="border-top: 1px solid #000000;"><font size=2> </font></td><td width=64 height=17 align=left style="border-top: 1px solid #000000;"><font size=2> </font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left style="border-top: 1px solid #000000;"><font size=2> </font></td><td width=64 height=17 align=left style="border-top: 1px solid #000000;"><font size=2> </font></td></tr><tr><td width=33 height=17 align=left><font size=2> </font></td><td width=320 height=17 align=left><font size=2>Marketable equity securities</font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left><font size=2>$</font></td><td width=64 height=17 align=right><font size=2> 388 </font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left><font size=2>$</font></td><td width=64 height=17 align=right><font size=2> 388 </font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left><font size=2>$</font></td><td width=64 height=17 align=right><font size=2> 325 </font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left><font size=2>$</font></td><td width=64 height=17 align=right><font size=2> 325 </font></td></tr><tr><td width=33 height=17 align=left><font size=2> </font></td><td width=320 height=17 align=left><font size=2>Long-term receivables</font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left><font size=2> </font></td><td width=64 height=17 align=right><font size=2> 364 </font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left><font size=2> </font></td><td width=64 height=17 align=right><font size=2> 345 </font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left><font size=2> </font></td><td width=64 height=17 align=right><font size=2> 343 </font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left><font size=2> </font></td><td width=64 height=17 align=right><font size=2> 316 </font></td></tr><tr><td width=33 height=17 align=left><font size=2> </font></td><td width=320 height=17 align=left><font size=2>Customer financing notes receivable</font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left><font size=2> </font></td><td width=64 height=17 align=right><font size=2> 335 </font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left><font size=2> </font></td><td width=64 height=17 align=right><font size=2> 283 </font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left><font size=2> </font></td><td width=64 height=17 align=right><font size=2> 316 </font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left><font size=2> </font></td><td width=64 height=17 align=right><font size=2> 245 </font></td></tr><tr><td width=33 height=17 align=left><font size=2> </font></td><td width=320 height=17 align=left><font size=2>Short-term borrowings</font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left><font size=2> </font></td><td width=64 height=17 align=right><font size=2> (1,242)</font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left><font size=2> </font></td><td width=64 height=17 align=right><font size=2> (1,242)</font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left><font size=2> </font></td><td width=64 height=17 align=right><font size=2> (1,023)</font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left><font size=2> </font></td><td width=64 height=17 align=right><font size=2> (1,023)</font></td></tr><tr><td width=33 height=17 align=left><font size=2> </font></td><td width=320 height=17 align=left><font size=2>Long-term debt</font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left><font size=2> </font></td><td width=64 height=17 align=right><font size=2> (9,533)</font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left><font size=2> </font></td><td width=64 height=17 align=right><font size=2> (10,381)</font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left><font size=2> </font></td><td width=64 height=17 align=right><font size=2> (10,408)</font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left><font size=2> </font></td><td width=64 height=17 align=right><font size=2> (11,332)</font></td></tr></table></DIV><DIV><FONT SIZE=2><P>The above fair values were computed based on comparable transactions, quoted market prices, discounted future cash flows or an estimate of the amount to be received or paid to terminate or settle the agreement, as applicable. Differences from carrying amounts are attributable to interest and or credit rate changes subsequent to when the transaction occurred. The values of marketable equity securities represent our investment in common stock that is classified as available for sale and is accounted for at fair value. The fair values of cash and cash equivalents, accounts receivable, net, short-term borrowings, and accounts payable approximate the carrying amounts due to the short-term maturities of these instruments. <BR> <BR>We have outstanding financing and rental commitments totaling $1,040 million at June 30, 2009. Risks associated with changes in interest rates on these commitments are mitigated by the fact that interest rates are variable during the commitment term and are set at the date of funding based on current market conditions, the fair value of the underlying collateral and the credit worthiness of the customers. As a result, the fair value of these financings is expected to equal the amounts funded. The fair value of the commitment itself is not readily determinable and is not considered significant.<BR></FONT></DIV></body></html>
<html><head><meta http-equiv="Content-Type" content="text/html; charset=utf-8" /></head><body><DIV><FONT SIZE=2><P>Note 9: Equity <BR>A summary of the changes in equity for the quarters and six months ended June 30, 2009 and 2008 is provided below: <BR></FONT></DIV><DIV><table style="border-collapse: collapse; margin-top: 20px;"><tr><td width=15 height=17 align=left><font size=2> </font></td><td width=15 height=17 align=left><font size=2> </font></td><td width=238 height=17 align=left><font size=2> </font></td><td width=9 height=17 align=left><font size=2> </font></td><td colspan=17 width=451 height=17 align=center style="border-bottom: 1px solid #000000;"><font size=2><B>Quarter Ended June 30,</B></font></td></tr><tr><td colspan=3 width=268 height=17 align=left style="border-bottom: 1px solid #000000;"><font size=2><B>(in millions of dollars)</B></font></td><td width=9 height=17 align=left><font size=2> </font></td><td colspan=8 width=221 height=17 align=center style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;"><font size=2><B>2009 </B></font></td><td width=9 height=17 align=center style="border-top: 1px solid #000000;"><font size=2><B> </B></font></td><td colspan=8 width=221 height=17 align=center style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;"><font size=2><B>2008 </B></font></td></tr><tr><td width=15 height=30 align=left style="border-top: 1px solid #000000;"><font size=2><B> </B></font></td><td width=15 height=30 align=left style="border-top: 1px solid #000000;"><font size=2><B> </B></font></td><td width=238 height=30 align=left style="border-top: 1px solid #000000;"><font size=2><B> </B></font></td><td width=9 height=30 align=left><font size=2> </font></td><td colspan=2 width=65 height=30 align=center style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;"><font size=2><B>Shareowners'
Equity</B></font></td><td width=9 height=30 align=center style="border-top: 1px solid #000000;"><font size=2><B> </B></font></td><td colspan=2 width=73 height=30 align=center style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;"><font size=2><B>Noncontrolling
Interest</B></font></td><td width=9 height=30 align=center style="border-top: 1px solid #000000;"><font size=2><B> </B></font></td><td colspan=2 width=65 height=30 align=center style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;"><font size=2><B>Total
Equity</B></font></td><td width=9 height=30 align=center><font size=2><B> </B></font></td><td colspan=2 width=65 height=30 align=center style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;"><font size=2><B>Shareowners'
Equity</B></font></td><td width=9 height=30 align=center style="border-top: 1px solid #000000;"><font size=2><B> </B></font></td><td colspan=2 width=73 height=30 align=center style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;"><font size=2><B>Noncontrolling
Interest</B></font></td><td width=9 height=30 align=center style="border-top: 1px solid #000000;"><font size=2><B> </B></font></td><td colspan=2 width=65 height=30 align=center style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;"><font size=2><B>Total
Equity</B></font></td></tr><tr><td colspan=3 width=268 height=17 align=left><font size=2>Equity, beginning of period</font></td><td width=9 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left style="border-top: 1px solid #000000;"><font size=2>$</font></td><td width=51 height=17 align=right style="border-top: 1px solid #000000;"><font size=2> 15,813 </font></td><td width=9 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left style="border-top: 1px solid #000000;"><font size=2>$</font></td><td width=59 height=17 align=right style="border-top: 1px solid #000000;"><font size=2> 973 </font></td><td width=9 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left style="border-top: 1px solid #000000;"><font size=2>$</font></td><td width=51 height=17 align=right style="border-top: 1px solid #000000;"><font size=2> 16,786 </font></td><td width=9 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left style="border-top: 1px solid #000000;"><font size=2>$</font></td><td width=51 height=17 align=right style="border-top: 1px solid #000000;"><font size=2> 21,586 </font></td><td width=9 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left style="border-top: 1px solid #000000;"><font size=2>$</font></td><td width=59 height=17 align=right style="border-top: 1px solid #000000;"><font size=2> 984 </font></td><td width=9 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left style="border-top: 1px solid #000000;"><font size=2>$</font></td><td width=51 height=17 align=right style="border-top: 1px solid #000000;"><font size=2> 22,570 </font></td></tr><tr><td width=15 height=17 align=left><font size=2> </font></td><td colspan=2 width=253 height=17 align=left><font size=2>Common Stock issued under employee plans</font></td><td width=9 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left><font size=2> </font></td><td width=51 height=17 align=right><font size=2> 149 </font></td><td width=9 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=right><font size=2> </font></td><td width=59 height=17 align=right><font size=2> </font></td><td width=9 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=right><font size=2> </font></td><td width=51 height=17 align=right><font size=2> 149 </font></td><td width=9 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left><font size=2> </font></td><td width=51 height=17 align=right><font size=2> 160 </font></td><td width=9 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left><font size=2> </font></td><td width=59 height=17 align=right><font size=2> </font></td><td width=9 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left><font size=2> </font></td><td width=51 height=17 align=right><font size=2> 160 </font></td></tr><tr><td width=15 height=17 align=left><font size=2> </font></td><td colspan=2 width=253 height=17 align=left><font size=2>Common Stock repurchased</font></td><td width=9 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left><font size=2> </font></td><td width=51 height=17 align=right><font size=2> (150)</font></td><td width=9 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=right><font size=2> </font></td><td width=59 height=17 align=right><font size=2> </font></td><td width=9 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=right><font size=2> </font></td><td width=51 height=17 align=right><font size=2> (150)</font></td><td width=9 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left><font size=2> </font></td><td width=51 height=17 align=right><font size=2> (747)</font></td><td width=9 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left><font size=2> </font></td><td width=59 height=17 align=right><font size=2> </font></td><td width=9 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left><font size=2> </font></td><td width=51 height=17 align=right><font size=2> (747)</font></td></tr><tr><td width=15 height=17 align=left><font size=2> </font></td><td colspan=2 width=253 height=17 align=left><font size=2>Dividends paid on Common Stock</font></td><td width=9 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left><font size=2> </font></td><td width=51 height=17 align=right><font size=2> (340)</font></td><td width=9 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=right><font size=2> </font></td><td width=59 height=17 align=left><font size=2> </font></td><td width=9 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=right><font size=2> </font></td><td width=51 height=17 align=right><font size=2> (340)</font></td><td width=9 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left><font size=2> </font></td><td width=51 height=17 align=right><font size=2> (290)</font></td><td width=9 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left><font size=2> </font></td><td width=59 height=17 align=right><font size=2> </font></td><td width=9 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left><font size=2> </font></td><td width=51 height=17 align=right><font size=2> (290)</font></td></tr><tr><td width=15 height=17 align=left><font size=2> </font></td><td colspan=2 width=253 height=17 align=left><font size=2>Dividends paid on ESOP Common Stock</font></td><td width=9 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left><font size=2> </font></td><td width=51 height=17 align=right><font size=2> (15)</font></td><td width=9 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=right><font size=2> </font></td><td width=59 height=17 align=right><font size=2> </font></td><td width=9 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=right><font size=2> </font></td><td width=51 height=17 align=right><font size=2> (15)</font></td><td width=9 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left><font size=2> </font></td><td width=51 height=17 align=right><font size=2> (13)</font></td><td width=9 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left><font size=2> </font></td><td width=59 height=17 align=right><font size=2> </font></td><td width=9 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left><font size=2> </font></td><td width=51 height=17 align=right><font size=2> (13)</font></td></tr><tr><td width=15 height=35 align=left><font size=2> </font></td><td colspan=2 width=253 height=35 align=left><font size=2>Dividends attributable to noncontrolling
interest</font></td><td width=9 height=35 align=left><font size=2> </font></td><td width=14 height=35 align=left><font size=2> </font></td><td width=51 height=35 align=right><font size=2> - </font></td><td width=9 height=35 align=left><font size=2> </font></td><td width=14 height=35 align=right><font size=2> </font></td><td width=59 height=35 align=right><font size=2> (108)</font></td><td width=9 height=35 align=left><font size=2> </font></td><td width=14 height=35 align=right><font size=2> </font></td><td width=51 height=35 align=right><font size=2> (108)</font></td><td width=9 height=35 align=left><font size=2> </font></td><td width=14 height=35 align=left><font size=2> </font></td><td width=51 height=35 align=right><font size=2> - </font></td><td width=9 height=35 align=left><font size=2> </font></td><td width=14 height=35 align=left><font size=2> </font></td><td width=59 height=35 align=right><font size=2> (87)</font></td><td width=9 height=35 align=left><font size=2> </font></td><td width=14 height=35 align=left><font size=2> </font></td><td width=51 height=35 align=right><font size=2> (87)</font></td></tr><tr><td width=15 height=35 align=left><font size=2> </font></td><td colspan=2 width=253 height=35 align=left><font size=2>Purchase of subsidiary shares from
noncontrolling interest</font></td><td width=9 height=35 align=left><font size=2> </font></td><td width=14 height=35 align=left><font size=2> </font></td><td width=51 height=35 align=right><font size=2> - </font></td><td width=9 height=35 align=left><font size=2> </font></td><td width=14 height=35 align=right><font size=2> </font></td><td width=59 height=35 align=right><font size=2> - </font></td><td width=9 height=35 align=left><font size=2> </font></td><td width=14 height=35 align=right><font size=2> </font></td><td width=51 height=35 align=right><font size=2> - </font></td><td width=9 height=35 align=left><font size=2> </font></td><td width=14 height=35 align=left><font size=2> </font></td><td width=51 height=35 align=right><font size=2> - </font></td><td width=9 height=35 align=left><font size=2> </font></td><td width=14 height=35 align=left><font size=2> </font></td><td width=59 height=35 align=right><font size=2> (51)</font></td><td width=9 height=35 align=left><font size=2> </font></td><td width=14 height=35 align=left><font size=2> </font></td><td width=51 height=35 align=right><font size=2> (51)</font></td></tr><tr><td width=15 height=35 align=left><font size=2> </font></td><td colspan=2 width=253 height=17 align=left><font size=2>Acquired noncontrolling interest</font></td><td width=9 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left><font size=2> </font></td><td width=51 height=17 align=right><font size=2> - </font></td><td width=9 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=right><font size=2> </font></td><td width=59 height=17 align=right><font size=2> 61 </font></td><td width=9 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=right><font size=2> </font></td><td width=51 height=17 align=right><font size=2> 61 </font></td><td width=9 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left><font size=2> </font></td><td width=51 height=17 align=right><font size=2> - </font></td><td width=9 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left><font size=2> </font></td><td width=59 height=17 align=right><font size=2> 16 </font></td><td width=9 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left><font size=2> </font></td><td width=51 height=17 align=right><font size=2> 16 </font></td></tr><tr><td width=15 height=17 align=left><font size=2> </font></td><td colspan=2 width=253 height=17 align=left><font size=2>Non-shareowners’ Changes in Equity:</font></td><td width=9 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left><font size=2> </font></td><td width=51 height=17 align=right><font size=2> </font></td><td width=9 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=right><font size=2> </font></td><td width=59 height=17 align=right><font size=2> </font></td><td width=9 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=right><font size=2> </font></td><td width=51 height=17 align=right><font size=2> </font></td><td width=9 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left><font size=2> </font></td><td width=51 height=17 align=right><font size=2> </font></td><td width=9 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left><font size=2> </font></td><td width=59 height=17 align=right><font size=2> </font></td><td width=9 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left><font size=2> </font></td><td width=51 height=17 align=right><font size=2> </font></td></tr><tr><td width=15 height=17 align=left><font size=2> </font></td><td width=15 height=17 align=left><font size=2> </font></td><td width=238 height=17 align=left><font size=2>Net income</font></td><td width=9 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left><font size=2> </font></td><td width=51 height=17 align=right><font size=2> 976 </font></td><td width=9 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=right><font size=2> </font></td><td width=59 height=17 align=right><font size=2> 90 </font></td><td width=9 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=right><font size=2> </font></td><td width=51 height=17 align=right><font size=2> 1,066 </font></td><td width=9 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left><font size=2> </font></td><td width=51 height=17 align=right><font size=2> 1,275 </font></td><td width=9 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left><font size=2> </font></td><td width=59 height=17 align=right><font size=2> 100 </font></td><td width=9 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left><font size=2> </font></td><td width=51 height=17 align=right><font size=2> 1,375 </font></td></tr><tr><td width=15 height=17 align=left><font size=2> </font></td><td width=15 height=17 align=left><font size=2> </font></td><td width=238 height=17 align=left><font size=2>Foreign currency translation, net</font></td><td width=9 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left><font size=2> </font></td><td width=51 height=17 align=right><font size=2> 747 </font></td><td width=9 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=right><font size=2> </font></td><td width=59 height=17 align=right><font size=2> 11 </font></td><td width=9 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=right><font size=2> </font></td><td width=51 height=17 align=right><font size=2> 758 </font></td><td width=9 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left><font size=2> </font></td><td width=51 height=17 align=right><font size=2> (51)</font></td><td width=9 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left><font size=2> </font></td><td width=59 height=17 align=right><font size=2> (5)</font></td><td width=9 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left><font size=2> </font></td><td width=51 height=17 align=right><font size=2> (56)</font></td></tr><tr><td width=15 height=35 align=left><font size=2> </font></td><td width=15 height=35 align=left><font size=2> </font></td><td width=238 height=35 align=left><font size=2>Increases (decreases) in unrealized gains
from available-for-sale investments, net</font></td><td width=9 height=35 align=left><font size=2> </font></td><td width=14 height=35 align=left><font size=2> </font></td><td width=51 height=35 align=right><font size=2> 49 </font></td><td width=9 height=35 align=left><font size=2> </font></td><td width=14 height=35 align=right><font size=2> </font></td><td width=59 height=35 align=right><font size=2> - </font></td><td width=9 height=35 align=left><font size=2> </font></td><td width=14 height=35 align=right><font size=2> </font></td><td width=51 height=35 align=right><font size=2> 49 </font></td><td width=9 height=35 align=left><font size=2> </font></td><td width=14 height=35 align=left><font size=2> </font></td><td width=51 height=35 align=right><font size=2> (21)</font></td><td width=9 height=35 align=left><font size=2> </font></td><td width=14 height=35 align=left><font size=2> </font></td><td width=59 height=35 align=right><font size=2> - </font></td><td width=9 height=35 align=left><font size=2> </font></td><td width=14 height=35 align=left><font size=2> </font></td><td width=51 height=35 align=right><font size=2> (21)</font></td></tr><tr><td width=15 height=17 align=left><font size=2> </font></td><td width=15 height=17 align=left><font size=2> </font></td><td width=238 height=17 align=left><font size=2>Cash flow hedging gains (losses)</font></td><td width=9 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left><font size=2> </font></td><td width=51 height=17 align=right><font size=2> 124 </font></td><td width=9 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=right><font size=2> </font></td><td width=59 height=17 align=right><font size=2> - </font></td><td width=9 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=right><font size=2> </font></td><td width=51 height=17 align=right><font size=2> 124 </font></td><td width=9 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left><font size=2> </font></td><td width=51 height=17 align=right><font size=2> (9)</font></td><td width=9 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left><font size=2> </font></td><td width=59 height=17 align=right><font size=2> - </font></td><td width=9 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left><font size=2> </font></td><td width=51 height=17 align=right><font size=2> (9)</font></td></tr><tr><td width=15 height=34 align=left><font size=2> </font></td><td width=15 height=34 align=left><font size=2> </font></td><td width=238 height=34 align=left><font size=2>Change in pension and post-retirement
benefit plans, net</font></td><td width=9 height=34 align=left><font size=2> </font></td><td width=14 height=34 align=left style="border-bottom: 1px solid #000000;"><font size=2> </font></td><td width=51 height=34 align=right style="border-bottom: 1px solid #000000;"><font size=2> 26 </font></td><td width=9 height=34 align=left><font size=2> </font></td><td width=14 height=34 align=right style="border-bottom: 1px solid #000000;"><font size=2> </font></td><td width=59 height=34 align=right style="border-bottom: 1px solid #000000;"><font size=2> - </font></td><td width=9 height=34 align=left><font size=2> </font></td><td width=14 height=34 align=right style="border-bottom: 1px solid #000000;"><font size=2> </font></td><td width=51 height=34 align=right style="border-bottom: 1px solid #000000;"><font size=2> 26 </font></td><td width=9 height=34 align=left><font size=2> </font></td><td width=14 height=34 align=left style="border-bottom: 1px solid #000000;"><font size=2> </font></td><td width=51 height=34 align=right style="border-bottom: 1px solid #000000;"><font size=2> 22 </font></td><td width=9 height=34 align=left><font size=2> </font></td><td width=14 height=34 align=left style="border-bottom: 1px solid #000000;"><font size=2> </font></td><td width=59 height=34 align=right style="border-bottom: 1px solid #000000;"><font size=2> - </font></td><td width=9 height=34 align=left><font size=2> </font></td><td width=14 height=34 align=left style="border-bottom: 1px solid #000000;"><font size=2> </font></td><td width=51 height=34 align=right style="border-bottom: 1px solid #000000;"><font size=2> 22 </font></td></tr><tr><td width=15 height=8 align=left><font size=2> </font></td><td width=15 height=8 align=left><font size=2> </font></td><td width=238 height=8 align=left><font size=2> </font></td><td width=9 height=8 align=left><font size=2> </font></td><td width=14 height=8 align=left style="border-top: 1px solid #000000;"><font size=2> </font></td><td width=51 height=8 align=right style="border-top: 1px solid #000000;"><font size=2> </font></td><td width=9 height=8 align=left><font size=2> </font></td><td width=14 height=8 align=right style="border-top: 1px solid #000000;"><font size=2> </font></td><td width=59 height=8 align=right style="border-top: 1px solid #000000;"><font size=2> </font></td><td width=9 height=8 align=left><font size=2> </font></td><td width=14 height=8 align=right style="border-top: 1px solid #000000;"><font size=2> </font></td><td width=51 height=8 align=right style="border-top: 1px solid #000000;"><font size=2> </font></td><td width=9 height=8 align=left><font size=2> </font></td><td width=14 height=8 align=left style="border-top: 1px solid #000000;"><font size=2> </font></td><td width=51 height=8 align=right style="border-top: 1px solid #000000;"><font size=2> </font></td><td width=9 height=8 align=left><font size=2> </font></td><td width=14 height=8 align=left style="border-top: 1px solid #000000;"><font size=2> </font></td><td width=59 height=8 align=right style="border-top: 1px solid #000000;"><font size=2> </font></td><td width=9 height=8 align=left><font size=2> </font></td><td width=14 height=8 align=left style="border-top: 1px solid #000000;"><font size=2> </font></td><td width=51 height=8 align=right style="border-top: 1px solid #000000;"><font size=2> </font></td></tr><tr><td colspan=3 width=268 height=18 align=left><font size=2>Equity, end of period</font></td><td width=9 height=18 align=left><font size=2> </font></td><td width=14 height=18 align=left style="border-bottom: 3px double #000000;"><font size=2>$</font></td><td width=51 height=18 align=right style="border-bottom: 3px double #000000;"><font size=2> 17,379 </font></td><td width=9 height=18 align=left><font size=2> </font></td><td width=14 height=18 align=left style="border-bottom: 3px double #000000;"><font size=2>$</font></td><td width=59 height=18 align=right style="border-bottom: 3px double #000000;"><font size=2> 1,027 </font></td><td width=9 height=18 align=left><font size=2> </font></td><td width=14 height=18 align=left style="border-bottom: 3px double #000000;"><font size=2>$</font></td><td width=51 height=18 align=right style="border-bottom: 3px double #000000;"><font size=2> 18,406 </font></td><td width=9 height=18 align=left><font size=2> </font></td><td width=14 height=18 align=left style="border-bottom: 3px double #000000;"><font size=2>$</font></td><td width=51 height=18 align=right style="border-bottom: 3px double #000000;"><font size=2> 21,912 </font></td><td width=9 height=18 align=left><font size=2> </font></td><td width=14 height=18 align=left style="border-bottom: 3px double #000000;"><font size=2>$</font></td><td width=59 height=18 align=right style="border-bottom: 3px double #000000;"><font size=2> 957 </font></td><td width=9 height=18 align=left><font size=2> </font></td><td width=14 height=18 align=left style="border-bottom: 3px double #000000;"><font size=2>$</font></td><td width=51 height=18 align=right style="border-bottom: 3px double #000000;"><font size=2> 22,869 </font></td></tr><tr><td width=15 height=8 align=left><font size=2> </font></td><td width=15 height=8 align=left><font size=2> </font></td><td width=238 height=8 align=left><font size=2> </font></td><td width=9 height=8 align=left><font size=2> </font></td><td width=14 height=8 align=left style="border-top: 3px double #000000;"><font size=2> </font></td><td width=51 height=8 align=right style="border-top: 3px double #000000;"><font size=2> </font></td><td width=9 height=8 align=left><font size=2> </font></td><td width=14 height=8 align=left style="border-top: 3px double #000000;"><font size=2> </font></td><td width=59 height=8 align=left style="border-top: 3px double #000000;"><font size=2> </font></td><td width=9 height=8 align=left><font size=2> </font></td><td width=14 height=8 align=left style="border-top: 3px double #000000;"><font size=2> </font></td><td width=51 height=8 align=left style="border-top: 3px double #000000;"><font size=2> </font></td><td width=9 height=8 align=left><font size=2> </font></td><td width=14 height=8 align=left style="border-top: 3px double #000000;"><font size=2> </font></td><td width=51 height=8 align=right style="border-top: 3px double #000000;"><font size=2> </font></td><td width=9 height=8 align=left><font size=2> </font></td><td width=14 height=8 align=left style="border-top: 3px double #000000;"><font size=2> </font></td><td width=59 height=8 align=right style="border-top: 3px double #000000;"><font size=2> </font></td><td width=9 height=8 align=left><font size=2> </font></td><td width=14 height=8 align=left style="border-top: 3px double #000000;"><font size=2> </font></td><td width=51 height=8 align=right style="border-top: 3px double #000000;"><font size=2> </font></td></tr></table></DIV><DIV><table style="border-collapse: collapse; margin-top: 20px;"><tr><td width=15 height=17 align=left><font size=2> </font></td><td width=15 height=17 align=left><font size=2> </font></td><td width=238 height=17 align=left><font size=2> </font></td><td width=9 height=17 align=left><font size=2> </font></td><td colspan=17 width=451 height=17 align=center style="border-bottom: 1px solid #000000;"><font size=2><B>Six Months Ended June 30,</B></font></td></tr><tr><td colspan=3 width=268 height=17 align=left style="border-bottom: 1px solid #000000;"><font size=2><B>(in millions of dollars)</B></font></td><td width=9 height=17 align=left><font size=2> </font></td><td colspan=8 width=221 height=17 align=center style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;"><font size=2><B>2009 </B></font></td><td width=9 height=17 align=center style="border-top: 1px solid #000000;"><font size=2><B> </B></font></td><td colspan=8 width=221 height=17 align=center style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;"><font size=2><B>2008 </B></font></td></tr><tr><td width=15 height=30 align=left style="border-top: 1px solid #000000;"><font size=2><B> </B></font></td><td width=15 height=30 align=left style="border-top: 1px solid #000000;"><font size=2><B> </B></font></td><td width=238 height=30 align=left style="border-top: 1px solid #000000;"><font size=2><B> </B></font></td><td width=9 height=30 align=left><font size=2> </font></td><td colspan=2 width=65 height=30 align=center style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;"><font size=2><B>Shareowners'
Equity</B></font></td><td width=9 height=30 align=center style="border-top: 1px solid #000000;"><font size=2><B> </B></font></td><td colspan=2 width=73 height=30 align=center style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;"><font size=2><B>Noncontrolling
Interest</B></font></td><td width=9 height=30 align=center style="border-top: 1px solid #000000;"><font size=2><B> </B></font></td><td colspan=2 width=65 height=30 align=center style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;"><font size=2><B>Total
Equity</B></font></td><td width=9 height=30 align=center><font size=2><B> </B></font></td><td colspan=2 width=65 height=30 align=center style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;"><font size=2><B>Shareowners'
Equity</B></font></td><td width=9 height=30 align=center style="border-top: 1px solid #000000;"><font size=2><B> </B></font></td><td colspan=2 width=73 height=30 align=center style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;"><font size=2><B>Noncontrolling
Interest</B></font></td><td width=9 height=30 align=center style="border-top: 1px solid #000000;"><font size=2><B> </B></font></td><td colspan=2 width=65 height=30 align=center style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;"><font size=2><B>Total
Equity</B></font></td></tr><tr><td colspan=3 width=268 height=17 align=left><font size=2>Equity, beginning of period</font></td><td width=9 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left style="border-top: 1px solid #000000;"><font size=2>$</font></td><td width=51 height=17 align=right style="border-top: 1px solid #000000;"><font size=2> 15,917 </font></td><td width=9 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left style="border-top: 1px solid #000000;"><font size=2>$</font></td><td width=59 height=17 align=right style="border-top: 1px solid #000000;"><font size=2> 1,009 </font></td><td width=9 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left style="border-top: 1px solid #000000;"><font size=2>$</font></td><td width=51 height=17 align=right style="border-top: 1px solid #000000;"><font size=2> 16,926 </font></td><td width=9 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left style="border-top: 1px solid #000000;"><font size=2>$</font></td><td width=51 height=17 align=right style="border-top: 1px solid #000000;"><font size=2> 21,355 </font></td><td width=9 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left style="border-top: 1px solid #000000;"><font size=2>$</font></td><td width=59 height=17 align=right style="border-top: 1px solid #000000;"><font size=2> 912 </font></td><td width=9 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left style="border-top: 1px solid #000000;"><font size=2>$</font></td><td width=51 height=17 align=right style="border-top: 1px solid #000000;"><font size=2> 22,267 </font></td></tr><tr><td width=15 height=17 align=left><font size=2> </font></td><td colspan=2 width=253 height=17 align=left><font size=2>Common Stock issued under employee plans</font></td><td width=9 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left><font size=2> </font></td><td width=51 height=17 align=right><font size=2> 220 </font></td><td width=9 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=right><font size=2> </font></td><td width=59 height=17 align=right><font size=2> </font></td><td width=9 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=right><font size=2> </font></td><td width=51 height=17 align=right><font size=2> 220 </font></td><td width=9 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left><font size=2> </font></td><td width=51 height=17 align=right><font size=2> 295 </font></td><td width=9 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left><font size=2> </font></td><td width=59 height=17 align=right><font size=2> </font></td><td width=9 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left><font size=2> </font></td><td width=51 height=17 align=right><font size=2> 295 </font></td></tr><tr><td width=15 height=17 align=left><font size=2> </font></td><td colspan=2 width=253 height=17 align=left><font size=2>Common Stock repurchased</font></td><td width=9 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left><font size=2> </font></td><td width=51 height=17 align=right><font size=2> (350)</font></td><td width=9 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=right><font size=2> </font></td><td width=59 height=17 align=right><font size=2> </font></td><td width=9 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=right><font size=2> </font></td><td width=51 height=17 align=right><font size=2> (350)</font></td><td width=9 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left><font size=2> </font></td><td width=51 height=17 align=right><font size=2> (1,567)</font></td><td width=9 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left><font size=2> </font></td><td width=59 height=17 align=right><font size=2> </font></td><td width=9 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left><font size=2> </font></td><td width=51 height=17 align=right><font size=2> (1,567)</font></td></tr><tr><td width=15 height=17 align=left><font size=2> </font></td><td colspan=2 width=253 height=17 align=left><font size=2>Dividends paid on Common Stock</font></td><td width=9 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left><font size=2> </font></td><td width=51 height=17 align=right><font size=2> (679)</font></td><td width=9 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=right><font size=2> </font></td><td width=59 height=17 align=left><font size=2> </font></td><td width=9 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=right><font size=2> </font></td><td width=51 height=17 align=right><font size=2> (679)</font></td><td width=9 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left><font size=2> </font></td><td width=51 height=17 align=right><font size=2> (583)</font></td><td width=9 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left><font size=2> </font></td><td width=59 height=17 align=right><font size=2> </font></td><td width=9 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left><font size=2> </font></td><td width=51 height=17 align=right><font size=2> (583)</font></td></tr><tr><td width=15 height=17 align=left><font size=2> </font></td><td colspan=2 width=253 height=17 align=left><font size=2>Dividends paid on ESOP Common Stock</font></td><td width=9 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left><font size=2> </font></td><td width=51 height=17 align=right><font size=2> (30)</font></td><td width=9 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=right><font size=2> </font></td><td width=59 height=17 align=right><font size=2> </font></td><td width=9 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=right><font size=2> </font></td><td width=51 height=17 align=right><font size=2> (30)</font></td><td width=9 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left><font size=2> </font></td><td width=51 height=17 align=right><font size=2> (25)</font></td><td width=9 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left><font size=2> </font></td><td width=59 height=17 align=right><font size=2> </font></td><td width=9 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left><font size=2> </font></td><td width=51 height=17 align=right><font size=2> (25)</font></td></tr><tr><td width=15 height=35 align=left><font size=2> </font></td><td colspan=2 width=253 height=35 align=left><font size=2>Dividends attributable to noncontrolling
interest</font></td><td width=9 height=35 align=left><font size=2> </font></td><td width=14 height=35 align=left><font size=2> </font></td><td width=51 height=35 align=right><font size=2> - </font></td><td width=9 height=35 align=left><font size=2> </font></td><td width=14 height=35 align=right><font size=2> </font></td><td width=59 height=35 align=right><font size=2> (200)</font></td><td width=9 height=35 align=left><font size=2> </font></td><td width=14 height=35 align=right><font size=2> </font></td><td width=51 height=35 align=right><font size=2> (200)</font></td><td width=9 height=35 align=left><font size=2> </font></td><td width=14 height=35 align=left><font size=2> </font></td><td width=51 height=35 align=right><font size=2> - </font></td><td width=9 height=35 align=left><font size=2> </font></td><td width=14 height=35 align=left><font size=2> </font></td><td width=59 height=35 align=right><font size=2> (189)</font></td><td width=9 height=35 align=left><font size=2> </font></td><td width=14 height=35 align=left><font size=2> </font></td><td width=51 height=35 align=right><font size=2> (189)</font></td></tr><tr><td width=15 height=35 align=left><font size=2> </font></td><td colspan=2 width=253 height=35 align=left><font size=2>Purchase of subsidiary shares from
noncontrolling interest</font></td><td width=9 height=35 align=left><font size=2> </font></td><td width=14 height=35 align=left><font size=2> </font></td><td width=51 height=35 align=right><font size=2> (27)</font></td><td width=9 height=35 align=left><font size=2> </font></td><td width=14 height=35 align=right><font size=2> </font></td><td width=59 height=35 align=right><font size=2> (10)</font></td><td width=9 height=35 align=left><font size=2> </font></td><td width=14 height=35 align=right><font size=2> </font></td><td width=51 height=35 align=right><font size=2> (37)</font></td><td width=9 height=35 align=left><font size=2> </font></td><td width=14 height=35 align=left><font size=2> </font></td><td width=51 height=35 align=right><font size=2> - </font></td><td width=9 height=35 align=left><font size=2> </font></td><td width=14 height=35 align=left><font size=2> </font></td><td width=59 height=35 align=right><font size=2> (51)</font></td><td width=9 height=35 align=left><font size=2> </font></td><td width=14 height=35 align=left><font size=2> </font></td><td width=51 height=35 align=right><font size=2> (51)</font></td></tr><tr><td width=15 height=35 align=left><font size=2> </font></td><td colspan=2 width=253 height=35 align=left><font size=2>Sale of subsidiary shares in
noncontrolling interest</font></td><td width=9 height=35 align=left><font size=2> </font></td><td width=14 height=35 align=left><font size=2> </font></td><td width=51 height=35 align=right><font size=2> - </font></td><td width=9 height=35 align=left><font size=2> </font></td><td width=14 height=35 align=right><font size=2> </font></td><td width=59 height=35 align=right><font size=2> - </font></td><td width=9 height=35 align=left><font size=2> </font></td><td width=14 height=35 align=right><font size=2> </font></td><td width=51 height=35 align=right><font size=2> - </font></td><td width=9 height=35 align=left><font size=2> </font></td><td width=14 height=35 align=left><font size=2> </font></td><td width=51 height=35 align=right><font size=2> - </font></td><td width=9 height=35 align=left><font size=2> </font></td><td width=14 height=35 align=left><font size=2> </font></td><td width=59 height=35 align=right><font size=2> 40 </font></td><td width=9 height=35 align=left><font size=2> </font></td><td width=14 height=35 align=left><font size=2> </font></td><td width=51 height=35 align=right><font size=2> 40 </font></td></tr><tr><td width=15 height=17 align=left><font size=2> </font></td><td colspan=2 width=253 height=17 align=left><font size=2>Acquired noncontrolling interest</font></td><td width=9 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left><font size=2> </font></td><td width=51 height=17 align=right><font size=2> - </font></td><td width=9 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=right><font size=2> </font></td><td width=59 height=17 align=right><font size=2> 75 </font></td><td width=9 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=right><font size=2> </font></td><td width=51 height=17 align=right><font size=2> 75 </font></td><td width=9 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left><font size=2> </font></td><td width=51 height=17 align=right><font size=2> - </font></td><td width=9 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left><font size=2> </font></td><td width=59 height=17 align=right><font size=2> 34 </font></td><td width=9 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left><font size=2> </font></td><td width=51 height=17 align=right><font size=2> 34 </font></td></tr><tr><td width=15 height=17 align=left><font size=2> </font></td><td colspan=2 width=253 height=17 align=left><font size=2>Non-shareowners’ Changes in Equity:</font></td><td width=9 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left><font size=2> </font></td><td width=51 height=17 align=right><font size=2> </font></td><td width=9 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=right><font size=2> </font></td><td width=59 height=17 align=right><font size=2> </font></td><td width=9 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=right><font size=2> </font></td><td width=51 height=17 align=right><font size=2> </font></td><td width=9 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left><font size=2> </font></td><td width=51 height=17 align=right><font size=2> </font></td><td width=9 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left><font size=2> </font></td><td width=59 height=17 align=right><font size=2> </font></td><td width=9 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left><font size=2> </font></td><td width=51 height=17 align=right><font size=2> </font></td></tr><tr><td width=15 height=17 align=left><font size=2> </font></td><td width=15 height=17 align=left><font size=2> </font></td><td width=238 height=17 align=left><font size=2>Net income</font></td><td width=9 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left><font size=2> </font></td><td width=51 height=17 align=right><font size=2> 1,698 </font></td><td width=9 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=right><font size=2> </font></td><td width=59 height=17 align=right><font size=2> 167 </font></td><td width=9 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=right><font size=2> </font></td><td width=51 height=17 align=right><font size=2> 1,865 </font></td><td width=9 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left><font size=2> </font></td><td width=51 height=17 align=right><font size=2> 2,275 </font></td><td width=9 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left><font size=2> </font></td><td width=59 height=17 align=right><font size=2> 179 </font></td><td width=9 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left><font size=2> </font></td><td width=51 height=17 align=right><font size=2> 2,454 </font></td></tr><tr><td width=15 height=17 align=left><font size=2> </font></td><td width=15 height=17 align=left><font size=2> </font></td><td width=238 height=17 align=left><font size=2>Foreign currency translation, net</font></td><td width=9 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left><font size=2> </font></td><td width=51 height=17 align=right><font size=2> 452 </font></td><td width=9 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=right><font size=2> </font></td><td width=59 height=17 align=right><font size=2> (14)</font></td><td width=9 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=right><font size=2> </font></td><td width=51 height=17 align=right><font size=2> 438 </font></td><td width=9 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left><font size=2> </font></td><td width=51 height=17 align=right><font size=2> 165 </font></td><td width=9 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left><font size=2> </font></td><td width=59 height=17 align=right><font size=2> 32 </font></td><td width=9 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left><font size=2> </font></td><td width=51 height=17 align=right><font size=2> 197 </font></td></tr><tr><td width=15 height=35 align=left><font size=2> </font></td><td width=15 height=35 align=left><font size=2> </font></td><td width=238 height=35 align=left><font size=2>Increases (decreases) in unrealized gains
from available-for-sale investments, net</font></td><td width=9 height=35 align=left><font size=2> </font></td><td width=14 height=35 align=left><font size=2> </font></td><td width=51 height=35 align=right><font size=2> 30 </font></td><td width=9 height=35 align=left><font size=2> </font></td><td width=14 height=35 align=right><font size=2> </font></td><td width=59 height=35 align=right><font size=2> - </font></td><td width=9 height=35 align=left><font size=2> </font></td><td width=14 height=35 align=right><font size=2> </font></td><td width=51 height=35 align=right><font size=2> 30 </font></td><td width=9 height=35 align=left><font size=2> </font></td><td width=14 height=35 align=left><font size=2> </font></td><td width=51 height=35 align=right><font size=2> (15)</font></td><td width=9 height=35 align=left><font size=2> </font></td><td width=14 height=35 align=left><font size=2> </font></td><td width=59 height=35 align=right><font size=2> - </font></td><td width=9 height=35 align=left><font size=2> </font></td><td width=14 height=35 align=left><font size=2> </font></td><td width=51 height=35 align=right><font size=2> (15)</font></td></tr><tr><td width=15 height=17 align=left><font size=2> </font></td><td width=15 height=17 align=left><font size=2> </font></td><td width=238 height=17 align=left><font size=2>Cash flow hedging gains (losses)</font></td><td width=9 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left><font size=2> </font></td><td width=51 height=17 align=right><font size=2> 72 </font></td><td width=9 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=right><font size=2> </font></td><td width=59 height=17 align=right><font size=2> - </font></td><td width=9 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=right><font size=2> </font></td><td width=51 height=17 align=right><font size=2> 72 </font></td><td width=9 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left><font size=2> </font></td><td width=51 height=17 align=right><font size=2> (35)</font></td><td width=9 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left><font size=2> </font></td><td width=59 height=17 align=right><font size=2> - </font></td><td width=9 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left><font size=2> </font></td><td width=51 height=17 align=right><font size=2> (35)</font></td></tr><tr><td width=15 height=34 align=left><font size=2> </font></td><td width=15 height=34 align=left><font size=2> </font></td><td width=238 height=34 align=left><font size=2>Change in pension and post-retirement
benefit plans, net</font></td><td width=9 height=34 align=left><font size=2> </font></td><td width=14 height=34 align=left style="border-bottom: 1px solid #000000;"><font size=2> </font></td><td width=51 height=34 align=right style="border-bottom: 1px solid #000000;"><font size=2> 76 </font></td><td width=9 height=34 align=left><font size=2> </font></td><td width=14 height=34 align=right style="border-bottom: 1px solid #000000;"><font size=2> </font></td><td width=59 height=34 align=right style="border-bottom: 1px solid #000000;"><font size=2> - </font></td><td width=9 height=34 align=left><font size=2> </font></td><td width=14 height=34 align=right style="border-bottom: 1px solid #000000;"><font size=2> </font></td><td width=51 height=34 align=right style="border-bottom: 1px solid #000000;"><font size=2> 76 </font></td><td width=9 height=34 align=left><font size=2> </font></td><td width=14 height=34 align=left style="border-bottom: 1px solid #000000;"><font size=2> </font></td><td width=51 height=34 align=right style="border-bottom: 1px solid #000000;"><font size=2> 47 </font></td><td width=9 height=34 align=left><font size=2> </font></td><td width=14 height=34 align=left style="border-bottom: 1px solid #000000;"><font size=2> </font></td><td width=59 height=34 align=right style="border-bottom: 1px solid #000000;"><font size=2> - </font></td><td width=9 height=34 align=left><font size=2> </font></td><td width=14 height=34 align=left style="border-bottom: 1px solid #000000;"><font size=2> </font></td><td width=51 height=34 align=right style="border-bottom: 1px solid #000000;"><font size=2> 47 </font></td></tr><tr><td width=15 height=8 align=left><font size=2> </font></td><td width=15 height=8 align=left><font size=2> </font></td><td width=238 height=8 align=left><font size=2> </font></td><td width=9 height=8 align=left><font size=2> </font></td><td width=14 height=8 align=left style="border-top: 1px solid #000000;"><font size=2> </font></td><td width=51 height=8 align=right style="border-top: 1px solid #000000;"><font size=2> </font></td><td width=9 height=8 align=left><font size=2> </font></td><td width=14 height=8 align=right style="border-top: 1px solid #000000;"><font size=2> </font></td><td width=59 height=8 align=right style="border-top: 1px solid #000000;"><font size=2> </font></td><td width=9 height=8 align=left><font size=2> </font></td><td width=14 height=8 align=right style="border-top: 1px solid #000000;"><font size=2> </font></td><td width=51 height=8 align=right style="border-top: 1px solid #000000;"><font size=2> </font></td><td width=9 height=8 align=left><font size=2> </font></td><td width=14 height=8 align=left style="border-top: 1px solid #000000;"><font size=2> </font></td><td width=51 height=8 align=right style="border-top: 1px solid #000000;"><font size=2> </font></td><td width=9 height=8 align=left><font size=2> </font></td><td width=14 height=8 align=left style="border-top: 1px solid #000000;"><font size=2> </font></td><td width=59 height=8 align=right style="border-top: 1px solid #000000;"><font size=2> </font></td><td width=9 height=8 align=left><font size=2> </font></td><td width=14 height=8 align=left style="border-top: 1px solid #000000;"><font size=2> </font></td><td width=51 height=8 align=right style="border-top: 1px solid #000000;"><font size=2> </font></td></tr><tr><td colspan=3 width=268 height=18 align=left><font size=2>Equity, end of period</font></td><td width=9 height=18 align=left><font size=2> </font></td><td width=14 height=18 align=left style="border-bottom: 3px double #000000;"><font size=2>$</font></td><td width=51 height=18 align=right style="border-bottom: 3px double #000000;"><font size=2> 17,379 </font></td><td width=9 height=18 align=left><font size=2> </font></td><td width=14 height=18 align=left style="border-bottom: 3px double #000000;"><font size=2>$</font></td><td width=59 height=18 align=right style="border-bottom: 3px double #000000;"><font size=2> 1,027 </font></td><td width=9 height=18 align=left><font size=2> </font></td><td width=14 height=18 align=left style="border-bottom: 3px double #000000;"><font size=2>$</font></td><td width=51 height=18 align=right style="border-bottom: 3px double #000000;"><font size=2> 18,406 </font></td><td width=9 height=18 align=left><font size=2> </font></td><td width=14 height=18 align=left style="border-bottom: 3px double #000000;"><font size=2>$</font></td><td width=51 height=18 align=right style="border-bottom: 3px double #000000;"><font size=2> 21,912 </font></td><td width=9 height=18 align=left><font size=2> </font></td><td width=14 height=18 align=left style="border-bottom: 3px double #000000;"><font size=2>$</font></td><td width=59 height=18 align=right style="border-bottom: 3px double #000000;"><font size=2> 957 </font></td><td width=9 height=18 align=left><font size=2> </font></td><td width=14 height=18 align=left style="border-bottom: 3px double #000000;"><font size=2>$</font></td><td width=51 height=18 align=right style="border-bottom: 3px double #000000;"><font size=2> 22,869 </font></td></tr><tr><td width=15 height=8 align=left><font size=2> </font></td><td width=15 height=8 align=left><font size=2> </font></td><td width=238 height=8 align=left><font size=2> </font></td><td width=9 height=8 align=left><font size=2> </font></td><td width=14 height=8 align=left style="border-top: 3px double #000000;"><font size=2> </font></td><td width=51 height=8 align=right style="border-top: 3px double #000000;"><font size=2> </font></td><td width=9 height=8 align=left><font size=2> </font></td><td width=14 height=8 align=left style="border-top: 3px double #000000;"><font size=2> </font></td><td width=59 height=8 align=left style="border-top: 3px double #000000;"><font size=2> </font></td><td width=9 height=8 align=left><font size=2> </font></td><td width=14 height=8 align=left style="border-top: 3px double #000000;"><font size=2> </font></td><td width=51 height=8 align=left style="border-top: 3px double #000000;"><font size=2> </font></td><td width=9 height=8 align=left><font size=2> </font></td><td width=14 height=8 align=left style="border-top: 3px double #000000;"><font size=2> </font></td><td width=51 height=8 align=right style="border-top: 3px double #000000;"><font size=2> </font></td><td width=9 height=8 align=left><font size=2> </font></td><td width=14 height=8 align=left style="border-top: 3px double #000000;"><font size=2> </font></td><td width=59 height=8 align=right style="border-top: 3px double #000000;"><font size=2> </font></td><td width=9 height=8 align=left><font size=2> </font></td><td width=14 height=8 align=left style="border-top: 3px double #000000;"><font size=2> </font></td><td width=51 height=8 align=right style="border-top: 3px double #000000;"><font size=2> </font></td></tr></table></DIV><DIV><FONT SIZE=2><P>Effective January 1, 2009, we adopted the provisions of SFAS 160. Certain provisions of this statement are required to be adopted retrospectively for all periods presented. Such provisions include a requirement that the carrying value of noncontrolling interests (previously referred to as minority 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 interest. As a result of this adoption, we reclassified noncontrolling interests in the amounts of $1,009 million and $957 million from the mezzanine section to equity in the December 31, 2008 and June 30, 2008, balance sheets, respectively. <BR> <BR>Consistent with the adoption of SFAS 141(R) and SFAS 160, changes in noncontrolling interests that do not result in a change of control and where there is a difference between fair value and carrying value are accounted for as equity transactions. A summary of these changes in ownership interest in subsidiaries and the effect on shareowners’ equity for the quarter and six months ended June 30, 2009 is provided below:<BR></FONT></DIV><DIV><table style="border-collapse: collapse; margin-top: 20px;"><tr><td width=15 height=26 align=left><font size=2> </font></td><td width=15 height=26 align=left><font size=2> </font></td><td width=429 height=26 align=left><font size=2> </font></td><td width=9 height=26 align=left><font size=2> </font></td><td colspan=2 width=96 height=26 align=center><font size=2><B>Quarter Ended</B></font></td><td width=27 height=26 align=left><font size=2> </font></td><td colspan=2 width=96 height=26 align=center><font size=2><B>Six Months Ended</B></font></td></tr><tr><td colspan=3 width=459 height=17 align=left style="border-bottom: 1px solid #000000;"><font size=2><B>(in millions of dollars)</B></font></td><td width=9 height=17 align=left><font size=2> </font></td><td colspan=2 width=96 height=17 align=center style="border-bottom: 1px solid #000000;"><font size=2><B>June 30, 2009</B></font></td><td width=27 height=17 align=left><font size=2> </font></td><td colspan=2 width=96 height=17 align=center style="border-bottom: 1px solid #000000;"><font size=2><B>June 30, 2009</B></font></td></tr><tr><td colspan=3 width=459 height=17 align=left style="border-top: 1px solid #000000;"><font size=2>Net income attributable to common shareowners</font></td><td width=9 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;"><font size=2>$</font></td><td width=82 height=17 align=right style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;"><font size=2> 976 </font></td><td width=27 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;"><font size=2>$</font></td><td width=82 height=17 align=right style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;"><font size=2> 1,698 </font></td></tr><tr><td width=15 height=8 align=left><font size=2> </font></td><td width=15 height=8 align=left><font size=2> </font></td><td width=429 height=8 align=left><font size=2> </font></td><td width=9 height=8 align=left><font size=2> </font></td><td width=14 height=8 align=left style="border-top: 1px solid #000000;"><font size=2> </font></td><td width=82 height=8 align=right style="border-top: 1px solid #000000;"><font size=2> </font></td><td width=27 height=8 align=left><font size=2> </font></td><td width=14 height=8 align=left style="border-top: 1px solid #000000;"><font size=2> </font></td><td width=82 height=8 align=right style="border-top: 1px solid #000000;"><font size=2> </font></td></tr><tr><td colspan=3 width=459 height=17 align=left><font size=2>Transfers to noncontrolling interests</font></td><td width=9 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left><font size=2> </font></td><td width=82 height=17 align=right><font size=2> </font></td><td width=27 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left><font size=2> </font></td><td width=82 height=17 align=right><font size=2> </font></td></tr><tr><td width=15 height=17 align=left><font size=2> </font></td><td colspan=2 width=444 height=17 align=left><font size=2>Decrease in common stock for purchase of subsidiary shares</font></td><td width=9 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left style="border-bottom: 1px solid #000000;"><font size=2> </font></td><td width=82 height=17 align=right style="border-bottom: 1px solid #000000;"><font size=2> - </font></td><td width=27 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left style="border-bottom: 1px solid #000000;"><font size=2> </font></td><td width=82 height=17 align=right style="border-bottom: 1px solid #000000;"><font size=2> (27)</font></td></tr><tr><td width=15 height=8 align=left><font size=2> </font></td><td width=15 height=8 align=left><font size=2> </font></td><td width=429 height=8 align=left><font size=2> </font></td><td width=9 height=8 align=left><font size=2> </font></td><td width=14 height=8 align=left style="border-top: 1px solid #000000;"><font size=2> </font></td><td width=82 height=8 align=right style="border-top: 1px solid #000000;"><font size=2> </font></td><td width=27 height=8 align=left><font size=2> </font></td><td width=14 height=8 align=left style="border-top: 1px solid #000000;"><font size=2> </font></td><td width=82 height=8 align=right style="border-top: 1px solid #000000;"><font size=2> </font></td></tr><tr><td colspan=3 width=459 height=33 align=left><font size=2>Change from net income attributable to common shareowners and transfers to noncontrolling interests</font></td><td width=9 height=33 align=left><font size=2> </font></td><td width=14 height=33 align=left style="border-bottom: 3px double #000000;"><font size=2>$</font></td><td width=82 height=33 align=right style="border-bottom: 3px double #000000;"><font size=2> 976 </font></td><td width=27 height=33 align=left><font size=2> </font></td><td width=14 height=33 align=left style="border-bottom: 3px double #000000;"><font size=2>$</font></td><td width=82 height=33 align=right style="border-bottom: 3px double #000000;"><font size=2> 1,671 </font></td></tr></table></DIV></body></html>
<html><head><meta http-equiv="Content-Type" content="text/html; charset=utf-8" /></head><body><DIV><FONT SIZE=2><P>Note 10: Guarantees <BR>We extend a variety of financial, market value and product performance guarantees to third parties. There have been no material changes to guarantees outstanding since December 31, 2008. <BR> <BR>The changes in the carrying amount of service and product warranties and product performance guarantees for the six months ended June 30, 2009 and 2008 are as follows: <BR></FONT></DIV><DIV><table style="border-collapse: collapse; margin-top: 20px;"><tr><td width=505 height=17 align=left style="border-bottom: 1px solid #000000;"><font size=2><B>(in millions of dollars)</B></font></td><td width=19 height=17 align=left><font size=2><B></B></font></td><td colspan=2 width=89 height=17 align=center style="border-bottom: 1px solid #000000;"><font size=2><B>2009 </B></font></td><td width=19 height=17 align=left><font size=2><B> </B></font></td><td colspan=2 width=89 height=17 align=center style="border-bottom: 1px solid #000000;"><font size=2><B>2008 </B></font></td></tr><tr><td width=505 height=17 align=left style="border-top: 1px solid #000000;"><font size=2>Balance as of January 1</font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=right style="border-top: 1px solid #000000;"><font size=2>$</font></td><td width=75 height=17 align=right style="border-top: 1px solid #000000;"><font size=2> 1,136 </font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=right style="border-top: 1px solid #000000;"><font size=2>$</font></td><td width=75 height=17 align=right style="border-top: 1px solid #000000;"><font size=2> 1,252 </font></td></tr><tr><td width=505 height=17 align=left><font size=2>Warranties and performance guarantees issued</font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left><font size=2> </font></td><td width=75 height=17 align=right><font size=2> 170 </font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left><font size=2> </font></td><td width=75 height=17 align=right><font size=2> 285 </font></td></tr><tr><td width=505 height=17 align=left><font size=2>Settlements made</font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left><font size=2> </font></td><td width=75 height=17 align=right><font size=2> (202)</font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left><font size=2> </font></td><td width=75 height=17 align=right><font size=2> (318)</font></td></tr><tr><td width=505 height=17 align=left><font size=2>Other</font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left><font size=2> </font></td><td width=75 height=17 align=right style="border-bottom: 1px solid #000000;"><font size=2> (26)</font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left><font size=2> </font></td><td width=75 height=17 align=right style="border-bottom: 1px solid #000000;"><font size=2> 18 </font></td></tr><tr><td width=505 height=18 align=left><font size=2>Balance as of June 30</font></td><td width=19 height=18 align=left><font size=2> </font></td><td width=14 height=18 align=right><font size=2>$</font></td><td width=75 height=18 align=right style="border-top: 1px solid #000000;border-bottom: 3px double #000000;"><font size=2> 1,078 </font></td><td width=19 height=18 align=left><font size=2> </font></td><td width=14 height=18 align=right><font size=2>$</font></td><td width=75 height=18 align=right style="border-top: 1px solid #000000;border-bottom: 3px double #000000;"><font size=2> 1,237 </font></td></tr></table></DIV></body></html>
<html><head><meta http-equiv="Content-Type" content="text/html; charset=utf-8" /></head><body><DIV><FONT SIZE=2><P>Note 11: Collaborative Arrangements<BR>In view of the risks and costs associated with developing new engines, Pratt & Whitney has entered into certain collaboration arrangements in which costs, revenues and risks are shared. Revenues generated from engine programs, spare parts sales, and aftermarket business under collaboration arrangements are recorded as earned in our financial statements. Amounts attributable to our collaborative partners for their share of revenues are recorded as an expense in our financial statements based upon the terms and nature of the arrangement. Costs associated with engine programs under collaborative arrangements are expensed as incurred. Under these arrangements, collaborators contribute their program share of engine parts, incur their own production costs and make certain payments to Pratt & Whitney for shared or joint program costs. The reimbursement of the collaborator’s share of program costs is recorded as a reduction of the related expense item at that time. As of June 30, 2009, the collaborators’ interests in existing engine production programs ranged from 1 percent to 29 percent. Pratt & Whitney directs those programs and is the principal participant in all existing collaborative arrangements. There are no individually significant collaborative arrangements and none of the partners exceed 25 percent share in an individual program. <BR> <BR>The following table illustrates the income statement classification and amounts attributable to transactions arising from the collaborative arrangements between participants for each period presented: </FONT></DIV><DIV><table style="border-collapse: collapse; margin-top: 20px;"><tr><td width=15 height=17 align=left><font size=2> </font></td><td width=321 height=17 align=left><font size=2> </font></td><td width=19 height=17 align=left><font size=2> </font></td><td colspan=5 width=171 height=17 align=center style="border-bottom: 1px solid #000000;"><font size=2><B>Quarter Ended June 30,</B></font></td><td width=19 height=17 align=left><font size=2> </font></td><td colspan=5 width=171 height=17 align=center style="border-bottom: 1px solid #000000;"><font size=2><B>Six Months Ended June 30,</B></font></td></tr><tr><td colspan=2 width=336 height=17 align=left style="border-bottom: 1px solid #000000;"><font size=2><B>(in millions of dollars)</B></font></td><td width=19 height=17 align=left><font size=2><B> </B></font></td><td colspan=2 width=76 height=17 align=center style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;"><font size=2><B>2009 </B></font></td><td width=19 height=17 align=center style="border-top: 1px solid #000000;"><font size=2><B> </B></font></td><td colspan=2 width=76 height=17 align=center style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;"><font size=2><B>2008 </B></font></td><td width=19 height=17 align=left><font size=2><B> </B></font></td><td colspan=2 width=76 height=17 align=center style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;"><font size=2><B>2009 </B></font></td><td width=19 height=17 align=center style="border-top: 1px solid #000000;"><font size=2><B> </B></font></td><td colspan=2 width=76 height=17 align=center style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;"><font size=2><B>2008 </B></font></td></tr><tr><td colspan=2 width=336 height=17 align=left style="border-top: 1px solid #000000;"><font size=2>Collaborator share of revenues:</font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=13 height=17 align=left style="border-top: 1px solid #000000;"><font size=2> </font></td><td width=63 height=17 align=right style="border-top: 1px solid #000000;"><font size=2> </font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=13 height=17 align=left style="border-top: 1px solid #000000;"><font size=2> </font></td><td width=63 height=17 align=right style="border-top: 1px solid #000000;"><font size=2> </font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=13 height=17 align=left style="border-top: 1px solid #000000;"><font size=2> </font></td><td width=63 height=17 align=right style="border-top: 1px solid #000000;"><font size=2> </font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=13 height=17 align=left style="border-top: 1px solid #000000;"><font size=2> </font></td><td width=63 height=17 align=right style="border-top: 1px solid #000000;"><font size=2> </font></td></tr><tr><td width=15 height=17 align=left><font size=2> </font></td><td width=321 height=17 align=left><font size=2>Cost of products sold</font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=13 height=17 align=left><font size=2> </font></td><td width=63 height=17 align=right><font size=2>$ 187 </font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=13 height=17 align=left><font size=2> </font></td><td width=63 height=17 align=right><font size=2>$ 273 </font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=13 height=17 align=left><font size=2> </font></td><td width=63 height=17 align=right><font size=2>$ 400 </font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=13 height=17 align=left><font size=2> </font></td><td width=63 height=17 align=right><font size=2>$ 527 </font></td></tr><tr><td width=15 height=17 align=left><font size=2> </font></td><td width=321 height=17 align=left><font size=2>Cost of services sold</font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=13 height=17 align=left><font size=2> </font></td><td width=63 height=17 align=right><font size=2> 7 </font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=13 height=17 align=left><font size=2> </font></td><td width=63 height=17 align=right><font size=2> 4 </font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=13 height=17 align=left><font size=2> </font></td><td width=63 height=17 align=right><font size=2> 14 </font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=13 height=17 align=left><font size=2> </font></td><td width=63 height=17 align=right><font size=2> 7 </font></td></tr><tr><td width=15 height=17 align=left><font size=2> </font></td><td width=321 height=17 align=left><font size=2> </font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=13 height=17 align=left><font size=2> </font></td><td width=63 height=17 align=right><font size=2> </font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=13 height=17 align=left><font size=2> </font></td><td width=63 height=17 align=right><font size=2> </font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=13 height=17 align=left><font size=2> </font></td><td width=63 height=17 align=right><font size=2> </font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=13 height=17 align=left><font size=2> </font></td><td width=63 height=17 align=right><font size=2> </font></td></tr><tr><td colspan=2 width=336 height=17 align=left><font size=2>Collaborator share of program costs </font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=13 height=17 align=left><font size=2> </font></td><td width=63 height=17 align=right><font size=2> </font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=13 height=17 align=left><font size=2> </font></td><td width=63 height=17 align=right><font size=2> </font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=13 height=17 align=left><font size=2> </font></td><td width=63 height=17 align=right><font size=2> </font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=13 height=17 align=left><font size=2> </font></td><td width=63 height=17 align=right><font size=2> </font></td></tr><tr><td width=15 height=17 align=left><font size=2> </font></td><td width=321 height=17 align=left><font size=2>(reimbursement of expenses incurred):</font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=13 height=17 align=left><font size=2> </font></td><td width=63 height=17 align=right><font size=2> </font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=13 height=17 align=left><font size=2> </font></td><td width=63 height=17 align=right><font size=2> </font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=13 height=17 align=left><font size=2> </font></td><td width=63 height=17 align=right><font size=2> </font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=13 height=17 align=left><font size=2> </font></td><td width=63 height=17 align=right><font size=2> </font></td></tr><tr><td width=15 height=17 align=left><font size=2> </font></td><td width=321 height=17 align=left><font size=2>Cost of products sold</font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=13 height=17 align=left><font size=2> </font></td><td width=63 height=17 align=right><font size=2> (14)</font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=13 height=17 align=left><font size=2> </font></td><td width=63 height=17 align=right><font size=2> (21)</font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=13 height=17 align=left><font size=2> </font></td><td width=63 height=17 align=right><font size=2> (33)</font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=13 height=17 align=left><font size=2> </font></td><td width=63 height=17 align=right><font size=2> (43)</font></td></tr><tr><td width=15 height=17 align=left><font size=2> </font></td><td width=321 height=17 align=left><font size=2>Research and development</font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=13 height=17 align=left><font size=2> </font></td><td width=63 height=17 align=right><font size=2> (20)</font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=13 height=17 align=left><font size=2> </font></td><td width=63 height=17 align=right><font size=2> (15)</font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=13 height=17 align=left><font size=2> </font></td><td width=63 height=17 align=right><font size=2> (32)</font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=13 height=17 align=left><font size=2> </font></td><td width=63 height=17 align=right><font size=2> (23)</font></td></tr><tr><td width=15 height=17 align=left><font size=2> </font></td><td width=321 height=17 align=left><font size=2>Selling, general and administrative</font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=13 height=17 align=left><font size=2> </font></td><td width=63 height=17 align=right><font size=2> (1)</font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=13 height=17 align=left><font size=2> </font></td><td width=63 height=17 align=right><font size=2> (2)</font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=13 height=17 align=left><font size=2> </font></td><td width=63 height=17 align=right><font size=2> (3)</font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=13 height=17 align=left><font size=2> </font></td><td width=63 height=17 align=right><font size=2> (5)</font></td></tr></table></DIV><DIV><FONT SIZE=2><P>In November 2007, the EITF issued EITF 07-1. This Issue is effective for financial statements issued for fiscal years beginning after December 15, 2008, and interim periods within those fiscal years, and must be applied retrospectively to all prior periods presented for all collaborative arrangements existing as of the effective date. This Issue requires that participants in a collaborative arrangement report costs incurred and revenues generated from these transactions on a gross basis and in the appropriate line items in each company’s financial statements pursuant to the guidance in EITF Issue No. 99-19, “Reporting Revenue Gross as a Principal versus Net as an Agent.” This Issue also requires disclosure of the nature and purpose of the participant’s collaborative arrangements, the participant’s rights and obligations under these arrangements, the accounting policy for collaborative arrangements, the income statement classification and amounts attributable to transactions arising from collaboration arrangements between participants, and the disclosure related to individually significant collaborative arrangements. <BR> <BR>We adopted EITF 07-1 as of January 1, 2009. As required by EITF 07-1, we have applied the provisions of this Issue retrospectively for all periods presented. As a result, the collaborators’ share of revenues, which were previously reported on a net basis, are now reported on a gross basis. Certain reclassifications were made to the prior year amounts in both the Condensed Consolidated Balance Sheet and Condensed Consolidated Statement of Operations. In the Condensed Consolidated Balance Sheet, accounts receivable and accounts payable were each increased by $368 million at December 31, 2008, in order to reflect the amounts owed to our collaborative partners for their share of revenues on a gross basis. <BR> <BR>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:<BR></FONT></DIV><DIV><table style="border-collapse: collapse; margin-top: 20px;"><tr><td width=15 height=17 align=left><font size=2> </font></td><td width=158 height=17 align=left><font size=2> </font></td><td width=15 height=17 align=left><font size=2> </font></td><td colspan=8 width=255 height=17 align=center style="border-bottom: 1px solid #000000;"><font size=2><B>Quarter Ended June 30, 2008</B></font></td><td width=15 height=17 align=left><font size=2> </font></td><td colspan=8 width=255 height=17 align=center style="border-bottom: 1px solid #000000;"><font size=2><B>Six Months Ended June 30, 2008</B></font></td></tr><tr><td colspan=2 width=173 height=42 align=left style="border-bottom: 1px solid #000000;"><font size=2><B>(in millions of dollars)</B></font></td><td width=15 height=42 align=left><font size=2><B> </B></font></td><td colspan=2 width=75 height=42 align=center style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;"><font size=2><B>As
Previously Reported</B></font></td><td width=15 height=42 align=center style="border-top: 1px solid #000000;"><font size=2><B> </B></font></td><td colspan=2 width=75 height=42 align=center style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;"><font size=2><B>Effect of Adoption of EITF 07-1 </B></font></td><td width=15 height=42 align=center style="border-top: 1px solid #000000;"><font size=2><B> </B></font></td><td colspan=2 width=75 height=42 align=center style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;"><font size=2><B>Currently Reported </B></font></td><td width=15 height=42 align=left><font size=2><B> </B></font></td><td colspan=2 width=75 height=42 align=center style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;"><font size=2><B>As
Previously Reported</B></font></td><td width=15 height=42 align=center style="border-top: 1px solid #000000;"><font size=2><B> </B></font></td><td colspan=2 width=75 height=42 align=center style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;"><font size=2><B>Effect of Adoption of EITF 07-1 </B></font></td><td width=15 height=42 align=center style="border-top: 1px solid #000000;"><font size=2><B> </B></font></td><td colspan=2 width=75 height=42 align=center style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;"><font size=2><B>Currently Reported </B></font></td></tr><tr><td colspan=2 width=173 height=17 align=left style="border-top: 1px solid #000000;"><font size=2>Revenues:</font></td><td width=15 height=17 align=left><font size=2> </font></td><td width=13 height=17 align=left style="border-top: 1px solid #000000;"><font size=2> </font></td><td width=62 height=17 align=left style="border-top: 1px solid #000000;"><font size=2> </font></td><td width=15 height=17 align=left><font size=2> </font></td><td width=13 height=17 align=left style="border-top: 1px solid #000000;"><font size=2> </font></td><td width=62 height=17 align=left style="border-top: 1px solid #000000;"><font size=2> </font></td><td width=15 height=17 align=left><font size=2> </font></td><td width=13 height=17 align=left style="border-top: 1px solid #000000;"><font size=2> </font></td><td width=62 height=17 align=left style="border-top: 1px solid #000000;"><font size=2> </font></td><td width=15 height=17 align=left><font size=2> </font></td><td width=13 height=17 align=left style="border-top: 1px solid #000000;"><font size=2> </font></td><td width=62 height=17 align=left style="border-top: 1px solid #000000;"><font size=2> </font></td><td width=15 height=17 align=left><font size=2> </font></td><td width=13 height=17 align=left style="border-top: 1px solid #000000;"><font size=2> </font></td><td width=62 height=17 align=left style="border-top: 1px solid #000000;"><font size=2> </font></td><td width=15 height=17 align=left><font size=2> </font></td><td width=13 height=17 align=left style="border-top: 1px solid #000000;"><font size=2> </font></td><td width=62 height=17 align=left style="border-top: 1px solid #000000;"><font size=2> </font></td></tr><tr><td width=15 height=17 align=left><font size=2> </font></td><td width=158 height=17 align=left><font size=2>Product sales</font></td><td width=15 height=17 align=left><font size=2> </font></td><td width=13 height=17 align=left><font size=2>$</font></td><td width=62 height=17 align=right><font size=2> 11,384 </font></td><td width=15 height=17 align=left><font size=2> </font></td><td width=13 height=17 align=left><font size=2>$</font></td><td width=62 height=17 align=right><font size=2> 273 </font></td><td width=15 height=17 align=left><font size=2> </font></td><td width=13 height=17 align=left><font size=2>$</font></td><td width=62 height=17 align=right><font size=2> 11,657 </font></td><td width=15 height=17 align=left><font size=2> </font></td><td width=13 height=17 align=left><font size=2>$</font></td><td width=62 height=17 align=right><font size=2> 21,075 </font></td><td width=15 height=17 align=left><font size=2> </font></td><td width=13 height=17 align=left><font size=2>$</font></td><td width=62 height=17 align=right><font size=2> 527 </font></td><td width=15 height=17 align=left><font size=2> </font></td><td width=13 height=17 align=left><font size=2>$</font></td><td width=62 height=17 align=right><font size=2> 21,602 </font></td></tr><tr><td width=15 height=17 align=left><font size=2> </font></td><td width=158 height=17 align=left><font size=2>Service sales</font></td><td width=15 height=17 align=left><font size=2> </font></td><td width=13 height=17 align=left><font size=2> </font></td><td width=62 height=17 align=right><font size=2> 4,151 </font></td><td width=15 height=17 align=left><font size=2> </font></td><td width=13 height=17 align=left><font size=2> </font></td><td width=62 height=17 align=right><font size=2> 4 </font></td><td width=15 height=17 align=left><font size=2> </font></td><td width=13 height=17 align=left><font size=2> </font></td><td width=62 height=17 align=right><font size=2> 4,155 </font></td><td width=15 height=17 align=left><font size=2> </font></td><td width=13 height=17 align=left><font size=2> </font></td><td width=62 height=17 align=right><font size=2> 8,037 </font></td><td width=15 height=17 align=left><font size=2> </font></td><td width=13 height=17 align=left><font size=2> </font></td><td width=62 height=17 align=right><font size=2> 7 </font></td><td width=15 height=17 align=left><font size=2> </font></td><td width=13 height=17 align=left><font size=2> </font></td><td width=62 height=17 align=right><font size=2> 8,044 </font></td></tr><tr><td width=15 height=17 align=left><font size=2> </font></td><td width=158 height=17 align=left><font size=2>Other income, net</font></td><td width=15 height=17 align=left><font size=2> </font></td><td width=13 height=17 align=left style="border-bottom: 1px solid #000000;"><font size=2> </font></td><td width=62 height=17 align=right style="border-bottom: 1px solid #000000;"><font size=2> 132 </font></td><td width=15 height=17 align=left><font size=2> </font></td><td width=13 height=17 align=left style="border-bottom: 1px solid #000000;"><font size=2> </font></td><td width=62 height=17 align=right style="border-bottom: 1px solid #000000;"><font size=2> - </font></td><td width=15 height=17 align=left><font size=2> </font></td><td width=13 height=17 align=left style="border-bottom: 1px solid #000000;"><font size=2> </font></td><td width=62 height=17 align=right style="border-bottom: 1px solid #000000;"><font size=2> 132 </font></td><td width=15 height=17 align=left><font size=2> </font></td><td width=13 height=17 align=left style="border-bottom: 1px solid #000000;"><font size=2> </font></td><td width=62 height=17 align=right style="border-bottom: 1px solid #000000;"><font size=2> 256 </font></td><td width=15 height=17 align=left><font size=2> </font></td><td width=13 height=17 align=left style="border-bottom: 1px solid #000000;"><font size=2> </font></td><td width=62 height=17 align=right style="border-bottom: 1px solid #000000;"><font size=2> - </font></td><td width=15 height=17 align=left><font size=2> </font></td><td width=13 height=17 align=left style="border-bottom: 1px solid #000000;"><font size=2> </font></td><td width=62 height=17 align=right style="border-bottom: 1px solid #000000;"><font size=2> 256 </font></td></tr><tr><td width=15 height=17 align=left><font size=2> </font></td><td width=158 height=17 align=left><font size=2> </font></td><td width=15 height=17 align=left><font size=2> </font></td><td width=13 height=17 align=left style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;"><font size=2> </font></td><td width=62 height=17 align=right style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;"><font size=2> 15,667 </font></td><td width=15 height=17 align=left><font size=2> </font></td><td width=13 height=17 align=left style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;"><font size=2> </font></td><td width=62 height=17 align=right style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;"><font size=2> 277 </font></td><td width=15 height=17 align=left><font size=2> </font></td><td width=13 height=17 align=left style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;"><font size=2> </font></td><td width=62 height=17 align=right style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;"><font size=2> 15,944 </font></td><td width=15 height=17 align=left><font size=2> </font></td><td width=13 height=17 align=left style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;"><font size=2> </font></td><td width=62 height=17 align=right style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;"><font size=2> 29,368 </font></td><td width=15 height=17 align=left><font size=2> </font></td><td width=13 height=17 align=left style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;"><font size=2> </font></td><td width=62 height=17 align=right style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;"><font size=2> 534 </font></td><td width=15 height=17 align=left><font size=2> </font></td><td width=13 height=17 align=left style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;"><font size=2> </font></td><td width=62 height=17 align=right style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;"><font size=2> 29,902 </font></td></tr><tr><td colspan=2 width=173 height=17 align=left><font size=2>Costs and Expenses:</font></td><td width=15 height=17 align=left><font size=2> </font></td><td width=13 height=17 align=left style="border-top: 1px solid #000000;"><font size=2> </font></td><td width=62 height=17 align=right style="border-top: 1px solid #000000;"><font size=2> </font></td><td width=15 height=17 align=left><font size=2> </font></td><td width=13 height=17 align=left style="border-top: 1px solid #000000;"><font size=2> </font></td><td width=62 height=17 align=right style="border-top: 1px solid #000000;"><font size=2> </font></td><td width=15 height=17 align=left><font size=2> </font></td><td width=13 height=17 align=left style="border-top: 1px solid #000000;"><font size=2> </font></td><td width=62 height=17 align=right style="border-top: 1px solid #000000;"><font size=2> </font></td><td width=15 height=17 align=left><font size=2> </font></td><td width=13 height=17 align=left style="border-top: 1px solid #000000;"><font size=2> </font></td><td width=62 height=17 align=right style="border-top: 1px solid #000000;"><font size=2> </font></td><td width=15 height=17 align=left><font size=2> </font></td><td width=13 height=17 align=left style="border-top: 1px solid #000000;"><font size=2> </font></td><td width=62 height=17 align=right style="border-top: 1px solid #000000;"><font size=2> </font></td><td width=15 height=17 align=left><font size=2> </font></td><td width=13 height=17 align=left style="border-top: 1px solid #000000;"><font size=2> </font></td><td width=62 height=17 align=right style="border-top: 1px solid #000000;"><font size=2> </font></td></tr><tr><td width=15 height=17 align=left><font size=2> </font></td><td width=158 height=17 align=left><font size=2>Cost of products sold</font></td><td width=15 height=17 align=left><font size=2> </font></td><td width=13 height=17 align=left><font size=2> </font></td><td width=62 height=17 align=right><font size=2> 8,556 </font></td><td width=15 height=17 align=left><font size=2> </font></td><td width=13 height=17 align=left><font size=2> </font></td><td width=62 height=17 align=right><font size=2> 273 </font></td><td width=15 height=17 align=left><font size=2> </font></td><td width=13 height=17 align=left><font size=2> </font></td><td width=62 height=17 align=right><font size=2> 8,829 </font></td><td width=15 height=17 align=left><font size=2> </font></td><td width=13 height=17 align=left><font size=2> </font></td><td width=62 height=17 align=right><font size=2> 15,903 </font></td><td width=15 height=17 align=left><font size=2> </font></td><td width=13 height=17 align=left><font size=2> </font></td><td width=62 height=17 align=right><font size=2> 527 </font></td><td width=15 height=17 align=left><font size=2> </font></td><td width=13 height=17 align=left><font size=2> </font></td><td width=62 height=17 align=right><font size=2> 16,430 </font></td></tr><tr><td width=15 height=17 align=left><font size=2> </font></td><td width=158 height=17 align=left><font size=2>Cost of services sold</font></td><td width=15 height=17 align=left><font size=2> </font></td><td width=13 height=17 align=left><font size=2> </font></td><td width=62 height=17 align=right><font size=2> 2,803 </font></td><td width=15 height=17 align=left><font size=2> </font></td><td width=13 height=17 align=left><font size=2> </font></td><td width=62 height=17 align=right><font size=2> 4 </font></td><td width=15 height=17 align=left><font size=2> </font></td><td width=13 height=17 align=left><font size=2> </font></td><td width=62 height=17 align=right><font size=2> 2,807 </font></td><td width=15 height=17 align=left><font size=2> </font></td><td width=13 height=17 align=left><font size=2> </font></td><td width=62 height=17 align=right><font size=2> 5,437 </font></td><td width=15 height=17 align=left><font size=2> </font></td><td width=13 height=17 align=left><font size=2> </font></td><td width=62 height=17 align=right><font size=2> 7 </font></td><td width=15 height=17 align=left><font size=2> </font></td><td width=13 height=17 align=left><font size=2> </font></td><td width=62 height=17 align=right><font size=2> 5,444 </font></td></tr><tr><td width=15 height=17 align=left><font size=2> </font></td><td width=158 height=17 align=left><font size=2>Research and development</font></td><td width=15 height=17 align=left><font size=2> </font></td><td width=13 height=17 align=left><font size=2> </font></td><td width=62 height=17 align=right><font size=2> 434 </font></td><td width=15 height=17 align=left><font size=2> </font></td><td width=13 height=17 align=left><font size=2> </font></td><td width=62 height=17 align=right><font size=2> - </font></td><td width=15 height=17 align=left><font size=2> </font></td><td width=13 height=17 align=left><font size=2> </font></td><td width=62 height=17 align=right><font size=2> 434 </font></td><td width=15 height=17 align=left><font size=2> </font></td><td width=13 height=17 align=left><font size=2> </font></td><td width=62 height=17 align=right><font size=2> 845 </font></td><td width=15 height=17 align=left><font size=2> </font></td><td width=13 height=17 align=left><font size=2> </font></td><td width=62 height=17 align=right><font size=2> - </font></td><td width=15 height=17 align=left><font size=2> </font></td><td width=13 height=17 align=left><font size=2> </font></td><td width=62 height=17 align=right><font size=2> 845 </font></td></tr><tr><td width=15 height=34 align=left><font size=2> </font></td><td width=158 height=34 align=left><font size=2>Selling, general and
administrative</font></td><td width=15 height=34 align=left><font size=2> </font></td><td width=13 height=34 align=left style="border-bottom: 1px solid #000000;"><font size=2> </font></td><td width=62 height=34 align=right style="border-bottom: 1px solid #000000;"><font size=2> 1,775 </font></td><td width=15 height=34 align=left><font size=2> </font></td><td width=13 height=34 align=left style="border-bottom: 1px solid #000000;"><font size=2> </font></td><td width=62 height=34 align=right style="border-bottom: 1px solid #000000;"><font size=2> - </font></td><td width=15 height=34 align=left><font size=2> </font></td><td width=13 height=34 align=left style="border-bottom: 1px solid #000000;"><font size=2> </font></td><td width=62 height=34 align=right style="border-bottom: 1px solid #000000;"><font size=2> 1,775 </font></td><td width=15 height=34 align=left><font size=2> </font></td><td width=13 height=34 align=left style="border-bottom: 1px solid #000000;"><font size=2> </font></td><td width=62 height=34 align=right style="border-bottom: 1px solid #000000;"><font size=2> 3,410 </font></td><td width=15 height=34 align=left><font size=2> </font></td><td width=13 height=34 align=left style="border-bottom: 1px solid #000000;"><font size=2> </font></td><td width=62 height=34 align=right style="border-bottom: 1px solid #000000;"><font size=2> - </font></td><td width=15 height=34 align=left><font size=2> </font></td><td width=13 height=34 align=left style="border-bottom: 1px solid #000000;"><font size=2> </font></td><td width=62 height=34 align=right style="border-bottom: 1px solid #000000;"><font size=2> 3,410 </font></td></tr><tr><td colspan=2 width=173 height=18 align=left><font size=2>Operating profit</font></td><td width=15 height=18 align=left><font size=2> </font></td><td width=13 height=18 align=left style="border-top: 1px solid #000000;border-bottom: 3px double #000000;"><font size=2>$</font></td><td width=62 height=18 align=right style="border-top: 1px solid #000000;border-bottom: 3px double #000000;"><font size=2> 2,099 </font></td><td width=15 height=18 align=left><font size=2> </font></td><td width=13 height=18 align=left style="border-top: 1px solid #000000;border-bottom: 3px double #000000;"><font size=2>$</font></td><td width=62 height=18 align=right style="border-top: 1px solid #000000;border-bottom: 3px double #000000;"><font size=2> - </font></td><td width=15 height=18 align=left><font size=2> </font></td><td width=13 height=18 align=left style="border-top: 1px solid #000000;border-bottom: 3px double #000000;"><font size=2>$</font></td><td width=62 height=18 align=right style="border-top: 1px solid #000000;border-bottom: 3px double #000000;"><font size=2> 2,099 </font></td><td width=15 height=18 align=left><font size=2> </font></td><td width=13 height=18 align=left style="border-top: 1px solid #000000;border-bottom: 3px double #000000;"><font size=2>$</font></td><td width=62 height=18 align=right style="border-top: 1px solid #000000;border-bottom: 3px double #000000;"><font size=2> 3,773 </font></td><td width=15 height=18 align=left><font size=2> </font></td><td width=13 height=18 align=left style="border-top: 1px solid #000000;border-bottom: 3px double #000000;"><font size=2>$</font></td><td width=62 height=18 align=right style="border-top: 1px solid #000000;border-bottom: 3px double #000000;"><font size=2> - </font></td><td width=15 height=18 align=left><font size=2> </font></td><td width=13 height=18 align=left style="border-top: 1px solid #000000;border-bottom: 3px double #000000;"><font size=2>$</font></td><td width=62 height=18 align=right style="border-top: 1px solid #000000;border-bottom: 3px double #000000;"><font size=2> 3,773 </font></td></tr></table></DIV></body></html>
<html><head><meta http-equiv="Content-Type" content="text/html; charset=utf-8" /></head><body><DIV><FONT SIZE=2><P>Note 12: Contingent Liabilities <BR>Summarized below are the matters previously described in Note 15 of the Notes to the Consolidated Financial Statements in our 2008 Annual Report, incorporated by reference in our 2008 Form 10-K. <BR> <BR>Environmental. Our operations are subject to environmental regulation by federal, state and local authorities in the United States and regulatory authorities with jurisdiction over our foreign operations. <BR> <BR>We accrue for environmental investigatory, remediation, operating and maintenance costs when it is probable that a liability has been incurred and the amount can be reasonably estimated. The most likely cost to be incurred is accrued based on an evaluation of currently available facts with respect to each individual site, including existing technology, current laws and regulations and prior remediation experience. Where no amount within a range of estimates is more likely, we accrue the minimum. For sites with multiple responsible parties, we consider our likely proportionate share of the anticipated remediation costs and the ability of the other parties to fulfill their obligations in establishing a provision for those costs. We discount liabilities with fixed or reliably determinable future cash payments. We do not reduce accrued environmental liabilities by potential insurance reimbursements. We periodically reassess these accrued amounts. We believe that the likelihood of incurring losses materially in excess of amounts accrued is remote. <BR> <BR>Government. 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 of these investigations or other government investigations (including violations 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 fine and debar us from new U.S. government contracting for a period generally not to exceed three years. The U.S. government could void any contracts found to be tainted by fraud. <BR> <BR>Our contracts with the U.S. government are also subject to audits. Like many defense contractors, we have received audit reports, which recommend that certain contract prices should be reduced to comply with various government regulations. Some of these audit reports involve substantial amounts. We have made voluntary refunds in those cases we believe appropriate and continue to litigate certain other cases. In addition, we accrue for liabilities associated with those matters that are probable and can be reasonably estimated. The most likely settlement amount to be incurred is accrued based upon a range of estimates. Where no amount within a range of estimates is more likely, then we accrue the minimum amount. <BR> <BR>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 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. <BR> <BR>As previously disclosed, 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 claimed that Sikorsky’s liability is approximately $80 million (including interest). We believe this claim is without merit and intend to appeal. <BR> <BR>Other. We extend performance and operating cost guarantees beyond our normal warranty and service policies for extended periods on some of our products. We have accrued our estimate of the liability that may result under these guarantees and for service costs that are probable and can be reasonably estimated. <BR> <BR>We have accrued for environmental investigatory, remediation, operating and maintenance costs, performance guarantees and other litigation and claims based on our estimate of the probable outcome of these matters. While it is possible that the outcome of these matters may differ from the recorded liability, we believe that resolution of these matters will not have a material impact on our competitive position, results of operations, cash flows or financial condition. <BR> <BR>We also have other commitments and contingent liabilities related to legal proceedings, self insurance programs and matters arising out of the normal course of business. We accrue contingencies based upon a range of possible outcomes. If no amount within this range is a better estimate than any other, then we accrue the minimum amount. <BR> <BR>Except as otherwise noted above, we do not believe that resolution of any of these matters will have a material adverse effect upon our competitive position, results of operations, cash flows or financial condition. </FONT></DIV></body></html>
<html><head><meta http-equiv="Content-Type" content="text/html; charset=utf-8" /></head><body><DIV><FONT SIZE=2><P>Note 13: Segment Financial Data <BR>Our operations are classified into six principal segments: Otis, Carrier, UTC Fire & Security, Pratt & Whitney, Hamilton Sundstrand and Sikorsky. The segments are generally based on the management structure of the businesses and the grouping of similar operating companies, where each management organization has general operating autonomy over diversified products and services. <BR> <BR>As discussed more fully in Note 11 to the Condensed Consolidated Financial Statements, we adopted EITF 07-1 as of January 1, 2009. As a result, the collaborators’ share of revenues, which were previously reported on a net basis, are now reported on a gross basis. Prior period amounts include retrospective application of EITF 07-1.<BR> <BR>Results for the quarters and six months ended June 30, 2009 and 2008 are as follows: <BR></FONT></DIV><DIV><table style="border-collapse: collapse; margin-top: 20px;"><tr><td width=156 height=17 align=left><font size=2><B>Quarter Ended June 30,</B></font></td><td width=19 height=17 align=left><font size=2><B> </B></font></td><td colspan=5 width=169 height=17 align=center style="border-bottom: 1px solid #000000;"><font size=2><B>Revenues</B></font></td><td width=19 height=17 align=left><font size=2><B> </B></font></td><td colspan=5 width=169 height=17 align=center style="border-bottom: 1px solid #000000;"><font size=2><B>Operating Profits</B></font></td><td width=19 height=17 align=left><font size=2><B> </B></font></td><td colspan=3 width=169 height=17 align=center style="border-bottom: 1px solid #000000;"><font size=2><B>Operating Profit Margins</B></font></td></tr><tr><td width=156 height=17 align=left style="border-bottom: 1px solid #000000;"><font size=2><B>(in millions of dollars)</B></font></td><td width=19 height=17 align=left><font size=2><B></B></font></td><td colspan=2 width=75 height=17 align=center style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;"><font size=2><B>2009 </B></font></td><td width=19 height=17 align=left style="border-top: 1px solid #000000;"><font size=2><B> </B></font></td><td colspan=2 width=75 height=17 align=center style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;"><font size=2><B>2008 </B></font></td><td width=19 height=17 align=left><font size=2><B> </B></font></td><td colspan=2 width=75 height=17 align=center style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;"><font size=2><B>2009 </B></font></td><td width=19 height=17 align=left style="border-top: 1px solid #000000;"><font size=2><B> </B></font></td><td colspan=2 width=75 height=17 align=center style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;"><font size=2><B>2008 </B></font></td><td width=19 height=17 align=left><font size=2><B> </B></font></td><td width=75 height=17 align=center style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;"><font size=2><B>2009 </B></font></td><td width=19 height=17 align=left style="border-top: 1px solid #000000;"><font size=2><B> </B></font></td><td width=75 height=17 align=center style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;"><font size=2><B>2008 </B></font></td></tr><tr><td width=156 height=17 align=left style="border-top: 1px solid #000000;"><font size=2>Otis</font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left style="border-top: 1px solid #000000;"><font size=2>$</font></td><td width=61 height=17 align=right style="border-top: 1px solid #000000;"><font size=2> 2,952 </font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left style="border-top: 1px solid #000000;"><font size=2>$</font></td><td width=61 height=17 align=right style="border-top: 1px solid #000000;"><font size=2> 3,404 </font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left style="border-top: 1px solid #000000;"><font size=2>$</font></td><td width=61 height=17 align=right style="border-top: 1px solid #000000;"><font size=2> 631 </font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left style="border-top: 1px solid #000000;"><font size=2>$</font></td><td width=61 height=17 align=right style="border-top: 1px solid #000000;"><font size=2> 671 </font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=75 height=17 align=right style="border-top: 1px solid #000000;"><font size=2>21.4% </font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=75 height=17 align=right style="border-top: 1px solid #000000;"><font size=2>19.7% </font></td></tr><tr><td width=156 height=17 align=left><font size=2>Carrier</font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left><font size=2> </font></td><td width=61 height=17 align=right><font size=2> 3,100 </font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left><font size=2> </font></td><td width=61 height=17 align=right><font size=2> 4,356 </font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left><font size=2> </font></td><td width=61 height=17 align=right><font size=2> 260 </font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left><font size=2> </font></td><td width=61 height=17 align=right><font size=2> 487 </font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=75 height=17 align=right><font size=2>8.4% </font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=75 height=17 align=right><font size=2>11.2% </font></td></tr><tr><td width=156 height=17 align=left><font size=2>UTC Fire & Security</font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left><font size=2> </font></td><td width=61 height=17 align=right><font size=2> 1,330 </font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left><font size=2> </font></td><td width=61 height=17 align=right><font size=2> 1,738 </font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left><font size=2> </font></td><td width=61 height=17 align=right><font size=2> 55 </font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left><font size=2> </font></td><td width=61 height=17 align=right><font size=2> 126 </font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=75 height=17 align=right><font size=2>4.1% </font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=75 height=17 align=right><font size=2>7.2% </font></td></tr><tr><td width=156 height=17 align=left><font size=2>Pratt & Whitney</font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left><font size=2> </font></td><td width=61 height=17 align=right><font size=2> 3,111 </font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left><font size=2> </font></td><td width=61 height=17 align=right><font size=2> 3,569 </font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left><font size=2> </font></td><td width=61 height=17 align=right><font size=2> 467 </font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left><font size=2> </font></td><td width=61 height=17 align=right><font size=2> 546 </font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=75 height=17 align=right><font size=2>15.0% </font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=75 height=17 align=right><font size=2>15.3% </font></td></tr><tr><td width=156 height=17 align=left><font size=2>Hamilton Sundstrand</font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left><font size=2> </font></td><td width=61 height=17 align=right><font size=2> 1,402 </font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left><font size=2> </font></td><td width=61 height=17 align=right><font size=2> 1,650 </font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left><font size=2> </font></td><td width=61 height=17 align=right><font size=2> 187 </font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left><font size=2> </font></td><td width=61 height=17 align=right><font size=2> 280 </font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=75 height=17 align=right><font size=2>13.3% </font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=75 height=17 align=right><font size=2>17.0% </font></td></tr><tr><td width=156 height=17 align=left><font size=2>Sikorsky</font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left style="border-bottom: 1px solid #000000;"><font size=2> </font></td><td width=61 height=17 align=right style="border-bottom: 1px solid #000000;"><font size=2> 1,389 </font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left style="border-bottom: 1px solid #000000;"><font size=2> </font></td><td width=61 height=17 align=right style="border-bottom: 1px solid #000000;"><font size=2> 1,307 </font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left style="border-bottom: 1px solid #000000;"><font size=2> </font></td><td width=61 height=17 align=right style="border-bottom: 1px solid #000000;"><font size=2> 133 </font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left style="border-bottom: 1px solid #000000;"><font size=2> </font></td><td width=61 height=17 align=right style="border-bottom: 1px solid #000000;"><font size=2> 111 </font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=75 height=17 align=right style="border-bottom: 1px solid #000000;"><font size=2>9.6% </font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=75 height=17 align=right style="border-bottom: 1px solid #000000;"><font size=2>8.5% </font></td></tr><tr><td width=156 height=25 align=left><font size=2>Total segments</font></td><td width=19 height=25 align=left><font size=2> </font></td><td width=14 height=25 align=left style="border-top: 1px solid #000000;"><font size=2> </font></td><td width=61 height=25 align=right style="border-top: 1px solid #000000;"><font size=2> 13,284 </font></td><td width=19 height=25 align=left><font size=2> </font></td><td width=14 height=25 align=left style="border-top: 1px solid #000000;"><font size=2> </font></td><td width=61 height=25 align=right style="border-top: 1px solid #000000;"><font size=2> 16,024 </font></td><td width=19 height=25 align=left><font size=2> </font></td><td width=14 height=25 align=left style="border-top: 1px solid #000000;"><font size=2> </font></td><td width=61 height=25 align=right style="border-top: 1px solid #000000;"><font size=2> 1,733 </font></td><td width=19 height=25 align=left><font size=2> </font></td><td width=14 height=25 align=left style="border-top: 1px solid #000000;"><font size=2> </font></td><td width=61 height=25 align=right style="border-top: 1px solid #000000;"><font size=2> 2,221 </font></td><td width=19 height=25 align=left><font size=2> </font></td><td width=75 height=25 align=right style="border-top: 1px solid #000000;"><font size=2>13.0% </font></td><td width=19 height=25 align=left><font size=2> </font></td><td width=75 height=25 align=right style="border-top: 1px solid #000000;"><font size=2>13.9% </font></td></tr><tr><td width=156 height=17 align=left><font size=2>Eliminations and other</font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left><font size=2> </font></td><td width=61 height=17 align=right><font size=2> (88)</font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left><font size=2> </font></td><td width=61 height=17 align=right><font size=2> (80)</font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left><font size=2> </font></td><td width=61 height=17 align=right><font size=2> (7)</font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left><font size=2> </font></td><td width=61 height=17 align=right><font size=2> (13)</font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=75 height=17 align=right><font size=2> </font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=75 height=17 align=right><font size=2> </font></td></tr><tr><td width=156 height=17 align=left><font size=2>General corporate expenses</font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left style="border-bottom: 1px solid #000000;"><font size=2> </font></td><td width=61 height=17 align=right style="border-bottom: 1px solid #000000;"><font size=2> - </font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left style="border-bottom: 1px solid #000000;"><font size=2> </font></td><td width=61 height=17 align=right style="border-bottom: 1px solid #000000;"><font size=2> - </font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left style="border-bottom: 1px solid #000000;"><font size=2> </font></td><td width=61 height=17 align=right style="border-bottom: 1px solid #000000;"><font size=2> (89)</font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left style="border-bottom: 1px solid #000000;"><font size=2> </font></td><td width=61 height=17 align=right style="border-bottom: 1px solid #000000;"><font size=2> (109)</font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=75 height=17 align=right style="border-bottom: 1px solid #000000;"><font size=2> </font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=75 height=17 align=right style="border-bottom: 1px solid #000000;"><font size=2> </font></td></tr><tr><td width=156 height=25 align=left><font size=2>Consolidated</font></td><td width=19 height=25 align=left><font size=2> </font></td><td width=14 height=25 align=left style="border-top: 1px solid #000000;border-bottom: 3px double #000000;"><font size=2>$</font></td><td width=61 height=25 align=right style="border-top: 1px solid #000000;border-bottom: 3px double #000000;"><font size=2> 13,196 </font></td><td width=19 height=25 align=left><font size=2> </font></td><td width=14 height=25 align=left style="border-top: 1px solid #000000;border-bottom: 3px double #000000;"><font size=2>$</font></td><td width=61 height=25 align=right style="border-top: 1px solid #000000;border-bottom: 3px double #000000;"><font size=2> 15,944 </font></td><td width=19 height=25 align=left><font size=2> </font></td><td width=14 height=25 align=left style="border-top: 1px solid #000000;border-bottom: 3px double #000000;"><font size=2>$</font></td><td width=61 height=25 align=right style="border-top: 1px solid #000000;border-bottom: 3px double #000000;"><font size=2> 1,637 </font></td><td width=19 height=25 align=left><font size=2> </font></td><td width=14 height=25 align=left style="border-top: 1px solid #000000;border-bottom: 3px double #000000;"><font size=2>$</font></td><td width=61 height=25 align=right style="border-top: 1px solid #000000;border-bottom: 3px double #000000;"><font size=2> 2,099 </font></td><td width=19 height=25 align=left><font size=2> </font></td><td width=75 height=25 align=right style="border-top: 1px solid #000000;border-bottom: 3px double #000000;"><font size=2>12.4% </font></td><td width=19 height=25 align=left><font size=2> </font></td><td width=75 height=25 align=right style="border-top: 1px solid #000000;border-bottom: 3px double #000000;"><font size=2>13.2% </font></td></tr><tr><td width=156 height=18 align=left><font size=2> </font></td><td width=19 height=18 align=left><font size=2> </font></td><td width=14 height=18 align=left style="border-top: 3px double #000000;"><font size=2> </font></td><td width=61 height=18 align=left style="border-top: 3px double #000000;"><font size=2> </font></td><td width=19 height=18 align=left><font size=2> </font></td><td width=14 height=18 align=left style="border-top: 3px double #000000;"><font size=2> </font></td><td width=61 height=18 align=left style="border-top: 3px double #000000;"><font size=2> </font></td><td width=19 height=18 align=left><font size=2> </font></td><td width=14 height=18 align=left style="border-top: 3px double #000000;"><font size=2> </font></td><td width=61 height=18 align=left style="border-top: 3px double #000000;"><font size=2> </font></td><td width=19 height=18 align=left><font size=2> </font></td><td width=14 height=18 align=left style="border-top: 3px double #000000;"><font size=2> </font></td><td width=61 height=18 align=left style="border-top: 3px double #000000;"><font size=2> </font></td><td width=19 height=18 align=left><font size=2> </font></td><td width=75 height=18 align=left style="border-top: 3px double #000000;"><font size=2> </font></td><td width=19 height=18 align=left><font size=2> </font></td><td width=75 height=18 align=left style="border-top: 3px double #000000;"><font size=2> </font></td></tr><tr><td width=156 height=17 align=left><font size=2><B>Six Months Ended June 30,</B></font></td><td width=19 height=17 align=left><font size=2><B> </B></font></td><td colspan=5 width=169 height=17 align=center style="border-bottom: 1px solid #000000;"><font size=2><B>Revenues</B></font></td><td width=19 height=17 align=left><font size=2><B> </B></font></td><td colspan=5 width=169 height=17 align=center style="border-bottom: 1px solid #000000;"><font size=2><B>Operating Profits</B></font></td><td width=19 height=17 align=left><font size=2><B> </B></font></td><td colspan=3 width=169 height=17 align=center style="border-bottom: 1px solid #000000;"><font size=2><B>Operating Profit Margins</B></font></td></tr><tr><td width=156 height=17 align=left style="border-bottom: 1px solid #000000;"><font size=2><B>(in millions of dollars)</B></font></td><td width=19 height=17 align=left><font size=2><B></B></font></td><td colspan=2 width=75 height=17 align=center style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;"><font size=2><B>2009 </B></font></td><td width=19 height=17 align=left style="border-top: 1px solid #000000;"><font size=2><B> </B></font></td><td colspan=2 width=75 height=17 align=center style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;"><font size=2><B>2008 </B></font></td><td width=19 height=17 align=left><font size=2><B> </B></font></td><td colspan=2 width=75 height=17 align=center style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;"><font size=2><B>2009 </B></font></td><td width=19 height=17 align=left style="border-top: 1px solid #000000;"><font size=2><B> </B></font></td><td colspan=2 width=75 height=17 align=center style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;"><font size=2><B>2008 </B></font></td><td width=19 height=17 align=left><font size=2><B> </B></font></td><td width=75 height=17 align=center style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;"><font size=2><B>2009 </B></font></td><td width=19 height=17 align=left style="border-top: 1px solid #000000;"><font size=2><B> </B></font></td><td width=75 height=17 align=center style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;"><font size=2><B>2008 </B></font></td></tr><tr><td width=156 height=17 align=left style="border-top: 1px solid #000000;"><font size=2>Otis</font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left style="border-top: 1px solid #000000;"><font size=2>$</font></td><td width=61 height=17 align=right style="border-top: 1px solid #000000;"><font size=2> 5,617 </font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left style="border-top: 1px solid #000000;"><font size=2>$</font></td><td width=61 height=17 align=right style="border-top: 1px solid #000000;"><font size=2> 6,461 </font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left style="border-top: 1px solid #000000;"><font size=2>$</font></td><td width=61 height=17 align=right style="border-top: 1px solid #000000;"><font size=2> 1,137 </font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left style="border-top: 1px solid #000000;"><font size=2>$</font></td><td width=61 height=17 align=right style="border-top: 1px solid #000000;"><font size=2> 1,251 </font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=75 height=17 align=right style="border-top: 1px solid #000000;"><font size=2>20.2% </font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=75 height=17 align=right style="border-top: 1px solid #000000;"><font size=2>19.4% </font></td></tr><tr><td width=156 height=17 align=left><font size=2>Carrier</font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left><font size=2> </font></td><td width=61 height=17 align=right><font size=2> 5,587 </font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left><font size=2> </font></td><td width=61 height=17 align=right><font size=2> 7,765 </font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left><font size=2> </font></td><td width=61 height=17 align=right><font size=2> 282 </font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left><font size=2> </font></td><td width=61 height=17 align=right><font size=2> 735 </font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=75 height=17 align=right><font size=2>5.0% </font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=75 height=17 align=right><font size=2>9.5% </font></td></tr><tr><td width=156 height=17 align=left><font size=2>UTC Fire & Security</font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left><font size=2> </font></td><td width=61 height=17 align=right><font size=2> 2,616 </font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left><font size=2> </font></td><td width=61 height=17 align=right><font size=2> 3,336 </font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left><font size=2> </font></td><td width=61 height=17 align=right><font size=2> 148 </font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left><font size=2> </font></td><td width=61 height=17 align=right><font size=2> 241 </font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=75 height=17 align=right><font size=2>5.7% </font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=75 height=17 align=right><font size=2>7.2% </font></td></tr><tr><td width=156 height=17 align=left><font size=2>Pratt & Whitney</font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left><font size=2> </font></td><td width=61 height=17 align=right><font size=2> 6,291 </font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left><font size=2> </font></td><td width=61 height=17 align=right><font size=2> 7,033 </font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left><font size=2> </font></td><td width=61 height=17 align=right><font size=2> 903 </font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left><font size=2> </font></td><td width=61 height=17 align=right><font size=2> 1,072 </font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=75 height=17 align=right><font size=2>14.4% </font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=75 height=17 align=right><font size=2>15.2% </font></td></tr><tr><td width=156 height=17 align=left><font size=2>Hamilton Sundstrand</font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left><font size=2> </font></td><td width=61 height=17 align=right><font size=2> 2,783 </font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left><font size=2> </font></td><td width=61 height=17 align=right><font size=2> 3,111 </font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left><font size=2> </font></td><td width=61 height=17 align=right><font size=2> 379 </font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left><font size=2> </font></td><td width=61 height=17 align=right><font size=2> 509 </font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=75 height=17 align=right><font size=2>13.6% </font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=75 height=17 align=right><font size=2>16.4% </font></td></tr><tr><td width=156 height=17 align=left><font size=2>Sikorsky</font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left style="border-bottom: 1px solid #000000;"><font size=2> </font></td><td width=61 height=17 align=right style="border-bottom: 1px solid #000000;"><font size=2> 2,723 </font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left style="border-bottom: 1px solid #000000;"><font size=2> </font></td><td width=61 height=17 align=right style="border-bottom: 1px solid #000000;"><font size=2> 2,330 </font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left style="border-bottom: 1px solid #000000;"><font size=2> </font></td><td width=61 height=17 align=right style="border-bottom: 1px solid #000000;"><font size=2> 249 </font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left style="border-bottom: 1px solid #000000;"><font size=2> </font></td><td width=61 height=17 align=right style="border-bottom: 1px solid #000000;"><font size=2> 193 </font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=75 height=17 align=right style="border-bottom: 1px solid #000000;"><font size=2>9.1% </font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=75 height=17 align=right style="border-bottom: 1px solid #000000;"><font size=2>8.3% </font></td></tr><tr><td width=156 height=17 align=left><font size=2>Total segments</font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left style="border-top: 1px solid #000000;"><font size=2> </font></td><td width=61 height=17 align=right style="border-top: 1px solid #000000;"><font size=2> 25,617 </font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left style="border-top: 1px solid #000000;"><font size=2> </font></td><td width=61 height=17 align=right style="border-top: 1px solid #000000;"><font size=2> 30,036 </font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left style="border-top: 1px solid #000000;"><font size=2> </font></td><td width=61 height=17 align=right style="border-top: 1px solid #000000;"><font size=2> 3,098 </font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left style="border-top: 1px solid #000000;"><font size=2> </font></td><td width=61 height=17 align=right style="border-top: 1px solid #000000;"><font size=2> 4,001 </font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=75 height=17 align=right style="border-top: 1px solid #000000;"><font size=2>12.1% </font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=75 height=17 align=right style="border-top: 1px solid #000000;"><font size=2>13.3% </font></td></tr><tr><td width=156 height=17 align=left><font size=2>Eliminations and other</font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left><font size=2> </font></td><td width=61 height=17 align=right><font size=2> (172)</font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left><font size=2> </font></td><td width=61 height=17 align=right><font size=2> (134)</font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left><font size=2> </font></td><td width=61 height=17 align=right><font size=2> (44)</font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left><font size=2> </font></td><td width=61 height=17 align=right><font size=2> (22)</font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=75 height=17 align=right><font size=2> </font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=75 height=17 align=right><font size=2> </font></td></tr><tr><td width=156 height=17 align=left><font size=2>General corporate expenses</font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left style="border-bottom: 1px solid #000000;"><font size=2> </font></td><td width=61 height=17 align=right style="border-bottom: 1px solid #000000;"><font size=2> - </font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left style="border-bottom: 1px solid #000000;"><font size=2> </font></td><td width=61 height=17 align=right style="border-bottom: 1px solid #000000;"><font size=2> - </font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left style="border-bottom: 1px solid #000000;"><font size=2> </font></td><td width=61 height=17 align=right style="border-bottom: 1px solid #000000;"><font size=2> (167)</font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=14 height=17 align=left style="border-bottom: 1px solid #000000;"><font size=2> </font></td><td width=61 height=17 align=right style="border-bottom: 1px solid #000000;"><font size=2> (206)</font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=75 height=17 align=right style="border-bottom: 1px solid #000000;"><font size=2> </font></td><td width=19 height=17 align=left><font size=2> </font></td><td width=75 height=17 align=right style="border-bottom: 1px solid #000000;"><font size=2> </font></td></tr><tr><td width=156 height=18 align=left><font size=2>Consolidated</font></td><td width=19 height=18 align=left><font size=2> </font></td><td width=14 height=18 align=left style="border-top: 1px solid #000000;border-bottom: 3px double #000000;"><font size=2>$</font></td><td width=61 height=18 align=right style="border-top: 1px solid #000000;border-bottom: 3px double #000000;"><font size=2> 25,445 </font></td><td width=19 height=18 align=left><font size=2> </font></td><td width=14 height=18 align=left style="border-top: 1px solid #000000;border-bottom: 3px double #000000;"><font size=2>$</font></td><td width=61 height=18 align=right style="border-top: 1px solid #000000;border-bottom: 3px double #000000;"><font size=2> 29,902 </font></td><td width=19 height=18 align=left><font size=2> </font></td><td width=14 height=18 align=left style="border-top: 1px solid #000000;border-bottom: 3px double #000000;"><font size=2>$</font></td><td width=61 height=18 align=right style="border-top: 1px solid #000000;border-bottom: 3px double #000000;"><font size=2> 2,887 </font></td><td width=19 height=18 align=left><font size=2> </font></td><td width=14 height=18 align=left style="border-top: 1px solid #000000;border-bottom: 3px double #000000;"><font size=2>$</font></td><td width=61 height=18 align=right style="border-top: 1px solid #000000;border-bottom: 3px double #000000;"><font size=2> 3,773 </font></td><td width=19 height=18 align=left><font size=2> </font></td><td width=75 height=18 align=right style="border-top: 1px solid #000000;border-bottom: 3px double #000000;"><font size=2>11.3% </font></td><td width=19 height=18 align=left><font size=2> </font></td><td width=75 height=18 align=right style="border-top: 1px solid #000000;border-bottom: 3px double #000000;"><font size=2>12.6% </font></td></tr></table></DIV><DIV><FONT SIZE=2><P>See Note 7 to the Condensed Consolidated Financial Statements for a discussion of restructuring charges included in segment operating results. <BR></FONT></DIV></body></html>
<html><head><meta http-equiv="Content-Type" content="text/html; charset=utf-8" /></head><body><DIV><FONT SIZE=2><P>Note 14: Accounting Pronouncements<BR>In December 2008, the FASB issued FSP FAS 132(R)-1, “Employers’ Disclosures about Postretirement Benefit Plan Assets.” This FSP amends SFAS No. 132 (revised 2003), “Employers’ Disclosures about Pensions and Other Postretirement Benefits,” to provide guidance on an employer’s disclosures about plan assets of a defined benefit pension or other postretirement plan on investment policies and strategies, major categories of plan assets, inputs and valuation techniques used to measure the fair value of plan assets and significant concentrations of risk within plan assets. This FSP will be effective for fiscal years ending after December 15, 2009, with earlier application permitted. Upon initial application, the provisions of this FSP are not required for earlier periods that are presented for comparative purposes. We are currently evaluating the disclosure requirements of this new FSP. <BR> <BR>In June 2009, the FASB issued SFAS No. 166, “Accounting for Transfers of Financial Assets – an amendment of FASB Statement No. 140” (SFAS 166). SFAS 166 removes the concept of a qualifying special-purpose entity from SFAS 140, “Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities,” establishes a new “participating interest” definition that must be met for transfers of portions of financial assets to be eligible for sale accounting, clarifies and amends the derecognition criteria for a transfer to be accounted for as a sale, and changes the amount that can be recognized as a gain or loss on a transfer accounted for as a sale when beneficial interests are received by the transferor. Enhanced disclosures are also required to provide information about transfers of financial assets and a transferor’s continuing involvement with transferred financial assets. This statement must be applied as of the beginning of an entity’s first annual reporting period that begins after November 15, 2009, for interim periods within that first annual reporting period, and for interim and annual reporting periods thereafter. Earlier application is prohibited. We are currently evaluating this new statement. <BR> <BR>In June 2009, the FASB issued SFAS No. 167, “Amendments to FASB Interpretation No. 46(R)” (SFAS 167). SFAS 167 amends FASB Interpretation No. 46 (revised December 2003), “Consolidation of Variable Interest Entities” (FIN 46(R)) to require an enterprise to qualitatively assess the determination of the primary beneficiary of a variable interest entity (VIE) based on whether the entity (1) has the power to direct the activities of a VIE that most significantly impact the entity’s economic performance and (2) has the obligation to absorb losses of the entity or the right to receive benefits from the entity that could potentially be significant to the VIE. Also, SFAS 167 requires an ongoing reconsideration of the primary beneficiary, and amends the events that trigger a reassessment of whether an entity is a VIE. Enhanced disclosures are also required to provide information about an enterprise’s involvement in a VIE. This statement shall be effective as of the beginning of each reporting entity’s first annual reporting period that begins after November 15, 2009, for interim periods within that first annual reporting period, and for interim and annual reporting periods thereafter. Earlier application is prohibited. We are currently evaluating this new statement. <BR> <BR>In June 2009, the FASB issued SFAS No. 168, “The FASB Accounting Standards CodificationTM and the Hierarchy of Generally Accepted Accounting Principles – a replacement of FASB Statement No. 162” (SFAS 168). SFAS 168 replaces SFAS No. 162, “The Hierarchy of Generally Accepted Accounting Principles” and establishes the “FASB Accounting Standards CodificationTM” (Codification) as the source of authoritative accounting principles recognized by the FASB to be applied by nongovernmental entities in the preparation of financial statements in conformity with generally accepted accounting principles in the United States. All guidance contained in the Codification carries an equal level of authority. On the effective date of SFAS 168, the Codification will supersede all then-existing non-SEC accounting and reporting standards. All other nongrandfathered non-SEC accounting literature not included in the Codification will become nonauthoritative. SFAS 168 is effective for financial statements issued for interim and annual periods ending after September 15, 2009. We have evaluated this new statement, and have determined that it will not have a significant impact on the determination or reporting of our financial results. <BR></FONT></DIV></body></html>