Restructuring Costs

During the nine months ended September 30, 2013, we recorded net pre-tax restructuring costs totaling $343 million for new and ongoing restructuring actions as follows:



(Dollars in millions)
Otis	$	68
UTC Climate, Controls & Security	66
Pratt & Whitney	122
UTC Aerospace Systems	65
Sikorsky	25
Eliminations and other	(1		)
Restructuring costs recorded within continuing operations	345
Restructuring costs recorded within discontinued operations	(2		)
Total	$	343

The net costs included $145 million recorded in cost of sales, $199 million in selling, general and administrative expenses, $1 million in other income, net, and ($2) million in discontinued operations. As described below, these costs primarily relate to actions initiated during 2013 and 2012.

2013 Actions. During the nine months ended September 30, 2013, we initiated restructuring actions relating to ongoing cost reduction efforts, including workforce reductions and the consolidation of field operations. We recorded net pre-tax restructuring costs totaling $298 million, including $100 million in cost of sales and $198 million in selling, general and administrative expenses.

We expect the actions initiated in the nine months ended September 30, 2013 to result in net workforce reductions of approximately 3,600 hourly and salaried employees, the exiting of approximately 600 thousand net square feet of facilities and the disposal of assets associated with exited facilities. As of September 30, 2013, we have completed net workforce reductions of approximately 2,400 employees and have exited approximately 5,000 net square feet. We are targeting the majority of the remaining workforce and all facility related cost reduction actions for completion during 2013 and 2014. No specific plans for significant other actions have been finalized at this time.

The following table summarizes the accrual balances and utilization by cost type for the 2013 restructuring actions:



(Dollars in millions)	Severance			Asset Write-Downs			Facility Exit, Lease Termination and Other Costs			Total
Restructuring accruals at July 1, 2013	$	153		$	—		$	7		$	160
Net pre-tax restructuring costs	89			1			6			96
Utilization and foreign exchange	(108		)	(1		)	(2		)	(111		)
Balance at September 30, 2013	$	134		$	—		$	11		$	145

The following table summarizes expected, incurred and remaining costs for the 2013 restructuring actions by type:



(Dollars in millions)	Severance			Asset Write-Downs			Facility Exit, Lease Termination and Other Costs			Total
Expected costs	$	287		$	13		$	41		$	341
Costs incurred - quarter ended March 31, 2013	(19		)	—			(1		)	(20		)
Costs incurred - quarter ended June 30, 2013	(163		)	(12		)	(7		)	(182		)
Costs incurred - quarter ended September 30, 2013	(89		)	(1		)	(6		)	(96		)
Balance at September 30, 2013	$	16		$	—		$	27		$	43

The following table summarizes expected, incurred and remaining costs for the 2013 restructuring actions by segment:



(Dollars in millions)	Expected Costs			Costs incurred Quarter ended March 31, 2013			Costs incurred Quarter ended June 30, 2013			Costs incurred Quarter ended September 30, 2013			Remaining Costs at September 30, 2013
Otis	$	61		$	(6	)	$	(35	)	$	(12	)	$	8
UTC Climate, Controls & Security	81			(8		)	(18		)	(34		)	21
Pratt & Whitney	127			(6		)	(93		)	(22		)	6
UTC Aerospace Systems	55			—			(28		)	(19		)	8
Sikorsky	18			—			(8		)	(10		)	—
Eliminations and other	(1		)	—			—			1			—
Total	$	341		$	(20	)	$	(182	)	$	(96	)	$	43

2012 Actions. During the nine months ended September 30, 2013, we recorded net pre-tax restructuring costs totaling $44 million for restructuring actions initiated in 2012, including $40 million in cost of sales, $3 million in selling, general and administrative expenses, and $1 million in other income, net. The 2012 actions relate to ongoing cost reduction efforts, including workforce reductions and the consolidation of field operations.

As of September 30, 2013, we have completed net workforce reductions of approximately 6,100 employees of an expected 7,300 employees, and have exited approximately 1.6 million net square feet of facilities of an expected 3.6 million net square feet. We are targeting the majority of the remaining workforce and facility related cost reduction actions for completion during 2013 and 2014.

The following table summarizes the accrual balances and utilization by cost type for the 2012 restructuring actions:



(Dollars in millions)	Severance			Asset Write-Downs		Facility Exit, Lease Termination and Other Costs			Total
Restructuring accruals at July 1, 2013	$	142		$	—	$	47		$	189
Net pre-tax restructuring costs	(3		)	—		9			6
Utilization and foreign exchange	(32		)	—		(13		)	(45		)
Balance at September 30, 2013	$	107		$	—	$	43		$	150

The following table summarizes expected, incurred and remaining costs for the 2012 restructuring actions by type:



(Dollars in millions)	Severance			Asset Write-Downs			Facility Exit, Lease Termination and Other Costs			Total
Expected costs	$	477		$	15		$	168		$	660
Costs incurred through December 31, 2012	(452		)	(14		)	(110		)	(576		)
Costs incurred - quarter ended March 31, 2013	(18		)	(1		)	(10		)	(29		)
Costs incurred - quarter ended June 30, 2013	1			—			(10		)	(9		)
Costs incurred - quarter ended September 30, 2013	3			—			(9		)	(6		)
Balance at September 30, 2013	$	11		$	—		$	29		$	40

The following table summarizes expected, incurred and remaining costs for the 2012 restructuring actions by segment:



(Dollars in millions)	Expected Costs		Costs incurred through December 31, 2012			Costs incurred Quarter ended March 31, 2013			Costs incurred Quarter ended June 30, 2013			Costs incurred Quarter ended September 30, 2013			Remaining Costs at September 30, 2013
Otis	$	157	$	(146	)	$	(1	)	$	(2	)	$	(1	)	$	7
UTC Climate, Controls & Security	149		(123		)	(14		)	(1		)	1			12
Pratt & Whitney	98		(94		)	(1		)	—			—			3
UTC Aerospace Systems	154		(121		)	(8		)	(5		)	(5		)	15
Sikorsky	57		(47		)	(5		)	(1		)	(1		)	3
Eliminations and other	19		(19		)	—			—			—			—
Discontinued operations	26		(26		)	—			—			—			—
Total	$	660	$	(576	)	$	(29	)	$	(9	)	$	(6	)	$	40

2011 Actions. As of September 30, 2013, we have approximately $5 million of accrual balances remaining related to 2011 actions.