Note 2: Discontinued Operations

3 Months Ended

Mar. 31, 2012

Notes to Condensed Consolidated Financial Statements [Abstract]

Note 2: Discontinued Operations

Note 2: Discontinued Operations

On March 14, 2012, the Board of Directors of the Company approved a plan for the divestiture of a number of non-core businesses. Cash generated from these divestitures is intended to be used to repay a portion of the short-term debt we expect to incur as part of the financing for the proposed acquisition of Goodrich. The divestitures are expected to generate approximately $3 billion in cash, net of taxes. The results of operations including the net gain or loss and the related cash flows which result from these non-core businesses have been reclassified to Discontinued Operations on our Condensed Consolidated Statement of Comprehensive Income and Condensed Consolidated Statement of Cash Flows for all periods presented. The assets and liabilities of these non-core businesses have been reclassified to Discontinued Operations on our Condensed Consolidated Balance Sheet as ofMarch 31, 2012. Cash flows from the operation of these discontinued businesses will continue until their disposals,most of which are expected to occur in the second half of 2012.

The planned divestitures are Hamilton Sundstrand's Industrial businesses, Pratt & Whitney Rocketdyne (“Rocketdyne”), and Clipper Windpower (“Clipper”). The operating results of Clipper had previously been reported within “Eliminations & other” in our segment disclosure. As a result of the decision to dispose of these businesses, the Company has recorded pre-tax goodwill impairment charges of approximately $360 million and $590 million related to Rocketdyne and Clipper, respectively, in discontinued operations during the first quarter of 2012. The goodwill impairment charges result from thedecision to dispose of both Rocketdyne and Clipper within a relatively short period after acquiring the businesses. Consequently, there has not been sufficient opportunity for the long-term operations to recover the value implicit in goodwill at the initial date of acquisition. Fair value of these businesses has been estimated using information available in the marketplace as we market these businesses for sale.

The following summarized financial information related to these non-core businesseshas been segregated from continuing operations and will be reported as discontinued operations through the dates of disposition:

			Quarter Ended March 31,
(Dollars in millions)			2012		2011
Discontinued Operations:
	Net sales		$	516	$	664
	Income from operations		$	41	$	90
	Income tax expense			(15)		(43)
		Income from operations, net of income taxes		26		47
	Loss on disposal			(961)		-
	Income tax benefit			84		-
	Net (loss) income on discontinued operations		$	(851)	$	47

The income tax benefit for the first quarter of 2012 includes approximately $235 million of unfavorable income tax adjustments related to the recognition of a deferred tax liability on the existing difference between the accounting versus tax gain on the planned dispositions of Hamilton Sundstrand's Industrial Businesses.

The assets and liabilities of discontinued operations on the Condensed Consolidated Balance Sheet as of March 31, 2012are:

(Dollars in millions)
Assets
Cash and cash equivalents		$	77
Accounts receivable, net			319
Inventories and contracts in progress, net			159
Future income tax benefits, current			20
Other assets, current			20
Future income tax benefits			7
Fixed assets, net			302
Goodwill			909
Intangible assets, net			109
Other assets			19
	Assets of Discontinued Operations	$	1,941
Liabilities
Short-term borrowings		$	1
Accounts payable			145
Accrued liabilities			513
Future pension and postretirement benefit obligations			4
Other long-term liabilities			108
	Liabilities of Discontinued Operations	$	771