32 UNITED TECHNOLOGIES CORPORATION RESTRUCTURING COSTS Net Income Attributable to Common Shareowners from Continuing Operations Net Income Attributable to Common Shareowners from Discontinued Operations Restructuring actions are an essential component of our operating margin improvement efforts and relate to both existing operations and those recently acquired. We expect to incur addi- tional restructuring costs in 2013 of approximately $300 million, including trailing costs related to prior actions, associated with our continuing cost reduction efforts and to the integration of acquis- itions. The expected adverse impact on earnings in 2013 from anticipated additional restructuring costs is expected to be offset by the beneficial impact from non-recurring items. Although no specific plans for significant actions have been finalized at this time, we As described below, the 2012 charges relate primarily to actions initiated during 2012 and 2011, while the 2011 charges relate primarily to actions initiated during 2011 and 2010. The 2012 restructuring costs reflected in Eliminations and other largely reflect curtailment charges required under our domestic pension plans due to the headcount reductions associated with the various restructur- ing actions. Diluted earnings per share from discontinued operations for 2012 includes $0.82 per share of goodwill and net asset impair- ment charges related to Rocketdyne, Clipper and UTC Power, and $1.01 per share gain on the disposition of the legacy Hamilton Diluted earnings per share from continuing operations for 2012 include a net charge of $0.01 per share from net restructuring and non-recurring items. Besides the restructuring charges of $590 million, non-recurring items included approximately $218 million of favorable pre-tax interest and income tax adjustments related to the conclusion of the IRS examination of the 2006 – 2008 tax years, approximately $59 million of favorable pre-tax interest and income tax adjustments related to the resolution of disputes with the Appeals division of the IRS for the 2004 – 2005 tax years, approx- imately $157 million of net gains resulting from UTC Climate, Con- trols & Security’s ongoing portfolio transformation, and an approximately $34 million non-cash gain recognized on the re- measurement to fair value of our previously held shares of Goodrich stock resulting from our acquisition of the company. Foreign currency translation, including hedging at Pratt & Whitney Canada (P&WC) generated a net adverse impact of $0.17 per diluted share on our operational performance in 2012. To help mitigate the volatility of foreign currency exchange rates on our operating results, we maintain foreign currency hedging programs, the majority of which are entered into by P&WC. In 2011, foreign currency generated a net positive impact on our operational results of $0.11 per diluted share, while in 2010 foreign currency had a favorable impact of $0.12 per diluted share. For additional dis- cussion of foreign currency exposure, see “Market Risk and Risk Management—Foreign Currency Exposures.” the legislative corporate tax extenders enacted in January 2013, as part of the American Taxpayer Relief Act of 2012. This adjustment relates to the 2012 retroactive impact of the new law. For additional discussion of income taxes, see “Critical Accounting Estimates—Income Taxes” and Note 11 to the Con- solidated Financial Statements. We recorded net pre-tax restructuring costs totaling $614 million in 2012 and $336 million in 2011 for new and ongoing restructuring actions. We recorded these charges in the segments as follows: Sundstrand Industrial businesses. A $0.16 per share benefit from the results of operations of discontinued entities was partially offset by the $0.07 per share Clipper warranty charge. Restructuring charges incurred in 2012 and 2011 were recorded as follows: (DOLLARS IN MILLIONS, EXCEPT PER SHARE AMOUNTS) 2012 2011 2010 Net income attributable to common shareowners from discontinued operations $ 283 $ 148 $ 178 Diluted earnings per share from discontinued operations $ 0.31 $ 0.16 $ 0.19 (DOLLARS IN MILLIONS) 2012 2011 Cost of sales $ 340 $ 164 Selling, general and administrative 249 149 Other income, net 1 2 Restructuring costs recorded within continuing operations 590 315 Restructuring costs recorded within discontinued operations 24 21 Total $ 614 $ 336 (DOLLARS IN MILLIONS) 2012 2011 Otis $ 164 $ 73 UTC Climate, Controls & Security 143 126 Pratt & Whitney 96 52 UTC Aerospace Systems 115 11 Sikorsky 53 53 Eliminations and other 19 – Restructuring costs recorded within continuing operations 590 315 Restructuring costs recorded within discontinued operations 24 21 Total $ 614 $ 336 (DOLLARS IN MILLIONS, EXCEPT PER SHARE AMOUNTS) 2012 2011 2010 Net income attributable to common shareowners from continuing operations $ 4,847 $ 4,831 $ 4,195 Diluted earnings per share from continuing operations $ 5.35 $ 5.33 $ 4.55