2012 ANNUAL REPORT 33 Management’s Discussion and Analysis continue to closely monitor the economic environment and may undertake further restructuring actions to keep our cost structure aligned with the demands of the prevailing market conditions. 2012 Actions. During 2012, we initiated restructuring actions relating to ongoing cost reduction efforts, including work- force reductions and consolidation of manufacturing operations. We recorded net pre-tax restructuring charges totaling $576 million as follows: The following table summarizes the charges associated with the 2012 restructuring actions: The following table summarizes the charges associated with the 2012 restructuring actions by cost type: We expect the actions initiated in 2012, once fully com- plete, to result in net workforce reductions of approximately 7,000 hourly and salaried employees, the exiting of approximately 2.6 million net square feet of facilities and the disposal of assets associated with the exited facilities. As of December 31, 2012, with respect to the actions initiated in 2012, we have completed net workforce reductions of approximately 4,000 employees, and 750,000 net square feet of facilities have been exited. We are targeting to complete in 2013 the majority of the remaining work- force and facility related cost reduction actions initiated in 2012. Approximately 80% of the total pre-tax charge will require cash payments, which we have and expect to continue to fund with cash generated from operations. During 2012, we had cash outflows of approximately $199 million related to the 2012 actions. We expect to incur additional restructuring and other charges of $105 million to complete these actions. We expect recurring pre-tax savings to increase over the two-year period subsequent to initiating the actions to approximately $560 million annually, of which, approx- imately $125 million was realized in 2012. 2011 Actions. During 2012 and 2011, we recorded net pre-tax restructuring charges of $53 million and $286 million, respectively, for actions initiated in 2011. The 2011 actions relate to ongoing cost reduction efforts, including workforce reductions and the consolidation of field operations. We recorded net pre-tax restructuring charges in 2012 and 2011 as follows: The following table summarizes the charges associated with the 2011 restructuring actions: The following table summarizes the 2012 and 2011 charges associated with the 2011 restructuring actions by cost type: We expect the actions initiated in 2011, once fully com- pleted, to result in net workforce reductions of approximately 4,900 (DOLLARS IN MILLIONS) 2012 Otis $ 146 UTC Climate, Controls & Security 123 Pratt & Whitney 94 UTC Aerospace Systems 121 Sikorsky 47 Eliminations and other 19 Restructuring costs recorded within continuing operations 550 Restructuring costs recorded within discontinued operations 26 Total $ 576 (DOLLARS IN MILLIONS) 2012 Cost of sales $ 313 Selling, general and administrative 236 Other income, net 1 Restructuring costs recorded within continuing operations 550 Restructuring costs recorded within discontinued operations 26 Total $ 576 (DOLLARS IN MILLIONS) 2012 Severance $ 426 Asset write-downs 14 Facility exit, lease termination and other costs 110 Restructuring costs recorded within continuing operations 550 Restructuring costs recorded within discontinued operations 26 Total $ 576 (DOLLARS IN MILLIONS) 2012 2011 Severance $30 $ 242 Asset write-downs 1 4 Facility exit, lease termination and other costs 21 19 Restructuring costs recorded within continuing operations 52 265 Restructuring costs recorded within discontinued operations 1 21 Total $53 $ 286 (DOLLARS IN MILLIONS) 2012 2011 Cost of sales $33 $ 120 Selling, general and administrative 19 142 Other income, net – 3 Restructuring costs recorded within continuing operations 52 265 Restructuring costs recorded within discontinued operations 1 21 Total $53 $ 286 (DOLLARS IN MILLIONS) 2012 2011 Otis $19 $ 76 UTC Climate, Controls & Security 25 93 Pratt & Whitney 3 37 UTC Aerospace Systems – 8 Sikorsky 5 51 Restructuring costs recorded within continuing operations 52 265 Restructuring costs recorded within discontinued operations 1 21 Total $53 $ 286