NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 6: FIXED ASSETS NOTE 7: ACCRUED LIABILITIES NOTE 8: BORROWINGS AND LINES OF CREDIT Our sales contracts in many cases are long-term contracts expected to be performed over periods exceeding twelve months. At both December 31, 2011 and 2010, approximately 75% of total inventories and contracts in progress have been acquired or manufactured under such long-term contracts, a portion of which is not scheduled for delivery within the next twelve months. Depreciation expense was $890 million in 2011, $900 million in 2010 and $852 million in 2009. The weighted-average interest rates applicable to short-term borrowings outstanding at December 31, 2011 and 2010 were 1.5% and 6.3%, respectively. The decline in the weighted- average interest rates for short-term borrowings was due to the commercial paper borrowings outstanding at December 31, 2011, which carry favorable interest rates. At December 31, 2011, approximately $1.3 billion was available under short-term lines of credit with local banks at our various domestic and international subsidiaries. In November 2011, our maximum commercial paper borrowing authority was increased from $3 billion to $4 billion. We generally use our commercial paper borrowings for general corporate purposes, including the funding of potential acquisitions and repurchases of our common stock. At December 31, 2011, we had revolving credit agreements with various banks permitting aggregate borrowings of up to $4.0 billion pursuant to a $2.0 billion revolving credit agreement and a $2.0 billion multicurrency revolving credit agreement, both of which expire in November 2016. These revolving credit agreements were signed on November 4, 2011 and replaced our previous revolving credit agreements executed in 2010 which had permitted aggregate borrowings of up to $3.0 billion. As of December 31, 2011, there were no borrowings under either of these revolving credit agreements. The undrawn portions of our revolving credit agreements are also available to serve as backup facilities for the issuance of commercial paper. On November 8, 2011, we entered into a bridge credit agreement with various financial institutions that provides for a $15 billion unsecured bridge loan facility, available to pay a portion of the cash consideration for the Goodrich acquisition, and to finance certain related transactions and pay related fees and expenses. Any funding under the bridge credit agreement would occur substantially concurrently with the consummation of the Goodrich acquisition, subject to customary conditions for acquisition financings of this type. Any loans made pursuant to the bridge credit agreement would mature on the date that is 364 days after the funding date. Our long-term debt consists of the following: (Dollars in millions) Estimated Useful Lives 2011 2010 Land $ 335 $ 342 Buildings and improvements 12-40 years 4,885 4,908 Machinery, tools and equipment 3-20 years 9,994 10,010 Other, including under construction 766 654 15,980 15,914 Accumulated depreciation (9,779) (9,634) $6 , 2 0 1 $6,280 (Dollars in millions) 2011 2010 Advances on sales contracts and service billings $ 5,028 $ 5,203 Accrued salaries, wages and employee benefits 1,910 1,918 Service and warranty accruals 702 449 Income taxes payable 547 504 Litigation and contract matters 535 577 Interest payable 325 294 Accrued restructuring costs 248 358 Accrued workers compensation 215 210 Accrued property, sales and use taxes 197 209 Other 2,580 2,525 $12,287 $12,247 (Dollars in millions) 2011 2010 Short-term borrowings: Commercial paper $455 $— Other borrowings 175 116 Total short-term borrowings $630 $116 (Dollars in millions) 2011 2010 6.100% notes due 2012* $ — $ 500 4.875% notes due 2015* 1,200 1,200 5.375% notes due 2017* 1,000 1,000 6.125% notes due 2019* 1,250 1,250 8.875% notes due 2019 272 272 4.500% notes due 2020* 1,250 1,250 8.750% notes due 2021 250 250 6.700% notes due 2028 400 400 7.500% notes due 2029* 550 550 5.400% notes due 2035* 600 600 6.050% notes due 2036* 600 600 6.125% notes due 2038* 1,000 1,000 5.700% notes due 2040* 1,000 1,000 Project financing obligations 127 141 Other (including capitalized leases) 131 160 Total long-term debt 9,630 10,173 Less current portion (129) (163) Long-term portion $9,501 $10,010 * We may redeem the above notes, in whole or in part, at our option at any time at a redemption price in U.S. Dollars equal to the greater of 100% of the principal amount of the notes to be redeemed or the sum of the present values of the remaining scheduled payments of principal and interest on the notes to be redeemed, discounted to the redemption date on a semiannual basis at the adjusted treasury rate plus 10-50 basis points. The redemption price will also include interest accrued to the date of redemption on the principal balance of the notes being redeemed. 68 UNITED TECHNOLOGIES CORPORATION