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United Technologies Management Discusses Q2 2012 Results - Earnings Call Transcript

Our large transactions, culture and people are key to success and I'm very happy with everything I see at this point. We have already identified all of the $400 million of run rate synergies that we expect to achieve by year 5, and leadership is looking up more. I am confident that Alain and the team will identify additional synergies as they work through the integration process.

We've completed the financing for Goodrich with a structure that was much better than originally expected. We issued the largest U.S. corporate bond offering since 2009, $9.8 billion at an average interest rate of less than 3%. We listen to our shareholders and we reduced our original need for equity issuance from $4 billion down to $1.1 billion of mandatory convertible units. We expect to pay down about 1/3 of the total [ph] purchase price by the end of 2012, using that proceeds from previously announced divestitures and cash from operations.

We have made great progress on the divestitures. We reached agreement to sell both Hamilton Sundstrand Industrial's business and Pratt & Whitney Rocketdyne this week. These are strong profitable businesses but we are streamlining the UTC portfolio to focus on our core commercial building systems and aerospace.

In the second quarter, we classified another non-core asset, our fuel cell business, as held up for sale. And we continue to expect to complete the divestiture of Clipper eminently. As expected, during the regulatory process for Goodrich, we agreed to divest businesses totaling about $250 million of annual sales, including Goodrich's electric power systems business, pumps and engine control business. These are attractive businesses with great employees so we expect a robust auction process. We also agreed to sell Goodrich interest into the air engine control original equipment joint venture for Rolls Royce.

Let me sum up by saying great progress on transformational changes that will generate real long term value for our shareholders. This team is executing in a superb way.

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