United Technologies spends substantial amounts of its own funds on research and development.
These expenditures, which are charged to expense as incurred, were $2.4 billion or 4.1% of total sales in 2012, $2.1 billion (3.5%) in 2011,
$1.7 billion (3.2%) in 2010, and $1.6 billion (3.0%) in 2009.
United Technologies also performs research and development work under contracts funded by the U.S. government and other customers. This contract research and development, which is performed in the company's aerospace businesses, amounted to $1.7 billion in 2012, $1.9 billion in 2011, as compared to $2.0 billion in 2010 and $2.1 billion in 2009. These contract research and development costs include amounts that are expensed as incurred, through cost of products sold, and amounts that are capitalized into inventory to be subsequently recovered through production shipments. Of the total contract research and development costs, $1.7 billion, $1.8 billion, $1.9 billion and $2.1 billion were expensed in 2012, 2011, 2010 and 2009, respectively. The remaining costs have been capitalized.
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