United Technologies Announces Resolution of Export Control Matters; Pay $55 Million In Total Penalties

United Technologies Corp.

today announced that it has resolved previously disclosed enforcement actions brought by the U.S. Department of Justice and the Department of State in connection with past violations of U.S. export control regulations. The resolution includes Pratt & Whitney Canada (P&WC), a United Technologies company, pleading guilty to violating the State Department's International Traffic in Arms Regulations (ITAR), as well as the False Statements Act. The plea arises out of the improper export to China of modifications to Hamilton Sundstrand engine control software incorporated into P&WC helicopter engines from 2002-2005. The Justice Department has agreed to defer any action against United Technologies and Hamilton Sundstrand arising out of these improper exports pending implementation of certain remedial obligations. Commenting on the resolution, United Technologies Chairman & Chief Executive Officer Louis Chenevert stated, "Export controls are an integral part of safeguarding U.S. national security and foreign policy interests. As a supplier of controlled products and technologies to the Department of Defense and other domestic and international customers, we are committed to conducting business in full compliance with all export laws and regulations. We accept responsibility for these past violations and we deeply regret they occurred." The agreement with the Department of State resolves self-disclosures made by the Company between 2006 and 2012, and includes $55 million in penalties, of which $35 million will be paid in cash over four years. The remaining $20 million will be suspended subject to certification and approval of qualifying compliance expenditures. Under the resolution with the Department of Justice, the UTC companies will collectively pay penalties totaling $20.7 million. The Company has fully reserved to account for all payments under the settlement agreements.