ACE GOLD RECERTIFICATION PRE-ASSESSMENT DOMESTIC CASH MANAGEMENT

1. ACE GOLD RECERTIFICATION • PRE-ASSESSMENT • DOMESTIC CASH MANAGEMENT

2. OVERVIEW Description: Provide daily liquidity to all participating UTC entities Customers: Legal Entity Users Business Unit Finance Council UTC Treasury Performance Measurements: Net cashpool position is within head account external borrowing limit (Quality Metric) Participants accounts are funded: 100% correct in terms of specified target balance (Quality Metric) Daily (Delivery Metric) Internal controls are SOX and internal audit compliant (Quality Metric)

3. ACE JOURNEY Value Stream (Process) Management ACE TOOLS UTILIZED I dentify EFA, Benchmarking, Process Map P Process Mandate rioritize M SIPOC, VSM, Kaizen Identification ap I Project Management, Kaizen Event, MP Solution mplement S tandardize Standard Work

4. OVERVIEW Daily Pull / Push System Flow System (Avg daily flow $1.06B, zero cash balance) Periodic Pull / Push System (Avg quarter-end cash $60M)

5. Identify PROBLEM DEFINITION • Technology change in the last few years eliminated SMARTPOLL which utilized an automated routine to dialup banks, download bank files, and upload files into Quantum • No comparable internet-based substitute for SMARTPOLL • Current Process – Manage multiple internet bank connections, each different • Increased manual processes to manage different bank files Problem: UTC Cash Concentration System Too much manual transaction processing relating to data handoffs, creating opportunities for mistakes and turnbacks – Employee Feedback

6. Identify BENCHMARKING Benchmarking November 6 - 7, 2007: Engagement of Sungard Consulting Review of Best Practices related to Quantum Treasury Workstation usage by other corporates Preliminary Findings: Automate data retrieval and import Eliminate holidays and float due to improper system settings Eliminate manual transaction entries – Use COM based uploads Automate transaction identification and Matching using system transaction rules Eliminate Manual intercompany entries through automated intercompany process or COM based uploads Automate bank to bank wire entries ……..

7. Prioritize PROCESS MANDATE

8. SIPOC Map

9. CURRENT STATE -VSM Map

10. NEAR FUTURE STATE -VSM Map

11. Kaizen Project List US Domestic Cash Management KAIZEN ACTION PLAN Implement Projected flows – actual flows are now auto-matched

12. KAIZEN IMPLEMENTATION Implement Waste Elimination, Mistake Proof Solutions, Revised Standard Work BEFORE AFTER

13. KAIZEN EVENT Implement Settlement Communication - Cause & Effect

14. KAIZEN EVENT Implement Settlement Communication - 5 Whys

15. KAIZEN EVENT Implement Corrective Action / Mistake Proofing

16. REVISED STANDARD WORK Standardize • Standard Work has been agreed and updated by the Domestic Cash Management and Foreign Exchange Groups: • Standard documents • Standard delivery location • Standard mutually agreed timing • Standard process across treasury operations and cash management

17. RESULTS E I A H • MP= Level 3 • Improved standard work • Automation • Improved efficiency of reporting • Improved standard work B D1 D2 • MP= Level 1 • COM sheet • Reduce handoffs • MP= Level 1 • Automation • MP= Level 1 • Reduce handoffs MP= Level 1 Takt: 480

18. NEXT STEPS

19. FUTURE STATE VALUE STREAM MAP

20. BENCHMARKING • Backups

21. BENCHMARKING • Continuous Initiatives • Sungard (Quantum Treasury System Provider) • DuPont (Quantum, SWIFTNet) • Microsoft (SWIFTnet) • GE (SWIFTnet) • Banks – JPMC, BOA, Mellon, Citibank Root Cause: Multiple banking connectivity, each different, posing costs, compliance and risk issues

22. BACKUP

23. RESULTS

24. RESULTS (CONTINUED) More Robust Standard Work, Waste Elimination, Mistake Proof Solutions

25. INTERNAL BENCHMARKING Leverage the Automated “COM” processes of Intercompany Lending Program

26. PROCESS MAPS – NEAR FUTURE STATE

27. EXTERNAL BENCHMARKING Best Practices

28. DESK PROCEDURES Ensure – Implement Revised Standard Work Standard Work has been updated by the Domestic Cash Management and Foreign Exchange Groups to reflect the following standard work items. Loans (between UTILI and UTPV) For all future transactions, the Senior Manager, Foreign Exchange will deliver a copy of the Settlement Report containing the appropriate approvals (as defined by the standard work of the Foreign Exchange and Funding Group), to the Domestic Cash Management Physical Inbox. This inbox will initially be located in John Conte’s office on the corner of his credenza. Revisions will be communicated as soon as possible and in person to the Domestic Cash Management Group, but no later than by noon of the day prior to Value Date. This verbal communication should be followed or accompanied by a revised Settlement Report. The timing of the delivery of report copies and revisions to Domestic Cash Management should be consistent with delivery of these items to Treasury Operations. The Domestic Cash Management group will eliminate the cover sheet form (signed by Ed Widness and others) currently in use, and instead make a copy of the approved Settlement Report to deliver to Ed Widness. FX on behalf of domestic BU’s For all future transactions, the Senior Manager, Foreign Exchange will deliver a copy of the Settlement Report containing the appropriate approvals (as defined by the standard work of the Foreign Exchange and Funding Group), to the Domestic Cash Management Physical Inbox. This inbox will initially be located in John Conte’s office on the corner of his credenza. Revisions will be communicated as soon as possible and in person to the Domestic Cash Management Group, but no later than by noon of the day prior to Value Date, if at all possible. This verbal communication should be followed or accompanied by a revised Settlement Report The timing of the delivery of report copies and revisions to Domestic Cash Management should be consistent with delivery of these items to Treasury Operations. Non-cash settlements between UTTC and UTC or UTPV These transactions are included in the Excel netting worksheet emailed by the FX Group. Actions by designated individual are identified therein. Actual Cash deals within the Netting system schedule should be posted by “L” Day, otherwise, not later than Settlement Date. The Domestic Cash Management Group will update their standard work documents to reflect this workflow. FWG Transactions Detailed paperwork for FWG transactions not included in the reports identified above should be delivered to the Domestic Cash Management Physical Inbox as soon as possible, but no later than by noon of the day prior to the required disbursement of funds.

29. NEXT STEPS

30. SWIFTNet Corporates wish to access their banks over a highly secure and standardised channel Customer Accounts payable Accounts receivable Treasury Single gateway Other Standard platform Standard communication Standard security Standard messaging Lower costs Higher STP Improved control /compliance Reduced risk

31. VAN Internet Streamlining with heterogeneous systems is a challenge Corporate client Accounts payable host to host X Leased line Accounts receivable e-banking Y Treasury Other e-banking Z PSTN “fax-banking”

32. ACE JOURNEY ACE TOOLS UTILIZED D efine EFA, Benchmarking, Process Mandate, SIPOC, VSM, Process Map I Benchmarking, VSM, RRCA nvestigate V MP Solution erify E Standard Work nsure Continuous Improvement: Benchmarking, EFA, MFA