HARTFORD, Conn., Jan. 23 /PRNewswire-FirstCall/ -- United Technologies
Corp. (NYSE: UTX) today reported fourth quarter 2007 earnings per share of
$1.08 and net income of $1.1 billion, up 24 percent and 23 percent,
respectively. Consolidated revenues for the quarter increased 15 percent to
$14.7 billion, including organic growth of 8 percent. Cash flow from
operations was $2.0 billion and, after capital expenditures of $456
million, substantially exceeded fourth quarter net income.
Full year earnings per share of $4.27 and net income of $4.2 billion
increased 15 and 13 percent, respectively, from 2006 results. Revenues
increased 14 percent to $54.8 billion, including 9 points of organic
growth, 3 points from foreign exchange, and 2 points from acquisitions.
Full year cash flow from operations was $5.3 billion and capital
expenditures were $1.2 billion.
"UTC had a powerful close to 2007 and expects continuing good
performance in 2008. Although the U.S. economic outlook is mixed, UTC's
balance across geographic and product markets should sustain yet another
year of double digit earnings per share growth," said UTC Chairman and
Chief Executive Officer George David.
"Organic growth was 9 percent for 2007, a fourth year in a row at
comparable levels. Markets across the board were good for us with the
single exception of North American Residential for Carrier. Commercial
aerospace volumes for UTC in total grew organically at 11 percent, as did
our commercial construction businesses combined in Otis and Carrier at 10
percent.
"In 2007, all six UTC businesses grew operating profits at double digit
rates, and we expect the same in 2008. Even with the significant
deterioration in its North American Residential market, Carrier grew its
operating profit overall at 12 percent on strong performances in its three
other global businesses. Accordingly, UTC confirms its prior guidance range
for 2008 earnings per share of $4.65 to $4.85, up 9 percent to 14 percent,
respectively.
"Cash flow from operations less capital expenditures reached 99 percent
of net income in 2007 in spite of two large non recurring outflows in the
first quarter totaling $500 million. Very strong fourth quarter performance
made this a good cash flow year for UTC in spite of these one time items,
and we anticipate being at our usual standard of cash flow exceeding net
income again in 2008," David added.
Share repurchase in the quarter was $501 million and totaled $2.0
billion for the year. Acquisition spending, including debt assumed, was
$2.3 billion for the year with $403 million in the fourth quarter. Debt to
capital ended the year at 30 percent, lower than 2006.
Foreign currency translation increased fourth quarter revenues by 5
percent and earnings by $0.02 per share. Restructuring, tax related items,
and other non recurring charges were $0.04 in excess of one time favorable
items in the quarter. As previously disclosed, the year ago period included
a $0.05 per share impact for restructuring charges in excess of one time
favorable items.
Restructuring costs in the fourth quarter were $63 million, and in the
year $166 million. Additional favorable items are anticipated in 2008 to
offset trailing costs from previous restructuring actions and to fund new
actions potentially initiated throughout the year.
The accompanying tables include information integral to assessing the
company's financial position, operating performance, and cash flow.
United Technologies Corp., based in Hartford, Connecticut, is a
diversified company that provides a broad range of high technology products
and support services to the building systems and aerospace industries.
This release is supplemented by presentation materials that are
available on UTC's website at http://www.utc.com, and includes "forward looking
statements" concerning expected revenue, earnings, cash flow, share
repurchases, restructuring and other matters that are subject to risks and
uncertainties. These statements often contain words such as "expect",
"anticipate", "plan", "estimate", "believe", "will", "see", "guidance" and
similar terms. Important factors that could cause actual results to differ
materially from those anticipated or implied in forward looking statements
include changes in the health of the global economy; strength of end market
demand in construction and in both the commercial and defense segments of
the aerospace industry; fluctuation in commodity prices, interest rates,
foreign currency exchange rates, and the impact of weather conditions; as
well as company specific items including the availability and impact of
acquisitions; the rate and ability to effectively integrate these acquired
businesses; the ability to achieve cost reductions at planned levels;
challenges in the design, development, production and support of advanced
technologies and new products and services; delays and disruption in
delivery of materials and services from suppliers; labor disputes; and the
outcome of legal proceedings. The level of share repurchases may vary
depending on the level of other investing activities. For information
identifying other important economic, political, regulatory, legal,
technological, competitive and other uncertainties, see UTC's SEC filings
as submitted from time to time, including but not limited to, the
information included in UTC's 10-K and 10-Q Reports under the headings
"Business", "Risk Factors", "Management's Discussion and Analysis of
Financial Condition and Results of Operations" and "Cautionary Note
Concerning Factors that May Affect Future Results", as well as the
information included in UTC's Current Reports on Form 8-K.
United Technologies Corporation
Condensed Consolidated Statement of Operations
Quarter Ended Year Ended
December 31, December 31,
(Unaudited) (Unaudited)
(Millions, except
per share amounts) 2007 2006 2007 2006
Revenues $14,714 $12,787 $54,759 $47,829
Cost and Expenses
Cost of goods and
services sold 10,729 9,521 39,922 34,740
Research and
development 481 406 1,678 1,529
Selling, general
and administrative 1,711 1,432 6,109 5,462
Operating Profit 1,793 1,428 7,050 6,098
Interest expense 174 153 666 606
Income before
income taxes
and minority
interests 1,619 1,275 6,384 5,492
Income taxes 481 337 1,836 1,494
Minority interests 78 73 324 266
Net Income $1,060 $865 $4,224 $3,732
Net Earnings Per Share
of Common Stock
Basic $1.11 $0.89 $4.38 $3.81
Diluted $1.08 $0.87 $4.27 $3.71
Average Shares
Basic 959 972 964 980
Diluted 984 998 989 1,006
As described on the following pages, consolidated results for the years
and quarters ended December 31, 2007 and 2006 include non-recurring items,
restructuring and related charges.
See accompanying Notes to Condensed Consolidated Financial Statements.
United Technologies Corporation
Segment Revenues and Operating Profit
Quarter Ended Year Ended
December 31, December 31,
(Millions) (Unaudited) (Unaudited)
2007 2006 2007 2006
Revenues
Otis $3,363 $2,848 $11,885 $10,290
Carrier 3,721 3,219 14,644 13,481
UTC Fire & Security 1,688 1,326 5,754 4,747
Pratt & Whitney 3,218 3,046 12,129 11,112
Hamilton Sundstrand 1,492 1,297 5,636 4,995
Sikorsky 1,278 1,084 4,789 3,230
Segment Revenues 14,760 12,820 54,837 47,855
Eliminations and other (46) (33) (78) (26)
Consolidated Revenues $14,714 $12,787 $54,759 $47,829
Operating Profit
Otis $648 $514 $2,321 $1,888
Carrier 259 193 1,381 1,237
UTC Fire & Security 137 101 443 301
Pratt & Whitney 496 409 2,011 1,817
Hamilton Sundstrand 254 219 967 832
Sikorsky 110 58 373 173
Segment Operating
Profit 1,904 1,494 7,496 6,248
Eliminations and other 12 27 (60) 187
General corporate
expenses (123) (93) (386) (337)
Consolidated Operating
Profit $1,793 $1,428 $7,050 $6,098
As described on the following pages, consolidated results for the years
and quarters ended December 31, 2007 and 2006 include non-recurring items,
restructuring and related charges.
United Technologies Corporation
Consolidated Operating Profit
Consolidated operating profit for the years and quarters ended December
31, 2007 and 2006 includes restructuring and related charges as follows:
Quarter Ended Year Ended
December 31, December 31,
(Unaudited) (Unaudited)
2007 2006 2007 2006
Otis $10 $6 $21 $46
Carrier 5 10 33 69
UTC Fire & Security 31 21 39 44
Pratt & Whitney 14 32 53 68
Hamilton Sundstrand 3 11 23 40
Sikorsky - 2 (3) 21
Total Restructuring
and Related Charges $63 $82 $166 $288
Consolidated results for the years and quarters ended December 31, 2007
and 2006 include the following non-recurring items.
Q4 - 2007
-- Carrier: Segment results include a $57 million gain from the sale of
Fincoil, an industrial cooling manufacturing business, and a $36
million charge on the settlement of litigation related to a furnace
warranty matter.
-- Otis: Segment results include a $26 million gain from the sale of a
non-core business.
-- Income Taxes: Charges for income tax adjustments of $49 million
associated with, amongst other items, foreign tax matters including a
change in non-U.S. tax laws.
Q3 - 2007
-- Eliminations and Other: Approximately $28 million pretax interest
adjustments related to the completion of the Internal Revenue Service
(IRS) examination of tax years 2000 through 2003.
-- Income Taxes: Favorable income tax adjustment of approximately $50
million, related primarily to the completion of the IRS examination of
tax years 2000 through 2003.
Q1 - 2007
-- Otis: Segment results include an $84 million gain from the sale of
land. The consolidated operating results include taxes related to the
gain of approximately $29 million in addition to an approximately $27
million charge for the minority partner's interest in the gain. The
resulting impact to consolidated net income is approximately $28
million.
-- Pratt & Whitney: Approximately $40 million gain at Pratt & Whitney
from a contract termination.
-- Eliminations and Other: A $216 million loss recorded in connection
with the European Union commission fine.
-- Eliminations and Other: A $151 million gain from the sale of
marketable securities.
In the first quarter, the net impact of the above items ($0.05 per
share), together with $35 million of pre-tax restructuring and related
charges ($0.02 per share), had a $0.07 adverse impact to earnings per
share.
Q3 - 2006
-- Carrier: Approximately $60 million pretax gain realized on the sale of
a partnership interest in Scroll Technologies, a North American
manufacturer of compressors used primarily for heating, ventilating,
and air-conditioning equipment.
Q2 - 2006
-- Pratt & Whitney: Approximately $80 million pretax gain related to the
settlement of a claim by the Department of Defense regarding Pratt &
Whitney's cost accounting practices for engine parts on commercial
engine collaboration programs.
-- Eliminations and Other: Approximately $60 million pretax interest
income related to the final determination by the U.S. Congress Joint
Committee on Taxation on a disputed issue in the IRS examination of tax
years 1994 through 1999.
-- Income Taxes: Favorable income tax adjustment of approximately $35
million, related to a determination by the U.S. Congress Joint
Committee on Taxation on a disputed issue in the IRS examination of tax
years 1994 through 1999.
In the second quarter, the net impact of the above favorable items
($0.13 per share), together with approximately $80 million of pre-tax
restructuring and related charges ($0.06 per share), contributed $0.07 to
earnings per share.
Q1 - 2006
-- Pratt & Whitney: Approximately $25 million gain realized on the sale of
a partnership interest in an engine program at Pratt Canada.
-- Eliminations and Other: Approximately $25 million gain from the sale of
marketable securities.
United Technologies Corporation
Condensed Consolidated Balance Sheet
December 31, December 31,
2007 2006
(Millions) (Unaudited) (Unaudited)
Assets
Cash and cash
equivalents $2,904 $2,546
Accounts receivable,
net 8,844 7,679
Inventories and contracts
in progress, net 8,101 6,657
Other current assets 2,222 1,962
Total Current Assets 22,071 18,844
Fixed assets, net 6,296 5,725
Goodwill, net 16,120 14,146
Intangible assets, net 3,757 3,216
Other assets 6,331 5,210
Total Assets $54,575 $47,141
Liabilities and Shareowners' Equity
Short-term debt $1,133 $894
Accounts payable 5,059 4,263
Accrued liabilities 11,277 10,051
Total Current Liabilities 17,469 15,208
Long-term debt 8,015 7,037
Other liabilities 6,824 6,763
Total Liabilities 32,308 29,008
Minority interest in
subsidiary companies 912 836
Shareowners' Equity:
Common Stock 10,358 9,395
Treasury Stock (11,338) (9,413)
Retained Earnings 21,751 18,754
Accumulated other
non-shareowners'
changes in equity 584 (1,439)
21,355 17,297
Total Liabilities and
Shareowners' Equity $54,575 $47,141
Debt Ratios:
Debt to total capitalization 30% 31%
Net debt to net capitalization 23% 24%
United Technologies Corporation
Condensed Consolidated Statement of Cash Flows
Quarter Ended Year Ended
December 31, December 31,
(Millions) (Unaudited) (Unaudited)
2007 2006 2007 2006
Operating Activities
Net Income $1,060 $865 $4,224 $3,732
Adjustments to reconcile
net income to net
cash flows provided
by operating activities:
Depreciation and
amortization 310 261 1,173 1,033
Deferred income
taxes and minority
interest 284 (157) 382 52
Stock compensation
cost 57 44 198 180
Changes in working
capital 605 872 32 191
Other, net (271) (230) (679) (385)
Net Cash Provided
by Operating
Activities 2,045 1,655 5,330 4,803
Investing Activities
Capital expenditures (456) (351) (1,153) (954)
Acquisitions and disposal
of businesses, net (295) (287) (1,739) (460)
Other, net (275) 44 (290) 153
Net Cash Used in
Investing Activities (1,026) (594) (3,182) (1,261)
Financing Activities
Increase in borrowings,
net (172) (497) 893 (533)
Dividends paid on Common
Stock (294) (246) (1,080) (951)
Repurchase of Common
Stock (501) (738) (2,001) (2,068)
Other, net 14 15 233 210
Net Cash Used in
Financing Activities (953) (1,466) (1,955) (3,342)
Effect of foreign
exchange rates 28 37 165 99
Net increase (decrease)
in cash and cash
equivalents 94 (368) 358 299
Cash and cash
equivalents - beginning
of period 2,810 2,914 2,546 2,247
Cash and cash
equivalents - end
of period $2,904 $2,546 $2,904 $2,546
United Technologies Corporation
Free Cash Flow Reconciliation
Quarter Ended
(Millions) December 31, 2007 December 31, 2006
(unaudited) (unaudited)
Net income $1,060 $865
Depreciation and
amortization 310 261
Change in working capital 605 872
Other 70 (343)
Cash flow from operating
activities 2,045 1,655
Cash flow from operating
activities as a percentage
of net income 193% 191%
Capital expenditures (456) (351)
Capital expenditures as a
percentage of net income (43%) (41%)
Free cash flow $1,589 $1,304
Free cash flow as a
percentage of net income 150% 151%
Free cash flow, which represents cash flow from operations less capital
expenditures, is the principal cash performance measure used by the
Company. Management believes free cash flow provides a relevant measure of
liquidity and a useful basis for assessing the Corporation's ability to
fund its activities, including the financing of acquisitions, debt service,
repurchases of the Corporation's Common Stock and distribution of earnings
to shareholders. Others that use the term free cash flow may calculate it
differently. The reconciliation of net cash flow provided by operating
activities prepared in accordance with Generally Accepted Accounting
Principles to free cash flow is above.
United Technologies Corporation
Notes to Condensed Consolidated Financial Statements
(1) Debt to total capitalization equals total debt divided by total
debt plus equity. Net debt to net capitalization equals total debt less
cash and cash equivalents divided by total debt plus equity less cash and
cash equivalents.
(2) Organic growth represents the total reported increase within the
Corporation's ongoing businesses less the impact of foreign currency
translation, acquisitions and divestitures completed in the preceding
twelve months and significant non-recurring items. Non-recurring items that
are not included in organic growth in 2007 include a $57 million gain at
Carrier from the sale of Fincoil, a $36 million charge at Carrier on the
settlement of litigation related to a furnace warranty matter, a $28
million pretax interest adjustment related to the completion of the IRS
examination of tax years 2000 through 2003, a $26 million gain at Otis from
the sale of a non-core business, an $84 million gain at Otis from the sale
of land (See Note 3 below), a $40 million gain at Pratt & Whitney from a
contract termination, and $151 million from the sale of marketable
securities, and a $216 million loss recorded in connection with the EU
commission fine during the first quarter. Non- recurring items that are not
included in organic growth in 2006 include approximately $25 million from
the sale of a partnership interest in an engine program at Pratt Canada,
$25 million from the sale of marketable securities, approximately $80
million from the settlement of Pratt collaboration programs, approximately
$60 million pretax gain realized on the sale of a partnership interest in
Scroll Technologies, and approximately $60 million of interest income
related to the final ruling on the 1994 - 1999 U.S. federal tax audits.
(3) Otis segment results include an $84 million gain from the sale of
land. The consolidated operating results include taxes related to the gain
of approximately $29 million in addition to an approximately $27 million
charge for the minority partner's interest in the gain. The resulting
impact to consolidated net income is approximately $28 million.
IR-UTC
Contact:
John Moran
(860) 728-7062
SOURCE United Technologies Corp.
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Related links:
http://www.utc.com/
http://www.prnewswire.com/comp/913919.html/
CONTACT:
John Moran, +1-860-728-7062, of United
Technologies Corp.; UTC Investor Relations, +1-860-728-7608
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