HARTFORD, Conn., Oct. 16 /PRNewswire-FirstCall/ -- United Technologies
Corp. (NYSE: UTX) today reported third quarter 2008 earnings per share of
$1.33 and net income of $1.3 billion, up 10 percent and 6 percent,
respectively, over the year ago quarter. Results for the current quarter
include a $0.03 per share net impact for restructuring costs in excess of a
one time gain. In 2007, a one time gain exceeded restructuring costs for a
net benefit of $0.04 per share. Excluding restructuring costs and the one
time gains in both periods, earnings per share grew 16 percent year over
year.
Third quarter consolidated revenues increased 7 percent to $14.8
billion, including 4 percent organic growth. Foreign currency translation
accounted for 3 points of the revenue growth and $0.03 of the earnings per
share increase. Cash flow from operations was $1.8 billion and capital
expenditures were $268 million for the quarter.
"UTC had another solid quarter, with operating margin expansion of 50
basis points and four of six business units reporting double digit earnings
growth," said Louis Chenevert, UTC President and Chief Executive Officer.
"Based on the strong performance in the first three quarters of the year,
we are raising the bottom end of earnings per share guidance to $4.90 from
$4.80. We now expect earnings per share of $4.90 - $4.95, up 15 to 16
percent above 2007 earnings per share.
"While we did see order rates slow in some businesses in the quarter
given the current turmoil, our backlogs across UTC remain strong. We are
confident our balanced portfolio, global footprint, and strong aftermarket
presence will enable us to deliver on our guidance," Chenevert said.
New equipment orders at Otis were flat in the quarter, with solid
double digit growth in Asia offset by a decline in North America. Carrier's
Commercial HVAC new equipment orders were up double digits globally.
Commercial aerospace spares orders in the quarter were below sales at Pratt
& Whitney's Commercial Engines business and approximately equal to sales at
Hamilton Sundstrand.
Chenevert added, "In the face of ongoing economic challenges, we
continue to aggressively reduce costs and restructure our businesses. In
the third quarter, we spent $93 million on restructuring, and we're on
track to spend around $300 million for the full year. We also spent $950
million for share repurchase in the quarter for a total of $2.5 billion
year to date and now expect share repurchase to be around $3 billion for
2008. We believe these actions, together with the balance of UTC's
businesses, will position us to outperform peers in 2009.
"Cash flow from operations less capital expenditures was 123% of net
income in the quarter. We continue to expect cash flow from operations less
capital expenditures to meet or exceed net income for the full year,"
Chenevert continued.
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 providing high technology products and services to the
building and aerospace industries. Additional information, including a
webcast, is available on the Internet at http://www.utc.com.
This release includes "forward-looking statements" concerning expected
revenue, earnings, cash flow, restructuring and share repurchases;
anticipated benefits of UTC's diversification, cost reduction efforts, and
business model; and other matters. These matters are subject to risks and
uncertainties. Important factors that could cause actual results to differ
materially from those anticipated or implied in forward looking statements
include the health of the global economy; the impact of volatility and
deterioration in financial markets on overall levels of economic activity;
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; and company- specific factors including the impact of
financial market volatility and deterioration on the financial strength of
customers and suppliers and on levels of air travel; the availability and
impact of acquisitions; the rate and ability to effectively integrate
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.
UTC-IR
Contact: John Moran, UTC
(860) 728-7062
United Technologies Corporation
Condensed Consolidated Statement of Operations
Quarter Ended Nine Months Ended
September 30, September 30,
(Unaudited) (Unaudited)
(Millions, except per
share amounts)
2008 2007 2008 2007
Revenues $14,814 $13,863 $44,182 $40,045
Cost and Expenses
Cost of goods and
services sold 10,664 10,068 32,004 29,193
Research and development 436 399 1,281 1,197
Selling, general and
administrative 1,665 1,508 5,075 4,398
Operating Profit 2,049 1,888 5,822 5,257
Interest expense 177 179 518 492
Income before income taxes
and minority interests 1,872 1,709 5,304 4,765
Income taxes 502 434 1,480 1,355
Minority interests 101 78 280 246
Net Income $1,269 $1,197 $3,544 $3,164
Net Earnings Per Share
of Common Stock
Basic $1.36 $1.24 $3.76 $3.28
Diluted $1.33 $1.21 $3.68 $3.19
Average Shares
Basic 933 963 943 966
Diluted 951 989 964 991
As described on the following pages, consolidated results for the
quarters and nine months ended September 30, 2008 and 2007 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 Nine Months Ended
September 30, September 30,
(Unaudited) (Unaudited)
(Millions)
2008 2007 2008 2007
Revenues
Otis $3,245 $2,936 $9,706 $8,522
Carrier 3,917 3,738 11,682 10,923
UTC Fire & Security 1,624 1,471 4,960 4,066
Pratt & Whitney 3,150 3,036 9,649 8,911
Hamilton Sundstrand 1,532 1,427 4,643 4,144
Sikorsky 1,438 1,307 3,768 3,511
Segment Revenues 14,906 13,915 44,408 40,077
Eliminations and other (92) (52) (226) (32)
Consolidated Revenues $14,814 $13,863 $44,182 $40,045
Operating Profit
Otis $648 $567 $1,899 $1,673
Carrier 421 420 1,156 1,122
UTC Fire & Security 154 119 395 306
Pratt & Whitney 530 503 1,602 1,515
Hamilton Sundstrand 286 249 795 713
Sikorsky 133 103 326 263
Segment Operating Profit 2,172 1,961 6,173 5,592
Eliminations and other (33) 11 (55) (72)
General corporate expenses (90) (84) (296) (263)
Consolidated Operating
Profit $2,049 $1,888 $5,822 $5,257
As described on the following pages, consolidated results for the
quarters and nine months ended September 30, 2008 and 2007 include
non-recurring items, restructuring and related charges.
United Technologies Corporation
Consolidated Operating Profit
Consolidated operating profit for the quarters and nine months ended
September 30, 2008 and 2007 includes restructuring and related charges as
follows:
Quarter Ended Nine Months Ended
September 30, September 30,
(Unaudited) (Unaudited)
2008 2007 2008 2007
Otis $5 $6 $11 $11
Carrier 34 15 91 28
UTC Fire & Security - 2 33 8
Pratt & Whitney 52 12 83 39
Hamilton Sundstrand 2 8 3 20
Sikorsky - - - (3)
Total Restructuring
and Related Charges $93 $43 $221 $103
Consolidated results for the for the quarters and nine months ended
September 30, 2008 and 2007 include the following non-recurring items.
Q3 - 2008
-- Pratt & Whitney: Approximately $37 million non-cash gain on a
partial sale of an investment.
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.
United Technologies Corporation
Condensed Consolidated Balance Sheet
September 30, December 31,
2008 2007
(Unaudited) (Unaudited)
(Millions)
Assets
Cash and cash equivalents $3,615 $2,904
Accounts receivable, net 9,346 8,844
Inventories and contracts in progress, net 9,011 8,101
Other current assets 2,209 2,222
Total Current Assets 24,181 22,071
Fixed assets, net 6,441 6,296
Goodwill, net 16,074 16,120
Intangible assets, net 3,484 3,757
Other assets 6,630 6,331
Total Assets $56,810 $54,575
Liabilities and Shareowners' Equity
Short-term debt $2,259 $1,133
Accounts payable 5,104 5,059
Accrued liabilities 12,494 11,277
Total Current Liabilities 19,857 17,469
Long-term debt 8,113 8,015
Other liabilities 6,795 6,824
Total Liabilities 34,765 32,308
Minority interest in subsidiary companies 962 912
Shareowners' Equity:
Common Stock 10,769 10,358
Treasury Stock (13,824) (11,338)
Retained Earnings 24,380 21,751
Accumulated other non-shareowners' changes
in equity (242) 584
21,083 21,355
Total Liabilities and Shareowners' Equity $56,810 $54,575
Debt Ratios:
Debt to total capitalization 33% 30%
Net debt to net capitalization 24% 23%
United Technologies Corporation
Condensed Consolidated Statement of Cash Flows
Quarter Ended Nine Months Ended
September 30, September 30,
(Unaudited) (Unaudited)
(Millions)
2008 2007 2008 2007
Operating Activities
Net Income $1,269 $1,197 $3,544 $3,164
Adjustments to reconcile
net income to net cash
flows provided by
operating activities:
Depreciation and
amortization 326 308 971 863
Deferred income taxes
and minority interest 91 90 137 98
Stock compensation cost 51 44 161 141
Changes in working capital 49 (178) (690) (573)
Other, net 49 (78) 18 (408)
Net Cash Provided by
Operating Activities 1,835 1,383 4,141 3,285
Investing Activities
Capital expenditures (268) (238) (810) (697)
Acquisitions and disposal
of businesses, net 23 (1,236) (438) (1,444)
Other, net 286 (145) 58 (15)
Net Cash Provided by
(Used) in Investing
Activities 41 (1,619) (1,190) (2,156)
Financing Activities
(Decrease) increase in
borrowings, net (328) 471 1,252 1,065
Dividends paid on Common
Stock (286) (296) (869) (786)
Repurchase of Common Stock (950) (500) (2,470) (1,500)
Other, net (60) 14 (149) 219
Net Cash Used in
Financing Activities (1,624) (311) (2,236) (1,002)
Effect of foreign exchange
rates (79) 65 (4) 137
Net increase (decrease)
in cash and cash
equivalents 173 (482) 711 264
Cash and cash equivalents -
beginning of period 3,442 3,292 2,904 2,546
Cash and cash equivalents -
end of period $3,615 $2,810 $3,615 $2,810
United Technologies Corporation
Free Cash Flow Reconciliation
Quarter Ended
(Millions) September 30, September 30,
2008 2007
(Unaudited) (Unaudited)
Net income $1,269 $1,197
Depreciation and amortization 326 308
Changes in working capital 49 (178)
Other 191 56
Cash flow from operating activities 1,835 1,383
Cash flow from operating activities as
a percentage of net income 144% 116%
Capital expenditures (268) (238)
Capital expenditures as a percentage
of net income (21%) (20%)
Free cash flow $1,567 $1,145
Free cash flow as a percentage of
net income 123% 96%
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. Not included within
organic growth for 2008 is a non-recurring item of approximately $37
million related to a non-cash gain on a partial sale of an investment at
Pratt & Whitney. Non-recurring items that are not included in organic
growth in 2007 include $28 million pretax interest adjustment related to
the completion of the IRS examination of tax years 2000 through 2003, 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.
(3) Otis segment results for the first quarter of 2007 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.
SOURCE United Technologies Corp.
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Related links:
http://www.utc.com
http://www.prnewswire.com/comp/913919.html /
CONTACT:
John Moran, UTC, +1-860-728-7062
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