HARTFORD, Conn., Oct. 17 /PRNewswire-FirstCall/ -- United Technologies
Corp. (NYSE: UTX) today reported third quarter 2007 earnings per share of
$1.21 and net income of $1.20 billion, up 22 percent and 20 percent,
respectively, over the year ago quarter. Revenues for the quarter increased
14 percent to $13.9 billion and included 9 percent organic growth. Foreign
currency translation and acquisitions accounted for the remainder of the
revenue growth. Cash flow from operations was $1.38 billion and capital
expenditures were $238 million.
The quarter included a $0.04 per share benefit of net tax related items
in excess of restructuring costs while the year ago period included net
costs of $0.02 per share as a result of restructuring in excess of one time
gains. Excluding restructuring/gains in both periods, earnings per share
grew 16 percent year over year. UTC expects recently enacted international
tax law changes to negatively impact the fourth quarter tax rate and offset
the $0.04 per share third quarter benefit.
"This was another solid quarter for UTC. Notably, organic revenue
growth came in at 9 percent, following 10 percent growth in each of the
first two quarters of 2007. In addition, five of our six business segments
grew profits at double digit rates as markets in general remain healthy and
cost reductions continue. While market conditions in Carrier's North
American residential business are clearly challenging, its other three
global businesses delivered double digit earnings growth," said UTC
Chairman and Chief Executive Officer George David.
"As we close in on the year, we now see EPS in the range of $4.22 -
$4.25, or 14 percent growth and at the top end of our prior range of $4.15
- $4.25. Given the organic revenue growth year to date and current
backlogs, we now expect revenues for the year in the range of $54 billion,
up from our previous outlook of $53 billion. Momentum in the businesses is
good, with the most recent evidence being the selection of Pratt &
Whitney's Geared Turbofan engine for the Mitsubishi Regional Jet. As usual,
we'll be reviewing the 2008 outlook at our December investor meeting and
anticipate delivering another solid outlook then," David said.
"Cash flow from operations less capital expenditures in the quarter was
solid, even with the inventory challenges we face as a result of another
quarter of strong organic revenue growth. We continue to target cash flow
performance for the year in the range of net income," David added.
Share repurchase in the quarter was $500 million and $1.5 billion for
the first nine months, on track with guidance of $2.0 billion for 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 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; and
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.
UTC-IR
Contact: John Moran
(860) 728-7062
United Technologies Corporation
Condensed Consolidated Statement of Operations
Quarter Ended Nine Months Ended
September 30, September 30,
(Millions, except per (Unaudited) (Unaudited)
share amounts)
2007 2006 2007 2006
Revenues $13,863 $12,163 $40,045 $35,042
Cost and Expenses
Cost of goods and services
sold 10,068 8,794 29,193 25,219
Research and development 399 384 1,197 1,123
Selling, general and
administrative 1,508 1,338 4,398 4,030
Operating Profit 1,888 1,647 5,257 4,670
Interest expense 179 156 492 453
Income before income taxes &
minority interests 1,709 1,491 4,765 4,217
Income taxes (434) (423) (1,355) (1,157)
Minority interests (78) (72) (246) (193)
Net Income $1,197 $996 $3,164 $2,867
Earnings Per Share of Common Stock
Basic $1.24 $1.02 $3.28 $2.92
Diluted $1.21 $0.99 $3.19 $2.84
Average Shares
Basic 963 980 966 983
Diluted 989 1,006 991 1,008
As described on the following pages, consolidated results for the
quarters and nine months ended September 30, 2007 and 2006 include
restructuring and related charges and non-recurring items.
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)
2007 2006 2007 2006
Revenues
Otis $2,936 $2,565 $8,522 $7,442
Carrier 3,738 3,607 10,923 10,262
UTC Fire & Security 1,471 1,142 4,066 3,421
Pratt & Whitney 3,036 2,771 8,911 8,066
Hamilton Sundstrand 1,427 1,253 4,144 3,698
Sikorsky 1,307 867 3,511 2,146
Segment Revenues 13,915 12,205 40,077 35,035
Eliminations and other (52) (42) (32) 7
Consolidated Revenues $13,863 $12,163 $40,045 $35,042
Operating Profit
Otis $567 $463 $1,673 $1,374
Carrier 420 430 1,122 1,044
UTC Fire & Security 119 70 306 200
Pratt & Whitney 503 443 1,515 1,408
Hamilton Sundstrand 249 220 713 613
Sikorsky 103 70 263 115
Segment Operating Profit 1,961 1,696 5,592 4,754
Eliminations and other 11 31 (72) 160
General corporate expenses (84) (80) (263) (244)
Consolidated Operating
Profit $1,888 $1,647 $5,257 $4,670
As described on the following pages, consolidated results for the
quarters and nine months ended September 30, 2007 and 2006 include
restructuring and related charges and non-recurring items.
United Technologies Corporation
Restructuring and Related Charges
Consolidated operating profit for the quarters and nine months ended
September 30, 2007 and 2006 includes restructuring and related charges as
follows:
Quarter Ended Nine Months Ended
September 30, September 30,
(Millions) (Unaudited) (Unaudited)
Restructuring and Related Charges 2007 2006 2007 2006
Otis $6 $32 $11 $40
Carrier 15 27 28 59
UTC Fire & Security 2 9 8 23
Pratt & Whitney 12 13 39 36
Hamilton Sundstrand 8 12 20 29
Sikorsky - - (3) 19
Consolidated Restructuring and
Related Charges $43 $93 $103 $206
Consolidated results for the quarters and nine months ended September
30, 2007 and 2006 include the following non-recurring items:
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: 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 (DoD) 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
September 30, December 31,
2007 2006
(Millions) (Unaudited) (Unaudited)
Assets
Cash and cash equivalents $2,810 $2,546
Accounts receivable, net 8,999 7,679
Inventories and contracts in progress, net 8,550 6,657
Other current assets 2,202 1,962
Total Current Assets 22,561 18,844
Fixed assets, net 6,053 5,725
Goodwill, net 15,871 14,146
Intangible assets, net 3,709 3,216
Other assets 5,303 5,210
Total Assets $53,497 $47,141
Liabilities and Shareowners' Equity
Short-term debt $2,268 $894
Accounts payable 4,977 4,263
Accrued liabilities 11,389 10,051
Total Current Liabilities 18,634 15,208
Long-term debt 7,059 7,037
Other liabilities 6,662 6,763
Total Liabilities 32,355 29,008
Minority interest in subsidiary companies 864 836
Shareowners' Equity:
Common Stock 10,208 9,395
Treasury Stock (10,840) (9,413)
Retained Earnings 21,004 18,754
Accumulated other non-shareowners' changes
in equity (94) (1,439)
20,278 17,297
Total Liabilities and Shareowners' Equity $53,497 $47,141
Debt Ratios:
Debt to total capitalization 32% 31%
Net debt to net capitalization 24% 24%
United Technologies Corporation
Condensed Consolidated Statement of Cash Flows
Quarter Ended Nine Months Ended
September 30, September 30,
(Millions) (Unaudited) (Unaudited)
2007 2006 2007 2006
Operating Activities
Net Income $1,197 $996 $3,164 $2,867
Adjustments to reconcile net income to
net cash flows provided by operating
activities:
Depreciation and amortization 308 252 863 772
Deferred income taxes and minority
interests 90 89 98 209
Stock compensation cost 44 45 141 136
Changes in working capital (178) 60 (573) (681)
Voluntary contributions to
pension plans* - (31) - (31)
Other, net (78) (50) (408) (124)
Net Cash Provided by Operating
Activities 1,383 1,361 3,285 3,148
Investing Activities
Capital expenditures (238) (184) (697) (603)
Acquisitions and disposal of
businesses, net (1,236) (16) (1,444) (173)
Other, net (145) 193 (15) 109
Net Cash Used in Investing
Activities (1,619) (7) (2,156) (667)
Financing Activities
Increase (decrease) in borrowings, net 471 (483) 1,065 (36)
Dividends paid on Common Stock (296) (249) (786) (705)
Repurchase of Common Stock (500) (580) (1,500) (1,330)
Other, net 14 (43) 219 195
Net Cash Used in Financing Activities (311) (1,355) (1,002) (1,876)
Effect of foreign exchange rates 65 32 137 62
Net (decrease) increase in cash
and cash equivalents (482) 31 264 667
Cash and cash equivalents -
beginning of period 3,292 2,883 2,546 2,247
Cash and cash equivalents -
end of period $2,810 $2,914 $2,810 $2,914
* Non-cash activities include contributions of UTC common stock of $150
million to domestic defined benefit pension plans in the first quarter of
2007 and second quarter of 2006.
United Technologies Corporation
Free Cash Flow Reconciliation
Quarter Ended
(Millions) September 30, September 30,
2007 2006
(unaudited) (unaudited)
Net income $1,197 $996
Depreciation and amortization 308 252
Change in working capital (178) 60
Other 56 53
Cash flow from operating activities 1,383 1,361
Cash flow from operating activities
as a percentage of net income 116% 137%
Capital expenditures (238) (184)
Capital expenditures as a percentage
of net income (20%) (18%)
Free cash flow $1,145 $1,177
Free cash flow as a percentage
of net income 96% 118%
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 $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, all of which were partially offset
by the $216 million loss recorded in connection with the EU
commission fine during the first quarter. Non-recurring revenues
that are not included in organic growth in 2006 include approximately
$25 million from the sale of marketable securities, approximately $80
million from the settlement of Pratt collaboration programs, 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.
SOURCE United Technologies Corp.
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Related links:
http://www.utc.com/
http://www.prnewswire.com/comp/913919.html/
CONTACT:
John Moran of United Technologies Corp.,
+1-860-728-7062, or Investor Relations, +1-860-728-7608
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