RTX CORPORATION 
By HARTFORD, Conn., Jan. 27 /PRNewswire-FirstCall/ -- United Technologies Corp. (NYSE: UTX) today reported fourth quarter 2009 earnings per share of $1.15 and net income attributable to common shareowners of $1.1 billion, down 7 percent and 6 percent, respectively, over the year ago quarter. Results for the current quarter include an $0.08 per share charge for restructuring costs net of one time items. In 2008, there was a net benefit of $0.06 per share from one time gains in excess of restructuring costs. Before these items, earnings per share grew 5 percent, or $0.06. Foreign currency translation contributed $0.04 of the earnings per share growth.
Consolidated revenues for the quarter of $14.1 billion were 5 percent below prior year, including 6 points of organic decline and 1 point of net divestitures, offset by 3 points of favorable foreign currency translation. Segment operating margin at 13.7 percent was 110 basis points higher than prior year. Adjusted for restructuring costs and one time items, segment operating margin was 150 basis points higher than prior year. Cash flow from operations was $1.5 billion, including $637 million of global pension contributions. Capital expenditures were $325 million in the quarter.
Full year earnings per share of $4.12 and net income attributable to common shareowners of $3.8 billion declined 16 and 18 percent, respectively, from 2008 results. Revenues of $52.9 billion were 11 percent below prior year including organic decline (7 points), adverse foreign currency translation (3 points), and net divestitures (1 point). Cash flow from operations was $5.4 billion and capital expenditures were $826 million.
"UTC closed the year with solid performance in the face of continuing difficult end markets," said Louis Chenevert, UTC Chairman & Chief Executive Officer. "Relentless focus on costs across the business contributed to strong margin expansion in the quarter. Strong working capital performance led full year cash flow from operations less capital expenditures to be 118 percent of net income attributable to common shareowners, including $1.3 billion of global pension contributions."
Restructuring and other charges for the quarter were $135 million, bringing the full year to $830 million. For the year, restructuring and other charges were $0.46 of earnings per share, net of one-time gains.
"Year over year order rates have remained stable, although at low levels, and we saw increases in some Asian economies, notably China," Chenevert continued. "While order rates will keep pressure on our top line, particularly in the first half of 2010, we anticipate that benefits from structural cost actions will allow us to deliver earnings growth of 7 percent to 13 percent with 2010 earnings per share of $4.40 to $4.65.
"We expect our usual standard of cash flow from operations less capital expenditures equal to or exceeding net income attributable to common shareowners in 2010. Our acquisition placeholder is $3 billion including the GE Security transaction, and share repurchase is expected to be $1.5 billion," Chenevert added.
Share repurchase in the quarter was $320 million and totaled $1.1 billion for the year. Acquisition spending was $703 million for the year with $146 million in the fourth quarter.
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, share repurchases, restructuring; anticipated benefits of UTC's diversification, cost reduction efforts and business model; and other matters that are subject to risks and uncertainties. These statements often contain words such as "expect", "anticipate", "plan", "estimate", "believe", "will", "should", "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 extended weakness in global economic conditions; extended contraction in credit conditions; the impact of volatility and deterioration in financial markets on overall levels of economic activity; declines in 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 impact of further deterioration and extended weakness in global economic conditions on demand for our products and services, the financial strength of customers and suppliers and on levels of air travel; financial difficulties, including bankruptcy, of commercial airlines; 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
www.utc.com
United Technologies Corporation
Condensed Consolidated Statement of Operations
Quarter Ended Year Ended
December 31, December 31,
(Unaudited) (Unaudited)
----------- -----------
(Millions, except per
share amounts) 2009 2008 2009 2008
---- ---- ---- ----
Revenues $14,100 $14,770 $52,920 $59,757
Costs and Expenses
Cost of goods and
services sold 10,317 10,828 38,861 43,637
Research and
development 421 490 1,558 1,771
Selling, general and
administrative 1,555 1,649 6,036 6,724
----- ----- ----- -----
Operating Profit 1,807 1,803 6,465 7,625
Interest expense 183 171 705 689
-- -- -- --
Income before income
taxes 1,624 1,632 5,760 6,936
Income taxes 455 403 1,581 1,883
-- -- ---- ----
Net income 1,169 1,229 4,179 5,053
Less: Noncontrolling
interest in
subsidiaries'
earnings 96 84 350 364
--- --- --- ---
Net income
attributable to
common shareowners $1,073 $1,145 $3,829 $4,689
====== ====== ====== ======
Net Earnings Per Share
of Common Stock
Basic $1.17 $1.24 $4.17 $5.00
Diluted $1.15 $1.23 $4.12 $4.90
Average Shares
Basic 915 922 917 938
Diluted 931 933 929 956
As described on the following pages, consolidated results for the
quarters and years ended December 31, 2009 and 2008 include non-
recurring items, restructuring and other 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,
(Unaudited) (Unaudited)
----------- -----------
(Millions) 2009 2008 2009 2008
---- ---- ---- ----
Revenues
Otis $3,200 $3,243 $11,779 $12,949
Carrier 2,819 3,262 11,413 14,944
UTC Fire &
Security 1,532 1,502 5,531 6,462
Pratt & Whitney 3,255 3,587 12,577 14,041
Hamilton
Sundstrand 1,416 1,564 5,599 6,207
Sikorsky 1,947 1,600 6,318 5,368
---- ---- ---- ----
Segment Revenues 14,169 14,758 53,217 59,971
Eliminations and
other (69) 12 (297) (214)
--- --- ---- ----
Consolidated
Revenues $14,100 $14,770 $52,920 $59,757
======= ======= ======= =======
Operating Profit
Otis $677 $578 $2,447 $2,477
Carrier 146 160 740 1,316
UTC Fire &
Security 196 147 493 542
Pratt & Whitney 488 520 1,835 2,122
Hamilton
Sundstrand 231 304 857 1,099
Sikorsky 202 152 608 478
-- -- -- --
Segment
Operating
Profit 1,940 1,861 6,980 8,034
Eliminations and
other (25) 54 (167) (1)
General
corporate
expenses (108) (112) (348) (408)
---- ---- ---- ----
Consolidated
Operating
Profit $1,807 $1,803 $6,465 $7,625
====== ====== ====== ======
Segment
Operating
Profit Margin
Otis 21.2% 17.8% 20.8% 19.1%
Carrier 5.2% 4.9% 6.5% 8.8%
UTC Fire &
Security 12.8% 9.8% 8.9% 8.4%
Pratt & Whitney 15.0% 14.5% 14.6% 15.1%
Hamilton
Sundstrand 16.3% 19.4% 15.3% 17.7%
Sikorsky 10.4% 9.5% 9.6% 8.9%
---- --- --- ---
Segment
Operating
Profit Margin 13.7% 12.6% 13.1% 13.4%
As described on the following pages, consolidated results for the
quarters and years ended December 31, 2009 and 2008 include non-
recurring items, restructuring and other charges.
United Technologies Corporation
Restructuring and Non-recurring Items
Consolidated operating profit for the quarters and years ended
December 31, 2009 and 2008 includes restructuring and other charges
as follows:
Quarter Ended Year Ended
December 31, December 31,
(Unaudited) (Unaudited)
----------- -----------
(Millions) 2009 2008 2009 2008
---- ---- ---- ----
Otis $27 $10 $158 $21
Carrier(1) 71 49 210 140
UTC Fire & Security 5 30 112 63
Pratt & Whitney(2) 13 33 190 116
Hamilton Sundstrand 19 13 88 16
Sikorsky - - 7 -
Eliminations and other(3) - 1 62 1
General corporate expenses - - 3 -
-- -- -- --
Total Restructuring and
Other Charges(1) $135 $136 $830 $357
==== ==== ==== ====
(1) Approximately $23 million and $39 million of the total amount of
restructuring and other charges incurred at Carrier in the quarter
and year ended December 31, 2009, respectively, resides in other
income, net which is reflected within revenues.
(2) Total restructuring and other charges incurred at Pratt & Whitney
in the year ended December 31, 2009 include $51 million of charges
recorded in the quarter ended September 30, 2009 that relate to
reserves established in connection with the announced plans to close
its Connecticut Airfoil Repair Operations facility in East Hartford,
Connecticut and its engine overhaul facility in Cheshire,
Connecticut. Litigation is pending in U.S. District Court in
Hartford, Connecticut concerning whether the planned closures comply
with the terms of Pratt & Whitney's collective bargaining agreement
with the International Association of Machinists.
(3) Total restructuring and other charges incurred in the year ended
December 31, 2009 primarily reflects the impact of a curtailment of
our domestic pension plans during the quarter ended September 30,
2009.
Consolidated results for the quarters and years ended December 31,
2009 and 2008 include the following non-recurring items:
Q4-2009
Carrier: Approximately $27 million of gains related to divestiture activity.
Q3-2009
Carrier: Approximately $57 million gain recognized from the contribution of the majority of Carrier's U.S. residential sales and distribution business into a new venture formed with Watsco, Inc.
Eliminations and other: Approximately $17 million of favorable pretax interest adjustments related to global tax examination activity in the quarter, primarily reflecting the completion of our review of the 2004 to 2005 Internal Revenue Service (IRS) audit report.
Income Taxes: Favorable income tax adjustments of approximately $38 million based on global examination activity in the quarter, including completion of our review of the 2004 to 2005 IRS audit report.
Income Taxes: Approximately $32 million adverse tax impact associated with a foreign reorganization.
Q2-2009
Otis: Approximately $52 million non-cash, non-taxable gain recognized on the remeasurement to fair value of a previously held equity interest in a joint venture resulting from the purchase of a controlling interest.
Q1-2009
Income Taxes: Favorable tax impact of approximately $25 million related to the formation of a commercial venture.
Q4-2008
Carrier: Approximately $67 million gain from the contribution of a business into a new venture operating in the Middle East and the Commonwealth of Independent States.
Hamilton Sundstrand: Approximately $25 million gain on the completion of a divestiture of a business.
Eliminations and other: Approximately $38 million gain from the sale of marketable securities and an approximately $12 million favorable pretax interest adjustment related to settlement of disputed adjustments from the 2000 through 2003 examination with the Appeals Division of the IRS.
Income Taxes: Favorable income tax adjustments of approximately $62 million related to settlement of disputed adjustments from the 2000 through 2003 examination with the Appeals Division of the IRS.
Q3-2008
Pratt & Whitney: Approximately $37 million non-cash gain on a partial sale of an investment.
The following page provides segment revenues, operating profits and operating profit margins as adjusted for restructuring and other charges, and the aforementioned non-recurring items. Management believes these adjusted results more accurately portray the ongoing operational performance and fundamentals of the underlying businesses. The amounts and timing of restructuring and other charges and non-recurring activity can vary substantially from period to period with no assurances of comparable activity or amounts being incurred in future periods. The $830 million of restructuring and other charges in 2009 is significantly in excess of that incurred in prior years and reflects the severity of the current global recession. These amounts have therefore been adjusted out in the following schedule in order to provide a more representative comparison of current year operating performance to prior year performance.
United Technologies Corporation
Segment Revenues and Operating Profit Adjusted for Restructuring and
Other Charges and Non-Recurring Items (as reflected on the previous
page)
Quarter Ended Year Ended
December 31, December 31,
(Unaudited) (Unaudited)
----------- -----------
(Millions) 2009 2008 2009 2008
---- ---- ---- ----
Adjusted Revenues
Otis $3,200 $3,243 $11,727 $12,949
Carrier 2,815 3,195 11,368 14,877
UTC Fire &
Security 1,532 1,502 5,531 6,462
Pratt & Whitney 3,255 3,587 12,577 14,004
Hamilton
Sundstrand 1,416 1,539 5,599 6,182
Sikorsky 1,947 1,600 6,318 5,368
---- ---- ---- ----
Adjusted Segment
Revenues 14,165 14,666 53,120 59,842
Eliminations and
other (69) (38) (314) (264)
--- --- ---- ----
Adjusted
Consolidated
Revenues $14,096 $14,628 $52,806 $59,578
======= ======= ======= =======
Adjusted
Operating Profit
Otis $704 $588 $2,553 $2,498
Carrier 190 142 866 1,389
UTC Fire &
Security 201 177 605 605
Pratt & Whitney 501 553 2,025 2,201
Hamilton
Sundstrand 250 292 945 1,090
Sikorsky 202 152 615 478
-- -- -- --
Adjusted Segment
Operating Profit 2,048 1,904 7,609 8,261
Eliminations and
other (25) 5 (122) (50)
General corporate
expenses (108) (112) (345) (408)
---- ---- ---- ----
Adjusted
Consolidated
Operating Profit $1,915 $1,797 $7,142 $7,803
====== ====== ====== ======
Adjusted Segment
Operating Profit
Margin
Otis 22.0% 18.1% 21.8% 19.3%
Carrier 6.7% 4.4% 7.6% 9.3%
UTC Fire &
Security 13.1% 11.8% 10.9% 9.4%
Pratt & Whitney 15.4% 15.4% 16.1% 15.7%
Hamilton
Sundstrand 17.7% 19.0% 16.9% 17.6%
Sikorsky 10.4% 9.5% 9.7% 8.9%
---- --- --- ---
Adjusted Segment
Operating Profit
Margin 14.5% 13.0% 14.3% 13.8%
United Technologies Corporation
Condensed Consolidated Balance Sheet
December 31, December 31,
2009 2008
(Millions) (Unaudited) (Unaudited)
----------- -----------
Assets
------
Cash and cash equivalents $4,449 $4,327
Accounts receivable, net 8,469 9,480
Inventories and contracts in progress, net 7,509 8,340
Other assets, current 2,767 2,320
---- ----
Total Current Assets 23,194 24,467
Fixed assets, net 6,364 6,348
Goodwill, net 16,298 15,363
Intangible assets, net 3,538 3,443
Other assets 6,368 7,216
---- ----
Total Assets $55,762 $56,837
======= =======
Liabilities and Equity
----------------------
Short-term debt $1,487 $2,139
Accounts payable 4,634 5,594
Accrued liabilities 11,792 12,069
----- -----
Total Current Liabilities 17,913 19,802
Long-term debt 8,257 9,337
Other liabilities 8,204 10,772
---- -----
Total Liabilities 34,374 39,911
----- -----
Redeemable noncontrolling interest 389 245
Shareowners' Equity:
Common Stock 11,565 10,979
Treasury Stock (15,408) (14,316)
Retained earnings 27,396 25,034
Accumulated other comprehensive loss (3,487) (5,934)
------ ------
Total Shareowners' Equity 20,066 15,763
Noncontrolling interest 933 918
-- --
Total Equity 20,999 16,681
----- -----
Total Liabilities and Equity $55,762 $56,837
======= =======
Debt Ratios:
Debt to total capitalization 32% 41%
Net debt to net capitalization 20% 30%
See accompanying Notes to Condensed Consolidated Financial Statements.
United Technologies Corporation
Condensed Consolidated Statement of Cash Flows
Quarter Ended Year Ended
December 31, December 31,
(Unaudited) (Unaudited)
----------- -----------
(Millions) 2009 2008 2009 2008
---- ---- ---- ----
Operating
Activities
Net income
attributable to
common
shareowners $1,073 $1,145 $3,829 $4,689
Noncontrolling
interest in
subsidiaries'
earnings 96 84 350 364
--- --- --- ---
Net income 1,169 1,229 4,179 5,053
Adjustments to
reconcile net
income to net
cash flows
provided by
operating
activities:
Depreciation and
amortization 333 350 1,258 1,321
Deferred income
tax provision 415 188 451 45
Stock
compensation
cost 43 50 153 211
Changes in
working capital 781 460 1,065 (230)
Global pension
contributions (637) (135) (1,270) (193)
Other operating
activities, net (629) (122) (483) (46)
---- ---- ---- ---
Net Cash Provided
by Operating
Activities 1,475 2,020 5,353 6,161
----- ----- ----- -----
Investing
Activities
Capital
expenditures (325) (406) (826) (1,216)
Acquisitions and
disposal of
businesses, net (95) (477) (545) (915)
Other investing
activities, net 47 (263) 267 (205)
--- ---- --- ----
Net Cash Used in
Investing
Activities (373) (1,146) (1,104) (2,336)
---- ------ ------ ------
Financing
Activities
(Decrease)
increase in
borrowings, net (700) 1,039 (1,737) 2,291
Dividends paid on
Common Stock (338) (341) (1,356) (1,210)
Repurchase of
Common Stock (320) (690) (1,100) (3,160)
Other financing
activities, net 75 (10) 2 (159)
--- --- --- ----
Net Cash Used in
Financing
Activities (1,283) (2) (4,191) (2,238)
------ --- ------ ------
Effect of foreign
exchange rates (2) (160) 64 (164)
--- ---- --- ----
Net (decrease)
increase in cash
and cash
equivalents (183) 712 122 1,423
Cash and cash
equivalents -
beginning of
period 4,632 3,615 4,327 2,904
----- ----- ----- -----
Cash and cash
equivalents -
end of period $4,449 $4,327 $4,449 $4,327
====== ====== ====== ======
See accompanying Notes to Condensed Consolidated Financial Statements.
United Technologies Corporation
Free Cash Flow Reconciliation
Quarter Ended December 31,
(Millions) (Unaudited)
-----------
2009 2008
---- ----
Net income attributable to
common shareowners $1,073 $1,145
Noncontrolling interest in
subsidiaries' earnings 96 84
--- ---
Net income 1,169 1,229
Depreciation and
amortization 333 350
Changes in working capital 781 460
Other (808) (19)
---- ---
Cash flow from operating
activities 1,475 2,020
Cash flow from operating
activities as a
percentage of 137 % 176 %
net income attributable to
common shareowners
Capital expenditures (325) (406)
---- ----
Capital expenditures as a
percentage of net income (30)% (35)%
attributable to common
shareowners ---- ----
Free cash flow $1,150 $1,614
====== ======
Free cash flow as a
percentage of net income 107 % 141 %
attributable to common
shareowners === ===
Year Ended December 31,
(Millions) (Unaudited)
-----------
2009 2008
---- ----
Net income attributable to
common shareowners $3,829 $4,689
Noncontrolling interest in
subsidiaries' earnings 350 364
--- ---
Net income 4,179 5,053
Depreciation and
amortization 1,258 1,321
Changes in working capital 1,065 (230)
Other (1,149) 17
------ --
Cash flow from operating
activities 5,353 6,161
Cash flow from operating
activities as a
percentage of 140 % 131 %
net income attributable to
common shareowners
Capital expenditures (826) (1,216)
---- ------
Capital expenditures as a
percentage of net income (22)% (26)%
attributable to common
shareowners ---- ----
Free cash flow $4,527 $4,945
====== ======
Free cash flow as a
percentage of net income 118 % 105 %
attributable to common
shareowners === ===
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) Certain reclassifications have been made to the prior year
amounts to conform to the current year presentation of
noncontrolling interests and collaborative arrangements as
required by the Consolidation and Distinguishing Liabilities from
Equity Topics and the Collaborative Arrangements Topic, respectively,
of the FASB Accounting Standards Codification ("FASB ASC").
Effective January 1, 2009, we adopted the provisions under the
Consolidation Topic and Distinguishing Liabilities from Equity
Topic as it relates to the accounting for noncontrolling interests
in consolidated financial statements, both of which were applied
retrospectively to all periods presented. Such provisions of the
Consolidation Topic include a requirement that the carrying value
of noncontrolling interest (previously referred to as minority
interest) be removed from the mezzanine section of the balance sheet
and reclassified as equity, unless it is subject to the provisions of
the Distinguishing Liabilities from Equity Topic; and consolidated net
income to be recast to include net income attributable to the
noncontrolling interest. The Distinguishing Liabilities from Equity
Topic requires certain noncontrolling interests where the company is
subject to a put option under which it may be required to purchase an
interest in a consolidated subsidiary from the noncontrolling interest
holder to be recorded at the greater of redemption value or
noncontrolling interest carrying value within the mezzanine section
of the balance sheet.
The Collaborative Arrangements Topic, which we adopted as of January
1, 2009, has been applied retrospectively to all prior periods
presented for all collaborative arrangements existing as of the
effective date. The Collaborative Arrangements Topic requires that
participants in a collaborative arrangement report costs incurred and
revenues generated from these transactions on a gross basis and in the
appropriate line item in each company's financial statement. Under
this Topic, revenues were increased approximately $213 million and
$271 million for the quarters ended December 31, 2009 and 2008 and
$801 million and $1,076 million for the years ended December 31, 2009
and 2008, respectively, with an offsetting increase to cost of sales
to reflect the collaborators' share of revenues on a gross basis.
Additionally, both accounts receivable and accounts payable were
increased by $368 million as of December 31, 2008 in order to reflect
the amounts owed to our collaborative partners for their share of
revenues on a gross basis.
(2) 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.
(3) 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 2009 include an
approximately $57 million gain recognized from the contribution of the
majority of Carrier's U.S. residential sales and distribution business
into a new venture formed with Watsco, Inc., approximately $52 million
related to a non-cash, non-taxable gain recognized on the
remeasurement to fair value of a previously held equity interest
in a joint venture as a result of the purchase of a controlling
interest, approximately $17 million of favorable pretax interest
adjustments related to global tax examination activity during the
year, primarily reflecting the completion of our review of the 2004
to 2005 Internal Revenue Service (IRS) audit report and approximately
$27 million of gains related to divestiture activity at Carrier. Not
included within organic growth for 2008 is an approximately $67
million gain from the contribution of a business into a new venture
operating in the Middle East and the Commonwealth of Independent
States, an approximately $25 million gain on the completion of a
divestiture of a business at Hamilton Sundstrand, an approximately
$37 million non-cash gain on a partial sale of an investment at Pratt
& Whitney, an approximately $38 million gain from the sale of
marketable securities, and approximately $12 million of favorable
pretax interest adjustments related to settlement of disputed
adjustments resulting from the 2000 through 2003 examination with
the Appeals Division of the IRS.
SOURCE United Technologies Corp.
