RTX CORPORATION 
By HARTFORD, Conn., Jan. 25, 2012 /PRNewswire/ -- United Technologies Corp. (NYSE: UTX) today reported fourth quarter 2011 earnings per share of $1.47 and net income attributable to common shareowners of $1.3 billion, up 12 percent and 11 percent, respectively, over the year ago quarter. Sales of $15.0 billion for the quarter were 1 percent above prior year including 2 points of organic growth and 1 point of net divestitures. Cash flow from operations was $2.0 billion and capital expenditures were $378 million in the quarter.
Results for the quarter included $0.11 per share of restructuring charges, offset by $0.12 of net favorable one-time items. The prior year quarter included charges for restructuring and net one-time items of $0.03 per share. Before these items, earnings per share increased $0.12 or 9 percent year over year. Foreign currency translation net of currency impact at Pratt & Whitney Canada did not have an impact on earnings per share.
Fourth quarter segment operating margin was 14.7 percent. Adjusted for restructuring costs and net one-time items, segment operating margin of 15.4 percent was 20 basis points higher than prior year. Research and development increased year over year by $95 million to $552 million.
Full year earnings per share of $5.49 and net income attributable to common shareowners of $5.0 billion increased 16 and 14 percent, respectively, from 2010. Sales of $58.2 billion were 7 percent above prior year including organic growth (6 points), favorable foreign currency translation (2 points), and net divestitures (1 point). Segment operating margin of 15.4 percent was 80 basis points higher than prior year; adjusted for restructuring and one-time items, segment operating margin of 15.7 percent was 30 basis points higher than prior year. All segments were at or above 10 percent operating margins. Cash flow from operations was $6.6 billion, including $551 million of global pension contributions. Capital expenditures were $983 million for the year. Cash flow from operations less capital expenditures exceeded net income attributable to common shareowners.
"UTC closed a solid 2011 despite tough compares in the commercial aerospace aftermarket and shorter cycle Carrier businesses and significant research and development investment in the quarter," said Louis Chenevert, UTC Chairman & Chief Executive Officer. "For the year, all business units grew organically and achieved double digit operating margins. This performance, together with the announcements to acquire Goodrich and Rolls-Royce's share of the IAE joint venture, positions the company for future earnings growth." Chenevert added, "As expected, cash generation was strong in both the quarter and full year."
New equipment orders at Otis were up 2 percent over the year ago fourth quarter with no impact from foreign exchange. Commercial HVAC new equipment orders at Carrier grew 5 percent excluding 1 point of unfavorable foreign exchange. Commercial spares orders at Hamilton Sundstrand were up 17 percent and at Pratt & Whitney's large engine business declined 16 percent, after growing 45 percent in the year ago fourth quarter.
"We remain confident in our ability to deliver 2012 earnings per share of $5.80 to $6.00, up 6 to 9 percent, for our base business excluding the pending Goodrich transaction, which remains on track to close mid-year," Chenevert stated. "While we see ongoing volatility in foreign exchange rates, we continue to see strength in commercial aerospace and growth in emerging markets.
"We continue to expect sales of between $59 billion and $60 billion and cash flow from operations less capital expenditures to equal or exceed net income attributable to common shareowners for our base business in 2012," Chenevert added.
Acquisition spending was $357 million for the year, of which $128 million was in the fourth quarter. Share repurchase was $2.2 billion for the year, of which none was in the fourth quarter.
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.
The accompanying tables include information integral to assessing the company's financial position, operating performance, and cash flow, including a reconciliation of differences between non-GAAP measures used in this release and the comparable financial measures calculated in accordance with generally accepted accounting principles in the United States.
This release includes statements that constitute "forward-looking statements" under the securities laws. Forward-looking statements often contain words such as "believe," "expect," "plans," "strategy," "prospects," "estimate," "project," "target," "anticipate," "will," "should," "see," "guidance," "confident" and similar terms. Forward-looking statements may include, among other things, statements relating to future and estimated sales, earnings, cash flow, results of operations, uses of cash and other measures of financial performance. All forward-looking statements involve risks, uncertainties and assumptions that may cause actual results to differ materially from those expressed or implied in the forward-looking statements. Risks and uncertainties include, without limitation, the effect of economic conditions in the markets in which we operate, including financial market conditions, fluctuation in commodity prices, interest rates and foreign currency exchange rates; future levels of indebtedness and capital and research and development spending; levels of end market demand in construction and in the aerospace industry; levels of air travel; financial difficulties of commercial airlines; the impact of weather conditions and natural disasters; the financial condition of our customers and suppliers; delays and disruption in delivery of materials and services from suppliers; cost reduction efforts and restructuring costs and savings and other consequences thereof; the scope, nature or impact of acquisitions, dispositions, joint ventures and other business arrangements, including integration of acquired businesses; the expected timing of completion of the previously announced transactions with Goodrich and Rolls-Royce; the development and production of new products and services; the anticipated benefits of diversification and balance of operations across product lines, regions and industries; the impact of the negotiation of collective bargaining agreements, and labor disputes; the outcome of legal proceedings and other contingencies; future availability of credit; pension plan assumptions and future contributions; and the effect of changes in tax, environmental and other laws and regulations and political conditions in countries in which we operate and other factors beyond our control. The closing of the Goodrich acquisition is subject to customary closing conditions, including regulatory and Goodrich shareholder approvals. The transaction with Rolls-Royce is also subject to customary closing conditions, including regulatory approvals. These forward-looking statements speak only as of the date of this release and we undertake no obligation to update or revise any forward-looking statements after we distribute this release. For additional information identifying factors that may cause actual results to vary materially from those stated in the forward-looking statements, see our reports on Forms 10-K, 10-Q and 8-K filed with the SEC from time to time, including, but not limited to, the information included in UTC's Forms 10-K and 10-Q under the headings "Business," "Risk Factors," "Management's Discussion and Analysis of Financial Condition and Results of Operations" and "Legal Proceedings" and in the notes to the financial statements included in UTC's Forms 10-K and 10-Q.
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) 2011 2010 2011 2010
---- ---- ---- ----
Net sales $14,966 $14,864 $58,190 $54,326
Costs and
Expenses:
Cost of products
and services
sold 10,851 11,000 42,153 39,414
Research and
development 552 457 2,058 1,746
Selling, general
and
administrative 1,699 1,631 6,464 6,024
----- ----- ----- -----
Total Costs and
Expenses 13,102 13,088 50,675 47,184
Other income, net 34 77 584 44
--- --- --- ---
Operating profit 1,898 1,853 8,099 7,186
Interest expense,
net 66 167 494 648
--- --- --- ---
Income before
income taxes 1,832 1,686 7,605 6,538
Income tax
expense 410 433 2,231 1,827
--- --- ----- -----
Net income 1,422 1,253 5,374 4,711
Less:
Noncontrolling
interest in
subsidiaries'
earnings 97 54 395 338
--- --- --- ---
Net income
attributable to
common
shareowners $1,325 $1,199 $4,979 $4,373
====== ====== ====== ======
Earnings Per
Share of Common
Stock:
Basic $1.49 $1.33 $5.58 $4.82
Diluted $1.47 $1.31 $5.49 $4.74
Weighted average
number of shares
outstanding:
Basic shares 888 902 892 908
Diluted shares 899 916 907 923
As described on the following pages, consolidated results for the quarters and years ended December 31, 2011 and 2010 include restructuring costs and non-recurring items that management believes should be considered when evaluating the underlying financial performance.
See accompanying Notes to Condensed Consolidated Financial Statements.
United Technologies Corporation
Segment Net Sales and Operating Profit
Quarter Ended Year Ended
December 31, December 31,
(Unaudited) (Unaudited)
----------- -----------
(Millions) 2011 2010 2011 2010
---- ---- ---- ----
Net Sales
Otis $3,211 $3,107 $12,437 $11,579
Carrier 2,635 2,890 11,969 11,386
UTC Fire &
Security 1,775 1,803 6,895 6,490
Pratt &
Whitney 3,632 3,585 13,430 12,935
Hamilton
Sundstrand 1,647 1,483 6,150 5,608
Sikorsky 2,110 2,087 7,355 6,684
----- ----- ----- -----
Segment
Sales 15,010 14,955 58,236 54,682
Eliminations
and other (44) (91) (46) (356)
Consolidated
Net Sales $14,966 $14,864 $58,190 $54,326
======= ======= ======= =======
Operating
Profit
Otis $711 $660 $2,815 $2,575
Carrier 330 210 1,520 1,062
UTC Fire &
Security 130 236 692 714
Pratt &
Whitney 539 482 1,999 1,987
Hamilton
Sundstrand 289 238 1,082 918
Sikorsky 207 239 840 716
--- --- --- ---
Segment
Operating
Profit 2,206 2,065 8,948 7,972
Eliminations
and other (184) (88) (430) (409)
General
corporate
expenses (124) (124) (419) (377)
Consolidated
Operating
Profit $1,898 $1,853 $8,099 $7,186
====== ====== ====== ======
Segment
Operating
Profit
Margin
Otis 22.1% 21.2% 22.6% 22.2%
Carrier 12.5% 7.3% 12.7% 9.3%
UTC Fire &
Security 7.3% 13.1% 10.0% 11.0%
Pratt &
Whitney 14.8% 13.4% 14.9% 15.4%
Hamilton
Sundstrand 17.5% 16.0% 17.6% 16.4%
Sikorsky 9.8% 11.5% 11.4% 10.7%
--- ---- ---- ----
Segment
Operating
Profit
Margin 14.7% 13.8% 15.4% 14.6%
As described on the following pages, consolidated results for the quarters and years ended December 31, 2011 and 2010 include restructuring costs and non-recurring items that management believes should be considered when evaluating the underlying financial performance.
United Technologies Corporation
Restructuring Costs and Non-Recurring Items Included in Consolidated
Results
Quarter Ended Year Ended
December 31, December 31,
(Unaudited) (Unaudited)
(Millions) 2011 2010 2011 2010
---- ---- ---- ----
Restructuring Costs included in Operating Profit:
Otis $(26) $(43) $(73) $(83)
Carrier (9) (43) (46) (75)
UTC Fire & Security (51) (25) (80) (78)
Pratt & Whitney (19) (90) (67) (138)
Hamilton Sundstrand (6) (26) (16) (37)
Sikorsky (37) - (53) (14)
Eliminations and other (1) - (6) (1) (18)
(148) (233) (336) (443)
Non-Recurring items included in Operating Profit:
Carrier 81 18 109 (5)
UTC Fire & Security (46) - (66) -
Pratt & Whitney - - 41 -
Hamilton Sundstrand - - - (28)
Sikorsky - - 73 -
Eliminations and other (45) 21 (45) (138)
(10) 39 112 (171)
Total impact on Consolidated
Operating Profit (158) (194) (224) (614)
Non-Recurring items included
in Interest
Expense, Net 89 - 89 24
Tax effect of restructuring and non-
recurring
items above 17 72 22 128
Non-Recurring items included
in Income
Tax Expense 63 93 80 195
Impact on Net Income Attributable
to
Common Shareowners $11 $(29) $(33) $(267)
Impact on Diluted Earnings Per
Share $0.01 $(0.03) $(0.04) $(0.29)
(1) Restructuring costs incurred in 2010 primarily reflects the impact of
curtailments on our domestic pension plans.
Details of the non-recurring items for the quarters and years ended December 31, 2011 and 2010 above are as follows:
Quarter Ended December 31, 2011
Carrier: Approximately $81 million net gain resulting from Carrier's
ongoing portfolio transformation primarily as a result of the
contribution of Carrier's heating, air-conditioning, and
ventilation operations in Brazil, Argentina, and Chile into a new
venture controlled by Midea Group of China.
UTC Fire & Security: Approximately $46 million other-than-
temporary impairment charge on an equity investment.
Eliminations and other: Approximately $45 million of reserves were
established for legal matters.
Non-Recurring item included in Interest Expense, Net: Approximately
$89 million of favorable pre-tax interest adjustments related to
the settlement of U.S. federal income tax refund claims for years
prior to 2004.
Non-Recurring item included in Income Tax Expense: Approximately $63
million of favorable income tax adjustments related to the
settlement of U.S. federal income tax refund claims for years prior
to 2004.
Quarter Ended September 30, 2011
Carrier: Approximately $28 million net gain resulting from
dispositions associated with Carrier's ongoing portfolio
transformation.
UTC Fire & Security: Approximately $20 million other-than-temporary
impairment charge on an equity investment.
Pratt & Whitney: Approximately $41 million gain recognized from the
sale of an equity investment.
Non-Recurring item included in Income Tax Expense: Favorable tax
benefit of approximately $17 million as a result of a U.K. tax rate
reduction enacted in July 2011.
Quarter Ended June 30, 2011
Sikorsky: Approximately $73 million gain recognized from the
contribution of a business into a new venture in the United Arab
Emirates.
Quarter Ended December 31, 2010
Carrier: Approximately $18 million net gain resulting from
dispositions associated with Carrier's ongoing portfolio
transformation.
Eliminations and other: Approximately $21 million non-cash, non-
taxable gain recognized on the remeasurement to fair value of our
previously held equity interest in Clipper resulting from our
purchase of a controlling interest (all remaining shares) of
Clipper.
Non-Recurring item included in Income Tax Expense: Approximately $38
million favorable net tax benefit associated with management's
decision to repatriate additional foreign cash to the U.S. in 2010
and 2011.
Non-Recurring item included in Income Tax Expense: Approximately $55
million net tax benefit associated with the completion of the
acquisition of all remaining shares of Clipper in December 2010.
Quarter Ended September 30, 2010
Carrier: Approximately $24 million net gain resulting from
dispositions associated with Carrier's ongoing portfolio
transformation.
Eliminations and other: Approximately $159 million other-than-
temporary impairment charge of our equity investment in Clipper.
Non-Recurring item included in Income Tax Expense: Approximately
$102 million favorable net tax benefit associated with management's
intention to repatriate additional foreign cash to the U.S. in 2010.
Quarter Ended June 30, 2010
Carrier: Approximately $47 million net charge resulting from
dispositions associated with Carrier's ongoing portfolio
transformation. Included in this net charge is an approximately $58
million asset impairment charge associated with the disposition of a
business, partially offset by an approximately $11 million gain on
the sale of another business.
Hamilton Sundstrand: Approximately $28 million of asset impairment
charges related primarily to the disposition of an aerospace
business as part of Hamilton Sundstrand's ongoing low cost sourcing
initiatives.
Non-Recurring item included in Interest Expense, Net: Favorable pre-
tax interest adjustment of approximately $24 million associated with
the resolution of an uncertain temporary tax item in the quarter.
The following page provides segment net sales, operating profits and operating profit margins as adjusted for the aforementioned restructuring costs and non-recurring items. Management believes these adjusted results more accurately portray the ongoing operational performance and fundamentals of the underlying businesses. The amount and timing of restructuring costs and non-recurring activity can vary substantially from period to period with no assurances of comparable activity or amounts being incurred in future periods. 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 Net Sales and Operating Profit Adjusted for Restructuring Costs
and Non-Recurring Items (as reflected on the previous pages)
Quarter Ended Year Ended
December 31, December 31,
(Unaudited) (Unaudited)
----------- -----------
(Millions) 2011 2010 2011 2010
---- ---- ---- ----
Net Sales
Otis $3,211 $3,107 $12,437 $11,579
Carrier 2,635 2,890 11,969 11,386
UTC Fire & Security 1,775 1,803 6,895 6,490
Pratt & Whitney 3,632 3,585 13,430 12,935
Hamilton Sundstrand 1,647 1,483 6,150 5,608
Sikorsky 2,110 2,087 7,355 6,684
----- ----- ----- -----
Segment Sales 15,010 14,955 58,236 54,682
Eliminations and other (44) (91) (46) (356)
Consolidated Net Sales $14,966 $14,864 $58,190 $54,326
======= ======= ======= =======
Adjusted Operating Profit
Otis $737 $703 $2,888 $2,658
Carrier 258 235 1,457 1,142
UTC Fire & Security 227 261 838 792
Pratt & Whitney 558 572 2,025 2,125
Hamilton Sundstrand 295 264 1,098 983
Sikorsky 244 239 820 730
--- --- --- ---
Adjusted Segment
Operating Profit 2,319 2,274 9,126 8,430
Eliminations and other (139) (103) (384) (253)
General corporate
expenses (124) (124) (419) (377)
Adjusted Consolidated
Operating Profit $2,056 $2,047 $8,323 $7,800
====== ====== ====== ======
Adjusted Segment
Operating Profit Margin
Otis 23.0% 22.6% 23.2% 23.0%
Carrier 9.8% 8.1% 12.2% 10.0%
UTC Fire & Security 12.8% 14.5% 12.2% 12.2%
Pratt & Whitney 15.4% 16.0% 15.1% 16.4%
Hamilton Sundstrand 17.9% 17.8% 17.9% 17.5%
Sikorsky 11.6% 11.5% 11.1% 10.9%
---- ---- ---- ----
Adjusted Segment
Operating Profit Margin 15.4% 15.2% 15.7% 15.4%
United Technologies Corporation
Condensed Consolidated Balance Sheet
December 31, December 31,
2011 2010
(Millions) (Unaudited) (Unaudited)
----------- -----------
Assets
------
Cash and cash equivalents $5,960 $4,083
Accounts receivable, net 9,546 8,925
Inventories and contracts in
progress, net 7,797 7,766
Other assets, current 2,455 2,736
----- -----
Total Current Assets 25,758 23,510
Fixed assets, net 6,201 6,280
Goodwill 17,943 17,721
Intangible assets, net 3,918 4,060
Other assets 7,632 6,922
----- -----
Total Assets $61,452 $58,493
======= =======
Liabilities and Equity
----------------------
Short-term debt $759 $279
Accounts payable 5,570 5,206
Accrued liabilities 12,287 12,247
------ ------
Total Current Liabilities 18,616 17,732
Long-term debt 9,501 10,010
Other long-term liabilities 10,157 8,102
------ -----
Total Liabilities 38,274 35,844
------ ------
Redeemable noncontrolling
interest 358 317
Shareowners' Equity:
Common Stock 13,293 12,431
Treasury Stock (19,410) (17,468)
Retained earnings 33,487 30,191
Accumulated other comprehensive
loss (5,490) (3,769)
------ ------
Total Shareowners' Equity 21,880 21,385
Noncontrolling interest 940 947
--- ---
Total Equity 22,820 22,332
------ ------
Total Liabilities and Equity $61,452 $58,493
======= =======
Debt Ratios:
Debt to total capitalization 31% 32%
Net debt to net capitalization 16% 22%
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) 2011 2010 2011 2010
---- ---- ---- ----
Operating Activities:
Net income attributable to
common shareowners $1,325 $1,199 $4,979 $4,373
Noncontrolling interest in
subsidiaries' earnings 97 54 395 338
--- --- --- ---
Net income 1,422 1,253 5,374 4,711
Adjustments to reconcile net
income to net cash flows
provided by operating
activities:
Depreciation and amortization 324 348 1,347 1,356
Deferred income tax (benefit)
provision (2) 536 331 413
Stock compensation cost 44 42 229 154
Change in working capital 275 494 (418) 525
Global pension contributions * (304) (600) (551) (1,299)
Other operating activities,
net 253 (397) 278 46
--- ---- --- ---
Net cash flows provided by
operating activities 2,012 1,676 6,590 5,906
----- ----- ----- -----
Investing Activities:
Capital expenditures (378) (386) (983) (865)
Acquisitions and dispositions
of businesses, net (15) (199) 140 (2,550)
Other investing activities,
net (16) 84 136 228
--- --- --- ---
Net cash flows used in
investing activities (409) (501) (707) (3,187)
---- ---- ---- ------
Financing Activities:
(Decrease) increase in
borrowings, net (1,075) (2,022) (1) 470
Dividends paid on Common Stock (410) (368) (1,602) (1,482)
Repurchase of Common Stock - (556) (2,175) (2,200)
Other financing activities,
net (110) 101 (227) 59
---- --- ---- ---
Net cash flows used in
financing activities (1,595) (2,845) (4,005) (3,153)
------ ------ ------ ------
Effect of foreign exchange
rate changes on cash and (14) 22 (1) 68
cash equivalents --- --- --- ---
Net (decrease) increase in
cash and cash equivalents (6) (1,648) 1,877 (366)
Cash and cash equivalents,
beginning of period 5,966 5,731 4,083 4,449
----- ----- ----- -----
Cash and cash equivalents, end
of period $5,960 $4,083 $5,960 $4,083
====== ====== ====== ======
* Non-cash activities include contributions of UTC common stock to domestic
defined benefit pension plans of
$450 million during the third quarter of 2011 and $250 million during the second quarter of 2010.
See accompanying Notes to Condensed Consolidated Financial Statements.
United Technologies Corporation
Free Cash Flow Reconciliation
Quarter Ended December 31,
(Unaudited)
-----------
(Millions) 2011 2010
---- ----
Net income attributable to
common shareowners $1,325 $1,199
Noncontrolling interest in
subsidiaries' earnings 97 54
--- ---
Net income 1,422 1,253
Depreciation and
amortization 324 348
Change in working capital 275 494
Other operating
activities, net (9) (419)
--- ----
Net cash flows provided by
operating activities 2,012 1,676
Net cash flows provided by
operating activities as a
percentage 152% 140%
of net income attributable
to common shareowners
Capital expenditures (378) (386)
---- ----
Capital expenditures as a
percentage of net income (29)% (32)%
attributable to common
shareowners ---- ----
Free cash flow $1,634 $1,290
====== ======
Free cash flow as a
percentage of net income 123% 108%
attributable to common
shareowners === ===
Year Ended December 31,
(Unaudited)
-----------
(Millions) 2011 2010
---- ----
Net income attributable to
common shareowners $4,979 $4,373
Noncontrolling interest in
subsidiaries' earnings 395 338
--- ---
Net income 5,374 4,711
Depreciation and
amortization 1,347 1,356
Change in working capital (418) 525
Other operating
activities, net 287 (686)
--- ----
Net cash flows provided by
operating activities 6,590 5,906
Net cash flows provided by
operating activities as a
percentage 133% 135%
of net income attributable
to common shareowners
Capital expenditures (983) (865)
---- ----
Capital expenditures as a
percentage of net income (20)% (20)%
attributable to common
shareowners ---- ----
Free cash flow $5,607 $5,041
====== ======
Free cash flow as a
percentage of net income 113 % 115 %
attributable to common
shareowners === ===
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 sales 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.
3. Free cash flow, which represents cash flow from operations less capital
expenditures, is the principal cash performance measure used by UTC.
Management believes free cash flow provides a relevant measure of
liquidity and a useful basis for assessing UTC's ability to fund its
activities, including the financing of acquisitions, debt service,
repurchases of UTC's common stock and distribution of earnings to
shareholders. Other companies 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 shown above.
SOURCE United Technologies Corp.
