UTC Reports Full Year 2015 Results, Affirms 2016 Outlook

Jan 27, 2016, 06:58 ET from United Technologies Corp.

FARMINGTON, Conn., Jan. 27, 2016 /PRNewswire/ -- 

Adjusted results

  • 2015 Adjusted EPS of $6.30 at high end of expected range
  • Adjusted EPS up slightly excluding $0.19 unfavorable FX impact
  • Affirms 2016 expectations for Adjusted EPS of $6.30 to $6.60 on sales of $56 billion to $58 billion

Reported (GAAP) results

  • 2015 GAAP EPS of $4.53, reflecting $0.31 in restructuring and $1.46 of other significant non-recurring and non-operational items
  • Full year sales were $56.1 billion, down 3 percent versus prior year primarily due to FX, with 1 point of organic sales growth

Key milestones and accomplishments

  • First Pratt & Whitney Geared Turbofan-powered A320neo entered into revenue service
  • Won major systems contracts for signature Hudson Yards development in New York City
  • Rebalanced portfolio by divesting Sikorsky
  • Returned $12 billion to shareowners, including share repurchase and dividends

United Technologies Corp. (NYSE: UTX) today reported full year 2015 Adjusted EPS of $6.30.  All results in this release reflect continuing operations unless otherwise noted.

"I'm pleased to report UTC's 2015 earnings reached the top end of expectations we set months ago," said UTC President and Chief Executive Officer Gregory Hayes. "Solid execution on our strategic priorities has set a strong foundation for future growth.

"In line with our 2015 strategic priorities, we took decisive actions to streamline our portfolio with the divestiture of Sikorsky and return over $12 billion to shareowners. Returning cash to shareowners continues to be a top priority and we are still targeting $22 billion of total shareowner returns through share repurchases and dividends from 2015 through 2017," Hayes said.  "We also streamlined UTC's organizational structure and initiated a $1.5 billion multi-year restructuring plan to improve competitiveness. 

"UTC is now more focused than ever on innovative new technologies for the aerospace and buildings industries.  This week Pratt & Whitney's Geared Turbofan entered into service on the first A320neo – making aviation history by meeting all of its key performance requirements from day one," Hayes added.

Full year 2015 Adjusted EPS of $6.30 decreased 2 percent year over year, with foreign currency having an unfavorable impact of $0.19, or 3 percent.  Excluding the unfavorable impact of foreign exchange rates, Adjusted EPS was up slightly year over year.  GAAP earnings per share were $4.53, reflecting $0.31 in restructuring and $1.46 of net charges related to other significant non-recurring and non-operational items.

Full year sales of $56.1 billion decreased by 3 percent, as 1 point of organic sales growth was more than offset by 4 points of adverse foreign exchange.  Free cash flow for the year was 126 percent of net income attributable to common shareowners, including slightly more than 25 points of benefit associated with restructuring and other significant items.

Fourth quarter Adjusted EPS of $1.53 was down 8 percent.  GAAP earnings for the fourth quarter reflected a loss of $0.30 per share, including $0.16 of restructuring costs and $1.67 of net unfavorable other significant items.  Sales of $14.3 billion were down 5 percent driven primarily by 4 points of unfavorable foreign exchange, with organic sales up slightly in the quarter.

Otis new equipment orders in the quarter increased 2 percent over the prior year at constant currency, and grew 11 percent excluding China.  Equipment orders at UTC Climate, Controls & Security decreased by 5 percent.  Commercial aftermarket sales were up 11 percent at Pratt & Whitney, and up 8 percent at UTC Aerospace Systems.

"As we enter 2016, the tough actions that we've taken, and will continue to take, put us in position to achieve our financial objectives.  We remain confident in our full year 2016 Adjusted EPS expectations of $6.30 to $6.60 on sales of $56 billion to $58 billion, despite a difficult macro environment," Hayes added.

UTC continues to anticipate 2016 free cash flow in the range of 90 to 100 percent of net income attributable to common shareowners.  The company also continues to expect share repurchase of $3 billion in 2016, beyond the repurchases that will be completed in 2016 under the previously announced $6 billion accelerated share repurchase program.  UTC continues to assume a $1 billion to $2 billion placeholder for acquisitions in 2016.

United Technologies Corp., based in Farmington, Connecticut, provides 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. To learn more about UTC, visit the website or follow the company on Twitter: @UTC

Use of Non-GAAP Financial Measures Adjusted EPS, adjusted segment margins and free cash flow are non-GAAP financial measures that are used in UTC's financial press releases and webcasts.  A reconciliation of these non-GAAP measures to the corresponding amounts prepared in accordance with generally accepted accounting principles (GAAP) is included in the tables to this press release. 

Adjusted EPS and adjusted segment margin reflect continuing operations, excluding restructuring costs and other significant items of a non-recurring and/or non-operational nature (often referred to in this press release as "other significant items").  Management believes Adjusted EPS and adjusted segment margin are both useful in providing period to period comparisons of the results of the Company's operational performance.  The tables attached to this press release provide additional information as to the items and amounts that have been excluded from Adjusted EPS and adjusted segment margin. 

Free cash flow represents cash flow from operations less capital expenditures.  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 the Company's Common Stock and distribution of earnings to shareowners.

When we provide our expectations for Adjusted EPS and/or free cash flow on a forward-looking basis, the closest corresponding GAAP measures (expected EPS from continuing operations and expected cash flow from operations) and a reconciliation of the differences between the non-GAAP expectation and the corresponding GAAP measure generally are not available (except as otherwise indicated) without unreasonable effort due to potentially high variability, complexity and low visibility as to the items that would be excluded from the GAAP measure in the relevant future period.  The variability of the excluded items may have a significant, and potentially unpredictable, impact on our future GAAP results.

Adjusted EPS, adjusted segment margins and free cash flow should not be considered in isolation or as substitutes for analysis of the Company's results as reported under GAAP.  Other companies may calculate adjusted EPS, adjusted segment margins and free cash flow differently than the Company does, limiting the usefulness of those measures for comparisons with such other companies.

Cautionary Statement This press release includes statements that constitute "forward-looking statements" under the securities laws. Forward-looking statements often contain words such as "believe," "expect," "plans," "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, charges, expenditures, share repurchases, acquisitions and divestitures, orders, foreign exchange rate assumptions 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 research and development spending; levels of end market demand in construction and in the aerospace industry; levels of air travel; financial condition of commercial airlines; the impact of government budget and funding decisions on the economy; changes in government procurement priorities and funding; weather conditions and natural disasters; delays and disruption in delivery of materials and services from suppliers; company and customer directed cost reduction efforts and restructuring costs and consequences thereof; the impact of acquisitions, dispositions, joint ventures and similar transactions; the development and production of new products and services; the impact of diversification across product lines, regions and industries; the impact of legal proceedings, investigations and other contingencies; pension plan assumptions and future contributions; the effect of changes in tax, environmental and other laws and regulations and political conditions; and other factors beyond our control. The level and timing of discretionary share repurchases (those outside the company's current accelerated share repurchase program) depend upon market conditions, the level of other investing activities and uses of cash, and discretionary share repurchases may be suspended at any time. The forward-looking statements speak only as of the date of this press release and we undertake no obligation to update or revise any forward-looking statements as of a later date. For additional information identifying factors that may cause actual results to vary materially from those stated in 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          

United Technologies Corporation

Condensed Consolidated Statement of Operations

Quarter Ended December 31,

Year Ended December 31,

(Unaudited)

(Unaudited)

(Millions, except per share amounts)

2015

2014

2015

2014

Net Sales

$

14,300

$

14,980

$

56,098

$

57,900

Costs and Expenses:

Cost of products and services sold

10,653

10,731

40,431

40,898

Research and development

611

624

2,279

2,475

Selling, general and administrative

1,625

1,620

5,886

6,172

Total Costs and Expenses

12,889

12,975

48,596

49,545

Other (expense) income, net

(1,019)

275

(211)

1,238

Operating profit

392

2,280

7,291

9,593

Interest expense, net

206

266

824

881

Income from continuing operations before income taxes

186

2,014

6,467

8,712

Income tax expense

363

634

2,111

2,244

(Loss) income from continuing operations

(177)

1,380

4,356

6,468

Less: Noncontrolling interest in subsidiaries' earnings

from continuing operations

79

102

360

402

(Loss) income from continuing operations attributable to

common shareowners

(256)

1,278

3,996

6,066

Discontinued operations:

(Loss) income from operations

(32)

291

252

175

Gain on disposal

6,108

6,042

Income tax expense

(2,544)

(96)

(2,684)

(20)

Income from discontinued operations

3,532

195

3,610

155

Less: Noncontrolling interest in subsidiaries' earnings

 from discontinued operations

(2)

(2)

1

Income from discontinued operations attributable to

common shareowners

3,534

195

3,612

154

Net income attributable to common shareowners

$

3,278

$

1,473

$

7,608

$

6,220

Earnings Per Share of Common Stock - Basic:

From continuing operations attributable to common shareowners

$

(0.30)

$

1.43

$

4.58

$

6.75

From discontinued operations attributable to common shareowners

4.16

0.22

4.14

0.17

Earnings Per Share of Common Stock - Diluted:

From continuing operations attributable to common shareowners

$

(0.30)

$

1.41

$

4.53

$

6.65

From discontinued operations attributable to common shareowners

4.16

0.22

4.09

0.17

Weighted Average Number of Shares Outstanding:

Basic shares

850

895

873

898

Diluted shares

850

907

883

912

As described on the following pages, consolidated results for the quarters and years ended December 31, 2015 and 2014 include restructuring costs and significant non-recurring and non-operational 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 December 31,

Year Ended December 31,

(Unaudited)

(Unaudited)

(Millions)

2015

2014

2015

2014

Net Sales

Otis

$

3,094

$

3,336

$

11,980

$

12,982

UTC Climate, Controls & Security

4,122

4,192

16,707

16,823

Pratt & Whitney

3,839

4,023

14,082

14,508

UTC Aerospace Systems

3,457

3,594

14,094

14,215

Segment Sales

14,512

15,145

56,863

58,528

Eliminations and other

(212)

(165)

(765)

(628)

Consolidated Net Sales

$

14,300

$

14,980

$

56,098

$

57,900

Operating Profit

Otis

$

542

$

674

$

2,338

$

2,640

UTC Climate, Controls & Security

613

623

2,936

2,782

Pratt & Whitney

(464)

547

861

2,000

UTC Aerospace Systems

167

588

1,888

2,355

Segment Operating Profit

858

2,432

8,023

9,777

Eliminations and other

(333)

(19)

(268)

304

General corporate expenses

(133)

(133)

(464)

(488)

Consolidated Operating Profit

$

392

$

2,280

$

7,291

$

9,593

Segment Operating Profit Margin

Otis

17.5

%

20.2

%

19.5

%

20.3

%

UTC Climate, Controls & Security

14.9

%

14.9

%

17.6

%

16.5

%

Pratt & Whitney

(12.1)

%

13.6

%

6.1

%

13.8

%

UTC Aerospace Systems

4.8

%

16.4

%

13.4

%

16.6

%

Segment Operating Profit Margin

5.9

%

16.1

%

14.1

%

16.7

%

As described on the following pages, consolidated results for the quarters and years ended December 31, 2015 and 2014 include restructuring costs and significant non-recurring and non-operational items that management believes should be considered when evaluating the underlying financial performance.

 

 

United Technologies Corporation

Reconciliation of Reported to Adjusted Results

Quarter Ended December 31,

Year Ended December 31,

(Unaudited)

(Unaudited)

In Millions - Income (Expense)

2015

2014

2015

2014

Net Sales

$

14,300

$

14,980

$

56,098

$

57,900

Significant non-recurring and non-operational items

included in Net Sales:

Pratt & Whitney - charge resulting from customer

contract negotiations

(142)

(142)

UTC Aerospace Systems - charge resulting from customer contract negotiations

(210)

(210)

Adjusted Net Sales

$

14,652

$

14,980

$

56,450

$

57,900

(Loss) income from continuing operations attributable

to common shareowners

$

(256)

$

1,278

$

3,996

$

6,066

Restructuring Costs included in Operating Profit:

Otis

(19)

(34)

(51)

(87)

UTC Climate, Controls & Security

(41)

(34)

(108)

(116)

Pratt & Whitney

(68)

(9)

(105)

(64)

UTC Aerospace Systems

(47)

(46)

(111)

(82)

Eliminations and other

(16)

(5)

(21)

(5)

(191)

(128)

(396)

(354)

Significant non-recurring and non-operational items included in Operating Profit:

UTC Climate, Controls & Security

(5)

121

30

Pratt & Whitney

(947)

(947)

1

UTC Aerospace Systems

(356)

(356)

Eliminations and other

(264)

(264)

220

(1,572)

(1,446)

251

Total impact on Consolidated Operating Profit

(1,763)

(128)

(1,842)

(103)

Significant non-recurring and non-operational items included in Interest Expense, Net

(55)

(11)

Tax effect of restructuring and significant non-recurring

and non-operational items above

551

32

617

7

Significant non-recurring and non-operational items included in Income Tax Expense

(342)

(87)

(342)

284

Less: Impact on Net Income from Continuing

Operations Attributable to Common Shareowners

(1,554)

(238)

(1,567)

177

Adjusted income from continuing operations attributable to common shareowners

$

1,298

$

1,516

$

5,563

$

5,889

Diluted Earnings Per Share from Continuing Operations

$

(0.30)

$

1.41

$

4.53

$

6.65

Impact on Diluted Earnings Per Share from Continuing Operations

(1.83)

(0.26)

(1.77)

0.19

Adjusted Diluted Earnings Per Share from Continuing Operations

$

1.53

$

1.67

$

6.30

$

6.46

 

 

Details of the significant non-recurring and non-operational items included within operating profit for the quarters and year ended December 31, 2015 and 2014 above are as follows:

Quarter Ended December 31,

Year Ended December 31,

(Unaudited)

(Unaudited)

In Millions - Income (Expense)

2015

2014

2015

2014

Significant non-recurring and non-operational items

included in Operating Profit:

UTC Climate, Controls & Security

Gain on fair value adjustment on acquisition of

controlling interest in a joint venture

$

$

$

126

$

Net gain from ongoing portfolio transformation

30

Acquisition and integration costs related to current

period acquisitions

(5)

(5)

Pratt & Whitney

Charge related to a research and development support

agreement with the Canadian government

(867)

(867)

Charge resulting from customer contract negotiations

(80)

(80)

Net gain on fair value adjustment related to a business acquisition

83

Adjustment to fair value of a joint venture investment

(60)

Charge for impairment of assets related to a joint

venture investment

(22)

UTC Aerospace Systems

Charge resulting from customer contract negotiations

(295)

(295)

Charge for impairment of assets held for sale

(61)

(61)

Eliminations & other

Charge for pending and future asbestos-related claims

(237)

(237)

(Charge) gain from agreement with a state taxing authority for monetization of tax credits

(27)

(27)

220

$

(1,572)

$

$

(1,446)

$

251

 

 

Details of the significant non-recurring and non-operational items included within interest and income tax of continuing operations for the quarters and year ended December 31, 2015 and 2014 above are as follows:

Quarter Ended December 31,

Year Ended December 31,

(Unaudited)

(Unaudited)

In Millions - Income (Expense)

2015

2014

2015

2014

Significant non-recurring and non-operational items

included in Interest Expense, Net

Unfavorable pre-tax interest accruals related to the

ongoing dispute with German tax authorities

$

$

(143)

$

$

(143)

Favorable pre-tax interest adjustments, primarily related

to Goodrich Corporation's 2000 to 2010 tax years

88

88

Favorable pre-tax interest adjustments, primarily related

to the Company's 2006 - 2008  and 2009 - 2010 tax

years

44

$

$

(55)

$

$

(11)

Significant non-recurring and non-operational items

included in Income Tax Expense

Unfavorable income tax accruals related to the

repatriation of foreign earnings

$

(274)

$

$

(274)

$

Unfavorable income tax accruals related to changes in

tax laws

(68)

(68)

Unfavorable income tax accruals related to the ongoing

dispute with German tax authorities

(267)

(267)

Favorable tax adjustment primarily associated with

management's decision to repatriate additional high

taxed dividends

180

180

Favorable income tax adjustments related to the

Company's 2006 - 2008 and 2009 - 2010 tax years, and

settlement of state income taxes related to the disposition of the

Hamilton Sundstrand Industrials

businesses

371

$

(342)

$

(87)

$

(342)

$

284

 

 

United Technologies Corporation

Segment Net Sales and Operating Profit Adjusted for Restructuring Costs and

Significant Non-recurring and Non-operational Items (as reflected on the previous three pages)

Quarter Ended December 31,

Year Ended December 31,

(Unaudited)

(Unaudited)

(Millions)

2015

2014

2015

2014

Adjusted Net Sales

Otis

$

3,094

$

3,336

$

11,980

$

12,982

UTC Climate, Controls & Security

4,122

4,192

16,707

16,823

Pratt & Whitney

3,981

4,023

14,224

14,508

UTC Aerospace Systems

3,667

3,594

14,304

14,215

Segment Sales

14,864

15,145

57,215

58,528

Eliminations and other

(212)

(165)

(765)

(628)

Adjusted Consolidated Net Sales

$

14,652

$

14,980

$

56,450

$

57,900

Adjusted Operating Profit

Otis

$

561

$

708

$

2,389

$

2,727

UTC Climate, Controls & Security

659

657

2,923

2,868

Pratt & Whitney

551

556

1,913

2,063

UTC Aerospace Systems

570

634

2,355

2,437

Segment Operating Profit

2,341

2,555

9,580

10,095

Eliminations and other

(58)

(18)

8

85

General corporate expenses

(128)

(129)

(455)

(484)

Adjusted Consolidated Operating Profit

$

2,155

$

2,408

$

9,133

$

9,696

Adjusted Segment Operating Profit Margin

Otis

18.1

%

21.2

%

19.9

%

21.0

%

UTC Climate, Controls & Security

16.0

%

15.7

%

17.5

%

17.0

%

Pratt & Whitney

13.8

%

13.8

%

13.4

%

14.2

%

UTC Aerospace Systems

15.5

%

17.6

%

16.5

%

17.1

%

Adjusted Segment Operating Profit Margin

15.7

%

16.9

%

16.7

%

17.2

%

 

 

United Technologies Corporation

Condensed Consolidated Balance Sheet

December 31,

December 31,

2015

2014

(Millions)

(Unaudited)

(Unaudited)

Assets

Cash and cash equivalents

$

7,075

$

5,229

Accounts receivable, net

10,653

10,448

Inventories and contracts in progress, net

8,135

7,642

Other assets, current

843

3,296

Assets held for sale

4,868

Total Current Assets

26,706

31,483

Fixed assets, net

8,732

8,592

Goodwill

27,301

27,448

Intangible assets, net

15,603

15,528

Other assets

9,142

8,155

Total Assets

$

87,484

$

91,206

Liabilities and Equity

Short-term debt

$

1,105

$

1,917

Accounts payable

6,875

6,250

Accrued liabilities

14,638

12,527

Liabilities held for sale

2,781

Total Current Liabilities

22,618

23,475

Long-term debt

19,320

17,784

Other long-term liabilities

16,580

17,243

Total Liabilities

58,518

58,502

Redeemable noncontrolling interest

122

140

Shareowners' Equity:

Common Stock

15,928

15,185

Treasury Stock

(30,907)

(21,922)

Retained earnings

49,956

44,611

Accumulated other comprehensive loss

(7,619)

(6,661)

Total Shareowners' Equity

27,358

31,213

Noncontrolling interest

1,486

1,351

Total Equity

28,844

32,564

Total Liabilities and Equity

$

87,484

$

91,206

Debt Ratios:

Debt to total capitalization

41

%

38

%

Net debt to net capitalization

32

%

31

%

See accompanying Notes to Condensed Consolidated Financial Statements.

 

 

United Technologies Corporation

Condensed Consolidated Statement of Cash Flows

Quarter Ended December 31,

Year Ended December 31,

(Unaudited)

(Unaudited)

(Millions)

2015

2014

2015

2014

Operating Activities of Continuing Operations:

(Loss) income from continuing operations

$

(177)

$

1,380

$

4,356

$

6,468

Adjustments to reconcile (loss) income from continuing operations to net

cash flows provided by operating activities of continuing operations:

Depreciation and amortization

462

468

1,863

1,820

Deferred income tax provision

218

172

662

403

Stock compensation cost

50

32

158

219

Canadian government settlement

867

867

Change in working capital

841

140

(847)

(729)

Global pension contributions

(54)

(313)

(147)

(517)

Other operating activities, net

447

93

(214)

(670)

   Net cash flows provided by operating activities of continuing operations

2,654

1,972

6,698

6,994

Investing Activities of Continuing Operations:

Capital expenditures

(608)

(531)

(1,652)

(1,594)

Acquisitions and dispositions of businesses, net

(181)

76

(338)

(58)

Increase in collaboration intangible assets

(106)

(134)

(437)

(593)

Receipts (payments) from settlements of derivative contracts

13

(60)

160

93

Other investing activities, net

(229)

(151)

(260)

(40)

   Net cash flows used in investing activities of continuing operations

(1,111)

(800)

(2,527)

(2,192)

Financing Activities of Continuing Operations:

(Repayment) issuance of long-term debt, net

(24)

15

(20)

(206)

(Decrease) increase in short-term borrowings, net

(2,096)

(209)

795

(346)

Proceeds from Common Stock issuance - equity unit remarketing

1,100

Dividends paid on Common Stock

(541)

(510)

(2,184)

(2,048)

Repurchase of Common Stock

(6,000)

(405)

(10,000)

(1,500)

Other financing activities, net

(254)

(65)

(467)

(147)

   Net cash flows used in financing activities of continuing operations

(8,915)

(1,174)

(10,776)

(4,247)

Discontinued Operations:

Net cash (used in) provided by operating activities

(73)

339

(372)

342

Net cash provided by (used in) investing activities

9,066

(29)

9,000

(113)

Net cash used in financing activities

(8)

(11)

(9)

(12)

   Net cash flows provided by discontinued operations

8,985

299

8,619

217

Effect of foreign exchange rate changes on cash and cash equivalents

(31)

(97)

(174)

(156)

   Net increase in cash and cash equivalents

1,582

200

1,840

616

Cash and cash equivalents, beginning of period

5,493

5,035

5,235

4,619

Cash and cash equivalents of continuing operations, end of period

7,075

5,235

7,075

5,235

Less: Cash and cash equivalents of assets held for sale

6

6

Cash and cash equivalents of continuing operations, end of period

$

7,075

$

5,229

$

7,075

$

5,229

 See accompanying Notes to Condensed Consolidated Financial Statements.

 

 

United Technologies Corporation

Free Cash Flow Reconciliation

Year Ended December 31,

(Unaudited)

(Millions)

2015

2014

Net income attributable to common shareowners from continuing operations

$

3,996

$

6,066

Net cash flows provided by operating activities of continuing operations

$

6,698

$

6,994

Net cash flows provided by operating activities of continuing operations as a

percentage of net income attributable to common shareowners from continuing

operations

168

%

115

%

Capital expenditures

(1,652)

(1,594)

Capital expenditures as a percentage of net income attributable to common shareowners from continuing operations

(41)

%

(26)

%

Free cash flow from continuing operations

$

5,046

$

5,400

Free cash flow from continuing operations as a percentage of net income attributable to common shareowners from continuing operations

126

%

89

%

 

 

Notes to Condensed Consolidated Financial Statements

(1)

Adjusted Net Sales, Adjusted Operating Profit and Adjusted EPS are non-GAAP financial measures.  Adjusted Net Sales represents Net Sales excluding significant items of a non-recurring and non-operational nature.  Adjusted Operating Profit represents operating profit excluding restructuring costs and other significant items of a non-recurring and non-operational nature.  Adjusted EPS represents diluted earnings per share from continuing operations, excluding restructuring costs and other significant items of a non-recurring and non-operational nature. Management believes Adjusted Net Sales, Adjusted Operating Profit and Adjusted EPS are useful in providing period to period comparisons of the results of the Company's ongoing operational performance. A reconciliation of these non-GAAP measures to the corresponding amounts prepared in accordance with generally accepted accounting principles is included in the tables above.

(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 sales growth is a non-GAAP financial measure that 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 and non-operational items.

(4)

Free cash flow is a non-GAAP financial measure that represents cash flow from operations less capital expenditures. Management believes free cash flow provides a useful measure of liquidity and an additional 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.  A reconciliation of net cash flow provided by operating activities, prepared in accordance with generally accepted accounting principles, to free cash flow is provided above.

(5)

Adjusted Net Sales, Adjusted Operating Profit, Adjusted EPS and free cash flow should not be considered in isolation or as substitutes for analysis of the Company's results as reported under GAAP.  Other companies may calculate Adjusted Net Sales, Adjusted Operating Profit, Adjusted EPS and free cash flow differently than the Company does, limiting the usefulness of those measures for comparisons with other companies.

 

Contact:

John Moran                               

(860) 728-7062                                         

 

SOURCE United Technologies Corp.



RELATED LINKS

http://www.utc.com