UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM 8-K

 

 

CURRENT REPORT

Pursuant to Section 13 OR 15(d) of The

Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): January 23, 2013

UNITED TECHNOLOGIES CORPORATION

(Exact name of registrant as specified in its charter)

 

Delaware   1-812   06-0570975

(State or other jurisdiction

of incorporation)

 

(Commission

File Number)

 

(I.R.S. Employer

Identification No.)

One Financial Plaza

Hartford, Connecticut 06103

(Address of principal executive offices, including zip code)

Registrant’s telephone number, including area code

(860) 728-7000

N/A

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

 

 


Section 2—Financial Information

Item 2.02. Results of Operations and Financial Condition.

On January 23, 2013, United Technologies Corporation (“ UTC ” or the “ the Company ”) issued a press release announcing its fourth quarter 2012 results.

The press release issued January 23, 2013 is furnished herewith as Exhibit No. 99 to this Report, and shall not be deemed filed for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “ Exchange Act ”), or otherwise subject to the liabilities of that Section and shall not be deemed to be incorporated by reference into any filing by the Company under the Securities Act of 1933, as amended (the “ Securities Act ”) or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.

Section 7—Regulation FD

Item 7.01. Regulation FD Disclosure.

The Committee on Compensation and Executive Development of UTC’s Board of Directors has considered and adopted a number of changes to UTC’s executive compensation programs and practices as follows:

(1) The benchmark target for the value of long-term incentive awards to members of UTC’s Executive Leadership Group (the “ ELG ”) has been reduced from the 65th percentile to the 50th percentile relative to the value of similar awards to senior executives at companies included in UTC’s compensation peer group or “CPG”. UTC’s Executive Leadership Group is made up of approximately 25 to 30 of the Company’s most senior executives, and includes the “named executive officers” listed in the Summary Compensation Table included in UTC’s annual proxy statement. UTC’s annual proxy statement also includes a list of the companies included in the compensation peer group identified and used by UTC in assessing the market-competitiveness of its executive compensation programs and practices. The value of long-term incentive awards granted on January 3, 2013 reflects the new benchmark target.

(2) The primary financial metric used to determine cash bonus awards under UTC’s Annual Executive Incentive Plan for corporate office executives, beginning with the 2013 performance period, will be net income from continuing operations, rather than the earnings per share metric used previously.

(3) The earnings per share metric utilized to measure vesting performance for performance share unit awards under UTC’s Long-Term Incentive Plan, beginning with the 2013 award grants, will be calculated on the basis of three-year cumulative performance rather than the combined performance of each one-year period calculated separately as used previous in recent awards.

The information in this Item 7.01 is furnished herewith and shall not be deemed filed for purposes of Section 18 of the Exchange Act, as amended, or otherwise subject to the liabilities of that Section and shall not be deemed to be incorporated by reference into any filing by the Company under the Securities Act or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.


Section 9—Financial Statements and Exhibits

Item 9.01. Financial Statements and Exhibits.

(d) Exhibits.

 

Exhibit
Number

  

Exhibit Description

99    Press release, dated January 23, 2013, issued by United Technologies Corporation.


SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

   

UNITED TECHNOLOGIES CORPORATION

(Registrant)

Date: January 23, 2013     By:   /s/ G REGORY J. H AYES
      Gregory J. Hayes
      Senior Vice President and Chief Financial Officer


EXHIBIT INDEX

 

Exhibit
Number

  

Exhibit Description

99    Press release, dated January 23, 2013, issued by United Technologies Corporation.

Exhibit 99

UTC REPORTS FOURTH QUARTER AND FULL YEAR EPS OF $1.04 AND $5.35; REAFFIRMS 2013 EPS OUTLOOK OF $5.85 TO $6.15

HARTFORD, Conn., January 23, 2013 – United Technologies Corp. (NYSE:UTX) today reported full year 2012 earnings per share of $5.35 and net income attributable to common shareowners of $4.8 billion, both essentially flat versus prior year. The acquisition of Goodrich Corporation was $0.06 dilutive to EPS. Sales of $57.7 billion were 4 percent above prior year including net acquisitions (6 points) and adverse foreign currency translation (2 points). For the year, organic sales were flat and segment operating margin was 14.0 percent. Adjusted for restructuring and one-time items, segment operating margin of 14.8 percent was 60 basis points lower than prior year, including dilution from the acquisition of Goodrich Corporation. Cash flow from operations of $6.6 billion, less capital expenditures of $1.4 billion, exceeded net income attributable to common shareowners.

“2012 was a transformational year for United Technologies with the successful completion of the Goodrich and IAE transactions, and the divestiture of several non-core assets,” said Louis Chênevert, UTC Chairman & Chief Executive Officer. “We reshaped our portfolio to focus on our core markets. We also invested $2.4 billion in developing game changing technologies and nearly $600 million on restructuring our operations to address a challenging economic environment.”

Fourth quarter 2012 earnings per share of $1.04 were down 27 percent from the year ago quarter. Results for the quarter included $0.25 per share of restructuring and one-time charges. The prior year quarter included $0.01 of net favorable one-time items in excess of restructuring charges. Before these items, earnings per share decreased $0.12 or 9 percent year over year. In addition, results included a $0.12 charge recorded at Sikorsky related to the Canadian Maritime Helicopter program. Foreign currency translation and hedges at Pratt & Whitney Canada had an adverse impact of $0.02 in the quarter.

Sales of $16.4 billion for the quarter were 14 percent above prior year. Net acquisitions provided 15 points of growth. Organic sales were flat and foreign currency translation had an adverse impact of 1 point. Fourth quarter segment operating margin was 11.4 percent. Adjusted for restructuring costs and net one-time items, segment operating margin of 13.3 percent was 200 basis points lower than prior year, primarily due to the impact of the acquisition of Goodrich Corporation and the Canadian Maritime Helicopter program charge at Sikorsky. Cash flow from operations of $2.0 billion less capital expenditures of $641 million exceeded net income attributable to common shareowners of $945 million.


“We closed the year better than we had anticipated,” said Chênevert. “Cash generation was strong both in the quarter and for the full year, and we delivered on our commitment to pay down approximately one-third of the Goodrich acquisition debt.”

New equipment orders at Otis were up 12 percent over the year ago fourth quarter including adverse foreign exchange of 1 point, driven by strong order growth in China. North American Residential HVAC new equipment orders at UTC Climate, Controls & Security grew 20 percent. Large commercial engine spares orders were up 46 percent at Pratt & Whitney including the impact from the incremental International Aero Engines share. Organically, commercial spares orders were down 8 percent at Pratt & Whitney and down 4 percent at UTC Aerospace Systems.

“With broad based improvement in our order trends, and a continued focus on integration and execution, we remain confident in our ability to deliver 2013 earnings per share of $5.85 to $6.15,” Chênevert added. “We continue to expect sales between $64 and $65 billion and cash flow from operations less capital expenditures to equal or exceed net income attributable to common shareowners in 2013.”

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 .

All financial results and projections reflect continuing operations unless otherwise noted. 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, financing plans, charges, expenditures, anticipated benefits of acquisitions and divestitures, 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, timing or impact of acquisitions, dispositions, joint ventures and other business arrangements, including integration of acquired businesses; the timing and amount of gains, losses, impairments and charges related to anticipated dispositions; the timing and impact of anticipated debt reduction following the Goodrich acquisition; 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 completion of the proposed divestitures of businesses is subject to uncertainties, including the ability to secure disposition agreements and regulatory approvals on acceptable terms; and satisfaction of other customary conditions. 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

# # #


United Technologies Corporation

Condensed Consolidated Statement of Comprehensive Income

 

     Quarter Ended
December 31,
(Unaudited)
    Year Ended
December 31,
(Unaudited)
 
(Millions, except per share amounts)    2012     2011     2012     2011  

Net sales

   $ 16,443     $ 14,377     $ 57,708     $ 55,754  

Costs and Expenses:

        

Cost of products and services sold

     12,286       10,411       42,153       40,369  

Research and development

     712       524       2,371       1,951  

Selling, general and administrative

     1,795       1,623       6,452       6,161  
  

 

 

   

 

 

   

 

 

   

 

 

 

Total Costs and Expenses

     14,793       12,558       50,976       48,481  

Other income, net

     101       26       952       573  
  

 

 

   

 

 

   

 

 

   

 

 

 

Operating profit

     1,751       1,845       7,684       7,846  

Interest expense, net

     260       67       773       496  
  

 

 

   

 

 

   

 

 

   

 

 

 

Income from continuing operations before income taxes

     1,491       1,778       6,911       7,350  

Income tax expense

     454       403       1,711       2,134  
  

 

 

   

 

 

   

 

 

   

 

 

 

Income from continuing operations

     1,037       1,375       5,200       5,216  
  

 

 

   

 

 

   

 

 

   

 

 

 

Discontinued operations:

        

Income from operations

     53       54       171       255  

Gain on disposal

     2,058       —         861       —    

Income tax expense

     (998     (7     (742     (97
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income from discontinued operations

     1,113       47       290       158  
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income

     2,150       1,422       5,490       5,374  

Less: Noncontrolling interest in subsidiaries’ earnings

     93       97       360       395  
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income attributable to common shareowners

   $ 2,057     $ 1,325     $ 5,130     $ 4,979  
  

 

 

   

 

 

   

 

 

   

 

 

 

Comprehensive income (loss)

   $ 1,369     $ (318   $ 5,540     $ 3,650  

Less: Comprehensive income attributable to noncontrolling interests

     97       81       368       392  
  

 

 

   

 

 

   

 

 

   

 

 

 

Comprehensive income (loss) attributable to common shareowners

   $ 1,272     $ (399   $ 5,172     $ 3,258  
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income attributable to common shareowners:

        

From continuing operations

   $ 945     $ 1,280     $ 4,847     $ 4,831  

From discontinued operations

     1,112       45       283       148  

Earnings Per Share of Common Stock – Basic:

        

From continuing operations

   $ 1.05     $ 1.44     $ 5.41     $ 5.41  

From discontinued operations

     1.24       0.05       0.32       0.17  

Earnings Per Share of Common Stock – Diluted:

        

From continuing operations

   $ 1.04     $ 1.42     $ 5.35     $ 5.33  

From discontinued operations

     1.22       0.05       0.31       0.16  

As described on the following pages, consolidated results for the quarters and years ended December 31, 2012 and 2011 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
December 31,
(Unaudited)
    Year Ended
December 31,
(Unaudited)
 
(Millions)    2012     2011     2012     2011  

Net Sales

        

Otis

   $ 3,205     $ 3,211     $ 12,056     $ 12,437  

UTC Climate, Controls & Security

     4,147       4,410       17,090       18,864  

Pratt & Whitney

     3,891       3,481       13,964       12,711  

UTC Aerospace Systems

     3,174       1,264       8,334       4,760  

Sikorsky

     2,176       2,110       6,791       7,355  
  

 

 

   

 

 

   

 

 

   

 

 

 

Segment Sales

     16,593       14,476       58,235       56,127  

Eliminations and other

     (150     (99     (527     (373
  

 

 

   

 

 

   

 

 

   

 

 

 

Consolidated Net Sales

   $ 16,443     $ 14,377     $ 57,708     $ 55,754  
  

 

 

   

 

 

   

 

 

   

 

 

 

Operating Profit

        

Otis

   $ 644     $ 711     $ 2,512     $ 2,815  

UTC Climate, Controls & Security

     460       461       2,425       2,212  

Pratt & Whitney

     364       519       1,589       1,867  

UTC Aerospace Systems

     264       198       944       759  

Sikorsky

     160       207       712       840  
  

 

 

   

 

 

   

 

 

   

 

 

 

Segment Operating Profit

     1,892       2,096       8,182       8,493  

Eliminations and other

     (18     (127     (72     (228

General corporate expenses

     (123     (124     (426     (419
  

 

 

   

 

 

   

 

 

   

 

 

 

Consolidated Operating Profit

   $ 1,751     $ 1,845     $ 7,684     $ 7,846  
  

 

 

   

 

 

   

 

 

   

 

 

 

Segment Operating Profit Margin

        

Otis

     20.1     22.1     20.8     22.6

UTC Climate, Controls & Security

     11.1     10.5     14.2     11.7

Pratt & Whitney

     9.4     14.9     11.4     14.7

UTC Aerospace Systems

     8.3     15.7     11.3     15.9

Sikorsky

     7.4     9.8     10.5     11.4
  

 

 

   

 

 

   

 

 

   

 

 

 

Segment Operating Profit Margin

     11.4     14.5     14.0     15.1

As described on the following pages, consolidated results for the quarters and years ended December 31, 2012 and 2011 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 Results of Continuing Operations

 

     Quarter Ended
December 31,
(Unaudited)
    Year Ended
December 31,
(Unaudited)
 
In Millions – Income (Expense)    2012     2011     2012     2011  

Restructuring Costs included in Operating Profit:

        

Otis

   $ (59   $ (26   $ (164   $ (73

UTC Climate, Controls & Security

     (45     (61     (143     (126

Pratt & Whitney

     (39     (18     (96     (52

UTC Aerospace Systems

     (75     (6     (115     (11

Sikorsky

     (35     (37     (53     (53

Eliminations and other  

     (5     —         (19     —    
  

 

 

   

 

 

   

 

 

   

 

 

 
     (258     (148     (590     (315
  

 

 

   

 

 

   

 

 

   

 

 

 

Non-Recurring Gains (Losses) included in Operating Profit:

        

UTC Climate, Controls & Security

     (65     35       157       43  

Pratt & Whitney

     —         —         —         41  

Sikorsky

     —         —         —         73  

Eliminations and other

     —         (45     24       (45
  

 

 

   

 

 

   

 

 

   

 

 

 
     (65     (10     181       112  
  

 

 

   

 

 

   

 

 

   

 

 

 

Total impact on Consolidated Operating Profit

     (323     (158     (409     (203

Non-Recurring items included in Interest Expense, Net

     —         89       40       89  

Tax effect of restructuring and non-recurring items above

     92       17       122       15  

Non-Recurring items included in Income Tax Expense

     —         63       237       80  
  

 

 

   

 

 

   

 

 

   

 

 

 

Impact on Net Income from Continuing Operations Attributable to Common Shareowners

   $ (231   $ 11     $ (10   $ (19
  

 

 

   

 

 

   

 

 

   

 

 

 

Impact on Diluted Earnings Per Share from Continuing Operations

   $ (0.25   $ 0.01     $ (0.01   $ (0.02
  

 

 

   

 

 

   

 

 

   

 

 

 


Details of the non-recurring items for the quarters and years ended December 31, 2012 and 2011 above are as follows:

Quarter Ended December 31, 2012

UTC Climate, Controls & Security: Approximately $65 million net charge from UTC Climate, Controls & Security’s ongoing portfolio transformation. This net charge includes approximately $24 million of pension settlement charges related to the sale of a controlling interest in its Canadian distribution business and $39 million of impairment charges related to the planned disposition of certain fire and security businesses.

Discontinued Operations: Approximately $2,103 million gain ($1,050 million net of tax) on the sale of the legacy Hamilton Sundstrand’s Industrial businesses.

Quarter Ended September 30, 2012

Eliminations and other: Approximately $34 million non-cash gain recognized on the remeasurement to fair value of our previously held shares of Goodrich Corporation stock resulting from our acquisition of the company.

Interest Expense, Net: Approximately $25 million of favorable pre-tax interest adjustments related to the resolution of disputes with the Appeals Division of the IRS for the Company’s 2004 – 2005 tax years.

Income Tax Expense: Approximately $34 million of favorable income tax adjustments related to the resolution of disputes with the Appeals Division of the IRS for the Company’s 2004 – 2005 tax years.

Discontinued Operations: Approximately $127 million of favorable income tax adjustments related to the reversal of a portion of the deferred tax liability initially recorded during the quarter ended March 31, 2012 on the existing difference between the expected accounting versus tax gain on the planned disposition of legacy Hamilton Sundstrand’s Industrial businesses. As a result of the structure of the transaction that was finalized in July 2012, a portion of the deferred tax liability cannot be recorded until the sale is finalized.

Quarter Ended June 30, 2012

UTC Climate, Controls & Security: Approximately $110 million net gain from UTC Climate, Controls & Security’s ongoing portfolio transformation. This net gain includes approximately $142 million from the sale of a controlling interest in its Canadian distribution business, partially offset by a $32 million loss on the disposition of its U.S. fire and security branch operations.

Discontinued Operations:

 

 

Approximately $179 million pre-tax impairment charge related to inventory, fixed assets and goodwill, as a result of the decision to dispose of the UTC Power business.

 

 

Approximately $91 million reserve for potential remediation costs associated with certain components of wind turbines previously installed by our Clipper business.

Quarter Ended March 31, 2012

UTC Climate, Controls & Security: Approximately $112 million net gain from UTC Climate, Controls & Security’s ongoing portfolio transformation. This net gain includes approximately $215 million from the sale of a controlling interest in a manufacturing and distribution joint venture in Asia, partially offset by $103 million of impairment charges related to planned business dispositions.


Eliminations and other: An additional $10 million of reserves were established for the export licensing compliance matters recorded in the fourth quarter 2011.

Interest Expense, Net: Approximately $15 million of favorable pre-tax interest adjustments related to the conclusion of the IRS’s examination of the Company’s 2006 – 2008 tax years.

Income Tax Expense: Approximately $203 million of favorable income tax adjustments related to the conclusion of the IRS’s examination of the Company’s 2006 – 2008 tax years.

Discontinued Operations:

 

 

Approximately $360 million and $590 million of pre-tax goodwill impairment charges ($220 million and $410 million after tax) related to Rocketdyne and Clipper, respectively.

 

 

Approximately $235 million of unfavorable income tax adjustments related to the recognition of a deferred tax liability on the existing difference between the expected accounting versus tax gain on the planned disposition of legacy Hamilton Sundstrand’s Industrial businesses.

Quarter Ended December 31, 2011

UTC Climate, Controls & Security:

 

 

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.

 

 

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.

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.

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

UTC Climate, Controls & Security:

 

 

Approximately $28 million net gain resulting from dispositions associated with UTC Climate, Controls & Security’s ongoing portfolio transformation.

 

 

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.


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.

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
December 31,
(Unaudited)
    Year Ended
December 31,
(Unaudited)
 
(Millions)    2012     2011     2012     2011  

Net Sales

        

Otis

   $ 3,205     $ 3,211     $ 12,056     $ 12,437  

UTC Climate, Controls & Security

     4,147       4,410       17,090       18,864  

Pratt & Whitney

     3,891       3,481       13,964       12,711  

UTC Aerospace Systems

     3,174       1,264       8,334       4,760  

Sikorsky

     2,176       2,110       6,791       7,355  
  

 

 

   

 

 

   

 

 

   

 

 

 

Segment Sales

     16,593       14,476       58,235       56,127  

Eliminations and other

     (150     (99     (527     (373
  

 

 

   

 

 

   

 

 

   

 

 

 

Consolidated Net Sales

   $ 16,443     $ 14,377     $ 57,708     $ 55,754  
  

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted Operating Profit

        

Otis

   $ 703     $ 737     $ 2,676     $ 2,888  

UTC Climate, Controls & Security

     570       487       2,411       2,295  

Pratt & Whitney

     403       537       1,685       1,878  

UTC Aerospace Systems

     339       204       1,059       770  

Sikorsky

     195       244       765       820  
  

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted Segment Operating Profit

     2,210       2,209       8,596       8,651  

Eliminations and other

     (13     (82     (77     (183

General corporate expenses

     (123     (124     (426     (419
  

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted Consolidated Operating Profit

   $ 2,074     $ 2,003     $ 8,093     $ 8,049  
  

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted Segment Operating Profit Margin

        

Otis

     21.9     23.0     22.2     23.2

UTC Climate, Controls & Security

     13.7     11.0     14.1     12.2

Pratt & Whitney

     10.4     15.4     12.1     14.8

UTC Aerospace Systems

     10.7     16.1     12.7     16.2

Sikorsky

     9.0     11.6     11.3     11.1
  

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted Segment Operating Profit Margin

     13.3     15.3     14.8     15.4


United Technologies Corporation

Condensed Consolidated Balance Sheet

 

(Millions)    December  31,
2012

(Unaudited)
    December  31,
2011

(Unaudited)
 

Assets

    

Cash and cash equivalents

   $ 4,819     $ 5,960  

Accounts receivable, net

     11,099       9,546  

Inventories and contracts in progress, net

     9,537       7,797  

Assets held for sale

     1,071       —    

Other assets, current

     3,084       2,455  
  

 

 

   

 

 

 

Total Current Assets

     29,610       25,758  

Fixed assets, net

     8,518       6,201  

Goodwill

     27,801       17,943  

Intangible assets, net

     15,189       3,918  

Other assets

     8,291       7,632  
  

 

 

   

 

 

 

Total Assets

   $ 89,409     $ 61,452  
  

 

 

   

 

 

 

Liabilities and Equity

    

Short-term debt

   $ 1,624     $ 759  

Accounts payable

     6,431       5,570  

Accrued liabilities

     15,310       12,287  

Liabilities held for sale

     421       —    
  

 

 

   

 

 

 

Total Current Liabilities

     23,786       18,616  

Long-term debt

     21,597       9,501  

Other long-term liabilities

     16,719       10,157  
  

 

 

   

 

 

 

Total Liabilities

     62,102       38,274  
  

 

 

   

 

 

 

Redeemable noncontrolling interest

     238       358  

Shareowners’ Equity:

    

Common Stock

     13,837       13,293  

Treasury Stock

     (19,251     (19,410

Retained earnings

     36,776       33,487  

Accumulated other comprehensive loss

     (5,448     (5,490
  

 

 

   

 

 

 

Total Shareowners’ Equity

     25,914       21,880  

Noncontrolling interest

     1,155       940  
  

 

 

   

 

 

 

Total Equity

     27,069       22,820  
  

 

 

   

 

 

 

Total Liabilities and Equity

   $ 89,409     $ 61,452  
  

 

 

   

 

 

 

Debt Ratios:

    

Debt to total capitalization

     46     31

Net debt to net capitalization

     40     16

See accompanying Notes to Condensed Consolidated Financial Statements.


United Technologies Corporation

Condensed Consolidated Statement of Cash Flows

 

     Quarter Ended
December 31,
(Unaudited)
    Year Ended
December 31,
(Unaudited)
 
(Millions)    2012     2011     2012     2011  

Operating Activities of Continuing Operations:

        

Income from continuing operations

   $ 1,037     $ 1,375     $ 5,200     $ 5,216  

Adjustments to reconcile net income from continuing operations to net cash flows provided by operating activities of continuing operations:

        

Depreciation and amortization

     477       301       1,524       1,263  

Deferred income tax provision (benefit)

     91       (3     120       334  

Stock compensation cost

     60       42       210       221  

Change in working capital

     252       261       103       (291

Global pension contributions *

     (197     (305     (430     (551

Other operating activities, net

     234       239       (122     268  
  

 

 

   

 

 

   

 

 

   

 

 

 

Net cash flows provided by operating activities of continuing operations

     1,954       1,910       6,605       6,460  
  

 

 

   

 

 

   

 

 

   

 

 

 

Investing Activities of Continuing Operations:

        

Capital expenditures

     (641     (359     (1,389     (929

Acquisitions and dispositions of businesses, net

     45       (16     (15,601     137  

Increase in collaboration intangible assets

     (149     —         (1,543     —    

Other investing activities, net

     (55     (9     (262     120  
  

 

 

   

 

 

   

 

 

   

 

 

 

Net cash flows used in investing activities of continuing operations

     (800     (384     (18,795     (672
  

 

 

   

 

 

   

 

 

   

 

 

 

Financing Activities of Continuing Operations:

        

(Repayment) issuance of long-term debt, net

     (741     (507     10,057       (557

(Decrease) increase in short-term borrowings, net

     (4,723     (568     (214     562  

Dividends paid on Common Stock

     (464     (410     (1,752     (1,602

Repurchase of Common Stock

     —         —         —         (2,175

Other financing activities, net

     (37     (108     (70     (211
  

 

 

   

 

 

   

 

 

   

 

 

 

Net cash flows (used in) provided by financing activities of continuing operations

     (5,965     (1,593     8,021       (3,983
  

 

 

   

 

 

   

 

 

   

 

 

 

Discontinued Operations:

        

Net cash provided by operating activities

     19       102       41       130  

Net cash provided by (used in) investing activities

     3,326       (25     2,974       (35

Net cash used in financing activities

     —         (2     —         (22
  

 

 

   

 

 

   

 

 

   

 

 

 

Net cash flows provided by discontinued operations

     3,345       75       3,015       73  
  

 

 

   

 

 

   

 

 

   

 

 

 

Effect of foreign exchange rate changes on cash and cash equivalents

     5       (14     30       (1
  

 

 

   

 

 

   

 

 

   

 

 

 

Net (decrease) increase in cash and cash equivalents

     (1,461     (6     (1,124     1,877  

Cash and cash equivalents, beginning of period

     6,297       5,966       5,960       4,083  
  

 

 

   

 

 

   

 

 

   

 

 

 

Cash and cash equivalents, end of period

     4,836       5,960       4,836       5,960  

Less: Cash and cash equivalents of assets held for sale

     (17     —         (17     —    

Cash and cash equivalents of continuing operations, end of period

   $ 4,819     $ 5,960     $ 4,819     $ 5,960  
  

 

 

   

 

 

   

 

 

   

 

 

 

 

* Non-cash activities include contributions of UTC common stock to domestic defined benefit pension plans of $450 million during the third quarter of 2011.

See accompanying Notes to Condensed Consolidated Financial Statements.


United Technologies Corporation

Free Cash Flow Reconciliation

 

     Quarter Ended December 31,
(Unaudited)
 
(Millions)    2012     2011  

Net income attributable to common shareowners from continuing operations

   $ 945       $ 1,280    
  

 

 

     

 

 

   

Net cash flows provided by operating activities of continuing operations

   $ 1,954       $ 1,910    

Net cash flows provided by operating activities of continuing operations as a percentage of net income attributable to common shareowners from continuing operations

       207       149

Capital expenditures

     (641       (359  
  

 

 

     

 

 

   

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

       (68 )%        (28 )% 
    

 

 

     

 

 

 

Free cash flow from continuing operations

   $ 1,313       $ 1,551    
  

 

 

     

 

 

   

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

       139       121
    

 

 

     

 

 

 
     Year Ended December 31,
(Unaudited)
 
(Millions)    2012     2011  

Net income attributable to common shareowners from continuing operations

   $ 4,847       $ 4,831    
  

 

 

     

 

 

   

Net cash flows provided by operating activities of continuing operations

   $ 6,605       $ 6,460    

Net cash flows provided by operating activities of continuing operations as a percentage of net income attributable to common shareowners from continuing operations

       136       134

Capital expenditures

     (1,389       (929  
  

 

 

     

 

 

   

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

       (29 )%        (19 )% 
    

 

 

     

 

 

 

Free cash flow from continuing operations

   $ 5,216       $ 5,531    
  

 

 

     

 

 

   

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

       108       114
    

 

 

     

 

 

 


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.

 

  (4) Prior period amounts reported within these Condensed Consolidated Financial Statements have been revised for:

 

   

The combination of the financial results of the former Carrier and UTC Fire & Security segments into a new segment called UTC Climate, Controls & Security; and

 

   

Discontinued operations related to actual and planned divestiture of a number of non-core businesses.