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News Article

United Technologies Reports 2017 Results Above Company Expectations, Announces 2018 Outlook

  • UTC delivers strongest organic sales growth in three years;
  • 2017 sales, adjusted EPS and free cash flow above company expectations;
  • Expects accelerating sales, earnings and free cash flow growth in 2018
  • Fourth Quarter 2017
  • Sales of $15.7 billion, up 7 percent versus prior year including 5 percent organic growth
  • GAAP EPS of $0.50 including a $0.90 charge for tax law changes
  • Adjusted EPS of $1.60, up 3 percent versus prior year
  • Full Year 2017
  • Sales of $59.8 billion, up 5 percent versus prior year including 4 percent organic growth
  • GAAP EPS of $5.70 including a $0.90 charge for tax law changes

FARMINGTON, Conn., Jan. 24, 2018 /PRNewswire/ -- United Technologies Corp. (NYSE: UTX) reported fourth quarter and full year 2017 results above expectations and expects continued growth in 2018. In a conference call with investors and analysts today, Chairman and Chief Executive Officer Gregory Hayes will discuss the 2017 results and the company's expectations for 2018.

"UTC had a strong finish to 2017," said Hayes.  "Sales, adjusted EPS and free cash flow were all above the top end of our expectations. Our focus on innovation, execution and cost reduction led to our best year of organic sales growth since 2014, with all businesses contributing. We gained share in our commercial businesses and continued to execute on our growing aerospace backlog.  UTC also announced the transformative Rockwell Collins acquisition which will create a premier aerospace supplier. As a result of this proposed transaction, together with the investments in our businesses and in our digital strategies, we are positioned well for years to come."

Hayes continued, "In 2018, we expect accelerating organic sales and adjusted earnings per share growth along with strong cash generation."

Fourth Quarter 2017

Fourth quarter sales of $15.7 billion were up 7 percent over the prior year including 5 points of organic sales growth and 2 points of foreign exchange.

GAAP EPS was $0.50 (down from $1.26 in the fourth quarter of 2016) and included 90 cents for a charge related to tax law changes and 20 cents of net restructuring and other significant items. Associated with the tax law change is an estimated, cumulative net cash payment of $1.5 billion to be paid through 2026. Adjusted EPS of $1.60 was up 3 percent versus the prior year.

Each of United Technologies' businesses grew sales in the fourth quarter. Commercial aftermarket sales were up 25 percent at Pratt & Whitney, and up 10 percent at UTC Aerospace Systems. Otis new equipment orders increased 1 percent versus the prior year at constant currency, with solid growth in the U.S. and Europe and continued pricing pressure in China. Equipment orders at UTC Climate, Controls & Security increased 9 percent organically.

Full Year 2017

Full year sales of $59.8 billion were up 5 percent versus the prior year with 4 points of organic sales growth and 1 point of net acquisitions impact.

Full year 2017 GAAP EPS of $5.70 was down 7 percent versus prior year. 2017 results included 90 cents for the fourth quarter tax charge and 5 cents of net restructuring and other significant items, as compared with 48 cents in 2016. Adjusted EPS of $6.65 increased 1 percent year over year. Net income for the year was $4.6 billion, down 10 percent versus the prior year. Cash flow from operations for the year was $5.6 billion and capital expenditures were $2.0 billion

In 2017, United Technologies invested in digital initiatives to drive operational efficiency and generate long-term value for its customers. Investments included the United Technologies Digital Accelerator, new digital solutions within UTC Climate, Controls & Security, and new tools for more than 15,000 Otis technicians worldwide. Pratt & Whitney's Geared Turbofan™ Engine was selected to power Delta Air Lines' order of 100 A321neo aircraft. Additionally, the proposed acquisition of Rockwell Collins, announced in 2017, will lead to a new era of innovative aerospace products and solutions for UTC's customers.

Outlook for 2018

UTC provides the following 2018 outlook (excluding the impact of the proposed Rockwell Collins acquisition):

  • Adjusted EPS of $6.85 to $7.10*;
  • Total sales of $62.5 to $64.0 billion, including organic sales growth of 4 to 6 percent*;
  • Free cash flow in the range of $4.5 to $5.0 billion.*

"Our outlook demonstrates how our strategic investments are paying off," said Hayes. "We are innovating for growth and expect all of our businesses to grow sales and earnings in 2018."

As a global technology company delivering essential products and services for a better life, United Technologies' businesses are well aligned with the world's megatrends, such as urbanization, digitization, and an expanding middle class. These advantages, combined with an improving global macro-economic environment, solidify the company's confidence in generating sustained value creation.

*Note: When we provide expectations for adjusted EPS, organic sales and free cash flow on a forward-looking basis, a reconciliation of the differences between the non-GAAP expectations and the corresponding GAAP measures generally is not available without unreasonable effort.  See "Use and Definitions of Non-GAAP Financial Measures" below for additional information.

United Technologies Corp., based in Farmington, Connecticut, provides high technology products and services to the building and aerospace industries. By combining a passion for science with precision engineering, the company is creating smart, sustainable solutions the world needs. Additional information, including a webcast, is available at www.utc.com or https://edge.media-server.com/m6/p/sec6ou3c, or to listen to the earnings call by phone, dial (877) 280-7280 between 7:10 a.m. and 7:30 a.m. ET. To learn more about UTC, visit the website or follow the company on Twitter: @UTC

Use and Definitions of Non-GAAP Financial Measures
United Technologies Corporation reports its financial results in accordance with accounting principles generally accepted in the United States ("GAAP").

We supplement the reporting of our financial information determined under GAAP with certain non-GAAP financial information.  The non-GAAP information presented provides investors with additional useful information, but should not be considered in isolation or as substitutes for the related GAAP measures.  Moreover, other companies may define non-GAAP measures differently, which limits the usefulness of these measures for comparisons with such other companies.  We encourage investors to review our financial statements and publicly-filed reports in their entirety and not to rely on any single financial measure. 

Adjusted net sales, organic sales, adjusted operating profit, adjusted net income and adjusted earnings per share ("EPS") are non-GAAP financial measures.  Adjusted net sales represents consolidated net sales from continuing operations (a GAAP measure), excluding significant items of a non-recurring and/or nonoperational nature (hereinafter referred to as "other significant items").  Organic sales represents consolidated net sales (a GAAP measure), excluding the impact of foreign currency translation, acquisitions and divestitures completed in the preceding twelve months and other significant items.  Adjusted operating profit represents income from continuing operations (a GAAP measure), excluding restructuring costs and other significant items. Adjusted net income represents net income from continuing operations (a GAAP measure), excluding restructuring costs and other significant items. Adjusted EPS represents diluted earnings per share from continuing operations (a GAAP measure), excluding restructuring costs and other significant items.  For the business segments, when applicable, adjustments of net sales, operating profit and margins similarly reflect continuing operations, excluding restructuring and other significant items.  Management believes that the non-GAAP measures just mentioned are useful in providing period-to-period comparisons of the results of the Company's ongoing operational performance. 

Free cash flow is a non-GAAP financial measure that represents cash flow from operations (a GAAP measure) less capital expenditures.  Management believes free cash flow is 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 the non-GAAP measures to the corresponding amounts prepared in accordance with GAAP appears in the tables in this press release. The tables provide additional information as to the items and amounts that have been excluded from the adjusted measures.

When we provide our expectation for adjusted EPS, adjusted operating profit, organic sales and free cash flow on a forward-looking basis, a reconciliation of the differences between the non-GAAP expectations and the corresponding GAAP measures (expected diluted EPS from continuing operations, operating profit, sales and expected cash flow from operations) generally is not available 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, such as unusual gains and losses, the ultimate outcome of pending litigation, fluctuations in foreign currency exchange rates, the impact and timing of potential acquisitions and divestitures, and other structural changes or their probable significance.  The variability of the excluded items may have a significant, and potentially unpredictable, impact on our future GAAP results.

Cautionary Statement
This communication contains statements which, to the extent they are not statements of historical or present fact, constitute "forward-looking statements" under the securities laws. From time to time, oral or written forward-looking statements may also be included in other information released to the public. These forward-looking statements are intended to provide management's current expectations or plans for our future operating and financial performance, based on assumptions currently believed to be valid. Forward-looking statements can be identified by the use of words such as "believe," "expect," "expectations," "plans," "strategy," "prospects," "estimate," "project," "target," "anticipate," "will," "should," "see," "guidance," "outlook," "confident" and other words of similar meaning in connection with a discussion of future operating or financial performance. Forward-looking statements may include, among other things, statements relating to future sales, earnings, cash flow, results of operations, uses of cash, share repurchases, tax rates and other measures of financial performance or potential future plans, strategies or transactions of United Technologies or the combined company following United Technologies' proposed acquisition of Rockwell Collins, the anticipated benefits of the proposed acquisition, including estimated synergies, the expected timing of completion of the transaction and other statements that are not historical facts. All forward-looking statements involve risks, uncertainties and other factors that may cause actual results to differ materially from those expressed or implied in the forward-looking statements. For those statements, we claim the protection of the safe harbor for forward-looking statements contained in the U.S. Private Securities Litigation Reform Act of 1995. Such risks, uncertainties and other factors include, without limitation: (1) the effect of economic conditions in the industries and markets in which United Technologies and Rockwell Collins operate in the U.S. and globally and any changes therein, including financial market conditions, fluctuations in commodity prices, interest rates and foreign currency exchange rates, levels of end market demand in construction and in both the commercial and defense segments of the aerospace industry, levels of air travel, financial condition of commercial airlines, the impact of weather conditions and natural disasters and the financial condition of our customers and suppliers; (2) challenges in the development, production, delivery, support, performance and realization of the anticipated benefits of advanced technologies and new products and services; (3) the scope, nature, impact or timing of acquisition and divestiture activity, including among other things integration of acquired businesses, including Rockwell Collins, into United Technologies' existing businesses and realization of synergies and opportunities for growth and innovation; (4) future levels of indebtedness, including indebtedness expected to be incurred by United Technologies in connection with the posed Rockwell Collins merger, and capital spending and research and development spending; (5) future availability of credit and factors that may affect such availability, including credit market conditions and our capital structure; (6) the timing and scope of future repurchases of United Technologies' common stock, which may be suspended at any time due to market conditions and the level of other investing activities and uses of cash, including in connection with the proposed acquisition of Rockwell; (7) delays and disruption in delivery of materials and services from suppliers; (8) company and customer-directed cost reduction efforts and restructuring costs and savings and other consequences thereof; (9) new business or investment opportunities; (10) our ability to realize the intended benefits of organizational changes; (11) the anticipated benefits of diversification and balance of operations across product lines, regions and industries; (12) the outcome of legal proceedings, investigations and other contingencies; (13) pension plan assumptions and future contributions; (14) the impact of the negotiation of collective bargaining agreements and labor disputes; (15) the effect of changes in political conditions in the U.S. and other countries in which United Technologies and Rockwell Collins operate, including the effect of changes in U.S. trade policies or the U.K.'s pending withdrawal from the EU, on general market conditions, global trade policies and currency exchange rates in the near term and beyond; (16) the effect of changes in tax (including the recently enacted Tax Cuts and Jobs Act in the U.S.), environmental, regulatory (including among other things import/export) and other laws and regulations in the U.S. and other countries in which United Technologies and Rockwell Collins operate; (17) the ability of United Technologies and Rockwell Collins to receive the required regulatory approvals (and the risk that such approvals may result in the imposition of conditions that could adversely affect the combined company or the expected benefits of the transaction) and to satisfy the other conditions to the closing of the transaction on a timely basis or at all; (18) the occurrence of events that may give rise to a right of one or both of United Technologies or Rockwell Collins to terminate the merger agreement, including on circumstances that might require Rockwell Collins to pay a termination fee of $695 million to United Technologies or $50 million of expense reimbursement; (19) negative effects of the announcement or the consummation of the transaction on the market price of United Technologies' and/or Rockwell Collins' common stock and/or on their respective financial performance; (20) risks related to Rockwell Collins and United Technologies being restricted in its operation of the business while the merger agreement is in effect; (21) risks relating to the value of the United Technologies' shares to be issued in the transaction, significant transaction costs and/or unknown liabilities; (22) risks associated with third party contracts containing consent and/or other provisions that may be triggered by United Technologies' proposed acquisition of Rockwell Collins; (23) risks associated with merger-related litigation or appraisal proceedings; and (24) the ability of United Technologies and Rockwell Collins, or the combined company, to retain and hire key personnel. There can be no assurance that United Technologies' proposed acquisition of Rockwell Collins or any other transaction described above will in fact be consummated in the manner described or at all. For additional information on identifying factors that may cause actual results to vary materially from those stated in forward-looking statements, see the reports of United Technologies and Rockwell Collins on Forms S-4, 10-K, 10-Q and 8-K filed with or furnished to the SEC from time to time. Any forward-looking statement speaks only as of the date on which it is made, and United Technologies and Rockwell Collins assume no obligation to update or revise such statement, whether as a result of new information, future events or otherwise, except as required by applicable law.

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)

2017


2016


2017


2016

Net Sales

$

15,680



$

14,659



$

59,837



$

57,244


Costs and Expenses:









Cost of products and services sold

11,733



10,723



43,953



41,460



Research and development

619



626



2,387



2,337



Selling, general and administrative

1,639



1,856



6,183



6,060



Total Costs and Expenses

13,991



13,205



52,523



49,857


Other income, net

263



185



1,358



785


Operating profit

1,952



1,639



8,672



8,172



Interest expense, net

247



366



909



1,039


Income from continuing operations before income taxes

1,705



1,273



7,763



7,133



Income tax expense

1,219



149



2,843



1,697


Income from continuing operations

486



1,124



4,920



5,436



Less: Noncontrolling interest in subsidiaries' earnings
from continuing operations

89



100



368



371


Income from continuing operations attributable to common
shareowners

397



1,024



4,552



5,065


Discontinued operations:









(Loss) income from operations



(1)





1



Gain on disposal



2





13



Income tax expense



(12)





(24)


Loss from discontinued operations attributable to common
shareowners



(11)





(10)


Net income attributable to common shareowners

$

397



$

1,013



$

4,552



$

5,055


Earnings Per Share of Common Stock - Basic:









From continuing operations attributable to common
shareowners

$

0.50



$

1.28



$

5.76



$

6.19



From discontinued operations attributable to common
shareowners



(0.01)





(0.01)



Total attributable to common shareowners

$

0.50



$

1.26



$

5.76



$

6.18


Earnings Per Share of Common Stock - Diluted:









From continuing operations attributable to common
shareowners

$

0.50



$

1.26



$

5.70



$

6.13



From discontinued operations attributable to common
shareowners



(0.01)





(0.01)



Total attributable to common shareowners

$

0.50



$

1.25



$

5.70



$

6.12


Weighted Average Number of Shares Outstanding:









Basic shares

789



802



790



818



Diluted shares

798



810



799



826


 

As described on the following pages, consolidated results for the quarters and years ended December 31, 2017 and 2016 include restructuring costs and significant non-recurring and non-operational items. See discussion above, "Use and Definitions of Non-GAAP Financial Measures," regarding consideration of such costs and items 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)

2017


2016


2017


2016

Net Sales








Otis

$

3,250



$

3,063



$

12,341



$

11,893


UTC Climate, Controls & Security

4,520



4,249



17,812



16,851


Pratt & Whitney

4,461



3,992



16,160



14,894


UTC Aerospace Systems

3,803



3,598



14,691



14,465


Segment Sales

16,034



14,902



61,004



58,103


Eliminations and other

(354)



(243)



(1,167)



(859)


Consolidated Net Sales

$

15,680



$

14,659



$

59,837



$

57,244










Operating Profit








Otis

$

470



$

516



$

2,021



$

2,147


UTC Climate, Controls & Security

636



677



3,300



2,956


Pratt & Whitney

436



409



1,460



1,545


UTC Aerospace Systems

599



578



2,370



2,298


Segment Operating Profit

2,141



2,180



9,151



8,946


Eliminations and other

(63)



(415)



(38)



(368)


General corporate expenses

(126)



(126)



(441)



(406)


Consolidated Operating Profit

$

1,952



$

1,639



$

8,672



$

8,172















Segment Operating Profit Margin













Otis


14.5

%



16.8

%



16.4

%


18.1

%

UTC Climate, Controls & Security


14.1

%



15.9

%



18.5

%


17.5

%

Pratt & Whitney


9.8

%



10.2

%



9.0

%


10.4

%

UTC Aerospace Systems


15.8

%



16.1

%



16.1

%


15.9

%

Segment Operating Profit Margin


13.4

%



14.6

%



15.0

%


15.4

%

 

As described on the following pages, consolidated results for the quarters and years ended December 31, 2017 and 2016 include restructuring costs and significant non-recurring and non-operational items. See discussion above, "Use and Definitions of Non-GAAP Financial Measures," regarding consideration of such costs and items when evaluating the underlying financial performance.

 

United Technologies Corporation

Reconciliation of Reported (GAAP) to Adjusted (Non-GAAP) Results






Quarter Ended December 31,


Year Ended December 31,


(Unaudited)


(Unaudited)

In Millions - Income (Expense)

2017


2016


2017


2016

Net Sales

$

15,680



$

14,659



$

59,837



$

57,244


Significant non-recurring and non-operational items
included in Net Sales:








Pratt & Whitney - charge resulting from customer
contract matters





(385)



(184)


Adjusted Net Sales

$

15,680



$

14,659



$

60,222



$

57,428










Income from continuing operations attributable to
common shareowners

$

397



$

1,024



$

4,552



$

5,065


Restructuring Costs included in Operating Profit:








Otis

(27)



(18)



(50)



(59)


UTC Climate, Controls & Security

(27)



6



(111)



(65)


Pratt & Whitney

(1)



(61)



(5)



(111)


UTC Aerospace Systems

(16)



(17)



(80)



(49)


Eliminations and other

(5)



1



(7)



(6)



(76)



(89)



(253)



(290)


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








UTC Climate, Controls & Security

(96)



(9)



283



(32)


Pratt & Whitney





(196)



(95)


Eliminations and other

(38)



(423)



56



(423)



(134)



(432)



143



(550)


Total impact on Consolidated Operating Profit

(210)



(521)



(110)



(840)


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

(6)



(142)



3



(140)


Tax effect of restructuring and significant non-
recurring and non-operational items above

61



242



11



354


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

(722)



175



(667)



231


Less: Impact on Net Income from Continuing Operations
Attributable to Common Shareowners

(877)



(246)



(763)



(395)


Adjusted income from continuing operations
attributable to common shareowners

$

1,274



$

1,270



$

5,315



$

5,460










Diluted Earnings Per Share from Continuing
Operations

$

0.50



$

1.26



$

5.70



$

6.13


Impact on Diluted Earnings Per Share from Continuing
Operations

(1.10)



(0.30)



(0.95)



(0.48)


Adjusted Diluted Earnings Per Share from Continuing
Operations

$

1.60



$

1.56



$

6.65



$

6.61










Effective Tax Rate -  Continuing Operations

71.5

%


11.7

%


36.6

%


23.8

%

Impact on Effective Tax Rate - Continuing Operations

(42.5)

%


17.5

%


(8.8)

%


4.3

%

Adjusted Effective Tax Rate -  Continuing Operations

29.0

%


29.2

%


27.8

%


28.1

%

 

Details of the significant non-recurring and non-operational items included within operating profit, interest and income tax of continuing operations for the quarter and years ended December 31, 2017 and 2016 above are as follows:

 


Quarter Ended December 31,


Year Ended December 31,


(Unaudited)


(Unaudited)

In Millions - Income (Expense)

2017


2016


2017


2016

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








UTC Climate, Controls & Security








Charge related to product recall program

$

(96)



$



$

(96)



$


Gain on sale of investments in Watsco, Inc.





379




Acquisition and integration costs



(9)





(32)


Pratt & Whitney








Charge resulting from customer contract matters





(196)



(95)


Eliminations & other








Transaction and integration costs related to merger
agreement with Rockwell Collins, Inc.

(38)





(65)




Gain on sale of available-for-sale securities





121




Pension settlement charge resulting from defined benefit
plan de-risking actions



(423)





(423)



$

(134)



$

(432)



$

143



$

(550)










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








Unfavorable pre-tax interest adjustments related to tax
law changes in Canada

$

(6)



$



$

(6)



$


Favorable pre-tax interest adjustments related to
expiration of tax statute of limitations





9




Net extinguishment loss from early redemption of debt



(164)





(164)


Favorable pre-tax interest adjustments, primarily related
to 2011 - 2012 tax years



22





22


Favorable pre-tax interest adjustments, primarily related
to Goodrich Corporation's 2011 - 2012 tax years







2



$

(6)



$

(142)



$

3



$

(140)


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








Unfavorable income tax adjustments related to the
estimated impact of the U.S. tax reform legislation
enacted on December 22, 2017

$

(690)



$



$

(690)



$


Net unfavorable tax adjustments related to tax law
changes in France and Canada

(32)





(32)




Favorable income tax adjustments related to expiration
of tax statute of limitations





55




Favorable income tax adjustments, primarily related to
2011 - 2012 tax years



150





150


Favorable income tax adjustments related to reductions
in French tax laws



25





25


Favorable income tax adjustments, primarily related to
Goodrich Corporation's 2011 - 2012 tax years







56



$

(722)



$

175



$

(667)



$

231


 

 

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 two pages)



Quarter Ended December 31,


Year Ended December 31,


(Unaudited)


(Unaudited)

(Millions)

2017


2016


2017


2016

Adjusted Net Sales








Otis

$

3,250



$

3,063



$

12,341



$

11,893


UTC Climate, Controls & Security

4,520



4,249



17,812



16,851


Pratt & Whitney

4,461



3,992



16,545



15,078


UTC Aerospace Systems

3,803



3,598



14,691



14,465


Segment Sales

16,034



14,902



61,389



58,287


Eliminations and other

(354)



(243)



(1,167)



(859)


Adjusted Consolidated Net Sales

$

15,680



$

14,659



$

60,222



$

57,428










Adjusted Operating Profit








Otis

$

497



$

534



$

2,071



$

2,206


UTC Climate, Controls & Security

759



680



3,128



3,053


Pratt & Whitney

437



470



1,661



1,751


UTC Aerospace Systems

615



595



2,450



2,347


Segment Operating Profit

2,308



2,279



9,310



9,357


Eliminations and other

(22)



7



(91)



60


General corporate expenses

(124)



(126)



(437)



(405)


Adjusted Consolidated Operating Profit

$

2,162



$

2,160



$

8,782



$

9,012










Adjusted Segment Operating Profit Margin








Otis


15.3

%



17.4

%



16.8

%



18.5

%

UTC Climate, Controls & Security


16.8

%



16.0

%



17.6

%



18.1

%

Pratt & Whitney


9.8

%



11.8

%



10.0

%



11.6

%

UTC Aerospace Systems


16.2

%



16.5

%



16.7

%



16.2

%

Adjusted Segment Operating Profit Margin


14.4

%



15.3

%



15.2

%



16.1

%

 

 

United Technologies Corporation

Components of Changes in Net Sales






Quarter Ended December 31, 2017 Compared with Quarter Ended December 31, 2016












Factors Contributing to Total % Change in Net Sales



Organic


FX
Translation


Acquisitions /
Divestitures, net


Other


Total

Otis


3%


3%




6%

UTC Climate, Controls & Security


3%


3%




6%

Pratt & Whitney


11%


1%




12%

UTC Aerospace Systems


5%


1%




6%












Consolidated


5%


2%




7%























Year Ended December 31, 2017 Compared with Year Ended December 31, 2016












Factors Contributing to Total % Change in Net Sales



Organic


FX
Translation


Acquisitions /
Divestitures, net


Other


Total

Otis


2%



1%


1%


4%

UTC Climate, Controls & Security


4%


1%


1%



6%

Pratt & Whitney


9%


1%



(1)%


9%

UTC Aerospace Systems


2%





2%












Consolidated


4%



1%



5%

 

 

United Technologies Corporation

Condensed Consolidated Balance Sheet



December 31,


December 31,


2017


2016

(Millions)

(Unaudited)


(Unaudited)

Assets




Cash and cash equivalents

$

8,985



$

7,157


Accounts receivable, net

12,595



11,481


Inventories and contracts in progress, net

9,881



8,704


Other assets, current

1,397



1,208


Total Current Assets

32,858



28,550


Fixed assets, net

10,186



9,158


Goodwill

27,910



27,059


Intangible assets, net

15,883



15,684


Other assets

10,083



9,255


Total Assets

$

96,920



$

89,706






Liabilities and Equity




Short-term debt

$

2,496



$

2,204


Accounts payable

9,579



7,483


Accrued liabilities

12,316



12,219


Total Current Liabilities

24,391



21,906


Long-term debt

24,989



21,697


Other long-term liabilities

15,988



16,638


Total Liabilities

65,368



60,241


Redeemable noncontrolling interest

131



296


Shareowners' Equity:




Common Stock

17,489



17,190


Treasury Stock

(35,596)



(34,150)


Retained earnings

55,242



52,873


Accumulated other comprehensive loss

(7,525)



(8,334)


Total Shareowners' Equity

29,610



27,579


Noncontrolling interest

1,811



1,590


Total Equity

31,421



29,169


Total Liabilities and Equity

$

96,920



$

89,706








Debt Ratios:






Debt to total capitalization

47

%


45

%

Net debt to net capitalization

37

%


36

%







 

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)

2017


2016


2017


2016

Operating Activities of Continuing Operations:








Net income from continuing operations

$

486



$

1,124



$

4,920



$

5,436


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








Depreciation and amortization

558



506



2,140



1,962


Deferred income tax (benefit) provision

(662)



125



62



398


Stock compensation cost

47



40



192



152


Change in working capital

306



(462)



(52)



(1,161)


Global pension contributions

(104)



(178)



(2,112)



(303)


Canadian government settlement

(39)





(285)



(237)


Other operating activities, net

1,929



690



766



165


Net cash flows provided by operating activities of continuing operations

2,521



1,845



5,631



6,412


Investing Activities of Continuing Operations:








Capital expenditures

(800)



(656)



(2,014)



(1,699)


Acquisitions and dispositions of businesses, net

(2)



(112)



(161)



(499)


Proceeds from sale of investments in Watsco, Inc.





596




Increase in collaboration intangible assets

(90)



(79)



(380)



(380)


(Payments) proceeds from settlements of derivative contracts

(134)



278



(317)



249


Other investing activities, net

(335)



(42)



(743)



(180)


Net cash flows used in investing activities of continuing operations

(1,361)



(611)



(3,019)



(2,509)


Financing Activities of Continuing Operations:








Issuance of long-term debt, net

893



1,736



3,350



4,017


Decrease in short-term borrowings, net

(671)



(268)



(271)



(331)


Dividends paid on Common Stock

(533)



(508)



(2,074)



(2,069)


Repurchase of Common Stock

(23)



(1,726)



(1,453)



(2,254)


Other financing activities, net

(366)



(219)



(545)



(551)


Net cash flows used in financing activities of continuing operations

(700)



(985)



(993)



(1,188)


Discontinued Operations:








Net cash used in operating activities



(46)





(2,532)


Net cash provided by investing activities







6


Net cash flows used in discontinued operations



(46)





(2,526)


Effect of foreign exchange rate changes on cash and cash equivalents

2



(148)



210



(120)


Net increase in cash, cash equivalents and restricted cash

462



55



1,829



69


Cash, cash equivalents and restricted cash, beginning of period

8,556



7,134



7,189



7,120


Cash, cash equivalents and restricted cash, end of period

9,018



7,189



9,018



7,189


Less: Restricted cash, included in Other assets

33



32



33



32


Cash and cash equivalents, end of period

$

8,985



$

7,157



$

8,985



$

7,157


 

See accompanying Notes to Condensed Consolidated Financial Statements.

 

United Technologies Corporation

Free Cash Flow Reconciliation



Quarter Ended December 31,


(Unaudited)

(Millions)

2017


2016







Net income attributable to common shareowners from continuing
operations

$

397




$

1,024



Net cash flows provided by operating activities of continuing operations

$

2,521




$

1,845



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


635

%



180

%

Capital expenditures

(800)




(656)



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


(202)

%



(64)

%

Free cash flow from continuing operations

$

1,721




$

1,189



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


434

%



116

%








Year Ended December 31,


(Unaudited)

(Millions)

2017


2016







Net income attributable to common shareowners from continuing
operations

$

4,552




$

5,065



Net cash flows provided by operating activities of continuing operations

$

5,631




$

6,412



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


124

%



127

%

Capital expenditures

(2,014)




(1,699)



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


(44)

%



(34)

%

Free cash flow from continuing operations

$

3,617




$

4,713



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


79

%



93

%

 

Notes to Condensed Consolidated Financial Statements

Certain reclassifications have been made to the prior year amounts to conform to the current year presentation.

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.

 

Contact: 

Media Inquiries, UTC 


(860) 728-7907




Investor Relations, UTC 


(860) 728-7608

 

SOURCE United Technologies Corp.