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HARTFORD, Conn. – United Technologies Corp. (NYSE:UTX) today reported third quarter 2009 earnings per share of $1.14 and net income attributable to common shareowners of $1.1 billion, down 14 percent and 17 percent, respectively, over the year ago quarter. Results for the current quarter include $0.13 per share in restructuring costs net of one time gains, as compared with $0.03 in the year ago quarter. Before these items, earnings per share declined 7 percent. Adverse foreign currency translation and currency hedges at Pratt & Whitney Canada totaled $0.07 per share in the third quarter of 2009.
Revenues for the quarter at $13.4 billion were 11 percent below prior year including organic decline (7 points) and adverse foreign currency translation (3 points). Segment operating margin at 14.5 percent was 20 basis points higher than prior year. Adjusted for restructuring costs and one time gains, segment operating margin was 70 basis points higher than prior year. Cash flow from operations was $1.9 billion, including $150 million of domestic pension contributions. Capital expenditures were $161 million in the quarter.
“Strong execution and our relentless focus on cost contributed to record segment operating margin even in the face of tough end markets,” said Louis Chênevert, UTC President and Chief Executive Officer. “Cash flow from operations less capital expenditures was 160 percent of net income attributable to common shareowners on significant inventory reductions across both commercial and aerospace businesses.
“Year over year order rates have substantially stabilized although at lower levels and we’ve started to see improvement in some Asian economies, notably China,” Chênevert continued. “Based on overall order trends as well as significant cost traction, we now expect 2009 earnings per share at $4.10, the midpoint of the prior range of $4.00 to $4.20. This guidance also reflects higher restructuring of $800 million this year with one-time gains of around $175 million, compared with $750 million of restructuring and $200 million of gains assumed earlier.
“Cash flow from operations less capital expenditures year to date is 123 percent of net income attributable to common shareowners, notwithstanding $551 million of domestic pension contributions,” Chênevert said. “Working capital and inventory reductions are enabling this, and we are confident this cash flow metric will again exceed UTC’s usual standard of 100 percent for the year.”
Chênevert added, “Order rates for most of our businesses have largely stabilized, although the shape of recovery is still uncertain. What is certain is the cost traction across UTC. In addition, the portfolio transformation at Carrier, a strong military backlog, and significant aftermarket content in all our businesses position us to resume earnings growth in 2010.”
The accompanying tables include information integral to assessing the company’s financial position, operating performance, and cash flow.
United Technologies Corp., based in Hartford, Connecticut, is a diversified company providing high technology products and services to the building and aerospace industries. Additional information, including a webcast, is available on the Internet at http://www.utc.com.
This release includes "forward looking statements" concerning expected revenue, earnings, cash flow, share repurchases, restructuring; anticipated benefits of UTC’s diversification, cost reduction efforts and business model; and other matters that are subject to risks and uncertainties. These statements often contain words such as “expect”, “anticipate”, “plan”, “estimate”, “believe”, “will”, “should”, “see”, “guidance” and similar terms. Important factors that could cause actual results to differ materially from those anticipated or implied in forward looking statements include extended weakness in global economic conditions; extended contraction in credit conditions; the impact of volatility and deterioration in financial markets on overall levels of economic activity; declines in end market demand in construction and in both the commercial and defense segments of the aerospace industry; fluctuation in commodity prices, interest rates, foreign currency exchange rates, and the impact of weather conditions; and company specific items including the impact of further deterioration and extended weakness in global economic conditions on the financial strength of customers and suppliers and on levels of air travel; financial difficulties, including bankruptcy, of commercial airlines; the availability and impact of acquisitions; the rate and ability to effectively integrate these acquired businesses; the ability to achieve cost reductions at planned levels; challenges in the design, development, production and support of advanced technologies and new products and services; delays and disruption in delivery of materials and services from suppliers; labor disputes; and the outcome of legal proceedings. The level of share repurchases may vary depending on the level of other investing activities. For information identifying other important economic, political, regulatory, legal, technological, competitive and other uncertainties, see UTC's SEC filings as submitted from time to time, including but not limited to, the information included in UTC's 10-K and 10-Q Reports under the headings "Business", "Risk Factors", "Management's Discussion and Analysis of Financial Condition and Results of Operations" and "Cautionary Note Concerning Factors that May Affect Future Results", as well as the information included in UTC's Current Reports on Form 8-K.