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Form 8-K UNITED TECHNOLOGIES CORP For: Jan 26

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January 26, 2015 4:21 PM EST


�
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 26, 2015
____________________________________�
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 06101
(Address of principal executive offices, including zip code)
Registrants 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�2Financial Information
Item�2.02. Results of Operations and Financial Condition.
On January 26, 2015, United Technologies Corporation (UTC or the Company) issued a press release announcing its fourth quarter 2014 results.
The press release issued January 26, 2015 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, or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.
Section�9Financial Statements and Exhibits
Item�9.01. Financial Statements and Exhibits.
(d) Exhibits.
Exhibit
Number
Exhibit Description
99
Press release, dated January 26, 2015, 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 26, 2015
By:
/S/ AKHIL JOHRI��������
�
�
Akhil Johri
�
�
Senior Vice President and Chief Financial Officer




�
EXHIBIT INDEX
�
Exhibit
Number
Exhibit Description
99
Press release, dated January 26, 2015, issued by United Technologies Corporation.





Exhibit 99

UTC REPORTS FULL YEAR 2014 RESULTS, UPDATES 2015 OUTLOOK

"
EPS of $6.82, up 10% versus the prior year
"
Sales of $65.1 billion, including 4% organic growth
"
Segment margins up 90 bps to 16.6%, ex. restructuring and one-time items
"
2015 EPS expectation updated to $6.85 to $7.05, from $7.00 to $7.20 driven by FX
HARTFORD, Conn., Jan. 26, 2015 - United Technologies Corp. (NYSE: UTX) reported full year 2014 earnings per share of $6.82 and net income attributable to common shareowners of $6.2 billion, up 10 percent and 9 percent, respectively over the prior year. Sales of $65.1 billion were 4 percent above prior year including 4 points of organic growth. Segment operating margin was 15.2 percent, 10 basis points lower than prior year. Adjusted for restructuring and one-time items, segment operating margin was 16.6 percent. Cash flow from operations of $7.3 billion, less capital expenditures of $1.7 billion, was 90 percent of net income attributable to common shareowners.
UTC delivered double digit earnings growth in 2014 despite a slower than expected global economy, said Gregory Hayes, UTC President & Chief Executive Officer. Strong conversion on solid topline growth, continued cost reductions and benefits from lower pension expense drove the double digit earnings increase for the year. We delivered 90 basis points of margin expansion even as we continued to invest for the future.
Earnings per share for the fourth quarter of $1.62 included $0.09 of restructuring costs and $0.17 of net unfavorable one-time items. The prior year quarter included $0.11 of restructuring costs and $0.02 of favorable one-time items. Adjusted for restructuring and net one-time items in both years, earnings per share grew 13 percent, with segment operating margins of 16.5 percent. Sales of $17.0 billion increased 1 percent, reflecting the benefit of organic growth (4 points) partially offset by unfavorable foreign exchange (3 points).
Otis new equipment orders in the quarter increased 12 percent over the prior year at constant currency. Equipment orders at UTC Climate, Controls & Security increased 11 percent. Commercial aftermarket sales were down 6 percent at Pratt & Whitney on a tough compare, and up 5 percent at UTC Aerospace Systems.
We saw good organic growth throughout the year, added Hayes. Based on solid backlog and continued orders strength, we see topline momentum as we enter 2015; our business fundamentals and operational expectations have not changed. However, with the continuing strengthening of the US dollar, as well as additional pension discount rate headwind, we now expect 2015 EPS of $6.85 to $7.05, on sales of $65 to $66 billion.
UTC expects to invest $1.7 billion in capital expenditures in 2015, and continues to estimate cash flow from operations less capital expenditures in the range of 90 to 100 percent of net income attributable to common shareowners. The company now expects share repurchase of $3 billion and acquisitions of approximately $1 billion in 2015, following $1.5 billion and $530 million, respectively, in 2014.
United Technologies Corp., based in Hartford, 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




All financial results and projections reflect continuing operations unless otherwise noted. The accompanying tables include information integral to assessing the companys 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 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 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 of share repurchases depends upon market conditions and the level of other investing activities and uses of cash. 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)
2014
�
2013
�
2014
�
2013
Net Sales
$
16,996

�
$
16,759

�
$
65,100

�
$
62,626

Costs and Expenses:
�
�
�
�
�
�
�
�
Cost of products and services sold
12,360

�
12,284

�
47,447

�
45,321

�
Research and development
668

�
658

�
2,635

�
2,529

�
Selling, general and administrative
1,701

�
1,721

�
6,500

�
6,718

�
Total Costs and Expenses
14,729

�
14,663

�
56,582

�
54,568

Other income, net
303

�
234

�
1,251

�
1,151

Operating profit
2,570

�
2,330

�
9,769

�
9,209

�
Interest expense, net
265

�
218

�
882

�
897

Income from continuing operations before income taxes
2,305

�
2,112

�
8,887

�
8,312

�
Income tax expense
730

�
561

�
2,264

�
2,238

Income from continuing operations
1,575

�
1,551

�
6,623

�
6,074

�
Less: Noncontrolling interest in subsidiaries' earnings from continuing operations
102

�
102

�
403

�
388

Income from continuing operations attributable to common shareowners
1,473

�
1,449

�
6,220

�
5,686

Discontinued Operations:
�
�
�
�
�
�
�
�
Income from operations


�


�


�
63

�
Loss on disposal


�
(3
)
�


�
(33
)
�
Income tax benefit


�
17

�


�
5

Income from discontinued operations attributable to common shareowners



14





35

Net income attributable to common shareowners
$
1,473

�
$
1,463

�
$
6,220

�
$
5,721

Earnings Per Share of Common Stock - Basic:
�
�
�
�
�
�
�
�
From continuing operations attributable to common shareowners
$
1.64

�
$
1.61

�
$
6.92

�
$
6.31

�
From discontinued operations attributable to common shareowners


�
0.02

�


�
0.04

Earnings Per Share of Common Stock - Diluted:
�
�
�
�
�
�
�
�
From continuing operations attributable to common shareowners
$
1.62

�
$
1.58

�
$
6.82

�
$
6.21

�
From discontinued operations attributable to common shareowners


�
0.02

�


�
0.04

Weighted Average Number of Shares Outstanding:
�
�
�
�
�
�
�
�
Basic shares
895

�
901

�
898

�
901

�
Diluted shares
907

�
917

�
912

�
915

As described on the following pages, consolidated results for the quarters and years ended December 31, 2014 and 2013 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,
�
Year Ended December 31,
�
(Unaudited)
�
(Unaudited)
(Millions)
2014
�
2013
�
2014
�
2013
Net Sales
�
�
�
�
�
�
�
Otis
$
3,336

�
$
3,344

�
$
12,982

�
$
12,484

UTC Climate, Controls & Security
4,192

�
4,192

�
16,823

�
16,809

Pratt & Whitney
4,023

�
4,089

�
14,508

�
14,501

UTC Aerospace Systems
3,594

�
3,451

�
14,215

�
13,347

Sikorsky
2,086

�
1,897

�
7,451

�
6,253

Segment Sales
17,231

�
16,973

�
65,979

�
63,394

Eliminations and other
(235
)
�
(214
)
�
(879
)
�
(768
)
Consolidated Net Sales
$
16,996

�
$
16,759

�
$
65,100

�
$
62,626

�
�
�
�
�
�
�
�
Operating Profit
�
�
�
�
�
�
�
Otis
$
674

�
$
684

�
$
2,640

�
$
2,590

UTC Climate, Controls & Security
623

�
622

�
2,782

�
2,590

Pratt & Whitney
547

�
464

�
2,000

�
1,876

UTC Aerospace Systems
588

�
517

�
2,355

�
2,018

Sikorsky
298

�
189

�
219

�
594

Segment Operating Profit
2,730

�
2,476

�
9,996

�
9,668

Eliminations and other
(27
)
�
(10
)
�
261

�
22

General corporate expenses
(133
)
�
(136
)
�
(488
)
�
(481
)
Consolidated Operating Profit
$
2,570

�
$
2,330

�
$
9,769

�
$
9,209

Segment Operating Profit Margin
�
�
�
�
�
�
�
Otis
20.2
%
�
20.5
%
�
20.3
%
�
20.7
%
UTC Climate, Controls & Security
14.9
%
�
14.8
%
�
16.5
%
�
15.4
%
Pratt & Whitney
13.6
%
�
11.3
%
�
13.8
%
�
12.9
%
UTC Aerospace Systems
16.4
%
�
15.0
%
�
16.6
%
�
15.1
%
Sikorsky
14.3
%
�
10.0
%
�
2.9
%
�
9.5
%
Segment Operating Profit Margin
15.8
%
�
14.6
%
�
15.2
%
�
15.3
%

As described on the following pages, consolidated results for the quarters and years ended December 31, 2014 and 2013 include restructuring costs and non-recurring items that management believes should be considered when evaluating the underlying financial performance.




United Technologies Corporation
Restructuring Costs and Non-Recurring Items Included in Consolidated Results
�
Quarter Ended December 31,
�
Year Ended December 31,
�
(Unaudited)
�
(Unaudited)
In Millions - Income (Expense)
2014
�
2013
�
2014
�
2013
Non-Recurring items included in Net Sales:
�
�
�
�
�
�
�
Sikorsky
$


�
$


�
$
830

�
$


�
�
�
�
�
�
�
�
Restructuring Costs included in Operating Profit:
�
�
�
�
�
�
�
Otis
$
(34
)
�
$
(20
)
�
$
(87
)
�
$
(88
)
UTC Climate, Controls & Security
(34
)
�
(31
)
�
(116
)
�
(97
)
Pratt & Whitney
(9
)
�
(32
)
�
(64
)
�
(154
)
UTC Aerospace Systems
(46
)
�
(27
)
�
(82
)
�
(92
)
Sikorsky
3

�
(25
)
�
(14
)
�
(50
)
Eliminations and other
(5
)
�
(1
)
�
(5
)
�


�
(125
)
�
(136
)
�
(368
)
�
(481
)
Non-Recurring items included in Operating Profit:
�
�
�
�
�
�
�
UTC Climate, Controls & Security


�
17

�
30

�
55

Pratt & Whitney


�


�
1

�
168

Sikorsky


�


�
(466
)
�


Eliminations and other


�


�
220

�


�


�
17

�
(215
)
�
223

Total impact on Consolidated Operating Profit
(125
)
�
(119
)
�
(583
)
�
(258
)
Non-Recurring items included in Interest Expense, Net
(55
)
�
12

�
(11
)
�
48

Tax effect of restructuring and non-recurring items above
30

�
15

�
185

�
54

Non-Recurring items included in Income Tax Expense
(87
)
�
13

�
284

�
154

Impact on Net Income from Continuing Operations Attributable to Common Shareowners
$
(237
)
�
$
(79
)
�
$
(125
)
�
$
(2
)
Impact on Diluted Earnings Per Share from Continuing Operations
$
(0.26
)
�
$
(0.09
)
�
$
(0.14
)
�
$








Details of the non-recurring items for the quarters and years ended December 31, 2014 and 2013 above are as follows:
Quarter Ended December 31, 2014
Interest Expense, Net:
"
Approximately $143 million of unfavorable pre-tax interest accruals related to the ongoing dispute with German tax authorities concerning a 1998 reorganization of the corporate structure of Otis operations in Germany.
"
Approximately $88 million of favorable pre-tax interest adjustments, primarily related to conclusion of litigation and the resolution of disputes with the Appeals Division of the IRS regarding Goodrich Corporations 2000 to 2010 tax years.
Income Tax Expense:
"
Approximately $267 million of unfavorable income tax accruals related to the ongoing dispute with German tax authorities concerning a 1998 reorganization of the corporate structure of Otis operations in Germany.
"
Approximately $180 million favorable tax adjustment primarily associated with managements decision to repatriate additional high taxed dividends in 2014.
Quarter Ended September 30, 2014
UTC Climate, Controls & Security: Approximately $30 million net gain from UTC Climate, Controls & Security's ongoing portfolio transformation, primarily due to a gain on the sale of an interest in a joint venture in North America.
Pratt & Whitney: Approximately $83 million net gain, primarily as a result of fair value adjustments related to a business acquisition.
Interest Expense, Net: Approximately $23 million of favorable pre-tax interest adjustments, primarily related to the resolution of disputes with the Appeals Division of the IRS for the Company's 2006 - 2008 tax years.
Income Tax Expense: Approximately $118 million of favorable income tax adjustments, primarily related to the resolution of disputes with the Appeals Division of the IRS for the Company's 2006 - 2008 tax years.
Quarter Ended June 30, 2014
Pratt & Whitney:
"
Approximately $60 million charge to adjust the fair value of a Pratt & Whitney joint venture investment.
"
Approximately $22 million charge for impairment of assets related to a joint venture.
Sikorsky:
"
A cumulative adjustment to record $830 million in sales and $438 million in losses based upon the change in estimate required for the contractual amendments signed with the Canadian Government on the Maritime Helicopter program.
"
Approximately $28 million charge for the impairment of a Sikorsky joint venture investment.
Eliminations & Other: Approximately $220 million gain on an agreement with a state taxing authority for the monetization of tax credits.
Interest Expense, Net: Approximately $21 million of favorable pre-tax interest adjustments, primarily related to the conclusion of the IRS's examination of the Company's 2009 and 2010 tax years.
Income Tax Expense: Approximately $253 million of favorable income tax adjustments related to the conclusion of the IRS's examination of the Company's 2009 and 2010 tax years, as well as the settlement of state income taxes related to the disposition of the Hamilton Sundstrand Industrials businesses.
Quarter Ended December 31, 2013
UTC Climate, Controls & Security: Approximately $17 million net gain from UTC Climate, Controls & Security's ongoing portfolio transformation, primarily due to a gain on the sale of a business in Australia.
Interest Expense, Net: Approximately $12 million of favorable pre-tax interest adjustments related to the resolution of a dispute with the IRS for the legacy Goodrich 2001 - 2006 tax years.
Income Tax Expense: Approximately $13 million of favorable income tax adjustments related to the resolution of a dispute with the IRS for the legacy Goodrich 2001 - 2006 tax years.




Quarter Ended September 30, 2013
Pratt & Whitney: Approximately $25 million charge to adjust the fair value of a Pratt & Whitney joint venture investment.
Income Tax Expense: Favorable tax benefit of approximately $24 million as a result of a U.K. tax rate reduction enacted in July 2013.
Quarter Ended June 30, 2013
Pratt & Whitney: Approximately $193 million gain from the sale of the Pratt & Whitney Power Systems business. This gain was not reclassified to "Discontinued Operations" due to our expected level of continuing involvement in the business post disposition.
Interest Expense, Net: Approximately $36 million of favorable pre-tax interest adjustments related to settlements for the Company's tax years prior to 2006, as well as the conclusion of certain IRS examinations of 2009 and 2010 tax years.
Income Tax Expense: Approximately $22 million of favorable income tax adjustments related to the conclusion of certain IRS examinations of 2009 and 2010 tax years.
Quarter Ended March 31, 2013
UTC Climate, Controls & Security: Approximately $38 million net gain from UTC Climate, Controls & Security's ongoing portfolio transformation, primarily due to a gain on the sale of a business in Hong Kong.
Income Tax Expense:� Approximately $95 million of favorable income tax adjustments as a result of the enactment of the American Taxpayer Relief Act of 2012 in January 2013. The $95 million is primarily related to the retroactive extension of the research and development credit to 2012.




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,
�
Year Ended December 31,
�
(Unaudited)
�
(Unaudited)
(Millions)
2014
�
2013
�
2014
�
2013
Net Sales
�
�
�
�
�
�
�
Otis
$
3,336

�
$
3,344

�
$
12,982

�
$
12,484

UTC Climate, Controls & Security
4,192

�
4,192

�
16,823

�
16,809

Pratt & Whitney
4,023

�
4,089

�
14,508

�
14,501

UTC Aerospace Systems
3,594

�
3,451

�
14,215

�
13,347

Sikorsky
2,086

�
1,897

�
6,621

�
6,253

Segment Sales
17,231

�
16,973

�
65,149

�
63,394

Eliminations and other
(235
)
�
(214
)
�
(879
)
�
(768
)
Consolidated Net Sales
$
16,996

�
$
16,759

�
$
64,270

�
$
62,626

�
�
�
�
�
�
�
�
Adjusted Operating Profit
�
�
�
�
�
�
�
Otis
$
708

�
$
704

�
$
2,727

�
$
2,678

UTC Climate, Controls & Security
657

�
636

�
2,868

�
2,632

Pratt & Whitney
556

�
496

�
2,063

�
1,862

UTC Aerospace Systems
634

�
544

�
2,437

�
2,110

Sikorsky
295

�
214

�
699

�
644

Segment Operating Profit
2,850

�
2,594

�
10,794

�
9,926

Eliminations and other
(26
)
�
(9
)
�
42

�
22

General corporate expenses
(129
)
�
(136
)
�
(484
)
�
(481
)
Adjusted Consolidated Operating Profit
$
2,695

�
$
2,449

�
$
10,352

�
$
9,467

Adjusted Segment Operating Profit Margin
�
�
�
�
�
�
�
Otis
21.2
%
�
21.1
%
�
21.0
%
�
21.5
%
UTC Climate, Controls & Security
15.7
%
�
15.2
%
�
17.0
%
�
15.7
%
Pratt & Whitney
13.8
%
�
12.1
%
�
14.2
%
�
12.8
%
UTC Aerospace Systems
17.6
%
�
15.8
%
�
17.1
%
�
15.8
%
Sikorsky
14.1
%
�
11.3
%
�
10.6
%
�
10.3
%
Adjusted Segment Operating Profit Margin
16.5
%
�
15.3
%
�
16.6
%
�
15.7
%





United Technologies Corporation
Condensed Consolidated Balance Sheet
�
December 31,
�
December�31,
�
2014
�
2013
(Millions)
(Unaudited)
�
(Unaudited)
Assets
�
�
�
Cash and cash equivalents
$
5,235

�
$
4,619

Accounts receivable, net
11,317

�
11,458

Inventories and contracts in progress, net
9,865

�
10,330

Other assets, current
3,341

�
3,035

Total Current Assets
29,758

�
29,442

Fixed assets, net
9,276

�
8,866

Goodwill
27,796

�
28,168

Intangible assets, net
15,560

�
15,521

Other assets
8,899

�
8,597

Total Assets
$
91,289

�
$
90,594

�
�
�
�
Liabilities and Equity
�
�
�
Short-term debt
$
1,922

�
$
500

Accounts payable
6,967

�
6,965

Accrued liabilities
14,006

�
15,335

Total Current Liabilities
22,895

�
22,800

Long-term debt
17,872

�
19,741

Other long-term liabilities
17,818

�
14,723

Total Liabilities
58,585

�
57,264

Redeemable noncontrolling interest
140

�
111

Shareowners' Equity:
�
�

Common Stock
15,185

�
14,638

Treasury Stock
(21,922
)
�
(20,431
)
Retained earnings
44,611

�
40,539

Accumulated other comprehensive loss
(6,661
)
�
(2,880
)
Total Shareowners' Equity
31,213

�
31,866

Noncontrolling interest
1,351

�
1,353

Total Equity
32,564

�
33,219

Total Liabilities and Equity
$
91,289

�
$
90,594

Debt Ratios:
�
�
�
Debt to total capitalization
38
%
�
38
%
Net debt to net capitalization
31
%
�
32
%

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)
2014
�
2013
�
2014
�
2013
Operating Activities of Continuing Operations:
�
�
�
�
�
�
�
Income from continuing operations
$
1,575

�
$
1,551

�
$
6,623

�
$
6,074

Adjustments to reconcile net income from continuing operations to net cash flows provided by operating activities of continuing operations:
�
�
�
�
�
�
�
Depreciation and amortization
489

�
486

�
1,907

�
1,821

Deferred income tax provision
258

�
228

�
376

�
242

Stock compensation cost
37

�
59

�
240

�
275

Change in working capital
149

�
264

�
(1,247
)
�
(199
)
Global pension contributions
(314
)
�
(37
)
�
(517
)
�
(108
)
Other operating activities, net
116

�
62

�
(46
)
�
(600
)
Net cash flows provided by operating activities of continuing operations
2,310

�
2,613

�
7,336

�
7,505

Investing Activities of Continuing Operations:
�
�
�
�
�
�
�
Capital expenditures
(557
)
�
(641
)
�
(1,711
)
�
(1,688
)
Acquisitions and dispositions of businesses, net
76

�
65

�
(58
)
�
1,409

Increase in collaboration intangible assets
(134
)
�
(175
)
�
(593
)
�
(722
)
Other investing activities, net
(212
)
�
(113
)
�
57

�
(463
)
Net cash flows used in investing activities of continuing operations
(827
)
�
(864
)
�
(2,305
)
�
(1,464
)
Financing Activities of Continuing Operations:
�
�
�
�
�
�
�
Issuance (repayment) of long-term debt, net
17

�
(976
)
�
(206
)
�
(2,770
)
(Decrease) increase in short-term borrowings, net
(218
)
�
91

�
(346
)
�
(113
)
Dividends paid on Common Stock
(510
)
�
(512
)
�
(2,048
)
�
(1,908
)
Repurchase of Common Stock
(405
)
�
(200
)
�
(1,500
)
�
(1,200
)
Other financing activities, net
(69
)
�
(116
)
�
(159
)
�
51

Net cash flows used in financing activities of continuing operations
(1,185
)
�
(1,713
)
�
(4,259
)
�
(5,940
)
Discontinued Operations:
�
�
�
�
�
�
�
Net cash used in operating activities


�
(25
)
�


�
(628
)
Net cash provided by investing activities


�


�


�
351

Net cash flows used in discontinued operations


�
(25
)
�


�
(277
)
Effect of foreign exchange rate changes on cash and cash equivalents
(98
)
�
(13
)
�
(156
)
�
(41
)
Net increase (decrease) in cash and cash equivalents
200

�
(2
)
�
616

�
(217
)
Cash and cash equivalents, beginning of period
5,035

�
4,621

�
4,619

�
4,836

Cash and cash equivalents of continuing operations, end of period
$
5,235

�
$
4,619

�
$
5,235

�
$
4,619

�

See accompanying Notes to Condensed Consolidated Financial Statements.




United Technologies Corporation
Free Cash Flow Reconciliation
�
Quarter Ended December 31,
�
(Unaudited)
(Millions)
2014
�
2013
�
�
�
�
�
�
Net income from continuing operations attributable to common shareowners
$
1,473

�
�
$
1,449

�
Net cash flows provided by operating activities of continuing operations
$
2,310

�
�
$
2,613

�
Net cash flows provided by operating activities of continuing operations as a percentage of net income from continuing operations attributable to common shareowners
�
157
�%
�
�
180
�%
Capital expenditures
(557
)
�
�
(641
)
�
Capital expenditures as a percentage of net income from continuing operations attributable to common shareowners
�
(38
)%
�
�
(44
)%
Free cash flow from continuing operations
$
1,753

�
�
$
1,972

�
Free cash flow from continuing operations as a percentage of net income from continuing operations attributable to common shareowners
�
119
�%
�
�
136
�%
�
�
�
�
�
�
�
Year Ended December 31,
�
(Unaudited)
(Millions)
2014
�
2013
�
�
�
�
�
�
Net income attributable to common shareowners from continuing operations
$
6,220

�
�
$
5,686

�
Net cash flows provided by operating activities of continuing operations
$
7,336

�
�
$
7,505

�
Net cash flows provided by operating activities of continuing operations as a percentage of net income attributable to common shareowners from continuing operations
�
118
�%
�
�
132
�%
Capital expenditures
(1,711
)
�
�
(1,688
)
�
Capital expenditures as a percentage of net income attributable to common shareowners from continuing operations
�
(28
)%
�
�
(30
)%
Free cash flow from continuing operations
$
5,625

�
�
$
5,817

�
Free cash flow from continuing operations as a percentage of net income attributable to common shareowners from continuing operations
�
90
�%
�
�
102
�%
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.




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