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Form 8-K UNITED TECHNOLOGIES CORP For: Oct 20

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October 20, 2015 7:21 AM EDT


 
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): October 20, 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.)
10 Farm Springs Road
Farmington, Connecticut 06032
(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 October 20, 2015, United Technologies Corporation (“UTC” or “the Company”) issued a press release announcing its third quarter 2015 results.
The press release issued October 20, 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 9—Financial Statements and Exhibits
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits.
Exhibit
Number
Exhibit Description
99
Press release, dated October 20, 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: October 20, 2015
By:
/S/ AKHIL JOHRI        
 
 
Akhil Johri
 
 
Senior Vice President and Chief Financial Officer




 
EXHIBIT INDEX
 
Exhibit
Number
Exhibit Description
99
Press release, dated October 20, 2015, issued by United Technologies Corporation.





Exhibit 99

UTC REPORTS THIRD QUARTER 2015 RESULTS; REAFFIRMS 2015 FULL YEAR EXPECTATIONS

•
EPS from continuing operations of $1.61, down 17% versus the prior year quarter
(up 1% ex. currency, restructuring and one-time items)
•
Reaffirms 2015 EPS from continuing operations expectations of $6.15 to $6.30 on sales of $57 to $58 billion
•
Sikorsky sale expected to close in Q4 2015; $6 billion in net cash proceeds to be used for share repurchases
•
UTC Board of Directors authorizes $12 billion share repurchase plan; $16 billion share repurchases expected for 2015 - 2017

FARMINGTON, Conn., October 20, 2015 - United Technologies Corp. (NYSE: UTX) today reported third quarter 2015 results. All results in this release reflect continuing operations unless otherwise noted.
Third quarter earnings per share of $1.61 and net income attributable to common shareowners of $1.4 billion were down 17 percent and 19 percent, respectively, versus the third quarter of 2014. Results for the current quarter include restructuring costs of $0.06 per share, while earnings per share in the year ago quarter included $0.22 of favorable one-time items net of restructuring. Excluding these items in both quarters, earnings per share of $1.67 decreased 2 percent year-over-year. Foreign currency had an unfavorable impact of $0.05, or 3 percent in the quarter. Excluding the impact of both unfavorable foreign exchange rate changes and restructuring and one-time items, earnings per share were up 1 percent year-over-year.
Sales of $13.8 billion decreased by 6 percent in the quarter, driven by 5 points of adverse foreign exchange and a 1 point decline in organic sales primarily attributed to a delay in engine deliveries as a result of the transition to a new logistics center at Pratt & Whitney. These deliveries should largely be recovered in the fourth quarter. Third quarter segment operating margin was 17.2 percent, and 17.6 percent when adjusted for restructuring costs.
“United Technologies is executing the strategic plan set forth earlier this year and is focused on maximizing the performance of our core building and aerospace systems businesses under a flatter and more transparent organizational structure,” said Gregory Hayes, UTC President and Chief Executive Officer. “We are on track to deliver results within our previous guidance ranges for full-year EPS of $6.15 to $6.30 and sales between $57 and $58 billion.”
Otis new equipment orders in the quarter increased 2 percent over the prior year at constant currency. Equipment orders at UTC Climate, Controls & Security decreased 2 percent. Commercial aerospace aftermarket sales were up 8 percent at Pratt & Whitney and up 1 percent at UTC Aerospace Systems on an organic basis.
“Our long-term growth outlook remains strong and we are well-positioned to continue creating value for our shareholders,” Mr. Hayes added. “UTC has world class, industry-leading franchises that provide differentiated technologies to very attractive end markets, create a strong base of recurring revenues, and generate a reliable stream of cash flow through cycles. Our approach to capital allocation remains balanced as we successfully reinvest in our business, evaluate M&A opportunistically and return cash to shareholders.”




UTC expects the previously announced sale of its Sikorsky unit to close in the fourth quarter of 2015. The Board of Directors has authorized a new $12 billion share repurchase program, including the $6 billion accelerated share repurchase using the net proceeds from the Sikorsky sale. The new share repurchase program replaces the previous program announced on July 20, 2015. The timing and amount of repurchases will be determined based on the Company’s evaluation of market conditions and other factors. The program may be suspended or discontinued at any time.
“United Technologies’ shares are an attractive investment opportunity which we are going to take advantage of in order to increase value for our shareholders,” said Mr. Hayes. “Including the $4 billion in repurchases made to date in 2015, we now expect to complete $16 billion of share repurchases through 2017.”
Cash flow from operations was $1.0 billion and capital expenditures were $390 million in the quarter. Share repurchase in the quarter was $1.0 billion and takes the year to date total to $4.0 billion. UTC continues to assume a placeholder for full year acquisition spend of $1 billion and expects cash flow from operations less capital expenditures in the range of 90 to 100 percent of net income attributable to common shareowners for 2015.

About United Technologies
United Technologies Corp., based in Farmington, Connecticut, provides high-technology systems 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. Foreign currency impact includes currency translation as well as hedging activity at Pratt & Whitney Canada. 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.

Safe Harbor
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 the plans, strategies, and objectives of UTC for future operations, including statements relating to the anticipated sale of Sikorsky; the future performance of UTC; future and estimated sales, earnings, cash flow, charges, expenditures and share repurchases; anticipated growth in sales; new products and their entry into service; anticipated benefits of organizational changes; and other measures of financial or operational performance. There can be no assurance that any transaction or future events will occur as anticipated, if at all, or that actual results will be as expected. 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 risks related to the anticipated sale of Sikorsky, including regulatory approvals and other conditions; 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; challenges in 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 or furnished to 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 September 30,
 
Nine Months Ended September 30,
 
 
(Unaudited)
 
(Unaudited)
(Millions, except per share amounts)
2015
 
2014
 
2015
 
2014
Net Sales
$
13,788

 
$
14,613

 
$
41,798

 
$
42,920

Costs and Expenses:
 
 
 
 
 
 
 
 
Cost of products and services sold
9,800

 
10,165

 
29,778

 
30,167

 
Research and development
546

 
640

 
1,668

 
1,851

 
Selling, general and administrative
1,359

 
1,501

 
4,261

 
4,552

 
Total Costs and Expenses
11,705

 
12,306

 
35,707

 
36,570

Other income, net
219

 
305

 
808

 
963

Operating profit
2,302

 
2,612

 
6,899

 
7,313

 
Interest expense, net
184

 
185

 
618

 
615

Income from continuing operations before income taxes
2,118

 
2,427

 
6,281

 
6,698

 
Income tax expense
592

 
575

 
1,748

 
1,610

Income from continuing operations
1,526

 
1,852

 
4,533

 
5,088

 
Less: Noncontrolling interest in subsidiaries' earnings from continuing operations
100

 
97

 
281

 
300

Income from continuing operations attributable to common shareowners
1,426

 
1,755

 
4,252

 
4,788

Discontinued operations:
 
 
 
 
 
 
 
 
Income (loss) from operations
27

 
133

 
284

 
(116
)
 
Transaction related expenses
(38
)
 
—

 
(66
)
 
—

 
Income tax (expense) benefit
(54
)
 
(33
)
 
(140
)
 
76

 
(Loss) income from discontinued operations
(65
)
 
100

 
78

 
(40
)
 
Less: Noncontrolling interest in subsidiaries' earnings from discontinued operations
(1
)
 
1

 
—

 
1

(Loss) income from discontinued operations attributable to common shareowners
(64
)
 
99

 
78

 
(41
)
Net income attributable to common shareowners
$
1,362

 
$
1,854

 
$
4,330

 
$
4,747

Earnings Per Share of Common Stock - Basic:
 
 
 
 
 
 
 
 
From continuing operations attributable to common shareowners
$
1.63

 
$
1.96

 
$
4.82

 
$
5.32

 
From discontinued operations attributable to common shareowners
(0.07
)
 
0.11

 
0.09

 
(0.05
)
Earnings Per Share of Common Stock - Diluted:
 
 
 
 
 
 
 
 
From continuing operations attributable to common shareowners
$
1.61

 
$
1.93

 
$
4.76

 
$
5.24

 
From discontinued operations attributable to common shareowners
(0.07
)
 
0.11

 
0.09

 
(0.04
)
Weighted Average Number of Shares Outstanding:
 
 
 
 
 
 
 
 
Basic shares
876

 
898

 
882

 
899

 
Diluted shares
885

 
910

 
894

 
913

As described on the following pages, consolidated results for the quarters and nine months ended September 30, 2015 and 2014 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 September 30,
 
Nine Months Ended September 30,
 
(Unaudited)
 
(Unaudited)
(Millions)
2015
 
2014
 
2015
 
2014
Net Sales
 
 
 
 
 
 
 
Otis
$
3,043

 
$
3,326

 
$
8,886

 
$
9,646

UTC Climate, Controls & Security
4,279

 
4,351

 
12,585

 
12,631

Pratt & Whitney
3,234

 
3,564

 
10,243

 
10,485

UTC Aerospace Systems
3,457

 
3,535

 
10,637

 
10,621

Segment Sales
14,013

 
14,776

 
42,351

 
43,383

Eliminations and other
(225
)
 
(163
)
 
(553
)
 
(463
)
Consolidated Net Sales
$
13,788

 
$
14,613

 
$
41,798

 
$
42,920

 
 
 
 
 
 
 
 
Operating Profit
 
 
 
 
 
 
 
Otis
$
642

 
$
703

 
$
1,796

 
$
1,966

UTC Climate, Controls & Security
771

 
807

 
2,323

 
2,159

Pratt & Whitney
419

 
633

 
1,325

 
1,453

UTC Aerospace Systems
572

 
575

 
1,721

 
1,767

Segment Operating Profit
2,404

 
2,718

 
7,165

 
7,345

Eliminations and other
(1
)
 
18

 
65

 
323

General corporate expenses
(101
)
 
(124
)
 
(331
)
 
(355
)
Consolidated Operating Profit
$
2,302

 
$
2,612

 
$
6,899

 
$
7,313

Segment Operating Profit Margin
 
 
 
 
 
 
 
Otis
21.1
%
 
21.1
%
 
20.2
%
 
20.4
%
UTC Climate, Controls & Security
18.0
%
 
18.5
%
 
18.5
%
 
17.1
%
Pratt & Whitney
13.0
%
 
17.8
%
 
12.9
%
 
13.9
%
UTC Aerospace Systems
16.5
%
 
16.3
%
 
16.2
%
 
16.6
%
Segment Operating Profit Margin
17.2
%
 
18.4
%
 
16.9
%
 
16.9
%

As described on the following pages, consolidated results for the quarters and nine months ended September 30, 2015 and 2014 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 of Continuing Operations
 
Quarter Ended September 30,
 
Nine Months Ended September 30,
 
(Unaudited)
 
(Unaudited)
In Millions - Income (Expense)
2015
 
2014
 
2015
 
2014
Restructuring Costs included in Operating Profit:
 
 
 
 
 
 
 
Otis
$
(18
)
 
$
(15
)
 
$
(32
)
 
$
(53
)
UTC Climate, Controls & Security
(15
)
 
(14
)
 
(67
)
 
(82
)
Pratt & Whitney
(22
)
 
(8
)
 
(37
)
 
(55
)
UTC Aerospace Systems
(14
)
 
(26
)
 
(64
)
 
(36
)
Eliminations and other
(4
)
 
—

 
(5
)
 
—

 
(73
)
 
(63
)
 
(205
)
 
(226
)
Non-Recurring items included in Operating Profit:
 
 
 
 
 
 
 
UTC Climate, Controls & Security
—

 
30

 
126

 
30

Pratt & Whitney
—

 
83

 
—

 
1

Eliminations and other
—

 
—

 
—

 
220

 
—

 
113

 
126

 
251

Total impact on Consolidated Operating Profit
(73
)
 
50

 
(79
)
 
25

Non-Recurring items included in Interest Expense, Net
—

 
23

 
—

 
44

Tax effect of restructuring and non-recurring items above
21

 
6

 
66

 
(25
)
Non-Recurring items included in Income Tax Expense
—

 
118

 
—

 
371

Impact on Net Income from Continuing Operations
Attributable to Common Shareowners
$
(52
)
 
$
197

 
$
(13
)
 
$
415

Impact on Diluted Earnings Per Share from
Continuing Operations
$
(0.06
)
 
$
0.22

 
$
(0.01
)
 
$
0.45






Details of the non-recurring items included within results of continuing operations for the quarters and nine months ended September 30, 2015 and 2014 above are as follows:
Quarter Ended March 31, 2015
UTC Climate, Controls & Security: Approximately $126 million gain as a result of a fair value adjustment related to the acquisition of a controlling interest in a joint venture investment.
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.
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.





United Technologies Corporation
Segment Net Sales and Operating Profit Adjusted for Restructuring Costs and Non-Recurring Items (as reflected on the previous page)

 
Quarter Ended September 30,
 
Nine Months Ended September 30,
 
(Unaudited)
 
(Unaudited)
(Millions)
2015
 
2014
 
2015
 
2014
Adjusted Net Sales
 
 
 
 
 
 
 
Otis
$
3,043

 
$
3,326

 
$
8,886

 
$
9,646

UTC Climate, Controls & Security
4,279

 
4,351

 
12,585

 
12,631

Pratt & Whitney
3,234

 
3,564

 
10,243

 
10,485

UTC Aerospace Systems
3,457

 
3,535

 
10,637

 
10,621

Segment Sales
14,013

 
14,776

 
42,351

 
43,383

Eliminations and other
(225
)
 
(163
)
 
(553
)
 
(463
)
Adjusted Consolidated Net Sales
$
13,788

 
$
14,613

 
$
41,798

 
$
42,920

 
 
 
 
 
 
 
 
Adjusted Operating Profit
 
 
 
 
 
 
 
Otis
$
660

 
$
718

 
$
1,828

 
$
2,019

UTC Climate, Controls & Security
786

 
791

 
2,264

 
2,211

Pratt & Whitney
441

 
558

 
1,362

 
1,507

UTC Aerospace Systems
586

 
601

 
1,785

 
1,803

Segment Operating Profit
2,473

 
2,668

 
7,239

 
7,540

Eliminations and other
(1
)
 
18

 
66

 
103

General corporate expenses
(97
)
 
(124
)
 
(327
)
 
(355
)
Adjusted Consolidated Operating Profit
$
2,375

 
$
2,562

 
$
6,978

 
$
7,288

Adjusted Segment Operating Profit Margin
 
 
 
 
 
 
 
Otis
21.7
%
 
21.6
%
 
20.6
%
 
20.9
%
UTC Climate, Controls & Security
18.4
%
 
18.2
%
 
18.0
%
 
17.5
%
Pratt & Whitney
13.6
%
 
15.7
%
 
13.3
%
 
14.4
%
UTC Aerospace Systems
17.0
%
 
17.0
%
 
16.8
%
 
17.0
%
Adjusted Segment Operating Profit Margin
17.6
%
 
18.1
%
 
17.1
%
 
17.4
%





United Technologies Corporation
Condensed Consolidated Balance Sheet
 
September 30,
 
December 31,
 
2015
 
2014
(Millions)
(Unaudited)
 
(Unaudited)
Assets
 
 
 
Cash and cash equivalents
$
5,477

 
$
5,229

Accounts receivable, net
10,647

 
10,448

Inventories and contracts in progress, net
8,453

 
7,642

Other assets, current
2,946

 
3,296

Assets held for sale
4,836

 
4,868

Total Current Assets
32,359

 
31,483

Fixed assets, net
8,515

 
8,592

Goodwill
27,354

 
27,448

Intangible assets, net
15,572

 
15,528

Other assets
8,335

 
8,238

Total Assets
$
92,135

 
$
91,289

 
 
 
 
Liabilities and Equity
 
 
 
Short-term debt
$
3,239

 
$
1,917

Accounts payable
6,333

 
6,250

Accrued liabilities
11,875

 
12,527

Liabilities held for sale
2,242

 
2,781

Total Current Liabilities
23,689

 
23,475

Long-term debt
19,428

 
17,867

Other long-term liabilities
16,835

 
17,243

Total Liabilities
59,952

 
58,585

Redeemable noncontrolling interest
132

 
140

Shareowners' Equity:
 
 

Common Stock
16,623

 
15,185

Treasury Stock
(25,946
)
 
(21,922
)
Retained earnings
47,236

 
44,611

Accumulated other comprehensive loss
(7,388
)
 
(6,661
)
Total Shareowners' Equity
30,525

 
31,213

Noncontrolling interest
1,526

 
1,351

Total Equity
32,051

 
32,564

Total Liabilities and Equity
$
92,135

 
$
91,289

Debt Ratios:
 
 
 
Debt to total capitalization
41
%
 
38
%
Net debt to net capitalization
35
%
 
31
%

See accompanying Notes to Condensed Consolidated Financial Statements.




United Technologies Corporation
Condensed Consolidated Statement of Cash Flows
 
Quarter Ended
September 30,
 
Nine Months Ended September 30,
 
(Unaudited)
 
(Unaudited)
(Millions)
2015
 
2014
 
2015
 
2014
Operating Activities of Continuing Operations:
 
 
 
 
 
 
 
Income from continuing operations
$
1,526

 
$
1,852

 
$
4,533

 
$
5,088

Adjustments to reconcile income from continuing operations to net cash flows provided by operating activities of continuing operations:
 
 
 
 
 
 
 
Depreciation and amortization
486

 
462

 
1,401

 
1,352

Deferred income tax provision
109

 
83

 
444

 
231

Stock compensation cost
16

 
78

 
108

 
187

Change in working capital
(966
)
 
(173
)
 
(1,688
)
 
(869
)
Global pension contributions
(23
)
 
(60
)
 
(93
)
 
(204
)
Other operating activities, net
(127
)
 
(215
)
 
(661
)
 
(763
)
Net cash flows provided by operating activities of continuing operations
1,021

 
2,027

 
4,044

 
5,022

Investing Activities of Continuing Operations:
 
 
 
 
 
 
 
Capital expenditures
(390
)
 
(391
)
 
(1,044
)
 
(1,063
)
Acquisitions and dispositions of businesses, net
(67
)
 
(207
)
 
(157
)
 
(134
)
Increase in collaboration intangible assets
(84
)
 
(152
)
 
(331
)
 
(459
)
(Payments) receipts from settlements of derivative contracts
(268
)
 
115

 
147

 
153

Other investing activities, net
(111
)
 
54

 
(31
)
 
111

Net cash flows used in investing activities of continuing operations
(920
)
 
(581
)
 
(1,416
)
 
(1,392
)
Financing Activities of Continuing Operations:
 
 
 
 
 
 
 
Issuance (repayment) of long-term debt, net
2

 
(49
)
 
4

 
(221
)
Increase (decrease) in short-term borrowings, net
247

 
(156
)
 
2,891

 
(137
)
Proceeds from Common Stock issuance - equity unit remarketing
1,100

 
—

 
1,100

 
—

Dividends paid on Common Stock
(547
)
 
(512
)
 
(1,643
)
 
(1,538
)
Repurchase of Common Stock
(1,000
)
 
(425
)
 
(4,000
)
 
(1,095
)
Other financing activities, net
(122
)
 
(92
)
 
(213
)
 
(82
)
Net cash flows used in financing activities of continuing operations
(320
)
 
(1,234
)
 
(1,861
)
 
(3,073
)
Discontinued Operations:
 
 
 
 
 
 
 
Net cash (used in) provided by operating activities
(123
)
 
(79
)
 
(299
)
 
3

Net cash used in investing activities
(7
)
 
(23
)
 
(66
)
 
(85
)
Net cash provided by (used in) financing activities
4

 
4

 
(1
)
 
—

Net cash flows used in discontinued operations
(126
)
 
(98
)
 
(366
)
 
(82
)
Effect of foreign exchange rate changes on cash and cash equivalents
(95
)
 
(41
)
 
(143
)
 
(59
)
Net (decrease) increase in cash and cash equivalents
(440
)
 
73

 
258

 
416

Cash and cash equivalents, beginning of period
5,933

 
4,962

 
5,235

 
4,619

Cash and cash equivalents of continuing operations, end of period
5,493

 
5,035

 
5,493

 
5,035

Less: Cash and cash equivalents of assets held for sale
16

 
5

 
16

 
5

Cash and cash equivalents of continuing operations, end of period
$
5,477

 
$
5,030

 
$
5,477

 
$
5,030


See accompanying Notes to Condensed Consolidated Financial Statements.




United Technologies Corporation
Free Cash Flow Reconciliation
 
Quarter Ended September 30,
 
(Unaudited)
(Millions)
2015
 
2014
 
 
 
 
 
 
Net income attributable to common shareowners from continuing operations
$
1,426

 
 
$
1,755

 
Net cash flows provided by operating activities of continuing operations
$
1,021

 
 
$
2,027

 
Net cash flows provided by operating activities of continuing operations as a percentage of net income attributable to common shareowners from continuing operations
 
72
 %
 
 
115
 %
Capital expenditures
(390
)
 
 
(391
)
 
Capital expenditures as a percentage of net income attributable to common shareowners from continuing operations
 
(27
)%
 
 
(22
)%
Free cash flow from continuing operations
$
631

 
 
$
1,636

 
Free cash flow from continuing operations as a percentage of net income attributable to common shareowners from continuing operations
 
44
 %
 
 
93
 %
 
 
 
 
 
 
 
Nine Months Ended September 30,
 
(Unaudited)
(Millions)
2015
 
2014
 
 
 
 
 
 
Net income attributable to common shareowners from continuing operations
$
4,252

 
 
$
4,788

 
Net cash flows provided by operating activities of continuing operations
$
4,044

 
 
$
5,022

 
Net cash flows provided by operating activities of continuing operations as a percentage of net income attributable to common shareowners from continuing operations
 
95
 %
 
 
105
 %
Capital expenditures
(1,044
)
 
 
(1,063
)
 
Capital expenditures as a percentage of net income attributable to common shareowners from continuing operations
 
(25
)%
 
 
(22
)%
Free cash flow from continuing operations
$
3,000

 
 
$
3,959

 
Free cash flow from continuing operations as a percentage of net income attributable to common shareowners from continuing operations
 
71
 %
 
 
83
 %
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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