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Form 8-K UNITED TECHNOLOGIES CORP For: Jan 27

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January 27, 2016 7:29 AM 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 27, 2016
____________________________________ 
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 January 27, 2016, United Technologies Corporation (“UTC” or “the Company”) issued a press release announcing its full year and fourth quarter 2015 results.
The press release issued January 27, 2016 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 January 27, 2016, 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 27, 2016
By:
/S/ AKHIL JOHRI        
 
 
Akhil Johri
 
 
Executive Vice President & Chief Financial Officer




 
EXHIBIT INDEX
 
Exhibit
Number
Exhibit Description
99
Press release, dated January 27, 2016, issued by United Technologies Corporation.





Exhibit 99

UTC REPORTS FULL YEAR 2015 RESULTS, AFFIRMS 2016 OUTLOOK

Adjusted results
•
2015 Adjusted EPS of $6.30 at high end of expected range
•
Adjusted EPS up slightly excluding $0.19 unfavorable FX impact
•
Affirms 2016 expectations for Adjusted EPS of $6.30 to $6.60 on sales of $56 billion to $58 billion
 
Reported (GAAP) results
•
2015 GAAP EPS of $4.53, reflecting $0.31 in restructuring and $1.46 of other significant non-recurring and non-operational items
•
Full-year sales were $56.1 billion, down 3 percent versus prior year primarily due to FX, with 1 point of organic sales growth

Key milestones and accomplishments
•
First Pratt & Whitney Geared Turbofan-powered A320neo entered into revenue service
•
Won major systems contracts for signature Hudson Yards development in New York City
•
Rebalanced portfolio by divesting Sikorsky
•
Returned $12 billion to shareowners, including share repurchase and dividends

FARMINGTON, Conn., Jan. 27, 2016 - United Technologies Corp. (NYSE: UTX) today reported full year 2015 Adjusted EPS of $6.30. All results in this release reflect continuing operations unless otherwise noted.
“I’m pleased to report UTC’s 2015 earnings reached the top end of expectations we set months ago,” said UTC President and Chief Executive Officer Gregory Hayes. “Solid execution on our strategic priorities has set a strong foundation for future growth.”
“In line with our 2015 strategic priorities, we took decisive actions to streamline our portfolio with the divestiture of Sikorsky and return over $12 billion to shareowners. Returning cash to shareowners continues to be a top priority and we are still targeting $22 billion of total shareowner returns through share repurchases and dividends from 2015 through 2017,” Hayes said. “We also streamlined UTC’s organizational structure and initiated a $1.5 billion multi-year restructuring plan to improve competitiveness.”
“UTC is now more focused than ever on innovative new technologies for the aerospace and buildings industries. This week Pratt & Whitney’s Geared Turbofan entered into service on the first A320neo - making aviation history by meeting all of its key performance requirements from day one,” Hayes added.
Full-year 2015 Adjusted EPS of $6.30 decreased 2 percent year over year, with foreign currency having an unfavorable impact of $0.19, or 3 percent. Excluding the unfavorable impact of foreign exchange rates, Adjusted EPS was up slightly year over year. GAAP earnings per share were $4.53, reflecting $0.31 in restructuring and $1.46 of net charges related to other significant non-recurring and non-operational items.
Full year sales of $56.1 billion decreased by 3 percent, as 1 point of organic sales growth was more than offset by 4 points of adverse foreign exchange. Free cash flow for the year was 126 percent of net income attributable to common shareowners, including slightly more than 25 points of benefit associated with restructuring and other significant items.





Fourth quarter Adjusted EPS of $1.53 was down 8 percent. GAAP earnings for the fourth quarter reflected a loss of $0.30 per share, including $0.16 of restructuring costs and $1.67 of net unfavorable other significant items. Sales of $14.3 billion were down 5 percent driven primarily by 4 points of unfavorable foreign exchange, with organic sales up slightly in the quarter.
Otis new equipment orders in the quarter increased 2 percent over the prior year at constant currency, and grew 11 percent excluding China. Equipment orders at UTC Climate, Controls & Security decreased by 5 percent. Commercial aftermarket sales were up 11 percent at Pratt & Whitney, and up 8 percent at UTC Aerospace Systems.
“As we enter 2016, the tough actions that we’ve taken, and will continue to take, put us in position to achieve our financial objectives. We remain confident in our full year 2016 Adjusted EPS expectations of $6.30 to $6.60 on sales of $56 billion to $58 billion, despite a difficult macro environment,” Hayes added.
UTC continues to anticipate 2016 free cash flow in the range of 90 to 100 percent of net income attributable to common shareowners. The company also continues to expect share repurchase of $3 billion in 2016, beyond the repurchases that will be completed in 2016 under the previously announced $6 billion accelerated share repurchase program. UTC continues to assume a $1 billion to $2 billion placeholder for acquisitions in 2016.
United Technologies Corp., based in Farmington, 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

Use of Non-GAAP Financial Measures
Adjusted EPS, adjusted segment margins and free cash flow are non-GAAP financial measures that are used in UTC’s financial press releases and webcasts. A reconciliation of these non-GAAP measures to the corresponding amounts prepared in accordance with generally accepted accounting principles (GAAP) is included in the tables to this press release.
Adjusted EPS and adjusted segment margin reflect continuing operations, excluding restructuring costs and other significant items of a non-recurring and/or non-operational nature (often referred to in this press release as “other significant items”). Management believes Adjusted EPS and adjusted segment margin are both useful in providing period to period comparisons of the results of the Company’s operational performance. The tables attached to this press release provide additional information as to the items and amounts that have been excluded from Adjusted EPS and adjusted segment margin.
Free cash flow represents cash flow from operations less capital expenditures. 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 the Company’s Common Stock and distribution of earnings to shareowners.
When we provide our expectations for Adjusted EPS and/or free cash flow on a forward-looking basis, the closest corresponding GAAP measures (expected EPS from continuing operations and expected cash flow from operations) and a reconciliation of the differences between the non-GAAP expectation and the corresponding GAAP measure generally are not available (except as otherwise indicated) 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. The variability of the excluded items may have a significant, and potentially unpredictable, impact on our future GAAP results.




Adjusted EPS, adjusted segment margins and free cash flow should not be considered in isolation or as substitutes for analysis of the Company’s results as reported under GAAP. Other companies may calculate adjusted EPS, adjusted segment margins and free cash flow differently than the Company does, limiting the usefulness of those measures for comparisons with such other companies.

Cautionary Statement
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, acquisitions and divestitures, orders, foreign exchange rate assumptions 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 and timing of discretionary share repurchases (those outside the company’s current accelerated share repurchase program) depend upon market conditions, the level of other investing activities and uses of cash, and discretionary share repurchases may be suspended at any time. 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)
2015
 
2014
 
2015
 
2014
Net Sales
$
14,300

 
$
14,980

 
$
56,098

 
$
57,900

Costs and Expenses:
 
 
 
 
 
 
 
 
Cost of products and services sold
10,653

 
10,731

 
40,431

 
40,898

 
Research and development
611

 
624

 
2,279

 
2,475

 
Selling, general and administrative
1,625

 
1,620

 
5,886

 
6,172

 
Total Costs and Expenses
12,889

 
12,975

 
48,596

 
49,545

Other (expense) income, net
(1,019
)
 
275

 
(211
)
 
1,238

Operating profit
392

 
2,280

 
7,291

 
9,593

 
Interest expense, net
206

 
266

 
824

 
881

Income from continuing operations before income taxes
186

 
2,014

 
6,467

 
8,712

 
Income tax expense
363

 
634

 
2,111

 
2,244

(Loss) income from continuing operations
(177
)
 
1,380

 
4,356

 
6,468

 
Less: Noncontrolling interest in subsidiaries' earnings from continuing operations
79

 
102

 
360

 
402

(Loss) income from continuing operations attributable to common shareowners
(256
)
 
1,278

 
3,996

 
6,066

Discontinued operations:
 
 
 
 
 
 
 
 
(Loss) income from operations
(32
)
 
291

 
252

 
175

 
Gain on disposal
6,108

 
—

 
6,042

 
—

 
Income tax expense
(2,544
)
 
(96
)
 
(2,684
)
 
(20
)
 
Income from discontinued operations
3,532

 
195

 
3,610

 
155

 
Less: Noncontrolling interest in subsidiaries' earnings from discontinued operations
(2
)
 
—

 
(2
)
 
1

Income from discontinued operations attributable to common shareowners
3,534

 
195

 
3,612

 
154

Net income attributable to common shareowners
$
3,278

 
$
1,473

 
$
7,608

 
$
6,220

Earnings Per Share of Common Stock - Basic:
 
 
 
 
 
 
 
 
From continuing operations attributable to common shareowners
$
(0.30
)
 
$
1.43

 
$
4.58

 
$
6.75

 
From discontinued operations attributable to common shareowners
4.16

 
0.22

 
4.14

 
0.17

Earnings Per Share of Common Stock - Diluted:
 
 
 
 
 
 
 
 
From continuing operations attributable to common shareowners
$
(0.30
)
 
$
1.41

 
$
4.53

 
$
6.65

 
From discontinued operations attributable to common shareowners
4.16

 
0.22

 
4.09

 
0.17

Weighted Average Number of Shares Outstanding:
 
 
 
 
 
 
 
 
Basic shares
850

 
895

 
873

 
898

 
Diluted shares
850

 
907

 
883

 
912

As described on the following pages, consolidated results for the quarters and years ended December 31, 2015 and 2014 include restructuring costs and significant non-recurring and non-operational 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)
2015
 
2014
 
2015
 
2014
Net Sales
 
 
 
 
 
 
 
Otis
$
3,094

 
$
3,336

 
$
11,980

 
$
12,982

UTC Climate, Controls & Security
4,122

 
4,192

 
16,707

 
16,823

Pratt & Whitney
3,839

 
4,023

 
14,082

 
14,508

UTC Aerospace Systems
3,457

 
3,594

 
14,094

 
14,215

Segment Sales
14,512

 
15,145

 
56,863

 
58,528

Eliminations and other
(212
)
 
(165
)
 
(765
)
 
(628
)
Consolidated Net Sales
$
14,300

 
$
14,980

 
$
56,098

 
$
57,900

 
 
 
 
 
 
 
 
Operating Profit
 
 
 
 
 
 
 
Otis
$
542

 
$
674

 
$
2,338

 
$
2,640

UTC Climate, Controls & Security
613

 
623

 
2,936

 
2,782

Pratt & Whitney
(464
)
 
547

 
861

 
2,000

UTC Aerospace Systems
167

 
588

 
1,888

 
2,355

Segment Operating Profit
858

 
2,432

 
8,023

 
9,777

Eliminations and other
(333
)
 
(19
)
 
(268
)
 
304

General corporate expenses
(133
)
 
(133
)
 
(464
)
 
(488
)
Consolidated Operating Profit
$
392

 
$
2,280

 
$
7,291

 
$
9,593

Segment Operating Profit Margin
 
 
 
 
 
 
 
Otis
17.5
 %
 
20.2
%
 
19.5
%
 
20.3
%
UTC Climate, Controls & Security
14.9
 %
 
14.9
%
 
17.6
%
 
16.5
%
Pratt & Whitney
(12.1
)%
 
13.6
%
 
6.1
%
 
13.8
%
UTC Aerospace Systems
4.8
 %
 
16.4
%
 
13.4
%
 
16.6
%
Segment Operating Profit Margin
5.9
 %
 
16.1
%
 
14.1
%
 
16.7
%

As described on the following pages, consolidated results for the quarters and years ended December 31, 2015 and 2014 include restructuring costs and significant non-recurring and non-operational items that management believes should be considered when evaluating the underlying financial performance.




United Technologies Corporation
Reconciliation of Reported to Adjusted Results

 
Quarter Ended December 31,
 
Year Ended December 31,
 
(Unaudited)
 
(Unaudited)
In Millions - Income (Expense)
2015
 
2014
 
2015
 
2014
Net Sales
$
14,300

 
$
14,980

 
$
56,098

 
$
57,900

Significant non-recurring and non-operational items included in Net Sales:
 
 
 
 
 
 
 
Pratt & Whitney - charge resulting from customer contract negotiations
(142
)
 
—

 
(142
)
 
—

UTC Aerospace Systems - charge resulting from customer contract negotiations
(210
)
 
—

 
(210
)
 
—

Adjusted Net Sales
$
14,652


$
14,980


$
56,450


$
57,900

 
 
 
 
 
 
 
 
(Loss) income from continuing operations attributable to common shareowners
$
(256
)
 
$
1,278

 
$
3,996

 
$
6,066

Restructuring Costs included in Operating Profit:
 
 
 
 
 
 
 
Otis
(19
)
 
(34
)
 
(51
)
 
(87
)
UTC Climate, Controls & Security
(41
)
 
(34
)
 
(108
)
 
(116
)
Pratt & Whitney
(68
)
 
(9
)
 
(105
)
 
(64
)
UTC Aerospace Systems
(47
)
 
(46
)
 
(111
)
 
(82
)
Eliminations and other
(16
)
 
(5
)
 
(21
)
 
(5
)
 
(191
)
 
(128
)
 
(396
)
 
(354
)
Significant non-recurring and non-operational items included in Operating Profit:
 
 
 
 
 
 
 
UTC Climate, Controls & Security
(5
)
 
—

 
121

 
30

Pratt & Whitney
(947
)
 
—

 
(947
)
 
1

UTC Aerospace Systems
(356
)
 
—

 
(356
)
 
—

Eliminations and other
(264
)
 
—

 
(264
)
 
220

 
(1,572
)
 
—

 
(1,446
)
 
251

Total impact on Consolidated Operating Profit
(1,763
)
 
(128
)
 
(1,842
)
 
(103
)
Significant non-recurring and non-operational items included in Interest Expense, Net
—

 
(55
)
 
—

 
(11
)
Tax effect of restructuring and significant non-recurring and non-operational items above
551

 
32

 
617

 
7

Significant non-recurring and non-operational items included in Income Tax Expense
(342
)
 
(87
)
 
(342
)
 
284

Less: Impact on Net Income from Continuing Operations Attributable to Common Shareowners
(1,554
)
 
(238
)
 
(1,567
)
 
177

Adjusted income from continuing operations attributable to common shareowners
$
1,298

 
$
1,516

 
$
5,563

 
$
5,889

 


 

 


 

Diluted Earnings Per Share from Continuing Operations
$
(0.30
)
 
$
1.41

 
$
4.53

 
$
6.65

Impact on Diluted Earnings Per Share from Continuing Operations
(1.83
)
 
(0.26
)
 
(1.77
)
 
0.19

Adjusted Diluted Earnings Per Share from Continuing Operations
$
1.53

 
$
1.67

 
$
6.30

 
$
6.46






Details of the significant non-recurring and non-operational items included within operating profit for the quarters and year ended December 31, 2015 and 2014 above are as follows:
 
Quarter Ended December 31,
 
Year Ended December 31,
 
(Unaudited)
 
(Unaudited)
In Millions - Income (Expense)
2015
 
2014
 
2015
 
2014
Significant non-recurring and non-operational items included in Operating Profit:
 
 
 
 
 
 
 
UTC Climate, Controls & Security
 
 
 
 
 
 
 
Gain on fair value adjustment on acquisition of controlling interest in a joint venture
$
—

 
$
—

 
$
126

 
$
—

Net gain from ongoing portfolio transformation
—

 
—

 
—

 
30

Acquisition and integration costs related to current period acquisitions
(5
)
 
—

 
(5
)
 
—

Pratt & Whitney
 
 
 
 
 
 
 
Charge related to a research and development support agreement with the Canadian government
(867
)
 
—

 
(867
)
 
—

Charge resulting from customer contract negotiations
(80
)
 
—

 
(80
)
 
—

Net gain on fair value adjustment related to a business acquisition
—

 
—

 
—

 
83

Adjustment to fair value of a joint venture investment
—

 
—

 
—

 
(60
)
Charge for impairment of assets related to a joint venture investment
—

 
—

 
—

 
(22
)
UTC Aerospace Systems
 
 
 
 
 
 
 
Charge resulting from customer contract negotiations
(295
)
 
—

 
(295
)
 
—

Charge for impairment of assets held for sale
(61
)
 
—

 
(61
)
 
—

Eliminations & other
 
 
 
 
 
 
 
Charge for pending and future asbestos-related claims
(237
)
 
—

 
(237
)
 
—

(Charge) gain from agreement with a state taxing authority for monetization of tax credits
(27
)
 
—

 
(27
)
 
220

 
$
(1,572
)
 
$
—

 
$
(1,446
)
 
$
251






Details of the significant non-recurring and non-operational items included within interest and income tax of continuing operations for the quarters and year ended December 31, 2015 and 2014 above are as follows:
 
Quarter Ended December 31,
 
Year Ended December 31,
 
(Unaudited)
 
(Unaudited)
In Millions - Income (Expense)
2015
 
2014
 
2015
 
2014
Significant non-recurring and non-operational items included in Interest Expense, Net
 
 
 
 
 
 
 
Unfavorable pre-tax interest accruals related to the ongoing dispute with German tax authorities
$
—

 
$
(143
)
 
$
—

 
$
(143
)
Favorable pre-tax interest adjustments, primarily related to Goodrich Corporation’s 2000 to 2010 tax years
—

 
88

 
—

 
88

Favorable pre-tax interest adjustments, primarily related to the Company's 2006 - 2008 and 2009 - 2010 tax years
—

 
—

 
—

 
44

 
$
—

 
$
(55
)
 
$
—

 
$
(11
)
Significant non-recurring and non-operational items included in Income Tax Expense
 
 
 
 
 
 
 
Unfavorable income tax accruals related to the repatriation of foreign earnings
$
(274
)
 
$
—

 
$
(274
)
 
$
—

Unfavorable income tax accruals related to changes in tax laws
(68
)
 
—

 
(68
)
 
—

Unfavorable income tax accruals related to the ongoing dispute with German tax authorities
—

 
(267
)
 
—

 
(267
)
Favorable tax adjustment primarily associated with management’s decision to repatriate additional high taxed dividends
—

 
180

 
—

 
180

Favorable income tax adjustments related to the Company's 2006 - 2008 and 2009 - 2010 tax years, and settlement of state income taxes related to the disposition of the Hamilton Sundstrand Industrials businesses
—

 
—

 
—

 
371

 
$
(342
)
 
$
(87
)
 
$
(342
)
 
$
284





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 three pages)

 
Quarter Ended December 31,
 
Year Ended December 31,
 
(Unaudited)
 
(Unaudited)
(Millions)
2015
 
2014
 
2015
 
2014
Adjusted Net Sales
 
 
 
 
 
 
 
Otis
$
3,094

 
$
3,336

 
$
11,980

 
$
12,982

UTC Climate, Controls & Security
4,122

 
4,192

 
16,707

 
16,823

Pratt & Whitney
3,981

 
4,023

 
14,224

 
14,508

UTC Aerospace Systems
3,667

 
3,594

 
14,304

 
14,215

Segment Sales
14,864

 
15,145

 
57,215

 
58,528

Eliminations and other
(212
)
 
(165
)
 
(765
)
 
(628
)
Adjusted Consolidated Net Sales
$
14,652

 
$
14,980

 
$
56,450

 
$
57,900

 
 
 
 
 
 
 
 
Adjusted Operating Profit
 
 
 
 
 
 
 
Otis
$
561

 
$
708

 
$
2,389

 
$
2,727

UTC Climate, Controls & Security
659

 
657

 
2,923

 
2,868

Pratt & Whitney
551

 
556

 
1,913

 
2,063

UTC Aerospace Systems
570

 
634

 
2,355

 
2,437

Segment Operating Profit
2,341

 
2,555

 
9,580

 
10,095

Eliminations and other
(58
)
 
(18
)
 
8

 
85

General corporate expenses
(128
)
 
(129
)
 
(455
)
 
(484
)
Adjusted Consolidated Operating Profit
$
2,155

 
$
2,408

 
$
9,133

 
$
9,696

Adjusted Segment Operating Profit Margin
 
 
 
 
 
 
 
Otis
18.1
%
 
21.2
%
 
19.9
%
 
21.0
%
UTC Climate, Controls & Security
16.0
%
 
15.7
%
 
17.5
%
 
17.0
%
Pratt & Whitney
13.8
%
 
13.8
%
 
13.4
%
 
14.2
%
UTC Aerospace Systems
15.5
%
 
17.6
%
 
16.5
%
 
17.1
%
Adjusted Segment Operating Profit Margin
15.7
%
 
16.9
%
 
16.7
%
 
17.2
%





United Technologies Corporation
Condensed Consolidated Balance Sheet
 
December 31,
 
December 31,
 
2015
 
2014
(Millions)
(Unaudited)
 
(Unaudited)
Assets
 
 
 
Cash and cash equivalents
$
7,075

 
$
5,229

Accounts receivable, net
10,653

 
10,448

Inventories and contracts in progress, net
8,135

 
7,642

Other assets, current
843

 
3,296

Assets held for sale
—

 
4,868

Total Current Assets
26,706

 
31,483

Fixed assets, net
8,732

 
8,592

Goodwill
27,301

 
27,448

Intangible assets, net
15,603

 
15,528

Other assets
9,142

 
8,155

Total Assets
$
87,484

 
$
91,206

 
 
 
 
Liabilities and Equity
 
 
 
Short-term debt
$
1,105

 
$
1,917

Accounts payable
6,875

 
6,250

Accrued liabilities
14,638

 
12,527

Liabilities held for sale
—

 
2,781

Total Current Liabilities
22,618

 
23,475

Long-term debt
19,320

 
17,784

Other long-term liabilities
16,580

 
17,243

Total Liabilities
58,518

 
58,502

Redeemable noncontrolling interest
122

 
140

Shareowners' Equity:
 
 

Common Stock
15,928

 
15,185

Treasury Stock
(30,907
)
 
(21,922
)
Retained earnings
49,956

 
44,611

Accumulated other comprehensive loss
(7,619
)
 
(6,661
)
Total Shareowners' Equity
27,358

 
31,213

Noncontrolling interest
1,486

 
1,351

Total Equity
28,844

 
32,564

Total Liabilities and Equity
$
87,484

 
$
91,206

Debt Ratios:
 
 
 
Debt to total capitalization
41
%
 
38
%
Net debt to net capitalization
32
%
 
31
%

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)
2015
 
2014
 
2015
 
2014
Operating Activities of Continuing Operations:
 
 
 
 
 
 
 
(Loss) income from continuing operations
$
(177
)
 
$
1,380

 
$
4,356

 
$
6,468

Adjustments to reconcile (loss) income from continuing operations to net cash flows provided by operating activities of continuing operations:
 
 
 
 
 
 
 
Depreciation and amortization
462

 
468

 
1,863

 
1,820

Deferred income tax provision
218

 
172

 
662

 
403

Stock compensation cost
50

 
32

 
158

 
219

Canadian government settlement
867

 
—

 
867

 
—

Change in working capital
841

 
140

 
(847
)
 
(729
)
Global pension contributions
(54
)
 
(313
)
 
(147
)
 
(517
)
Other operating activities, net
447

 
93

 
(214
)
 
(670
)
Net cash flows provided by operating activities of continuing operations
2,654

 
1,972

 
6,698

 
6,994

Investing Activities of Continuing Operations:
 
 
 
 
 
 
 
Capital expenditures
(608
)
 
(531
)
 
(1,652
)
 
(1,594
)
Acquisitions and dispositions of businesses, net
(181
)
 
76

 
(338
)
 
(58
)
Increase in collaboration intangible assets
(106
)
 
(134
)
 
(437
)
 
(593
)
Receipts (payments) from settlements of derivative contracts
13

 
(60
)
 
160

 
93

Other investing activities, net
(229
)
 
(151
)
 
(260
)
 
(40
)
Net cash flows used in investing activities of continuing operations
(1,111
)
 
(800
)
 
(2,527
)
 
(2,192
)
Financing Activities of Continuing Operations:
 
 
 
 
 
 
 
(Repayment) issuance of long-term debt, net
(24
)
 
15

 
(20
)
 
(206
)
(Decrease) increase in short-term borrowings, net
(2,096
)
 
(209
)
 
795

 
(346
)
Proceeds from Common Stock issuance - equity unit remarketing
—

 
—

 
1,100

 
—

Dividends paid on Common Stock
(541
)
 
(510
)
 
(2,184
)
 
(2,048
)
Repurchase of Common Stock
(6,000
)
 
(405
)
 
(10,000
)
 
(1,500
)
Other financing activities, net
(254
)
 
(65
)
 
(467
)
 
(147
)
Net cash flows used in financing activities of continuing operations
(8,915
)
 
(1,174
)
 
(10,776
)
 
(4,247
)
Discontinued Operations:
 
 
 
 
 
 
 
Net cash (used in) provided by operating activities
(73
)
 
339

 
(372
)
 
342

Net cash provided by (used in) investing activities
9,066

 
(29
)
 
9,000

 
(113
)
Net cash used in financing activities
(8
)
 
(11
)
 
(9
)
 
(12
)
Net cash flows provided by discontinued operations
8,985

 
299

 
8,619

 
217

Effect of foreign exchange rate changes on cash and cash equivalents
(31
)
 
(97
)
 
(174
)
 
(156
)
Net increase in cash and cash equivalents
1,582

 
200

 
1,840

 
616

Cash and cash equivalents, beginning of period
5,493

 
5,035

 
5,235

 
4,619

Cash and cash equivalents of continuing operations, end of period
7,075

 
5,235

 
7,075

 
5,235

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

 
6

 
—

 
6

Cash and cash equivalents of continuing operations, end of period
$
7,075

 
$
5,229

 
$
7,075

 
$
5,229


See accompanying Notes to Condensed Consolidated Financial Statements.




United Technologies Corporation
Free Cash Flow Reconciliation
 
Year Ended December 31,
 
(Unaudited)
(Millions)
2015
 
2014
 
 
 
 
 
 
Net income attributable to common shareowners from continuing operations
$
3,996

 
 
$
6,066

 
Net cash flows provided by operating activities of continuing operations
$
6,698

 
 
$
6,994

 
Net cash flows provided by operating activities of continuing operations as a percentage of net income attributable to common shareowners from continuing operations
 
168
 %
 
 
115
 %
Capital expenditures
(1,652
)
 
 
(1,594
)
 
Capital expenditures as a percentage of net income attributable to common shareowners from continuing operations
 
(41
)%
 
 
(26
)%
Free cash flow from continuing operations
$
5,046

 
 
$
5,400

 
Free cash flow from continuing operations as a percentage of net income attributable to common shareowners from continuing operations
 
126
 %
 
 
89
 %
Notes to Condensed Consolidated Financial Statements
(1)
Adjusted Net Sales, Adjusted Operating Profit and Adjusted EPS are non-GAAP financial measures. Adjusted Net Sales represents Net Sales excluding significant items of a non-recurring and non-operational nature. Adjusted Operating Profit represents operating profit excluding restructuring costs and other significant items of a non-recurring and non-operational nature. Adjusted EPS represents diluted earnings per share from continuing operations, excluding restructuring costs and other significant items of a non-recurring and non-operational nature. Management believes Adjusted Net Sales, Adjusted Operating Profit and Adjusted EPS are useful in providing period to period comparisons of the results of the Company’s ongoing operational performance. A reconciliation of these non-GAAP measures to the corresponding amounts prepared in accordance with generally accepted accounting principles is included in the tables above.
(2)
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.
(3)
Organic sales growth is a non-GAAP financial measure that 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 and non-operational items.
(4)
Free cash flow is a non-GAAP financial measure that represents cash flow from operations less capital expenditures. Management believes free cash flow provides 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 net cash flow provided by operating activities, prepared in accordance with generally accepted accounting principles, to free cash flow is provided above.
(5)
Adjusted Net Sales, Adjusted Operating Profit, Adjusted EPS and free cash flow should not be considered in isolation or as substitutes for analysis of the Company’s results as reported under GAAP. Other companies may calculate Adjusted Net Sales, Adjusted Operating Profit, Adjusted EPS and free cash flow differently than the Company does, limiting the usefulness of those measures for comparisons with other companies.




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