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): July 21, 2004
UNITED TECHNOLOGIES CORPORATION
(Exact name of registrant as specified in its charter)
| Delaware (State or other jurisdiction of incorporation or organization) |
1-812 (Commission File Number) |
06-0570975 (I.R.S. Employer Identification No.) |
One Financial Plaza
Hartford, Connecticut 06103
(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)
Item 12. Results of Operations and Financial Condition
On July 21, 2004, United Technologies Corporation issued a press release announcing its second quarter 2004 results. The press release is attached hereto as Exhibit 99.1.
The press release issued July 21, 2004 is furnished herewith as Exhibit No. 99.1 to this Report, and shall not be deemed filed for the purposes of Section 18 of the Exchange Act.
SIGNATURE
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: July 21, 2004 | By: |
/S/ GREGORY J. HAYES | ||
| Gregory J. Hayes | ||||
| Vice President, Accounting and Control | ||||
INDEX TO EXHIBITS
| Exhibit Number |
Exhibit Description |
Page | ||
| 99.1 | Press release, dated July 21, 2004, issued by United Technologies Corporation | 1 | ||
EXHIBIT 99.1
UTC RAISES 2004 EARNINGS AND CASH FLOW OUTLOOK;
SECOND QUARTER EARNINGS PER SHARE INCREASE 32 PERCENT ON 24 PERCENT REVENUE GROWTH
HARTFORD, Conn., July 21, 2004 – United Technologies Corp. (NYSE:UTX) today reported second quarter diluted earnings per share improved to $1.66 and net income increased to $837 million, both up 32 percent compared with the year ago quarter. Consolidated revenues grew 24 percent to $9.6 billion, on organic growth of 9 percent and the addition of Chubb. Cash flow from operations of $1,101 million less capital expenditures of $148 million exceeded net income in the quarter.
As previously disclosed, the quarter’s results include higher interest income and the benefit of a favorable income tax adjustment, both resulting from settlement of 1986-1993 U.S. Federal tax audits. The company recorded restructuring charges of $156 million in the quarter. The net impact of these items contributed 14 cents to earnings per share. For the full year, charges for cost reduction actions will exceed the favorable impact of this tax settlement and a first quarter contract related gain.
Favorable foreign exchange in the quarter added 2 percentage points to revenue growth and 4 cents to earnings per share.
“This was a very strong quarter. We had double digit organic revenue growth at Carrier, continuing exceptional performance at Otis, and recovery in the commercial aerospace aftermarket,” said Chairman and Chief Executive Officer George David.
“We’re raising our 2004 earnings and cash flow outlook accordingly. Full year earnings per share should grow at least 15 percent to the range of $5.40 to $5.50. Cash flow from operations less capital expenditures should equal net income, including voluntary contributions to pension plans globally of $500 million.”
David added, “We like the way we are positioned for the next several years. Restructuring actions initiated from the first quarter gain, second quarter tax settlement and operating income above expectations will exceed $500 million this year and provide steady and increasing returns over the 2005-2006 time period. We like our acquisition strategy, including the prospective Linde acquisition by Carrier. Our cost reduction disciplines are mature and have momentum and we anticipate continuing margin expansion. The company feels great.”
UTC repurchased $264 million of its common stock in the quarter and $480 million year to date. Full year guidance is being raised to approximately $800 million.
Year to date earnings per share increased 23 percent on revenue growth of 26 percent. For the first half, net income grew 25 percent to $1.4 billion. Cash from operations of $1.9 billion less capital expenditures of $271 million exceeded net income, including $358 million of voluntary contributions to pension plans globally.
The accompanying tables include information integral to assessing the company’s financial position, operating performance and cash flow.
United Technologies Corp., based in Hartford, Connecticut, is a diversified company that provides a broad range of high technology products and support services to the building systems and aerospace industries. This release includes forward looking statements concerning expected future earnings, cash flow and other matters related to future business and financial performance and plans. These statements are based on current expectations and assumptions, which are inherently subject to risks and uncertainties. For information identifying economic, political, climatic, currency, regulatory, technological, competitive and other important factors that could cause actual results to differ materially from those anticipated in forward looking statements, see UTC’s SEC filings and reports as updated from time to time, including, but not limited to, the information in the “Business” section of UTC’s Annual Report on Form 10-K and in UTC’s 10-K and 10-Q reports under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”
# # #
United Technologies Corporation
Condensed Consolidated Statement of Operations
| (Millions, except per share amounts) | Quarter Ended June 30, (Unaudited) |
Six Months Ended June 30, (Unaudited) |
||||||||||||||
| 2004 |
2003 |
2004 |
2003 |
|||||||||||||
| Revenues |
$ | 9,622 | $ | 7,790 | $ | 18,268 | $ | 14,492 | ||||||||
| Cost and Expenses |
||||||||||||||||
| Cost of goods and services sold |
6,971 | 5,619 | 13,241 | 10,485 | ||||||||||||
| Research and development |
313 | 281 | 621 | 516 | ||||||||||||
| Selling, general and administrative |
1,088 | 857 | 2,193 | 1,621 | ||||||||||||
| Operating Profit |
1,250 | 1,033 | 2,213 | 1,870 | ||||||||||||
| Interest expense |
91 | 93 | 178 | 184 | ||||||||||||
| Income before income taxes and minority interests |
1,159 | 940 | 2,035 | 1,686 | ||||||||||||
| Income taxes |
(261 | ) | (263 | ) | (506 | ) | (472 | ) | ||||||||
| Minority interests |
(61 | ) | (45 | ) | (113 | ) | (80 | ) | ||||||||
| Net Income (a) |
$ | 837 | $ | 632 | $ | 1,416 | $ | 1,134 | ||||||||
| Earnings Per Share of Common Stock |
||||||||||||||||
| Basic |
$ | 1.69 | $ | 1.33 | $ | 2.85 | $ | 2.38 | ||||||||
| Diluted |
$ | 1.66 | $ | 1.26 | $ | 2.79 | $ | 2.27 | ||||||||
| Average Shares (in millions) |
||||||||||||||||
| Basic |
496 | 468 | 498 | 469 | ||||||||||||
| Diluted |
505 | 500 | 507 | 500 | ||||||||||||
| a) | Results for the second quarter of 2004 include interest income of approximately $125 million pretax and a favorable income tax adjustment of approximately $80 million after tax, both resulting from the settlement of 1986-1993 U.S. Federal tax audits. Also in the second quarter of 2004, the Corporation recorded pre-tax restructuring charges of $156 million. The net after-tax impact of these items contributed approximately 14 cents to diluted earnings per share in the second quarter of 2004. |
Results for the six months ended June 30, 2004 also include a $250 million pre-tax payment from DaimlerChrysler in consideration for the Corporation’s release of certain commitments made by DaimlerChrysler in support of MTU Aero Engines GmbH. Results for the six months of 2004 also include pre-tax restructuring charges of $259 million.
See accompanying Notes to Condensed Consolidated Financial Statements.
United Technologies Corporation
Segment Revenues and Operating Profit
(Unaudited)
| (Millions) | Quarter Ended June 30, |
Six Months Ended June 30, |
||||||||||||||
| 2004 |
2003 |
2004 |
2003 |
|||||||||||||
| Revenues |
||||||||||||||||
| Otis |
$ | 2,208 | $ | 1,956 | $ | 4,323 | $ | 3,776 | ||||||||
| Carrier |
3,022 | 2,640 | 5,256 | 4,597 | ||||||||||||
| Chubb |
708 | — | 1,411 | — | ||||||||||||
| Pratt & Whitney |
2,084 | 1,948 | 4,028 | 3,679 | ||||||||||||
| Flight |
1,547 | 1,392 | 3,015 | 2,709 | ||||||||||||
| Segment Revenue |
9,569 | 7,936 | 18,033 | 14,761 | ||||||||||||
| Eliminations and other |
53 | (146 | ) | 235 | (269 | ) | ||||||||||
| Consolidated Revenues |
$ | 9,622 | $ | 7,790 | $ | 18,268 | $ | 14,492 | ||||||||
| Operating Profit |
||||||||||||||||
| Otis |
$ | 363 | $ | 336 | $ | 685 | $ | 650 | ||||||||
| Carrier |
364 | 363 | 439 | 514 | ||||||||||||
| Chubb |
35 | — | 67 | — | ||||||||||||
| Pratt & Whitney |
307 | 269 | 528 | 545 | ||||||||||||
| Flight |
199 | 173 | 385 | 360 | ||||||||||||
| Segment Operating Profit |
1,268 | 1,141 | 2,104 | 2,069 | ||||||||||||
| Eliminations and other |
48 | (48 | ) | 243 | (85 | ) | ||||||||||
| General corporate expenses |
(66 | ) | (60 | ) | (134 | ) | (114 | ) | ||||||||
| Consolidated Operating Profit |
$ | 1,250 | $ | 1,033 | $ | 2,213 | $ | 1,870 | ||||||||
Segment operating profit for the six months ended June 30, 2004 includes restructuring and related charges. The amounts recorded in the first quarter were as follows: Otis - $68 million; Carrier - $113 million; Pratt & Whitney - $51 million; Flight - $21 million; and Eliminations and other - $6 million.
The amounts recorded in the second quarter were as follows: Otis - $38 million; Carrier - $71 million; Pratt & Whitney - $23 million; Flight - $17 million and Eliminations and other - $7 million.
In the first and second quarters of 2003, the Corporation recorded charges of $11 million and $22 million, respectively, in connection with its continuing cost reduction efforts. These charges were similar in nature to those noted above and were recorded in both the commercial and aerospace units.
See accompanying Notes to Condensed Consolidated Financial Statements.
United Technologies Corporation
Condensed Consolidated Balance Sheet
| (Millions) | June 30, 2004 |
December 31, 2003 |
||||||
| (Unaudited) | (Audited) | |||||||
| Assets | ||||||||
| Cash and cash equivalents |
$ | 2,018 | $ | 1,623 | ||||
| Accounts receivable, net |
6,000 | 5,187 | ||||||
| Inventories and contracts in progress, net |
4,442 | 4,420 | ||||||
| Other current assets |
1,703 | 1,760 | ||||||
| Total Current Assets |
14,163 | 12,990 | ||||||
| Fixed assets, net |
4,847 | 5,080 | ||||||
| Goodwill, net |
9,644 | 9,329 | ||||||
| Other assets |
8,038 | 7,875 | ||||||
| Total Assets |
$ | 36,692 | $ | 35,274 | ||||
| Liabilities and Shareowners’ Equity | ||||||||
| Short-term debt |
$ | 718 | $ | 1,044 | ||||
| Accounts payable |
3,269 | 2,806 | ||||||
| Accrued liabilities |
7,414 | 7,071 | ||||||
| Total Current Liabilities |
11,401 | 10,921 | ||||||
| Long-term debt |
4,247 | 4,257 | ||||||
| Other liabilities |
7,752 | 7,680 | ||||||
| Minority interest |
812 | 709 | ||||||
| Shareowners’ Equity: |
||||||||
| Common Stock |
6,535 | 6,314 | ||||||
| Treasury Stock |
(5,808 | ) | (5,335 | ) | ||||
| Retained Earnings |
13,578 | 12,527 | ||||||
| Accumulated other non-shareowners’ changes in equity |
(1,825 | ) | (1,799 | ) | ||||
| 12,480 | 11,707 | |||||||
| Total Liabilities and Shareowners’ Equity |
$ | 36,692 | $ | 35,274 | ||||
| Debt Ratios: |
||||||||
| Debt to total capitalization |
28 | % | 31 | % | ||||
| Net debt to total capitalization |
19 | % | 24 | % | ||||
See accompanying Notes to Condensed Consolidated Financial Statements.
United Technologies Corporation
Condensed Statement of Cash Flows
| (Unaudited) | Quarter Ended June 30, |
Six Months Ended June 30, |
||||||||||||||
| (in millions)
|
2004 |
2003 |
2004 |
2003 |
||||||||||||
| Operating Activities |
||||||||||||||||
| Net Income |
$ | 837 | $ | 632 | $ | 1,416 | $ | 1,134 | ||||||||
| Adjustments to reconcile net income to net cash flows provided by operating activities: |
||||||||||||||||
| Depreciation and amortization |
252 | 187 | 514 | 367 | ||||||||||||
| Deferred income taxes and minority interest |
154 | 100 | 225 | 226 | ||||||||||||
| Changes in working capital |
(363 | ) | (125 | ) | (73 | ) | (209 | ) | ||||||||
| Voluntary contributions to pension plans |
(50 | ) | (100 | ) | (358 | ) | (600 | ) | ||||||||
| Other, net |
271 | 109 | 167 | 137 | ||||||||||||
| Net Cash Provided by Operating Activities |
1,101 | 803 | 1,891 | 1,055 | ||||||||||||
| Investing Activities |
||||||||||||||||
| Capital expenditures |
(148 | ) | (109 | ) | (271 | ) | (196 | ) | ||||||||
| Acquisitions and disposal of businesses, net |
(162 | ) | (76 | ) | (203 | ) | (94 | ) | ||||||||
| Other, net |
(35 | ) | (35 | ) | 33 | (38 | ) | |||||||||
| Net Cash Used in Investing Activities |
(345 | ) | (220 | ) | (441 | ) | (328 | ) | ||||||||
| Financing Activities |
||||||||||||||||
| (Decrease) increase in borrowings, net |
(20 | ) | (25 | ) | (301 | ) | (10 | ) | ||||||||
| Dividends paid on Common Stock |
(165 | ) | (127 | ) | (331 | ) | (242 | ) | ||||||||
| Repurchase of Common Stock |
(264 | ) | (50 | ) | (480 | ) | (251 | ) | ||||||||
| Other, net |
(3 | ) | 54 | 71 | 32 | |||||||||||
| Net Cash Used in Financing Activities |
(452 | ) | (148 | ) | (1,041 | ) | (471 | ) | ||||||||
| Effect of foreign exchange rates |
(17 | ) | 53 | (14 | ) | 79 | ||||||||||
| Net increase in Cash and cash equivalents |
287 | 488 | 395 | 335 | ||||||||||||
| Cash and cash equivalents - beginning of period |
1,731 | 1,927 | 1,623 | 2,080 | ||||||||||||
| Cash and cash equivalents - end of period |
$ | 2,018 | $ | 2,415 | $ | 2,018 | $ | 2,415 | ||||||||
See accompanying Notes to Condensed Consolidated Financial Statements
United Technologies Corporation
Notes to Condensed Consolidated Financial Statements
| (1) | Certain reclassifications have been made to prior year amounts to conform to current year presentation. |
| (2) | Debt to total capitalization equals total debt divided by total debt plus equity. Net debt to total capitalization equals total debt less Cash and cash equivalents divided by total debt plus equity less Cash and cash equivalents. |