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2015-06-30 8-K Earnings Release


 
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, 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)
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 July 21, 2015, United Technologies Corporation (“UTC” or “the Company”) issued a press release announcing its second quarter 2015 results.
The press release issued July 21, 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 July 21, 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: July 21, 2015
By:
/S/ AKHIL JOHRI        
 
 
Akhil Johri
 
 
Senior Vice President and Chief Financial Officer




 
EXHIBIT INDEX
 
Exhibit
Number
Exhibit Description
99
Press release, dated July 21, 2015, issued by United Technologies Corporation.



2015-06-30 8-K Earnings Release Exhibit 99


Exhibit 99

UTC REPORTS SECOND QUARTER 2015 RESULTS; REVISES 2015 EPS EXPECTATIONS

•
Sales of $16.3 billion, including 3% organic growth
•
EPS of $1.73, down 6%
•
EPS up 2% excluding restructuring, one-time items, and FX
•
Expected 2015 EPS from continuing operations revised, now $6.15 to $6.30

HARTFORD, Conn., July 21, 2015 - United Technologies Corp. (NYSE:UTX) today reported second quarter earnings per share of $1.73 and net income attributable to common shareowners of $1.5 billion, down 6 percent and 8 percent respectively versus the prior year. Results for the current quarter include unfavorable one-time items and restructuring charges of $0.08 per share. Net favorable one-time items offset restructuring costs in the second quarter of last year. Excluding these items in both quarters, earnings per share of $1.81 decreased 2 percent year over year. Foreign currency had an unfavorable impact of $0.06.
Sales of $16.3 billion decreased by 5 percent, reflecting the impact of adverse foreign exchange (4 points) and absence of the prior year Sikorsky Canadian Maritime Helicopter Program adjustment (5 points), which were partially offset by the benefit of organic growth (3 points) and acquisitions (1 point) in 2015. Second quarter segment operating profit increased 21 percent over the prior year quarter. Adjusted for restructuring costs and net one-time items, segment operating profit was down 3 percent.
“Through the first half of the year, the businesses delivered 3 percent organic sales growth in what continues to be a slow growth global economy. This solid growth contributed to a 6 percent increase in EPS on a constant currency basis, excluding the impact of gains and restructuring,” said Gregory Hayes, UTC President and Chief Executive Officer. “Continued strength in the U.S. dollar has had a significant adverse impact on our results this year.”
Otis new equipment orders in the quarter increased 5 percent over the prior year at constant currency, with growth in the Americas and in EMEA offset by a 10 percent orders decline in China. At UTC Climate, Controls & Security, equipment orders increased 4 percent, with growth in U.S. residential HVAC and Transicold offset by a 15 percent orders decline in China. Commercial aerospace aftermarket sales were up 1 percent at Pratt & Whitney and flat at UTC Aerospace Systems on an organic basis. Provisioning and repair sales at UTC Aerospace Systems were down in the quarter, but those declines were partially offset by high single digit growth in spare parts sales.
“With six months of trends behind us, it is now clear the commercial aftermarket at UTC Aerospace Systems will be significantly below our expectations for the year,” Hayes added. “This, along with continuing softness in Otis Europe and a slowing China, led us to reassess our 2015 outlook for UTC Aerospace Systems and Otis. We now expect 2015 operating profit at UTC Aerospace Systems to be down $25 to $75 million and at Otis to be down $25 to $75 million at constant currency. Including the adverse impact of FX, we expect profit at Otis to be down $300 to $350 million compared to prior year.”
“While this revised forecast is disappointing, we remain confident in our long term outlook for the business. We




have industry leading franchises, strong recurring revenue streams and have focused our portfolio on attractive end markets. We will accelerate aggressive cost reduction across the businesses and look for additional structural cost actions that can drive earnings growth well into the future. We will also look to deploy additional capital to share repurchase and M&A,” Hayes continued.
As announced yesterday, UTC has reached an agreement to sell Sikorsky to Lockheed Martin for $9 billion, subject to regulatory approvals and customary closing conditions. As a result, Sikorsky will be reported in discontinued operations beginning in the third quarter. The company now expects full year EPS of $6.45 to $6.60 from operations including Sikorsky, but excluding an expected gain related to its sale. Expectations from continuing operations are now $6.15 to $6.30. This is down from the previous expectations of $6.55 to $6.85 and $6.35 to $6.55, respectively. Sales expectations from continuing operations have also been revised to $57 to $58 billion from the prior expectation of $58 to $59 billion. The revised expectations reflect approximately 3 percent organic sales growth.
Cash flow from operations was $1.5 billion and capital expenditures were $358 million in the quarter. UTC continues to assume a $1 billion placeholder for full year acquisition spend and expects cash flow from operations less capital expenditures in the range of 90 to 100 percent of net income from continuing operations attributable to common shareowners for 2015.
United Technologies Corp., based in Hartford, 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.
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 a potential sale of Sikorsky, or the terms, timing or structure of any such transaction (or whether any such transaction will take place at all); the future performance of UTC or Sikorsky if any such transaction is completed; 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 a potential sale of, or any other transaction relating to, Sikorsky; 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 June 30,
 
Six Months Ended June 30,
 
 
(Unaudited)
 
(Unaudited)
(Millions, except per share amounts)
2015
 
2014
 
2015
 
2014
Net Sales
$
16,333

 
$
17,191

 
$
30,874

 
$
31,936

Costs and Expenses:
 
 
 
 
 
 
 
 
Cost of products and services sold
11,825

 
12,931

 
22,348

 
23,621

 
Research and development
606

 
666

 
1,208

 
1,290

 
Selling, general and administrative
1,543

 
1,623

 
3,106

 
3,219

 
Total Costs and Expenses
13,974

 
15,220

 
26,662

 
28,130

Other income, net
193

 
384

 
614

 
647

Operating profit
2,552

 
2,355

 
4,826

 
4,453

 
Interest expense, net
216

 
206

 
434

 
431

Income before income taxes
2,336

 
2,149

 
4,392

 
4,022

 
Income tax expense
684

 
359

 
1,242

 
926

Net income
1,652

 
1,790

 
3,150

 
3,096

 
Less: Noncontrolling interest in subsidiaries' earnings
110

 
110

 
182

 
203

Net income attributable to common shareowners
$
1,542

 
$
1,680

 
$
2,968

 
$
2,893

Earnings Per Share of Common Stock:
 
 
 
 
 
 
 
 
Basic
$
1.76

 
$
1.87

 
$
3.35

 
$
3.21

 
Diluted
1.73

 
1.84

 
3.31

 
3.16

Weighted Average Number of Shares Outstanding:
 
 
 
 
 
 
 
 
Basic shares
877

 
900

 
885

 
900

 
Diluted shares
889

 
915

 
898

 
915


As described on the following pages, consolidated results for the quarters and six months ended June 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 June 30,
 
Six Months Ended June 30,
 
(Unaudited)
 
(Unaudited)
(Millions)
2015
 
2014
 
2015
 
2014
Net Sales
 
 
 
 
 
 
 
Otis
$
3,098

 
$
3,365

 
$
5,843

 
$
6,320

UTC Climate, Controls & Security
4,454

 
4,429

 
8,306

 
8,280

Pratt & Whitney
3,677

 
3,592

 
7,009

 
6,921

UTC Aerospace Systems
3,632

 
3,636

 
7,180

 
7,086

Sikorsky
1,691

 
2,384

 
2,958

 
3,745

Segment Sales
16,552

 
17,406

 
31,296

 
32,352

Eliminations and other
(219
)
 
(215
)
 
(422
)
 
(416
)
Consolidated Net Sales
$
16,333

 
$
17,191

 
$
30,874

 
$
31,936

 
 
 
 
 
 
 
 
Operating Profit
 
 
 
 
 
 
 
Otis
$
627

 
$
693

 
$
1,154

 
$
1,263

UTC Climate, Controls & Security
823

 
815

 
1,552

 
1,352

Pratt & Whitney
487

 
432

 
906

 
820

UTC Aerospace Systems
580

 
602

 
1,149

 
1,192

Sikorsky
165

 
(317
)
 
257

 
(231
)
Segment Operating Profit
2,682

 
2,225

 
5,018

 
4,396

Eliminations and other
(10
)
 
249

 
38

 
288

General corporate expenses
(120
)
 
(119
)
 
(230
)
 
(231
)
Consolidated Operating Profit
$
2,552

 
$
2,355

 
$
4,826

 
$
4,453

Segment Operating Profit Margin
 
 
 
 
 
 
 
Otis
20.2
%
 
20.6
 %
 
19.8
%
 
20.0
 %
UTC Climate, Controls & Security
18.5
%
 
18.4
 %
 
18.7
%
 
16.3
 %
Pratt & Whitney
13.2
%
 
12.0
 %
 
12.9
%
 
11.8
 %
UTC Aerospace Systems
16.0
%
 
16.6
 %
 
16.0
%
 
16.8
 %
Sikorsky
9.8
%
 
(13.3
)%
 
8.7
%
 
(6.2
)%
Segment Operating Profit Margin
16.2
%
 
12.8
 %
 
16.0
%
 
13.6
 %

As described on the following pages, consolidated results for the quarters and six months ended June 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
 
Quarter Ended June 30,
 
Six Months Ended June 30,
 
(Unaudited)
 
(Unaudited)
In Millions - Income (Expense)
2015
 
2014
 
2015
 
2014
Non-Recurring items included in Net Sales:
 
 
 
 
 
 
 
Sikorsky
$
—

 
$
830

 
$
—

 
$
830

 
 
 
 
 
 
 
 
Restructuring Costs included in Operating Profit:
 
 
 
 
 
 
 
Otis
$
(8
)
 
$
(21
)
 
$
(14
)
 
$
(38
)
UTC Climate, Controls & Security
(28
)
 
(25
)
 
(52
)
 
(68
)
Pratt & Whitney
(2
)
 
(5
)
 
(15
)
 
(47
)
UTC Aerospace Systems
—

 
(4
)
 
(50
)
 
(10
)
Sikorsky
(23
)
 
—

 
(23
)
 
(17
)
Eliminations and other
(1
)
 
—

 
(1
)
 
—

 
(62
)
 
(55
)
 
(155
)
 
(180
)
Non-Recurring items included in Operating Profit:
 
 
 
 
 
 
 
UTC Climate, Controls & Security
—

 
—

 
126

 
—

Pratt & Whitney
—

 
(82
)
 
—

 
(82
)
Sikorsky
—

 
(466
)
 
—

 
(466
)
Eliminations and other
(28
)
 
220

 
(28
)
 
220

 
(28
)
 
(328
)
 
98

 
(328
)
Total impact on Consolidated Operating Profit
(90
)
 
(383
)
 
(57
)
 
(508
)
Non-Recurring items included in Interest Expense, Net
—

 
21

 
—

 
21

Tax effect of restructuring and non-recurring items above
23

 
108

 
53

 
150

Non-Recurring items included in Income Tax Expense
—

 
253

 
—

 
253

Impact on Net Income Attributable to Common Shareowners
$
(67
)
 
$
(1
)
 
$
(4
)
 
$
(84
)
Impact on Diluted Earnings Per Share
$
(0.08
)
 
$
—

 
$
—

 
$
(0.09
)





Details of the non-recurring items for the quarters and six months ended June 30, 2015 and 2014 above are as follows:
Quarter Ended June 30, 2015
Eliminations & Other: Approximately $28 million of transaction and separation costs related to the planned sale or spin-off of Sikorsky.
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 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.





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 June 30,
 
Six Months Ended June 30,
 
(Unaudited)
 
(Unaudited)
(Millions)
2015
 
2014
 
2015
 
2014
Adjusted Net Sales
 
 
 
 
 
 
 
Otis
$
3,098

 
$
3,365

 
$
5,843

 
$
6,320

UTC Climate, Controls & Security
4,454

 
4,429

 
8,306

 
8,280

Pratt & Whitney
3,677

 
3,592

 
7,009

 
6,921

UTC Aerospace Systems
3,632

 
3,636

 
7,180

 
7,086

Sikorsky
1,691

 
1,554

 
2,958

 
2,915

Segment Sales
16,552

 
16,576

 
31,296

 
31,522

Eliminations and other
(219
)
 
(215
)
 
(422
)
 
(416
)
Adjusted Consolidated Net Sales
$
16,333

 
$
16,361

 
$
30,874

 
$
31,106

 
 
 
 
 
 
 
 
Adjusted Operating Profit
 
 
 
 
 
 
 
Otis
$
635

 
$
714

 
$
1,168

 
$
1,301

UTC Climate, Controls & Security
851

 
840

 
1,478

 
1,420

Pratt & Whitney
489

 
519

 
921

 
949

UTC Aerospace Systems
580

 
606

 
1,199

 
1,202

Sikorsky
188

 
149

 
280

 
252

Segment Operating Profit
2,743

 
2,828

 
5,046

 
5,124

Eliminations and other
19

 
29

 
67

 
68

General corporate expenses
(120
)
 
(119
)
 
(230
)
 
(231
)
Adjusted Consolidated Operating Profit
$
2,642

 
$
2,738

 
$
4,883

 
$
4,961

Adjusted Segment Operating Profit Margin
 
 
 
 
 
 
 
Otis
20.5
%
 
21.2
%
 
20.0
%
 
20.6
%
UTC Climate, Controls & Security
19.1
%
 
19.0
%
 
17.8
%
 
17.1
%
Pratt & Whitney
13.3
%
 
14.4
%
 
13.1
%
 
13.7
%
UTC Aerospace Systems
16.0
%
 
16.7
%
 
16.7
%
 
17.0
%
Sikorsky
11.1
%
 
9.6
%
 
9.5
%
 
8.6
%
Adjusted Segment Operating Profit Margin
16.6
%
 
17.1
%
 
16.1
%
 
16.3
%





United Technologies Corporation
Condensed Consolidated Balance Sheet
 
June 30,
 
December 31,
 
2015
 
2014
(Millions)
(Unaudited)
 
(Unaudited)
Assets
 
 
 
Cash and cash equivalents
$
5,933

 
$
5,235

Accounts receivable, net
11,516

 
11,317

Inventories and contracts in progress, net
10,295

 
9,865

Other assets, current
2,925

 
3,341

Total Current Assets
30,669

 
29,758

Fixed assets, net
9,266

 
9,276

Goodwill
27,933

 
27,796

Intangible assets, net
15,706

 
15,560

Other assets
9,199

 
8,899

Total Assets
$
92,773

 
$
91,289

 
 
 
 
Liabilities and Equity
 
 
 
Short-term debt
$
2,954

 
$
1,922

Accounts payable
7,153

 
6,967

Accrued liabilities
13,622

 
14,006

Total Current Liabilities
23,729

 
22,895

Long-term debt
19,489

 
17,872

Other long-term liabilities
17,483

 
17,818

Total Liabilities
60,701

 
58,585

Redeemable noncontrolling interest
134

 
140

Shareowners' Equity:
 
 

Common Stock
15,031

 
15,185

Treasury Stock
(24,520
)
 
(21,922
)
Retained earnings
46,443

 
44,611

Accumulated other comprehensive loss
(6,577
)
 
(6,661
)
Total Shareowners' Equity
30,377

 
31,213

Noncontrolling interest
1,561

 
1,351

Total Equity
31,938

 
32,564

Total Liabilities and Equity
$
92,773

 
$
91,289

Debt Ratios:
 
 
 
Debt to total capitalization
41
%
 
38
%
Net debt to net capitalization
34
%
 
31
%

See accompanying Notes to Condensed Consolidated Financial Statements.




United Technologies Corporation
Condensed Consolidated Statement of Cash Flows
 
Quarter Ended June 30,
 
Six Months Ended June 30,
 
(Unaudited)
 
(Unaudited)
(Millions)
2015
 
2014
 
2015
 
2014
Operating Activities:
 
 
 
 
 
 
 
Net income
$
1,652

 
$
1,790

 
$
3,150

 
$
3,096

Adjustments to reconcile net income to net cash flows provided by operating activities:
 
 
 
 
 
 
 
Depreciation and amortization
479

 
468

 
958

 
935

Deferred income tax provision (benefit)
180

 
(8
)
 
325

 
36

Stock compensation cost
51

 
58

 
102

 
118

Change in working capital
(407
)
 
(478
)
 
(1,044
)
 
(999
)
Global pension contributions
(26
)
 
(60
)
 
(70
)
 
(144
)
Other operating activities, net
(393
)
 
(28
)
 
(573
)
 
35

Net cash flows provided by operating activities
1,536

 
1,742

 
2,848

 
3,077

Investing Activities:
 
 
 
 
 
 
 
Capital expenditures
(358
)
 
(406
)
 
(706
)
 
(739
)
Acquisitions and dispositions of businesses, net
(19
)
 
(34
)
 
(90
)
 
72

Increase in collaboration intangible assets
(115
)
 
(165
)
 
(247
)
 
(308
)
(Payments) receipts from settlements of derivative contracts
(154
)
 
150

 
415

 
37

Other investing activities, net
(83
)
 
26

 
72

 
65

Net cash flows used in investing activities
(729
)
 
(429
)
 
(556
)
 
(873
)
Financing Activities:
 
 
 
 
 
 
 
(Repayment) issuance of long-term debt, net
(7
)
 
(179
)
 
3

 
(173
)
Increase in short-term borrowings, net
468

 
219

 
2,645

 
19

Dividends paid on Common Stock
(543
)
 
(513
)
 
(1,096
)
 
(1,026
)
Repurchase of Common Stock
—

 
(335
)
 
(3,000
)
 
(670
)
Other financing activities, net
(78
)
 
(41
)
 
(98
)
 
7

Net cash flows used in financing activities
(160
)
 
(849
)
 
(1,546
)
 
(1,843
)
Effect of foreign exchange rate changes on cash and cash equivalents
5

 
21

 
(48
)
 
(18
)
Net increase in cash and cash equivalents
652

 
485

 
698

 
343

Cash and cash equivalents, beginning of period
5,281

 
4,477

 
5,235

 
4,619

Cash and cash equivalents, end of period
$
5,933

 
$
4,962

 
$
5,933

 
$
4,962

 
See accompanying Notes to Condensed Consolidated Financial Statements.




United Technologies Corporation
Free Cash Flow Reconciliation
 
Quarter Ended June 30,
 
(Unaudited)
(Millions)
2015
 
2014
 
 
 
 
 
 
Net income attributable to common shareowners
$
1,542

 
 
$
1,680

 
Net cash flows provided by operating activities
$
1,536

 
 
$
1,742

 
Net cash flows provided by operating activities as a percentage of net income attributable to common shareowners
 
100
 %
 
 
104
 %
Capital expenditures
(358
)
 
 
(406
)
 
Capital expenditures as a percentage of net income attributable to common shareowners
 
(23
)%
 
 
(24
)%
Free cash flow
$
1,178

 
 
$
1,336

 
Free cash flow as a percentage of net income attributable to common shareowners
 
76
 %
 
 
80
 %
 
 
 
 
 
 
 
Six Months Ended June 30,
 
(Unaudited)
(Millions)
2015
 
2014
 
 
 
 
 
 
Net income attributable to common shareowners
$
2,968

 
 
$
2,893

 
Net cash flows provided by operating activities
$
2,848

 
 
$
3,077

 
Net cash flows provided by operating activities as a percentage of net income attributable to common shareowners
 
96
 %
 
 
106
 %
Capital expenditures
(706
)
 
 
(739
)
 
Capital expenditures as a percentage of net income attributable to common shareowners
 
(24
)%
 
 
(26
)%
Free cash flow
$
2,142

 
 
$
2,338

 
Free cash flow as a percentage of net income attributable to common shareowners
 
72
 %
 
 
81
 %
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.