|
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||
(State or other jurisdiction
of incorporation)
|
(Commission
File Number)
|
(IRS Employer
Identification No.)
|
|
|
(Address of principal executive offices, including zip code)
|
|
(Registrant’s telephone number, including area code)
(
|
|
N/A
|
|
(Former name or former address, if changed since last report)
|
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))
|
Title of each class
|
Trading Symbol(s)
|
Name of each exchange on which registered
|
||
|
|
|
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(CUSIP 913017 10 9)
|
||||
|
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|
||
(CUSIP 913017 CD9)
|
||||
|
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|
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(CUSIP U91301 AD0)
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||||
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||
(CUSIP 913017 CU1)
|
||||
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(CUSIP 913017 CE7)
|
||||
|
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|
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(CUSIP 913017 CV9)
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||||
|
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|
||
(CUSIP 913017 CS6)
|
||||
|
|
|
||
(CUSIP 913017 CT4)
|
• |
More specifically, the fact that the negotiations prior to the signing of the merger agreement were informed by, among other things, a number of methodologies and
analyses, including historical and projected future financial and trading performance, discounted projected future cash flows and relative contribution analyses based on revenue, EBITDA, net income, free cash flow and other metrics,
including analyses taking into account leverage, pension matters and other adjustments, and the fact that the transaction terms, including the exchange ratio, that were ultimately agreed by the parties took into consideration, among other
things, these analyses as well as the lengthy negotiations between the parties;
|
Price to EPS Multiple
|
FCF Yield
|
FV to EBITDA Multiple
|
FV to FAS/CAS Adjusted EBITDA Multiple(1)
|
|||||||||||||||||||||||||||||
2019E
|
|
2020E
|
|
2019E
|
|
2020E
|
|
2019E
|
|
2020E
|
|
2019E
|
|
2020E
|
|
|||||||||||||||||
General Dynamics Corporation
|
14.8
|
x
|
13.3
|
x
|
7.2
|
%
|
7.2
|
%
|
11.8
|
x
|
11.0
|
x
|
–
|
–
|
||||||||||||||||||
L3 Technologies, Inc./Harris Corporation(2)
|
NA
|
18.9
|
x
|
NA
|
6.6
|
%
|
NA
|
13.5
|
x
|
–
|
–
|
|||||||||||||||||||||
Lockheed Martin Corporation
|
17.3
|
x
|
14.2
|
x
|
6.1
|
%
|
5.8
|
%
|
12.2
|
x
|
10.7
|
x
|
15.7
|
x
|
13.3
|
x
|
||||||||||||||||
Northrop Grumman Corporation
|
16.4
|
x
|
14.3
|
x
|
5.6
|
%
|
6.2
|
%
|
13.7
|
x
|
12.5
|
x
|
14.9
|
x
|
13.5
|
x
|
(1) |
No multiple applicable with respect to L3 Technologies, Inc./ Harris Corporation and General Dynamics Corporation, as FAS/CAS Adjusted EBITDA cannot be calculated
based on disclosure in the public filings of these companies.
|
(2) |
2020E multiples for L3 Technologies, Inc./Harris Corporation are pro forma and 2019E multiples for L3 Technologies, Inc./Harris Corporation are not applicable, in
each case, due to their pending merger.
|
Price to EPS Multiple
|
FV to EBITDA Multiple
|
|||||||||||||||
2019E
|
|
2020E
|
|
2019E
|
|
2020E
|
|
|||||||||
Curtiss-Wright Corporation
|
16.6
|
x
|
15.6
|
x
|
11.0
|
x
|
10.5
|
x
|
||||||||
L3 Technologies, Inc./Harris Corporation(1)
|
NA
|
18.9
|
x
|
NA
|
13.5
|
x
|
||||||||||
Meggitt PLC
|
16.3
|
x
|
14.7
|
x
|
11.7
|
x
|
11.0
|
x
|
||||||||
Moog, Inc.
|
16.4
|
x
|
14.8
|
x
|
9.8
|
x
|
9.3
|
x
|
||||||||
MTU Aero Engines AG
|
22.5
|
x
|
20.3
|
x
|
14.6
|
x
|
13.2
|
x
|
||||||||
Rolls-Royce Holdings plc(2)
|
NM
|
NM
|
12.2
|
x
|
9.6
|
x
|
||||||||||
Safran S.A.
|
24.0
|
x
|
20.2
|
x
|
14.9
|
x
|
13.0
|
x
|
||||||||
Thales Group
|
15.9
|
x
|
13.8
|
x
|
10.1
|
x
|
9.0
|
x
|
||||||||
TransDigm Group Incorporated(3)
|
NA
|
21.4
|
x
|
NA
|
14.6
|
x
|
||||||||||
Woodward, Inc.
|
22.5
|
x
|
19.7
|
x
|
15.5
|
x
|
13.6
|
x
|
(1) |
2020E multiples for L3 Technologies, Inc./Harris Corporation are pro forma and 2019E multiples for L3 Technologies, Inc./Harris Corporation are not applicable, in
each case, due to their pending merger.
|
(2) |
No meaningful multiple for Rolls-Royce Holdings plc as a result of its ongoing restructuring.
|
(3) |
2019E multiples for TransDigm Group Incorporated are not applicable as a result of its acquisition by Esterline Technologies Corporation.
|
• |
Citigroup performed a discounted cash flow analysis of Raytheon Excluding Pension by calculating the estimated present value of the unlevered, after-tax free cash
flows that Raytheon Excluding Pension was forecasted to generate during the last nine month stub period of calendar year 2019 through calendar year 2023. Citigroup calculated a range of terminal values for Raytheon Excluding Pension by
applying perpetuity growth rates ranging from 1.75% to 2.75%, which range was selected based on Citigroup’s professional judgment and experience, to the terminal year estimate of unlevered, after-tax free cash flow of Raytheon Excluding
Pension. The unlevered, after-tax free cash flows and the range of terminal values were then discounted to present values as of March 31, 2019, using discount rates ranging from 7.0% to 8.1%, which Citigroup derived based on estimates of
Raytheon’s weighted average cost of capital, taking into account macro-economic assumptions, estimates of risk, Raytheon’s capital structure and other appropriate factors.
|
• |
Citigroup performed a discounted cash flow analysis for Collins Aerospace, a UTC aerospace business, by calculating (1) the estimated present value of the
unlevered, after-tax free cash flows that Collins Aerospace (excluding the impact of certain contractual obligations of Rockwell Collins and Goodrich) was forecasted to generate during the last nine-month period of calendar year 2019
through calendar year 2023 and (2) the estimated present value of the after-tax cash flows of certain contractual obligations of Rockwell Collins and Goodrich during the last nine-month period of calendar year 2019 through calendar year
2034. Citigroup calculated a range of terminal values for Collins Aerospace (excluding the cash flows related to certain contractual obligations of Rockwell Collins and Goodrich) by applying perpetuity growth rates ranging from 2.5% to
3.5%, which range was selected based on Citigroup’s professional judgment and experience, to the terminal year estimate of unlevered, after-tax free cash flow of Collins Aerospace (excluding the impact of certain contractual obligations
of Rockwell Collins and Goodrich), and assumed there was no terminal value for the cash flows related to certain contractual obligations of Rockwell Collins and Goodrich, as directed by Raytheon’s management. The unlevered, after-tax free
cash flows and the range of terminal values were then discounted to present values as of March 31, 2019, using discount rates of 7.6% to 8.8%, which Citigroup derived based on estimates of Collins Aerospace’s weighted average cost of
capital, taking into account macro-economic assumptions, estimates of risk, capital structure and other appropriate factors.
|
• |
Citigroup performed a discounted cash flow analysis for P&W, by calculating the estimated present value of the unlevered, after-tax free cash flows that P&W
was forecasted to generate during the last nine-month period of calendar year 2019 (1) through calendar year 2027, in the case of the P&W military and Canada business, which calculation was based in part on the P&W military and
Canada supplemental information (where applicable) and (2) through calendar year 2064, in the case of the P&W commercial business, which calculation was based in part on the P&W existing large commercial program supplemental
information (where applicable). Citigroup calculated a range of terminal values for P&W (other than with respect to P&W commercial, as directed by Raytheon management) by applying perpetuity growth rates ranging from 1.75% to
2.75%, which range was selected based on Citigroup’s professional judgment and experience, to the terminal year estimate of unlevered, after-tax free cash flow of the P&W military and Canada business. The unlevered, after-tax free
cash flows and the ranges of terminal values, if applicable, with respect to both the P&W military and Canada business and the P&W commercial business were then discounted to present values as of March 31, 2019, using discount
rates of 8.1% to 9.4%, which Citigroup derived based on estimates of P&W’s weighted average cost of capital, taking into account macro-economic assumptions, estimates of risk, capital structure and other appropriate factors.
|
• |
publicly available research analysts’ forward stock price targets for Raytheon common stock of $175.00 to $265.00 per share, with a mean of $209.38 per share and a
median of $207.50 per share (on an undiscounted basis), and approximately $160.70 to $243.35 per share (discounted to present value at Raytheon’s estimated cost of equity).
|
Fiscal Year
(in millions, except per share data, and all amounts in USD)
|
||||||||||||||||||||
2019E
|
|
2020E
|
|
2021E
|
|
2022E
|
|
2023E
|
|
|||||||||||
Sales
|
28,787
|
30,075
|
31,516
|
33,020
|
34,753
|
|||||||||||||||
EBIT(1)
|
4,776
|
5,079
|
5,440
|
5,777
|
5,977
|
|||||||||||||||
Depreciation and Amortization
|
658
|
770
|
742
|
751
|
745
|
|||||||||||||||
EBITDA(2)
|
5,434
|
5,849
|
6,183
|
6,528
|
6,721
|
|||||||||||||||
Cash Taxes
|
(937
|
)
|
(814
|
)
|
(912
|
)
|
(872
|
)
|
(1,025
|
)
|
||||||||||
Changes in Net Working Capital
/ Other(3)
|
(318
|
)
|
(89
|
)
|
(959
|
)
|
(574
|
)
|
(495
|
)
|
||||||||||
Capital Expenditures and
Capitalized Software
Development
|
(1,213
|
)
|
(832
|
)
|
(728
|
)
|
(710
|
)
|
(674
|
)
|
||||||||||
Unlevered Free Cash Flow(4)
|
2,966
|
4,114
|
3,584
|
4,372
|
4,527
|
|||||||||||||||
Earnings Per Share
|
11.50
|
12.88
|
--
|
--
|
--
|
(1) |
EBIT represents earnings before interest expense and income taxes, retirement benefits non-service expense and other income (expense) and is a non-GAAP financial
measure.
|
(2) |
EBITDA represents earnings before interest expense, income taxes, depreciation and amortization, retirement benefits non-service expense and other income (expense)
and is a non-GAAP financial measure.
|
(3) |
Changes in net working capital / Other represents changes in net working capital, upward adjustments to reflect non-cash stock-based compensation, pension
adjustments and other net operating cash flows.
|
(4) |
Unlevered free cash flow represents earnings before interest and after cash taxes plus depreciation and amortization, less changes in net working capital, plus
other net operating cash flows (including pension adjustments and upward adjustments to reflect non-cash stock-based compensation) and less capital expenditures and capitalized software development, and is a non-GAAP financial measure.
|
UNITED TECHNOLOGIES CORPORATION
|
||
(Registrant)
|
||
Date: October 2, 2019
|
By:
|
/s/ CHARLES D. GILL
|
Charles D. Gill
|
||
Executive Vice President & General Counsel
|