United Technologies Corporation
UNITED TECHNOLOGIES CORP /DE/ (Form: 8-K, Received: 07/25/2017 07:09:34)


 
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 25 2017
____________________________________ 
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))
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company    ¨
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.    ¨





 
Section 2—Financial Information
Item 2.02. Results of Operations and Financial Condition.
On July 25 2017 , United Technologies Corporation (“ UTC ” or “ the Company ”) issued a press release announcing its second quarter 2017 results.
The press release issued July 25 2017 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 25 2017, 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 25, 2017
By:
/ S / A KHIL J OHRI        
 
 
Akhil Johri
 
 
Executive Vice President & Chief Financial Officer





Exhibit 99

UTC REPORTS SECOND QUARTER 2017 RESULTS


Raises outlook for 2017 sales and low end of adjusted EPS and organic sales growth
Sales of $15.3 billion, up 3 percent versus prior year including 3 percent organic sales growth
GAAP EPS of $1.80, up 5 percent versus prior year
Adjusted EPS of $1.85, up 2 percent versus prior year
Cash flow from operations of $2.1 billion, 149 percent of net income
Free cash flow attributable to net income of 118 percent

FARMINGTON, CT, July 25, 2017 - United Technologies Corp. (NYSE:UTX) today reported second quarter 2017 results. All results in this release reflect continuing operations unless otherwise noted.
“United Technologies delivered another quarter of strong results with sales up 3 percent including 3 percent organic sales growth and robust cash flow,” said UTC Chairman and Chief Executive Officer Gregory Hayes. “Our performance is in-line with our expectations as we continue to execute on our strategic priorities, including growing the business through our investments in innovative products and services, delivering on our aerospace backlog, and achieving our cost reduction goals, while maintaining a disciplined approach to capital allocation.”
“Based on our solid year-to-date performance and outlook for the remainder of 2017, we are raising the low end of our full-year adjusted EPS outlook range by 15 cents. We now expect adjusted EPS of $6.45 to $6.60.* Additionally, we are raising our sales outlook to a range of $58.5 to $59.5 billion. This reflects organic growth expectations of 3 to 4 percent versus our prior expectation of 2 to 4 percent.* We remain confident that our portfolio of global industry leading franchises is well positioned and will continue to create long-term sustainable shareowner value.”
Second quarter GAAP EPS of $1.80 was up 9 cents (5 percent) versus the prior year and included 5 cents of restructuring. Adjusted EPS of $1.85 was up 2 percent. Sales of $15.3 billion were up 3 percent, driven by 3 points of organic growth and 1 point of net acquisition growth, partially offset by 1 point of adverse foreign exchange.
Net income for the quarter was $1.4 billion, up 1 percent versus the prior year. Cash flow from operations for the quarter was $2.1 billion (149 percent of net income attributable to common shareholders) and capital expenditures were $446 million. Free cash flow of $1.7 billion in the quarter was 118 percent of net income attributable to common shareowners.
In the quarter, new equipment orders at Otis were flat versus the prior year and increased by 11 percent organically at UTC Climate, Controls & Security, each at constant currency. Commercial aftermarket sales were up 4 percent at Pratt & Whitney and were up 7 percent at UTC Aerospace Systems.





UTC updates its 2017 outlook and now anticipates:
Adjusted EPS of $6.45 to $6.60, up from $6.30 to $6.60*;
Sales of $58.5 billion to $59.5 billion, up from $57.5 billion to $59 billion (up 2 to 4 percent, including organic sales growth of 3 to 4 percent*);
There is no change in the Company’s previously provided 2017 expectations for free cash flow, share repurchases, or the placeholder for acquisitions.    
*Note: When we provide expectations for adjusted EPS, organic sales and free cash flow on a forward-looking basis, a reconciliation of the differences between the non-GAAP expectations and the corresponding GAAP measures generally is not available without unreasonable effort. See “Use and Definitions of Non-GAAP Financial Measures” below for additional information.
United Technologies Corp., based in Farmington, Connecticut, provides high technology products and services to the building and aerospace industries. By combining a passion for science with precision engineering, the company is creating smart, sustainable solutions the world needs. Additional information, including a webcast, is available at www.utc.com or http://edge.media-server.com/m/p/79sxfkwf , or to listen to the earnings call by phone, dial (877) 280-7280 between 8:10 a.m. and 8:30 a.m. ET. To learn more about UTC, visit the website or follow the company on Twitter: @UTC

Use and Definitions of Non-GAAP Financial Measures
 
United Technologies Corporation reports its financial results in accordance with accounting principles generally accepted in the United States ("GAAP").
We supplement the reporting of our financial information determined under GAAP with certain non-GAAP financial information. The non-GAAP information presented provides investors with additional useful information, but should not be considered in isolation or as substitutes for the related GAAP measures. Moreover, other companies may define non-GAAP measures differently, which limits the usefulness of these measures for comparisons with such other companies. We encourage investors to review our financial statements and publicly-filed reports in their entirety and not to rely on any single financial measure.
Adjusted net sales, organic sales, adjusted operating profit, adjusted net income and adjusted diluted earnings per share (“EPS”) are non-GAAP financial measures. Adjusted net sales represents consolidated net sales from continuing operations (a GAAP measure), excluding significant items of a non-recurring and/or nonoperational nature (hereinafter referred to as “other significant items”). Organic sales represents consolidated net sales (a GAAP measure), excluding the impact of foreign currency translation, acquisitions and divestitures completed in the preceding twelve months and other significant items. Adjusted operating profit represents income from continuing operations (a GAAP measure), excluding restructuring costs and other significant items. Adjusted net income represents net income from continuing operations (a GAAP measure), excluding restructuring costs and other significant items. Adjusted diluted EPS represents diluted earnings per share from continuing operations (a GAAP measure), excluding restructuring costs and other significant items. For the business segments, when applicable, adjustments of net sales, operating profit and margins similarly reflect continuing operations,





excluding restructuring and other significant items. Management believes that the non-GAAP measures just mentioned are useful in providing period-to-period comparisons of the results of the Company’s ongoing operational performance.
Free cash flow is a non-GAAP financial measure that represents cash flow from operations (a GAAP measure) less capital expenditures. Management believes free cash flow is 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 the non-GAAP measures to the corresponding amounts prepared in accordance with GAAP appears in the tables in this Appendix. The tables provide additional information as to the items and amounts that have been excluded from the adjusted measures.
When we provide our expectation for adjusted EPS, organic sales and free cash flow on a forward-looking basis, a reconciliation of the differences between the non-GAAP expectations and the corresponding GAAP measures (expected diluted EPS from continuing operations, sales and expected cash flow from operations) generally is not available 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, such as unusual gains and losses, the ultimate outcome of pending litigation, fluctuations in foreign currency exchange rates, the impact and timing of potential acquisitions and divestitures, and other structural changes or their probable significance. The variability of the excluded items may have a significant, and potentially unpredictable, impact on our future GAAP results.

Cautionary Statement
This press release contains statements which, to the extent they are not statements of historical or present fact, constitute "forward-looking statements" under the securities laws. From time to time, oral or written forward-looking statements may also be included in other information released to the public. These forward-looking statements are intended to provide management’s current expectations or plans for our future operating and financial performance, based on assumptions currently believed to be valid. Forward-looking statements can be identified by the use of words such as "believe," "expect," "expectations," "plans," "strategy," "prospects," "estimate," "project," "target," "anticipate," "will," "should," "see," "guidance," "confident" and other words of similar meaning in connection with a discussion of future operating or financial performance. Forward-looking statements may include, among other things, statements relating to future sales, earnings, cash flow, results of operations, uses of cash, share repurchases and other measures of financial performance or potential future plans, strategies or transactions. All forward-looking statements involve risks, uncertainties and other factors that may cause actual results to differ materially from those expressed or implied in the forward-looking statements. For those statements, we claim the protection of the safe harbor for forward-looking statements contained in the U.S. Private Securities Litigation Reform Act of 1995. Such risks, uncertainties and other factors include, without limitation: (1) the effect of economic conditions in the industries and markets in which we operate in the U.S. and globally and any changes therein, including financial market conditions, fluctuations in commodity prices, interest rates and foreign currency exchange rates, levels of end market demand in construction and in both the commercial and defense segments of the aerospace industry, levels of air travel, financial condition of commercial airlines, the impact of weather conditions and natural disasters and the financial condition of our customers and suppliers; (2) challenges in the development, production, delivery, support, performance and





realization of the anticipated benefits of advanced technologies and new products and services; (3) future levels of indebtedness and capital spending and research and development spending; (4) future availability of credit and factors that may affect such availability, including credit market conditions and our capital structure; (5) the timing and scope of future repurchases of our common stock, which may be suspended at any time due to market conditions and the level of other investing activities and uses of cash; (6) delays and disruption in delivery of materials and services from suppliers; (7) company and customer- directed cost reduction efforts and restructuring costs and savings and other consequences thereof; (8) the scope, nature, impact or timing of acquisition and divestiture activity, including among other things integration of acquired businesses into our existing businesses and realization of synergies and opportunities for growth and innovation; (9) new business or investment opportunities; (10) our ability to realize the intended benefits of organizational changes; (11) the anticipated benefits of diversification and balance of operations across product lines, regions and industries; (12) the outcome of legal proceedings, investigations and other contingencies; (13) pension plan assumptions and future contributions; (14) the impact of the negotiation of collective bargaining agreements and labor disputes; (15) the effect of changes in political conditions in the U.S. and other countries in which we operate, including the effect of changes in U.S. trade policies or the U.K.'s pending withdrawal from the EU, on general market conditions, global trade policies and currency exchange rates in the near term and beyond; and (16) the effect of changes in tax, environmental, regulatory (including among other things import/export) and other laws and regulations in the U.S. and other countries in which we operate. 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. Any forward-looking statement speaks only as of the date on which it is made, and we assume no obligation to update or revise such statement, whether as a result of new information, future events or otherwise, except as required by applicable law.

 
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)
2017
 
2016
 
2017
 
2016
Net Sales
$
15,280

 
$
14,874

 
$
29,095

 
$
28,231

Costs and Expenses:
 
 
 
 
 
 
 
 
Cost of products and services sold
11,100

 
10,741

 
21,177

 
20,395

 
Research and development
609

 
588

 
1,186

 
1,129

 
Selling, general and administrative
1,538

 
1,451

 
3,020

 
2,814

 
Total Costs and Expenses
13,247

 
12,780

 
25,383

 
24,338

Other income, net
257

 
243

 
845

 
389

Operating profit
2,290

 
2,337

 
4,557

 
4,282

 
Interest expense, net
226

 
225

 
439

 
448

Income from continuing operations before income taxes
2,064

 
2,112

 
4,118

 
3,834

 
Income tax expense
532

 
587

 
1,118

 
1,056

Income from continuing operations
1,532

 
1,525

 
3,000

 
2,778

 
Less: Noncontrolling interest in subsidiaries' earnings from continuing operations
93

 
99

 
175

 
180

Income from continuing operations attributable to common shareowners
1,439

 
1,426

 
2,825

 
2,598

Discontinued operations:
 
 
 
 
 
 
 
 
Income from operations

 
1

 

 
1

 
(Loss) gain on disposal

 
(3
)
 

 
15

 
Income tax expense

 
(45
)
 

 
(52
)
Loss from discontinued operations attributable to common shareowners

 
(47
)
 

 
(36
)
Net income attributable to common shareowners
$
1,439

 
$
1,379

 
$
2,825

 
$
2,562

Earnings (Loss) Per Share of Common Stock - Basic:
 
 
 
 
 
 
 
 
From continuing operations attributable to common shareowners
$
1.83

 
$
1.73

 
$
3.57

 
$
3.15

 
From discontinued operations attributable to common shareowners

 
(0.06
)
 

 
(0.04
)
 
Total attributable to common shareowners
$
1.83

 
$
1.67

 
$
3.57

 
$
3.11

Earnings (Loss) Per Share of Common Stock - Diluted:
 
 
 
 
 
 
 
 
From continuing operations attributable to common shareowners
$
1.80

 
$
1.71

 
$
3.53

 
$
3.12

 
From discontinued operations attributable to common shareowners

 
(0.06
)
 

 
(0.04
)
 
Total attributable to common shareowners
$
1.80

 
$
1.65

 
$
3.53

 
$
3.08

Weighted Average Number of Shares Outstanding:
 
 
 
 
 
 
 
 
Basic shares
789

 
825

 
791

 
825

 
Diluted shares
798

 
834

 
800

 
832

As described on the following pages, consolidated results for the quarters and six months ended June 30, 2017 and 2016 include restructuring costs and significant non-recurring and non-operational items. See discussion above, "Use and Definitions of Non-GAAP Financial Measures," regarding consideration of such costs and items 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)
2017
 
2016
 
2017
 
2016
Net Sales
 
 
 
 
 
 
 
Otis
$
3,131

 
$
3,097

 
$
5,935

 
$
5,812

UTC Climate, Controls & Security
4,712

 
4,459

 
8,604

 
8,187

Pratt & Whitney
4,070

 
3,813

 
7,828

 
7,401

UTC Aerospace Systems
3,640

 
3,716

 
7,251

 
7,221

Segment Sales
15,553

 
15,085

 
29,618

 
28,621

Eliminations and other
(273
)
 
(211
)
 
(523
)
 
(390
)
Consolidated Net Sales
$
15,280

 
$
14,874

 
$
29,095

 
$
28,231

 
 
 
 
 
 
 
 
Operating Profit
 
 
 
 
 
 
 
Otis
$
544

 
$
581

 
$
996

 
$
1,047

UTC Climate, Controls & Security
873

 
872

 
1,836

 
1,478

Pratt & Whitney
402

 
386

 
795

 
796

UTC Aerospace Systems
579

 
582

 
1,155

 
1,120

Segment Operating Profit
2,398

 
2,421

 
4,782

 
4,441

Eliminations and other
(2
)
 
13

 
(15
)
 
29

General corporate expenses
(106
)
 
(97
)
 
(210
)
 
(188
)
Consolidated Operating Profit
$
2,290

 
$
2,337

 
$
4,557

 
$
4,282

Segment Operating Profit Margin
 
 
 
 
 
 
 
Otis
17.4
%
 
18.8
%
 
16.8
%
 
18.0
%
UTC Climate, Controls & Security
18.5
%
 
19.6
%
 
21.3
%
 
18.1
%
Pratt & Whitney
9.9
%
 
10.1
%
 
10.2
%
 
10.8
%
UTC Aerospace Systems
15.9
%
 
15.7
%
 
15.9
%
 
15.5
%
Segment Operating Profit Margin
15.4
%
 
16.0
%
 
16.1
%
 
15.5
%

As described on the following pages, consolidated results for the quarters and six months ended June 30, 2017 and 2016 include restructuring costs and significant non-recurring and non-operational items. See discussion above, "Use and Definitions of Non-GAAP Financial Measures," regarding consideration of such costs and items when evaluating the underlying financial performance.




United Technologies Corporation
Reconciliation of Reported (GAAP) to Adjusted (Non-GAAP) Results

 
Quarter Ended June 30,
 
Six Months Ended June 30,
 
(Unaudited)
 
(Unaudited)
In Millions - Income (Expense)
2017
 
2016
 
2017
 
2016
Income from continuing operations attributable to common shareowners
$
1,439

 
$
1,426

 
$
2,825

 
$
2,598

Restructuring Costs included in Operating Profit:
 
 
 
 
 
 
 
Otis
(12
)
 
(16
)
 
(17
)
 
(31
)
UTC Climate, Controls & Security
(18
)
 
(25
)
 
(41
)
 
(53
)
Pratt & Whitney
(6
)
 
(66
)
 
(6
)
 
(71
)
UTC Aerospace Systems
(24
)
 
(8
)
 
(47
)
 
(21
)
Eliminations and other

 
(1
)
 
(1
)
 
(2
)
 
(60
)
 
(116
)
 
(112
)
 
(178
)
Significant non-recurring and non-operational items included in Operating Profit:
 
 
 
 
 
 
 
UTC Climate, Controls & Security
 
 
 
 
 
 
 
Gain on sale of investments in Watsco, Inc.

 

 
379

 

Acquisition and integration costs related to current period acquisitions

 
(12
)
 

 
(12
)
Eliminations and other
 
 
 
 
 
 
 
Gain on sale of available-for-sale security

 

 
1

 

 

 
(12
)
 
380

 
(12
)
Total impact on Consolidated Operating Profit
(60
)
 
(128
)
 
268

 
(190
)
Tax effect of restructuring and significant non-recurring and non-operational items above
20

 
40

 
(104
)
 
60

Less: Impact on Net Income from Continuing Operations Attributable to Common Shareowners
(40
)
 
(88
)
 
164

 
(130
)
Adjusted income from continuing operations attributable to common shareowners
$
1,479

 
$
1,514

 
$
2,661

 
$
2,728

 


 

 


 

Diluted Earnings Per Share from Continuing Operations
$
1.80

 
$
1.71

 
$
3.53

 
$
3.12

Impact on Diluted Earnings Per Share from Continuing Operations
(0.05
)
 
(0.11
)
 
0.20

 
(0.16
)
Adjusted Diluted Earnings Per Share from Continuing Operations
$
1.85

 
$
1.82

 
$
3.33

 
$
3.28

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 




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 page)

 
Quarter Ended June 30,
 
Six Months Ended June 30,
 
(Unaudited)
 
(Unaudited)
(Millions)
2017
 
2016
 
2017
 
2016
Net Sales
 
 
 
 
 
 
 
Otis
$
3,131

 
$
3,097

 
$
5,935

 
$
5,812

UTC Climate, Controls & Security
4,712

 
4,459

 
8,604

 
8,187

Pratt & Whitney
4,070

 
3,813

 
7,828

 
7,401

UTC Aerospace Systems
3,640

 
3,716

 
7,251

 
7,221

Segment Sales
15,553

 
15,085

 
29,618

 
28,621

Eliminations and other
(273
)
 
(211
)
 
(523
)
 
(390
)
Consolidated Net Sales
$
15,280

 
$
14,874

 
$
29,095

 
$
28,231

 
 
 
 
 
 
 
 
Adjusted Operating Profit
 
 
 
 
 
 
 
Otis
$
556

 
$
597

 
$
1,013

 
$
1,078

UTC Climate, Controls & Security
891

 
909

 
1,498

 
1,543

Pratt & Whitney
408

 
452

 
801

 
867

UTC Aerospace Systems
603

 
590

 
1,202

 
1,141

Segment Operating Profit
2,458

 
2,548

 
4,514

 
4,629

Eliminations and other
(2
)
 
14

 
(16
)
 
31

General corporate expenses
(106
)
 
(97
)
 
(209
)
 
(188
)
Adjusted Consolidated Operating Profit
$
2,350

 
$
2,465

 
$
4,289

 
$
4,472

Adjusted Segment Operating Profit Margin
 
 
 
 
 
 
 
Otis
17.8
%
 
19.3
%
 
17.1
%
 
18.5
%
UTC Climate, Controls & Security
18.9
%
 
20.4
%
 
17.4
%
 
18.8
%
Pratt & Whitney
10.0
%
 
11.9
%
 
10.2
%
 
11.7
%
UTC Aerospace Systems
16.6
%
 
15.9
%
 
16.6
%
 
15.8
%
Adjusted Segment Operating Profit Margin
15.8
%
 
16.9
%
 
15.2
%
 
16.2
%





United Technologies Corporation
Components of Changes in Net Sales

Quarter Ended June 30, 2017 Compared with Quarter Ended June 30, 2016
 
 
 
 
 
 
 
 
 
 
 
Factors Contributing to Total % Change in Net Sales
 
 
Organic
 
FX
Translation
 
Acquisitions /
Divestitures, net
 
Other
 
Total
Otis
 
1%
 
(2)%
 
1%
 
1%
 
1%
UTC Climate, Controls & Security
 
5%
 
(1)%
 
2%
 
 
6%
Pratt & Whitney
 
6%
 
1%
 
 
 
7%
UTC Aerospace Systems
 
(1)%
 
 
(1)%
 
 
(2)%
 
 
 
 
 
 
 
 
 
 
 
Consolidated
 
3%
 
(1)%
 
1%
 
 
3%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Six Months Ended June 30, 2017 Compared with Six Months Ended June 30, 2016
 
 
 
 
 
 
 
 
 
 
 
Factors Contributing to Total % Change in Net Sales
 
 
Organic
 
FX
Translation
 
Acquisitions /
Divestitures, net
 
Other
 
Total
Otis
 
2%
 
(2)%
 
1%
 
1%
 
2%
UTC Climate, Controls & Security
 
3%
 
(1)%
 
3%
 
 
5%
Pratt & Whitney
 
5%
 
1%
 
 
 
6%
UTC Aerospace Systems
 
2%
 
(1)%
 
(1)%
 
 
 
 
 
 
 
 
 
 
 
 
 
Consolidated
 
3%
 
(1)%
 
1%
 
 
3%






United Technologies Corporation
Condensed Consolidated Balance Sheet
 
June 30,
 
December 31,
 
2017
 
2016
(Millions)
(Unaudited)
 
(Unaudited)
Assets
 
 
 
Cash and cash equivalents
$
9,345

 
$
7,157

Accounts receivable, net
12,597

 
11,481

Inventories and contracts in progress, net
9,860

 
8,704

Other assets, current
1,027

 
1,208

Total Current Assets
32,829

 
28,550

Fixed assets, net
9,475

 
9,158

Goodwill
27,587

 
27,059

Intangible assets, net
15,881

 
15,684

Other assets
9,021

 
9,255

Total Assets
$
94,793

 
$
89,706

 
 
 
 
Liabilities and Equity
 
 
 
Short-term debt
$
2,743

 
$
2,204

Accounts payable
8,542

 
7,483

Accrued liabilities
12,634

 
12,219

Total Current Liabilities
23,919

 
21,906

Long-term debt
23,883

 
21,697

Other long-term liabilities
16,430

 
16,638

Total Liabilities
64,232

 
60,241

Redeemable noncontrolling interest
406

 
296

Shareowners' Equity:
 
 

Common Stock
17,282

 
17,190

Treasury Stock
(35,516
)
 
(34,150
)
Retained earnings
54,640

 
52,873

Accumulated other comprehensive loss
(7,964
)
 
(8,334
)
Total Shareowners' Equity
28,442

 
27,579

Noncontrolling interest
1,713

 
1,590

Total Equity
30,155

 
29,169

Total Liabilities and Equity
$
94,793

 
$
89,706

Debt Ratios:
 
 
 
Debt to total capitalization
47
%
 
45
%
Net debt to net capitalization
36
%
 
36
%

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)
2017
 
2016
 
2017
 
2016
Operating Activities of Continuing Operations:
 
 
 
 
 
 
 
Net income from continuing operations
$
1,532

 
$
1,525

 
$
3,000

 
$
2,778

Adjustments to reconcile net income from continuing operations to net cash flows provided by operating activities of continuing operations:
 
 
 
 
 
 
 
Depreciation and amortization
527

 
494

 
1,039

 
960

Deferred income tax provision
393

 
75

 
502

 
220

Stock compensation cost
49

 
48

 
96

 
96

Change in working capital
(79
)
 
35

 
(554
)
 
(596
)
Global pension contributions
(33
)
 
(32
)
 
(79
)
 
(107
)
Canadian government settlement

 

 
(246
)
 
(237
)
Other operating activities, net
(243
)
 
(337
)
 
(619
)
 
(508
)
Net cash flows provided by operating activities of continuing operations
2,146

 
1,808

 
3,139

 
2,606

Investing Activities of Continuing Operations:
 
 
 
 
 
 
 
Capital expenditures
(446
)
 
(363
)
 
(771
)
 
(649
)
Acquisitions and dispositions of businesses, net
(49
)
 
(425
)
 
(149
)
 
(488
)
Proceeds from sale of investments in Watsco, Inc.

 

 
596

 

Increase in collaboration intangible assets
(94
)
 
(101
)
 
(195
)
 
(199
)
(Payments) receipts from settlements of derivative contracts
(181
)
 
44

 
(294
)
 
86

Other investing activities, net
(81
)
 
(42
)
 
(177
)
 
(130
)
Net cash flows used in investing activities of continuing operations
(851
)
 
(887
)
 
(990
)
 
(1,380
)
Financing Activities of Continuing Operations:
 
 
 
 
 
 
 
Issuance (repayment) of long-term debt, net
2,429

 
(2
)
 
2,402

 
2,322

(Decrease) increase in short-term borrowings, net
(535
)
 
(484
)
 
32

 
(178
)
Dividends paid on Common Stock
(503
)
 
(526
)
 
(1,008
)
 
(1,035
)
Repurchase of Common Stock
(437
)
 
(36
)
 
(1,370
)
 
(36
)
Other financing activities, net
(77
)
 
(68
)
 
(108
)
 
(159
)
Net cash flows provided by (used in) financing activities of continuing operations
877

 
(1,116
)
 
(52
)
 
914

Discontinued Operations:
 
 
 
 
 
 
 
Net cash used in operating activities

 
(236
)
 

 
(2,463
)
Net cash provided by investing activities

 
6

 

 
6

Net cash flows used in discontinued operations

 
(230
)
 

 
(2,457
)
Effect of foreign exchange rate changes on cash and cash equivalents
26

 
(7
)
 
95

 
10

Net increase (decrease) in cash, cash equivalents and restricted cash
2,198

 
(432
)
 
2,192

 
(307
)
Cash, cash equivalents and restricted cash, beginning of period
7,183

 
7,245

 
7,189

 
7,120

Cash, cash equivalents and restricted cash, end of period
9,381

 
6,813

 
9,381

 
6,813

Less: Restricted cash, included in Other assets
36

 
28

 
36

 
28

Cash and cash equivalents, end of period
$
9,345

 
$
6,785

 
$
9,345

 
$
6,785


See accompanying Notes to Condensed Consolidated Financial Statements.




United Technologies Corporation
Free Cash Flow Reconciliation
 
Quarter Ended June 30,
 
(Unaudited)
(Millions)
2017
 
2016
 
 
 
 
 
 
Net income attributable to common shareowners from continuing operations
$
1,439

 
 
$
1,426

 
Net cash flows provided by operating activities of continuing operations
$
2,146

 
 
$
1,808

 
Net cash flows provided by operating activities of continuing operations as a percentage of net income attributable to common shareowners from continuing operations
 
149
 %
 
 
127
 %
Capital expenditures
(446
)
 
 
(363
)
 
Capital expenditures as a percentage of net income attributable to common shareowners from continuing operations
 
(31
)%
 
 
(25
)%
Free cash flow from continuing operations
$
1,700

 
 
$
1,445

 
Free cash flow from continuing operations as a percentage of net income attributable to common shareowners from continuing operations
 
118
 %
 
 
101
 %
 
 
 
 
 
 
 
Six Months Ended June 30,
 
(Unaudited)
(Millions)
2017
 
2016
 
 
 
 
 
 
Net income attributable to common shareowners from continuing operations
$
2,825

 
 
$
2,598

 
Net cash flows provided by operating activities of continuing operations
$
3,139

 
 
$
2,606

 
Net cash flows provided by operating activities of continuing operations as a percentage of net income attributable to common shareowners from continuing operations
 
111
 %
 
 
100
 %
Capital expenditures
(771
)
 
 
(649
)
 
Capital expenditures as a percentage of net income attributable to common shareowners from continuing operations
 
(27
)%
 
 
(25
)%
Free cash flow from continuing operations
$
2,368

 
 
$
1,957

 
Free cash flow from continuing operations as a percentage of net income attributable to common shareowners from continuing operations
 
84
 %
 
 
75
 %
Notes to Condensed Consolidated Financial Statements
Certain reclassifications have been made to the prior year amounts to conform to the current year presentation. As previously disclosed in our 2016 Form 10-K, in 2016 we early adopted Accounting Standards Update (ASU) 2016-09, Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting , ASU 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments and ASU 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash . Amounts previously reported for the quarter and six months ended June 30, 2016 have been restated as required upon adoption of these ASUs. These restatements had an immaterial impact to the Condensed Consolidated Financial Statements as of June 30, 2016 and for the quarter and six months then ended.
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.