United Technologies Reports Q2 Earnings
23 July 1997
United Technologies Reports 19 Percent Higher Second Quarter Earnings Per Share
HARTFORD, Conn., July 23 -- United Technologies Corporation's
second quarter earnings per share increased 19 percent to $1.17, compared with
$0.98 in the prior year. Net income increased 17 percent to $304 million,
from $259 million in 1996.
Revenues for the second quarter were $6.5 billion, 7 percent above the
prior year.
Foreign currency translation reduced second quarter 1997 revenues by
$149 million and earnings per share by $0.04.
The change in reporting period for UTC's international operations
beginning January 1, 1997 did not have a significant impact on consolidated
second quarter results, but had a positive effect on Carrier, offset by a
negative impact at Otis (see footnote to financial statements).
First half available cash flow, before share repurchase, acquisitions, and
divestitures, was $708 million, compared with $653 million in the first half
of 1996. Net debt ended the quarter at $320 million and net debt to capital
at 7 percent, down from $807 million and 16 percent, respectively, a year ago.
In the first six months, UTC repurchased 4.1 million shares of common
stock for $302 million, compared with 3.5 million shares for $182 million
during the first half of 1996. Acquisitions totaled $101 million in the first
half.
George David, Chairman and Chief Executive Officer, said "Our second
quarter performance reaffirms our ability to meet investor expectations by
consistently generating double digit earnings growth and strong cash flow."
UTC's aerospace businesses led the strong second quarter performance.
Pratt & Whitney's revenues increased 27 percent due to higher aftermarket
sales and increased commercial and military engine shipments. Operating
profit grew 31 percent, reflecting the revenue increase and continued cost
reductions, which more than offset greater research and development spending.
Flight Systems' operating profit increased 11 percent on 9 percent higher
revenues, due to double digit revenue growth and improved margins at Hamilton
Standard and continued strong performance at Sikorsky.
Carrier's second quarter operating profit improved 8 percent on 3 percent
revenue growth. At constant foreign currency rates, operating profit
increased 12 percent and revenues 6 percent. Margin improvement in the North
American residential and commercial unitary businesses and the benefit of the
reporting change more than offset the currency impact, continued weakness in
Europe, and lost sales due to a strike at a North American commercial products
facility.
Otis' operating profit increased 3 percent on flat revenues in the second
quarter. On a constant currency basis, operating profit increased 11 percent
and revenues 5 percent. Profit improvement in Europe and the Americas and
lower restructuring charges were largely offset by the currency impact and the
unfavorable effect of the reporting change.
Automotive's results weakened versus last year's second quarter due mainly
to continued performance issues at the Interiors business and a 9 percent
decline in revenues, the latter due in part to strikes at customer facilities.
The second quarter included charges for closure of a manufacturing facility
and administrative work force reductions, while last year's second quarter
included a provision related to participation in the costs of a customer
recall program.
Six Months Results
Earnings per share for the first six months were $2.03, on net income of
$528 million, compared with $1.60, on net income of $423 million, in the first
half of 1996. Revenues were $12.4 billion, versus $11.4 billion in 1996.
Foreign currency translation reduced first half 1997 revenues by $287 million
and earnings per share by $0.07.
United Technologies Corporation provides a broad range of high technology
products and support services to the building systems, automotive, and
aerospace industries.
This earnings release includes forward looking statements that involve
risks and uncertainties. Political, climatic, currency, regulatory,
technological, competitive and other factors could cause actual results to
differ materially from those anticipated in the forward looking statements.
Additional information regarding these risk factors and uncertainties is
detailed from time to time in UTC's SEC filings.
United Technologies Corporation
Segment Revenues and Operating Profit
(Unaudited)
(Millions of Dollars)
REVENUES
Increase(Decrease)
1997 1996 Amount Percent
Quarter Ended June 30,
Otis $1,397 1,401 $(4) 0%
Carrier 1,691 1,634 57 3%
Automotive 782 861 (79) (9)%
Pratt & Whitney 1,944 1,533 411 27%
Flight Systems 702 646 56 9%
OPERATING PROFIT
Increase(Decrease)
1997 1996 Amount Percent
Quarter Ended June 30,
Otis $133 $ 129 $4 3%
Carrier 167 155 12 8%
Automotive 33 51 (18) (35)%
Pratt & Whitney 210 160 50 31%
Flight Systems 68 61 7 11%
REVENUES
Increase(Decrease)
1997 1996 Amount Percent
Six Months Ended June 30,
Otis $2,765 $2,704 $ 61 2%
Carrier 3,078 2,959 119 4%
Automotive 1,523 1,605 (82) (5)%
Pratt & Whitney 3,663 2,949 714 24%
Flight Systems 1,453 1,284 169 13%
OPERATING PROFIT
Increase(Decrease)
Six Months Ended June 30, 1997 1996 Amount Percent
Otis $264 $246 $18 7%
Carrier 237 210 27 13%
Automotive 64 101 (37) (37)%
Pratt & Whitney 392 300 92 31%
Flight Systems 137 110 27 25%
United Technologies Corporation
Condensed Consolidated Statement of Operations
(Unaudited)
(Millions of Dollars, except per share amounts)
Quarter Ended Six Months Ended
June 30, June 30,
1997 1996 1997 1996
Revenues
Otis $1,397 $1,401 $2,765 $2,704
Carrier 1,691 1,634 3,078 2,959
Automotive 782 861 1,523 1,605
Pratt & Whitney 1,944 1,533 3,663 2,949
Flight Systems 702 646 1,453 1,284
Corporate items and
eliminations (33) (32) (65) (66)
6,483 6,043 12,417 11,435
Cost and Expenses
Cost of goods and
services sold 4,888 4,558 9,424 8,666
Research and
development 316 274 587 524
Selling, general and
administrative 727 709 1,429 1,392
Interest 49 56 97 114
5,980 5,597 11,537 10,696
Income before
income taxes and
minority interests 503 446 880 739
Income taxes 162 151 286 250
Minority interests 37 36 66 66
Net income $304 $259 $528 $423
Per Share of Common Stock:
Earnings $1.17 $0.98 $2.03 $1.60
Dividends $0.31 $0.275 $0.62 $0.55
Average common
equivalent shares
(in thousands) 258,343 262,326 258,644 262,314
See accompanying Note to Condensed Consolidated Financial Statements.
United Technologies Corporation
Note to Condensed Consolidated Financial Statements
(Unaudited)
Beginning January 1, 1997, international operating subsidiaries, which had
generally been included in the Condensed Consolidated Financial Statements
based on fiscal years ending November 30, are now included based on fiscal
years ending December 31. The change, which primarily affected the commercial
and industrial businesses, was made to present the results of these operations
on a more timely basis. As a result of this change, the pattern of 1997
quarterly results will differ from the past due in part to seasonality in some
business segments. If this change had been made effective January 1, 1996,
the estimated impact on quarter ended June 30, 1996 and full year earnings per
share would not have been significant. December 1996 results for these
international subsidiaries, which were not significant, are included in
retained earnings.
United Technologies Corporation
Condensed Balance Sheet
(Unaudited)
(Millions of Dollars, except ratios)
June 30, December 31,
1997 1996
Assets
Cash and cash equivalents $1,413 $1,127
Accounts receivable, net 3,898 3,717
Inventories and contracts
in progress, net 3,327 3,342
Other current assets 1,423 1,425
Total Current Assets $10,061 $9,611
Fixed assets, net 4,245 4,371
Other assets 2,725 2,763
Total Assets $17,031 $16,745
Short-term debt $352 $348
Accounts payable 2,032 2,186
Accrued liabilities 5,260 4,856
Total Current Liabilities 7,644 7,390
Long-term debt 1,381 1,437
Other liabilities 3,232 3,178
ESOP Convertible Preferred
Stock, net 441 434
Shareowners' Equity:
Common Stock 2,432 2,345
Treasury Stock (1,926) (1,626)
Retained Earnings 4,187 3,849
Currency and pension
adjustments (360) (262)
Total 4,333 4,306
Total Liabilities and
Shareowners' Equity $17,031 $16,745
Debt Ratios:
Debt to total capitalization 29% 29%
Net debt to total capitalization 7% 13%
SOURCE United Technologies Inc.