UTC Reports Q3 Earnings
22 October 1997
UTC Reports 20 Percent Increase in Third Quarter Earnings Per Share
HARTFORD, Conn., Oct. 22 -- United Technologies Corporation's
third quarter earnings per share increased 20 percent to $1.16, compared with
$0.97 in the prior year. Net income increased 18 percent to $300 million,
from $254 million in 1996.
Revenues for the third quarter were $6.0 billion, 1 percent above the
prior year. At constant foreign exchange, revenues would have been 4 percent
higher, and earnings per share $0.05 higher.
Year to date available cash flow, before share repurchase, acquisitions,
and divestitures, was $1.04 billion, $40 million above the first nine months
of 1996. Net debt ended the quarter at $398 million and net debt to capital
at 8 percent, up slightly from the end of June due to higher share repurchase
and acquisition spending.
In the first nine months, UTC spent $539 million to repurchase 7.0 million
shares of common stock, compared to $274 million for 5.2 million shares during
the first nine months of 1996.
Acquisitions totaled $279 million through September, including Pratt &
Whitney's third quarter purchases of the component repair businesses of Howmet
and Interturbine.
George David, Chairman and Chief Executive Officer, said, "Our strong
third quarter results demonstrate our ability to achieve our performance
objectives despite adverse conditions, such as unfavorable currency
translation and weakness in the air conditioning industry. We are confident
that we will continue to meet our financial targets, including 15 percent
earnings per share growth in 1998."
In the third quarter, operating profit as a percentage of revenues
improved in all five of UTC's business segments. The change in reporting
period for UTC's international operations beginning January 1, 1997 did not
have a significant impact on consolidated third quarter results, but had a
positive effect on Otis, offset by a negative impact at Carrier (see Note to
Condensed Consolidated Financial Statements).
Pratt & Whitney's operating profit improved 27 percent due to a 16 percent
increase in revenues and continued productivity improvements. The revenue
growth reflected increased commercial and military engine shipments and higher
aftermarket sales.
Carrier's third quarter operating profit declined 1 percent on 5 percent
lower revenues. At constant foreign currency rates, operating profit increased
2 percent and revenues declined 1 percent. Higher transportation refrigeration
sales and the impact of recent acquisitions offset weather related weakness in
North America and Europe.
Otis' operating profit fell 1 percent on a 3 percent decline in revenues.
At constant foreign currency rates, operating profit increased 13 percent and
revenues 6 percent.
Automotive's operating profit was flat in the seasonally weak third
quarter. Margin improvement in the Interiors business offset an 11 percent
revenue decline due to foreign currency translation, the fourth quarter 1996
divestiture of the steering wheels business, and lower production of certain
high content vehicles.
Flight Systems' operating profit improved 37 percent on a 2 percent
revenue decline, as margin improvements at both Hamilton Standard and Sikorsky
and continued strong revenue growth at Hamilton Standard more than offset
lower revenues at Sikorsky due to the timing of helicopter shipments.
Earnings per share for the first nine months were $3.19, on net income of
$828 million, compared with $2.57, on net income of $677 million, in the first
nine months of 1996. Revenues were $18.4 billion, versus $17.4 billion in
1996. At constant foreign exchange, revenues would have been 3 percent higher,
and earnings per share $0.12 higher.
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
Condensed Consolidated Statement of Operations
(Unaudited)
(Millions of Dollars, except per share amounts)
Quarter Ended Nine Months Ended
September 30, September 30,
1997 1996 1997 1996
Revenues
Otis $1,342 $1,382 $4,107 $4,086
Carrier 1,513 1,588 4,591 4,547
Automotive 659 738 2,182 2,343
Pratt & Whitney 1,838 1,582 5,501 4,531
Flight Systems 669 682 2,122 1,966
Corporate items and
eliminations (42) (33) (107) (99)
Total 5,979 5,939 18,396 17,374
Cost and Expenses
Cost of goods and
services sold 4,483 4,476 13,907 13,142
Research and
development 268 270 855 794
Selling, general and
administrative 690 708 2,119 2,100
Interest 49 54 146 168
Total 5,490 5,508 17,027 16,204
Income before
income taxes and
minority interests 489 431 1,369 1,170
Income taxes 159 144 445 394
Minority interests 30 33 96 99
Net income $300 $254 $828 $677
Per Share of Common Stock:
Earnings $1.16 $0.97 $3.19 $2.57
Dividends $0.31 $0.275 $0.93 $0.825
Average common
equivalent shares
(in thousands) 257,360 260,730 258,034 261,600
See accompanying Note to Condensed Consolidated Financial Statements
United Technologies Corporation
Segment Revenues and Operating Profit
(Unaudited)
(Millions of Dollars)
REVENUES
Increase(Decrease)
1997 1996 Amount Percent
Quarter Ended September 30,
Otis $1,342 $1,382 $(40) (3)%
Carrier 1,513 1,588 (75) (5)%
Automotive 659 738 (79) (11)%
Pratt & Whitney 1,838 1,582 256 16 %
Flight Systems 669 682 (13) (2)%
OPERATING PROFIT
Increase(Decrease)
1997 1996 Amount Percent
Quarter Ended September 30,
Otis $131 $ 132 $ (1) (1)%
Carrier 157 159 (2) (1)%
Automotive 42 42 0 0 %
Pratt & Whitney 208 164 44 27 %
Flight Systems 70 51 19 37 %
OPERATING PROFIT MARGIN
% Point
Increase
1997 1996 (Decrease)
Quarter Ended September 30,
Otis 9.8% 9.6% 0.2
Carrier 10.4% 10.0% 0.4
Automotive 6.4% 5.7% 0.7
Pratt & Whitney 11.3% 10.4% 0.9
Flight Systems 10.5% 7.5% 3.0
United Technologies Corporation
Segment Revenues and Operating Profit
(Unaudited)
(Millions of Dollars)
REVENUES
Increase(Decrease)
1997 1996 Amount Percent
Nine Months Ended
September 30,
Otis $4,107 $4,086 $21 1 %
Carrier 4,591 4,547 44 1 %
Automotive 2,182 2,343 (161) (7)%
Pratt & Whitney 5,501 4,531 970 21 %
Flight Systems 2,122 1,966 156 8 %
OPERATING PROFIT
Increase(Decrease)
1997 1996 Amount Percent
Nine Months Ended
September 30,
Otis $395 $378 $17 4 %
Carrier 394 369 25 7 %
Automotive 106 143 (37) (26)%
Pratt & Whitney 600 464 136 29 %
Flight Systems 207 161 46 29 %
OPERATING PROFIT MARGIN
% Point
Increase
1997 1996 (Decrease)
Nine Months Ended
September 30,
Otis 9.6% 9.3% 0.3
Carrier 8.6% 8.1% 0.5
Automotive 4.9% 6.1% (1.2)
Pratt & Whitney 10.9% 10.2% 0.7
Flight Systems 9.8% 8.2% 1.6
United Technologies Corporation
Condensed Consolidated Balance Sheet
(Millions of Dollars)
September 30, December 31,
1997 1996
(Unaudited)
Assets
Cash and cash equivalents $1,283 $1,127
Accounts receivable, net 3,859 3,717
Inventories and contracts
in progress, net 3,346 3,342
Other current assets 1,394 1,425
Total Current Assets $9,882 $9,611
Fixed assets, net 4,225 4,371
Other assets 2,814 2,763
Total Assets $16,921 $16,745
Liabilities and Shareowners' Equity
Short-term debt $318 $348
Accounts payable 1,896 2,186
Accrued liabilities 5,257 4,856
Total Current Liabilities 7,471 7,390
Long-term debt 1,363 1,437
Other liabilities 3,345 3,178
ESOP Convertible Preferred
Stock, net 444 434
Shareowners' Equity:
Common Stock 2,461 2,345
Treasury Stock (2,163) (1,626)
Retained Earnings 4,398 3,849
Currency and pension adjustments(398) (262)
Total 4,298 4,306
Total Liabilities and
Shareowners' Equity $16,921 $16,745
Debt Ratios:
Debt to total capitalization 28% 29%
Net debt to total capitalization 8% 13%
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 September 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.
SOURCE United Technologies Corporation