UTC Reports Fourth Quarter Earnings Per Share of $0.97
22 January 1998
UTC Reports Fourth Quarter Earnings Per Share of $0.97
HARTFORD, Conn., Jan. 22 -- United Technologies Corporation
reported fourth quarter diluted earnings per share of $0.97, up
24 percent versus $0.78 in the prior year after adjusting 1996 for the change
in reporting period for international operations (see footnote to financial
statements). Net income increased 21 percent to $244 million, from
$202 million in 1996 on a comparable basis.
For the full year, diluted earnings per share were $4.21 on net income of
$1.072 billion, up 21 percent from $3.48 on net income of $906 million in
1996.
Earnings per share for 1997 and 1996 reflect the adoption of FAS 128, the
new accounting standard for earnings per share.
Revenues for the fourth quarter were $6.3 billion, 3 percent above the
prior year. Full year revenues of $24.7 billion were 5 percent higher than
1996.
At constant foreign currency rates, fourth quarter and full year earnings
per share would have been higher by $0.02 and $0.14, respectively, while
revenues would have been higher by 4 percent for the quarter and 3 percent for
the full year.
George David, Chairman and Chief Executive Officer commented, "We had an
excellent year in 1997, with 21 percent earnings growth and continued
exceptionally strong cash flow, despite unfavorable exchange rates,
restructuring charges, and difficult conditions in a number of our markets.
We enter 1998 with strong momentum and remain confident that we will achieve
15 percent earnings per share growth this year."
Available cash flow for the full year was $1.26 billion, $69 million
higher than 1996. Net debt ended the year at $860 million and net debt to
capital at 17 percent, up from $658 million and 13 percent, respectively, at
year end 1996 due to higher share repurchase and acquisition spending. Debt
to capital ended the year at 28 percent.
Acquisitions totaled $642 million for the year, including Carrier's fourth
quarter commercial refrigeration purchases of Tyler Refrigeration Corporation
and Ardco, Inc.
UTC repurchased 11.2 million shares of common stock for $849 million in
1997, including 4.2 million shares for $310 million in the fourth quarter.
This compares to 8.0 million shares for $459 million repurchased for the full
year 1996.
In the fourth quarter, operating profit improved in four of UTC's
five business segments.
Pratt & Whitney's operating profit increased 25 percent due to 14 percent
revenue growth and continued cost reductions and productivity improvements.
The revenue improvement reflected higher aftermarket sales, increased large
commercial and military engine shipments, and higher government development
revenues.
Carrier's operating profit increased 21 percent on 4 percent higher
revenues in the seasonally weak fourth quarter. Improved performance in the
transportation refrigeration business and Latin America, together with the
impact of recent acquisitions, more than offset weakness in Asia and
unfavorable foreign currency translation.
Operating profit at Otis declined by $76 million on 5 percent lower
revenues, principally due to charges for salaried work force reductions
designed to lower costs and streamline the organization. The impact of the
reporting change and foreign currency translation also contributed to the
lower results.
Automotive's operating profit increased 26 percent, reflecting improved
performance in the Interiors business. Revenues declined by 1 percent, after
excluding from 1996 revenues the gain on the divestiture of the steering
wheels business.
Operating profit at Flight Systems increased 7 percent on comparable
revenue growth, principally at Hamilton Standard.
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 are
subject to risks and uncertainties. For information identifying economic,
political, climatic, currency, regulatory, technological, competitive and some
other important factors that could cause actual results to differ materially
from those anticipated in the forward looking statements, see UTC's SEC
filings as updated from time to time, including, but not limited to, the
discussion included in the Business section of UTC's Annual Report on
Form 10-K under the headings "Description of Businesses by Industry Segment"
and "Other Matters Relating to the Corporation's Business as a Whole."
UNITED TECHNOLOGIES CORPORATION
Condensed Consolidated Statement of Operations
(Millions of Dollars, except per share amounts)
Quarter Ended Year Ended
December 31, December 31,
1997 1996 1997 1996
Revenues
Otis $1,441 $1,509 $5,548 $5,595
Carrier 1,465 1,411 6,056 5,958
Automotive 805 890 2,987 3,233
Pratt & Whitney 1,901 1,670 7,402 6,201
Flight Systems 740 685 2,862 2,651
Corporate items and
eliminations (35) (27) (142) (126)
6,317 6,138 24,713 23,512
Cost and Expenses
Cost of goods and
services sold 4,745 4,595 18,652 17,737
Research and
development 332 328 1,187 1,122
Selling, general and
administrative 796 772 2,915 2,872
Interest 49 53 195 221
5,922 5,748 22,949 21,952
Income before
income taxes and
minority interests 395 390 1,764 1,560
Income taxes 128 129 573 523
Minority interests 23 32 119 131
Net income $244 $229 $1,072 $906
Per Share of Common Stock:
Basic $1.02 $0.93 $4.44 $3.63
Diluted $0.97 $0.88 $4.21 $3.48
Dividends $0.31 $0.275 $1.24 $1.10
Average shares
(in thousands):
Basic 230,713 239,225 234,443 241,454
Diluted 249,555 257,249 253,555 258,606
See accompanying Notes to Condensed Consolidated Financial Statements.
UNITED TECHNOLOGIES CORPORATION
Segment Revenues and Operating Profit
(Millions of Dollars)
REVENUES
Increase(Decrease)
1997 1996 Amount Percent
Quarter Ended December 31,
Otis $1,441 $1,509 $(68) (5)%
Carrier 1,465 1,411 54 4 %
Automotive 805 890 (85) (10)%
Pratt & Whitney 1,901 1,670 231 14 %
Flight Systems 740 685 55 8 %
OPERATING PROFIT
Increase(Decrease)
1997 1996 Amount Percent
Quarter Ended December 31,
Otis $70 $146 $(76) (52)%
Carrier 64 53 11 21 %
Automotive 67 53 14 26 %
Pratt & Whitney 216 173 43 25 %
Flight Systems 78 73 5 7 %
OPERATING PROFIT MARGIN
% Point
Increase
1997 1996 (Decrease)
Quarter Ended December 31,
Otis 4.9% 9.7% (4.8)
Carrier 4.4% 3.8% 0.6
Automotive 8.3% 6.0% 2.3
Pratt & Whitney 11.4% 10.4% 1.0
Flight Systems 10.5% 10.7% (0.2)
UNITED TECHNOLOGIES CORPORATION
Segment Revenues and Operating Profit
(Millions of Dollars)
REVENUES
Increase(Decrease)
1997 1996 Amount Percent
Year Ended December 31,
Otis $5,548 $5,595 $(47) (1)%
Carrier 6,056 5,958 98 2 %
Automotive 2,987 3,233 (246) (8)%
Pratt & Whitney 7,402 6,201 1,201 19 %
Flight Systems 2,862 2,651 211 8 %
OPERATING PROFIT
Increase(Decrease)
1997 1996 Amount Percent
Year Ended December 31,
Otis $465 $524 $(59) (11)%
Carrier 458 422 36 9 %
Automotive 173 196 (23) (12)%
Pratt & Whitney 816 637 179 28 %
Flight Systems 285 234 51 22 %
OPERATING PROFIT MARGIN
% Point
Increase
1997 1996 (Decrease)
Year Ended December 31,
Otis 8.4% 9.4% (1.0)
Carrier 7.6% 7.1% 0.5
Automotive 5.8% 6.1% (0.3)
Pratt & Whitney 11.0% 10.3% 0.7
Flight Systems 10.0% 8.8% 1.2
UNITED TECHNOLOGIES CORPORATION
Condensed Consolidated Balance Sheet
(Millions of Dollars)
December 31,
1997 1996
Assets
Cash and cash equivalents $755 $1,127
Accounts receivable, net 3,789 3,717
Inventories and contracts
in progress, net 3,173 3,342
Other current assets 1,531 1,425
Total Current Assets $9,248 $9,611
Fixed assets, net 4,262 4,371
Other assets 3,209 2,763
Total Assets $16,719 $16,745
Liabilities and Shareowners' Equity
Short-term debt $340 $348
Accounts payable 1,978 2,186
Accrued liabilities 4,993 4,679
Total Current Liabilities 7,311 7,213
Long-term debt 1,275 1,437
Other liabilities 3,610 3,355
ESOP Convertible Preferred
Stock, net 450 434
Shareowners' Equity:
Common Stock 2,488 2,345
Treasury Stock (2,472) (1,626)
Retained Earnings 4,558 3,849
Currency and pension adjustments (501) (262)
4,073 4,306
Total Liabilities and
Shareowners' Equity $16,719 $16,745
Debt Ratios:
Debt to total capitalization 28% 29%
Net debt to total capitalization 17% 13%
See accompanying Notes to Condensed Consolidated Financial Statements.
UNITED TECHNOLOGIES CORPORATION
Notes to Condensed Consolidated Financial Statements
(1) 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 differs 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 would have been a decrease in 1996 fourth quarter
earnings per share of $0.10, with no significant impact on the full year.
December 1996 results for these international subsidiaries, which were not
significant, are included in retained earnings.
(2) Certain reclassifications have been made to prior year amounts to
conform to current year presentation.
SOURCE United Technologies Corporation