UTC Reports 20% Increase in First Quarter Earnings Per Share
20 April 1999
UTC Reports 20% Increase in First Quarter Earnings Per Share
HARTFORD, Conn., April 20 -- United Technologies Corp.
reported first quarter diluted earnings per share of $1.25, up
20 percent versus $1.04 in the prior year. Net income was $308 million,
18 percent above the $260 million reported in 1998.
Revenues for the first quarter, excluding the automotive segment, were
$5.4 billion, 3 percent higher than the prior year. Revenue growth at Pratt &
Whitney and Otis was partially offset by lower revenues in the Flight segment.
Foreign currency rates did not have a meaningful impact on either reported
revenues or earnings per share.
Available cash flow was $244 million for the first quarter. At the end of
March, debt to capital was 33 percent, equal to the year end 1998 rate and
7 percentage points higher than a year ago.
UTC repurchased 775,000 shares of common stock for $97 million in the
quarter.
Acquisition spending totaled $95 million in the quarter, primarily for the
funding of a portion of Carrier's global alliance with Toshiba.
George David, chairman and chief executive officer said, "We were very
pleased with our first quarter, not only because of continued excellent
financial results, but also because of the acquisition of Sundstrand and
divestiture of UT Automotive. These actions reposition our resources around
UTC's core aerospace and buildings businesses. We expect both transactions to
close in the second quarter."
David continued, "Although the Automotive divestiture will be dilutive, as
previously reported, we expect operating strength across UTC to easily
overcome this dilution and still lead to our 15 percent earnings per share
growth commitment. We do anticipate significant restructuring charges in the
second and third quarters, which will offset substantially the UTA gain.
These will be targeted, as is customary with UTC, at high and early payout
cost reductions, strengthening confidence in continued earnings growth. Apart
from the cash flow impact of these higher restructuring amounts, we also
remain confident that our available cash flow will be at least $1.4 billion
for 1999."
Pratt & Whitney's operating profit increased more than 20 percent on
9 percent revenue growth after excluding a government contract settlement gain
in the first quarter of 1998. Operating profit and revenue improvement
reflected higher military engine shipments and growth in the overhaul and
repair business.
Carrier's operating profit increased 15 percent on 1 percent revenue
growth, excluding first quarter 1998 restructuring charges, reflecting
contributions from recent acquisitions and improved cost performance. Revenue
increases in commercial refrigeration and Europe were largely offset by
weakness in Asia and Latin America.
Operating profit at Otis increased $57 million on a 3 percent revenue
increase. Like Carrier, Otis took significant restructuring actions in the
first quarter of 1998. All regions except Latin America reported improved
earnings. North American and European revenue growth was partially offset by
lower revenues in Asia and Latin America.
Flight Systems' operating profit declined 38 percent on a 10 percent
revenue decline, as continued revenue and performance improvements at Hamilton
Standard were more than offset by lower helicopter shipments and restructuring
actions at Sikorsky.
Automotive's operating profit declined $2 million on an 11 percent
increase in revenues. UTC expects to complete the sale of its automotive
business in the second quarter and, accordingly, has classified the segment as
a discontinued operation in its financial statements.
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 Business by Operating Segment"
and "Other Matters Relating to the Corporation's Business as a Whole."
United Technologies Corporation
Condensed Consolidated Statement of Operations
(Unaudited)
(Millions of Dollars, except per share amounts)
Quarter Ended
March 31,
1999 1998
Revenues
Otis $1,363 $1,322
Carrier 1,510 1,498
Pratt & Whitney 2,019 1,916
Flight Systems 606 676
Corporate items and elimination (56) (104)
Continuing operations 5,442 5,308
Cost and Expenses
Cost of goods and
services sold $3,977 $3,961
Research and development 274 277
Selling, general and
administrative 701 661
Interest 55 47
5,007 4,946
Income before income taxes and
minority interests $435 $362
Income taxes 136 114
Minority interests 21 19
Income from continuing operations 278 229
Income from discontinued operation 30 31
Net Income $308 $260
Earnings Per Share of Common Stock
Continuing operations
Basic $1.20 $0.96
Diluted $1.13 $0.91
Discontinued operation
Basic $0.13 $0.14
Diluted $0.12 $0.13
Net earnings
Basic $1.33 $1.10
Diluted $1.25 $1.04
Dividends $0.36 $0.31
Average shares (in thousands):
Basic 225,425 229,416
Diluted 246,128 248,811
See accompanying Note to Condensed Consolidated Financial Statements.
United Technologies Corporation
Segment Revenues and Operating Profit
(Unaudited)
(Millions of Dollars)
REVENUES
Increase(Decrease)
1999 1998 Amount Percent
Quarter Ended March 31,
Otis $1,363 $1,322 $41 3%
Carrier 1,510 1,498 12 1%
Pratt & Whitney 2,019 1,916 103 5%
Flight Systems 606 676 (70) (10)%
UT Automotive 810 729 81 11%
Segment Revenue 6,308 6,141 167 3%
Eliminations and other (56) (104)
Discontinued operation (810) (729)
Consolidated Revenue $5,442 $5,308
OPERATING PROFIT
Increase(Decrease)
1999 1998 Amount Percent
Quarter Ended March 31,
Otis $155 $98 $57 58%
Carrier 91 18 73 406%
Pratt & Whitney 280 293 (13) (4)%
Flight Systems 40 65 (25) (38)%
UT Automotive 47 49 (2) (4)%
Segment Operating Profit 613 523 90 17%
Eliminations and other (11) (10)
General corporate expenses (65) (55)
Discontinued operation (47) (49)
Consolidated
Operating Profit $490 $409
OPERATING PROFIT MARGIN
% Point
1999 1998 Increase(Decrease)
Quarter Ended March 31,
Otis 11.4% 7.4% 4.0
Carrier 6.0% 1.2% 4.8
Pratt & Whitney 13.9% 15.3% (1.4)
Flight Systems 6.6% 9.6% (3.0)
UT Automotive 5.8% 6.7% (0.9)
Segment Operating
Profit Margin 9.7% 8.5% 1.2
See accompanying Note to Condensed Consolidated Financial Statements.
United Technologies Corporation
Condensed Consolidated Balance Sheet
(Millions of Dollars)
March 31, December 31,
1999 1998
(Unaudited)
Assets
Cash and cash equivalents $657 $550
Accounts receivable, net 3,418 3,417
Inventories and contracts
in progress, net 3,302 3,191
Other current assets 1,426 1,383
Investment in discontinued
operation 1,255 1,287
Total Current Assets 10,058 9,828
Fixed assets, net 3,461 3,555
Other assets 4,393 4,385
Total Assets $17,912 $17,768
Liabilities and Shareowners' Equity
Short-term debt $641 $603
Accounts payable 1,648 1,860
Accrued liabilities 5,092 4,719
Total Current Liabilities 7,381 7,182
Long-term debt 1,553 1,570
Other liabilities 4,025 4,182
ESOP Convertible Preferred
Stock, net 454 456
Shareowners' Equity:
Common Stock 2,818 2,708
Treasury Stock (3,212) (3,117)
Retained Earnings 5,595 5,411
Accumulated other
non-shareowner
changes in equity (702) (624)
4,499 4,378
Total Liabilities and
Shareowners' Equity $17,912 $17,768
Debt Ratios:
Debt to total capitalization 33% 33%
Net debt to total
capitalization 25% 27%
See accompanying Note to Condensed Consolidated Financial Statements.
United Technologies Corporation
Note to Condensed Consolidated Financial Statements
(1) Certain reclassifications have been made to prior year amounts to
conform to current year presentation.